ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: 12-32710
DATE: 2014-10-07
BETWEEN:
977372 Ontario Inc.
Plaintiff
– and –
348166 Ontario Ltd. and Sil-Tri Biofeuls Ltd.
Defendants
Dennis Touesnard, for the Plaintiff
Ben Fortino and Diana Colangelo, for the Defendants
HEARD: September 24 and 25, 2014
the honourable mr. g.e. taylor
The Evidence
[1] The plaintiff entered into a contract with the defendants to supply and install polyurethane spray foam insulation to a quonset hut and exterior boiler located at 7 Portside Drive in the City of Hamilton, owned by the defendant 348166 Ontario Ltd. The total contract price was $27,120 including HST. A deposit of $10,000 was paid leaving a balance owing of $17,120. The insulation was installed in October 2011. When the balance owing was not paid, the plaintiff filed a construction lien.
[2] The plaintiff completed all of the work contemplated by the contract. However, during the course of applying the foam insulation, the plaintiff’s employees damaged two doors in the quonset hut. The plaintiff replaced these doors without cost of to the defendants. The plaintiff expected to be paid the balance owing once the replacement doors were installed. After the replacement doors were installed, the defendants complained about “overspray” which means areas in the quonset hut were unintentionally sprayed with a light coating of foam insulation. When the plaintiff realized that the defendants did not intend to pay the balance owing on the contract because of the overspray, the lien was registered.
[3] Alex Schuts, one of the owners of the plaintiff, testified that overspray is a regular occurrence when installing foam insulation. Overspray can be removed in some cases but not in others. Crews are trained to deal with overspray which can be removed by scraping. He described the tanks in the quonset hut as having been aggressively oversprayed. He said that was because the tanks were tight against the wall of the hut and it was difficult to spray in behind them.
[4] In cross-examination, Alex Schuts testified that, at no time, had he attended at the premises of the defendants. He testified that the contract required floors, windows, doors, receptacles and valuables to be covered with drop sheets during the spraying of the insulation. He said he became aware of the defendants’ concerns about overspray after the lien was registered. He said he became aware that the tanks in the quonset hut had received some overspray. He said a car in the quonset hut had received some insulation overspray but that the car had been cleaned. He said he was not aware of overspray on the floor of the quonset hut. He agreed that the tanks had been “hit hard” with overspray and that it is not the responsibility of the customer to remove any overspray.
[5] Joe Silvestri, the president of the defendant Sil-Tri, testified that he dealt with a person named Bruce, whose last name he did not know, regarding the contract to insulate the quonset hut and boiler. He said the work took place over two weekends and that the tanks inside the quonset hut were moved to the center of the building so that the plaintiff’s crew could access the walls. At one point during the installation of the insulation, he asked if tarps should be put down and was told that there would be limited overspray. He did notice some tarps being used but they did not cover the entire area. When the work was completed, he said he immediately noticed the overspray. When he brought his concern to the attention of Bruce and another of the plaintiff’s employees by the name of Gary, they apologized for the damage to the doors and the overspray.
[6] Joe Silvestri testified that the contract price was agreed upon at $27,120 but this included the cost of placing a coating over the boiler which was located outside the quonset hut. He said Bruce told him the cost to coat the boiler would be $1300 but he agreed to include that in the total contract price. This is why the contract was awarded to the plaintiff.
[7] Joe Silvestri said that two weeks after the insulation was completed, Bruce and Gary came to the premises. They said it would be very difficult and expensive to remove the overspray from the tanks. He said Bruce and Gary suggested that the balance owing of $17,120 be forgiven and he agreed. Nothing has been done to date to clean the tanks although they are still being used. He testified that he had recently obtained a quotation for $50,000 to remove the overspray from the tanks.
[8] In cross-examination, Joe Silvestri agreed that a coating on the boiler is not mentioned in either the proposal or the invoice for the work performed by the plaintiff. He said the defendants had incurred an expense of somewhere between $400 and $500 to put a protective coating on the boiler.
[9] In cross-examination, Joe Silvestri testified that although he has continued to use the tanks, he does intend to clean the overspray. He said it is a fire hazard because of the buildup of oil on the exterior of the tanks.
[10] Kendra Fisher, a Regional Manager for Platinum Pro Painters testified that the cost to remove the overspray from the tanks would be $49,440.89 based on a quotation dated June 13, 2014.
[11] Counsel for the defendants agreed that the plaintiff should be permitted to call reply evidence from Bruce Jackson and Gary Smith, both of whom were and are employees of the plaintiff.
[12] Bruce Jackson testified that he was the plaintiff’s sales representative for the contract to supply and install foam insulation to the quonset hut and boiler of the defendants. He said when preparing the proposal he forgot about the need to include a coating for the outside boiler. When he realized the omission, he spoke to Joe Silvestri and told him it would cost of $1300 to apply a coating for the insulation on the boiler. He said it was too late in the season to apply the coating to the boiler but it would be done in the spring.
[13] He testified that Joe Silvestri was dissatisfied with the work done by the plaintiff but he denied agreeing that the balance owing on the contract would be forgiven. He also said that after the new doors were installed he and Gary Smith returned to the defendants’ premises and requested access to the building to remove the overspray. Joe Silvestri would not permit them to enter the building.
[14] In cross-examination, Bruce Jackson agreed that there was significant overspray which he described as extensive in one particular area. He also agreed that the quality of the work performed by the plaintiff in relation to the overspray and the damage to the doors was unacceptable although he maintained that the foam insulation applied to the walls of the quonset hut and the boiler was satisfactory.
[15] Gary Smith, the plaintiff’s field manager became involved in the contract with the defendants because of the damage caused to the doors of the quonset hut. The doors were replaced at no cost to the defendants. From discussions with Joe Silvestri, it was his understanding that the balance owing on the contract would be paid after the doors were replaced.
[16] After the doors were replaced, Gary Smith testified that he and Bruce Jackson met with Joe Silvestri to discuss cleanup of the overspray. He said a crew was sent to do the cleanup but Joe Silvestri was not satisfied. After that, Joe Silvestri would not allow anyone from the plaintiff onto the premises to do any further cleanup. Gary Smith denied ever having a conversation with Joe Silvestri about the defendants not paying the balance owing on the contract because of the issue about overspray. He did state, however, that because of the shape of the building and the location of the tanks, it was difficult to completely cover the tanks so as to prevent overspray.
[17] In cross-examination, Bruce Smith testified that there were some areas that were hard hit with overspray but for the most part the tanks had a light mist of overspray on them. He said that the conditions for this job were difficult because of the nature of the building. He said the plaintiff’s employees covered the tanks as best they could to prevent overspray to the tanks but it was not possible to completely cover the tanks so that there would be no overspray.
Discussion
[18] I am satisfied, based on the testimony of all witnesses that there was overspray of the foam insulation particularly on the tanks in the quonset hut. I am also satisfied that there was some overspray in other areas such as on the top of the ceiling of the office and in some locations on the floor of the building. There is some disagreement about how extensive the overspray was but based on the testimony of the plaintiff’s own witnesses, I have no difficulty in concluding that there was an unacceptable degree of overspray particularly to the tanks.
[19] In my view, it is significant that the defendants have continued to use the tanks for almost 3 years without removing the oversprayed insulation on the tanks or elsewhere in the building. The defendants admitted that the plaintiff completed the work contracted for.
[20] I am of the opinion that the defendants are attempting to use the fact of the overspray on the tanks to avoid having to pay the balance owing on the contract for the supply and installation of the insulation to the quonset hut and boiler. It is significant that the problem with the overspray did not become a major issue until after the damage to doors were replaced and the plaintiff sought payment of the balance owing on the contract. The plaintiff was willing to have a crew attend at the defendants’ premises to remove the overspray but was not allowed to do so. No effort has been made to have the tanks cleaned and indeed it was not until June 2014 that an estimate for the cleanup was obtained.
[21] I found the testimony of Joe Silvestri to be unsatisfactory in several aspects. I do not accept his testimony that there was a discussion between he and Bruce Jackson and Gary Smith about the balance owing on the contract being forgiven or written off because of the issue with the overspray. The defendants did not plead that there was an agreement to forgive the balance owing. In my view, if the conversation reported by Joe Silvestri had occurred, he would have told his lawyer about it and the legal consequences of that agreement would have been pleaded in defence of the claim. I also rejected the testimony of Joe Silvestri about the cost to coat the boiler was included in the contract price. He testified about the expense incurred by the defendants to apply the coating to the boiler. His evidence is inconsistent with the admission that the defendants had not incurred any out-of-pocket expenses to add to the work performed by the plaintiff. I therefore accept the testimony of Alex Schuts and Bruce Jackson that it was an oversight to not include the cost to apply a coating to the boiler in the original proposal and that as a result of the omission the plaintiff offered to apply the coating in the spring of 2012 at a cost of $1300.
[22] I do not accept the testimony of Joe Silvestri that he raised the issue about the overspray with Bruce Jackson and Gary Smith immediately after completion of the installation. Rather, I accept the evidence of Gary Smith that based on his discussions with Joe Silvestri he understood the balance owing would be paid once the damage to doors were replaced. To me, it is highly unlikely that the plaintiff would have willingly replaced the doors at its own cost if it had already been told that the defendants had no intention of paying the balance owing on the contract because of the overspray.
[23] I also do not accept the testimony of Joe Silvestri that overspray to the tanks must be removed because it is becoming a fire hazard. No independent evidence was presented on this point and because of my conclusion with respect to other aspects of the testimony of Joe Silvestri, I am not prepared to accept his unsupported testimony on this point.
[24] The only evidence as to the cost to clean the tanks is that of Kendra Fisher who testified that it would cost almost $50,000 to do so. Because the defendants have been content to use the tanks in their present condition for almost 3 years, I doubt that the quote from Platinum Pro Painters will ever be accepted.
[25] That said, it is clear to me that the plaintiff’s workmanship was substandard. Accordingly, the plaintiff is not entitled to payment of the full balance owing on the contract. Applying my best judgment, and in particular taking into consideration the photographs of the condition of the tanks after the plaintiff’s work was completed, I find that an appropriate reduction in the contract price would be $10,000 plus HST of $130.
[26] Accordingly, there will be judgment in favour of the plaintiff for $6990. The Counterclaim is dismissed. The plaintiff is entitled to interest on the judgment at the appropriate Courts of Justice Act rate. The plaintiff is also entitled to a lien pursuant to the Construction Lien Act for the amount of its judgment.
Costs
[27] At the conclusion of the trial, I asked counsel for their Cost Outlines and the Bills of Costs. As would be expected, without knowing the outcome as set out in these reasons both parties sought costs of the action. The plaintiff seeks costs partial indemnity costs of $7273.84 for fees including HST and $832.72 for disbursements including HST. The defendant seeks costs totaling $12,458.77 including HST which appears to be on the substantial indemnity scale. Although Offers were exchanged none have any impact pursuant to Rule 49 of the Rules of Civil Procedure except possibility the plaintiff’s Offer of September 15, 2014 but I was not told if that Offer remained open for acceptance until the commencement of the trial.
[28] The amount of the judgment in favour of the plaintiff is modest but it must also be kept in mind that the Counterclaim of almost $50,000 was dismissed. I find the amount that the plaintiff seeks as its costs of the action to be reasonable, particularly in light of the costs claimed by the defendant. The plaintiff is granted judgment for its costs of the action on a partial indemnity scale which I fix at $8,000.00 inclusive of disbursements and HST.
G. E. Taylor, J.
Released: October 7, 2014
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
977372 Ontario Inc.
Plaintiff
– and –
348166 Ontario Ltd. and Sil-Tri Biofeuls Ltd.
Defendants
REASONS FOR JUDGMENT
G.E. Taylor, J.
Released: October 7, 2014