CITATION: Hydrastone Inc. v. Clearway Construction Inc., 2015 ONSC 2669
COURT FILE NO.: CV-07-343729
DATE: April 23, 2015
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Hydrastone Inc.
L. Klug, for the plaintiff (defendant by counterclaim) Fax: 905-889-8747
Plaintiff (defendant by counterclaim)
- and -
Clearway Construction Inc., City of Toronto and The Queen in the Right of the Province of Ontario as represented by the Ministry of Public Infrastructure Renewal[^1]
M. Drudi, for defendant Clearway (plaintiff by counterclaim) Fax: 905-850-9146
Defendants (plaintiff[^2] by counterclaim)
HEARD: April 7, 9 and 10, 2015
Master C. Albert
[1] Hydrastone Inc. (“Hydrastone”) claims payment for services and materials supplied as a subcontractor to Clearway Construction Inc. (“Clearway”) on a watermain project carried out in 2006 and 2007 in the City of Toronto. Clearway counterclaims for equipment rental and repairs to City property.
[2] Hydrastone reduced its claim from $300,221.34 to $200,000.00 after the release of holdback. Clearway reduced its counterclaim from one million dollars to $110,120.52 in 2014.
I. Background
[3] Clearway, as the general contractor on a watermain project for the City of Toronto, subcontracted with Technicore Underground Inc. (“Technicore”) to lay the tunnel for a new watermain. Clearway also subcontracted with Hydrastone to supply and apply the cement mortar tunnel lining.
[4] Complications ensued and the job did not progress as planned. Technicore ran into difficulties and the tunnels were not in place and ready to receive Hydracore’s cement lining on the originally intended start date of August 1, 2006. Nor was the tunnel laid in such a way that Hydracore could mobilize its machinery and equipment inside the tunnel at one end and work continuously to the other end before removing it. The extra mobilizations increased Hydrastone’s costs and form the basis for its claim for an extra for re-mobilizations.
[5] Another complication arose when a watermain burst at Leslie Street causing Technicore to build the tunnel for a portion of the watermain at a steeper slope than that provided for in the specifications upon which Hydracore had relied in estimating the cost of the job. Hydracore lined the portion of the tunnel near Leslie Street by hand instead of by machine, reducing its efficiency and increasing its costs. Hydrascore claims these additional costs as an extra.
[6] Clearway issued a very large counterclaim against Hydrastone but after related lawsuits were resolved Clearway reduced its counterclaim to backcharges for (i) Hydrastone’s use of Clearway’s equipment and (ii) damage to sidewalks and landscaping adjacent to the project site.
[7] Hydrastone delivered its notice of claim for lien on October 18, 2007 and issued its statement of claim on November 15, 2007.
II. Issues
[8] The issues are:
a) Were remobilizations of Hydrastone’s machinery and equipment outside the scope of the subcontract work and chargeable as extras?
b) Did the change in the slope of the tunnel at Leslie Street require hand lining that would not have been required had the tunnel been built to the original specifications?
c) Is Hydrastone entitled to charge extra for flood damage to its equipment?
d) Is Hydrastone entitled to charge extra to remove sludge from the tunnel?
e) Is Hydrastone entitled to charge extra to re-inspect the tunnel after a gap of several months?
f) Is Clearway entitled to backcharge for Hydrastone’s use of its equipment and machinery and for damage adjacent to the work site?
III. The contract
[9] The parties entered into a written stipulated price subcontract in form CCCA S-1. The subcontract acknowledges that Clearway and City of Toronto had entered into a prime contract for the construction of a watermain on the hydro corridor “from Bayview Avenue to Brookshire Boulevard”.
[10] The subcontract provides at article 1.1 that Hydrastone shall supply all material, labour, tools and equipment necessary for the proper performance of the subcontract work described as:
“The supply and placing of the 13mm thick cement mortar lining of the steel pipe and specials (?) and patching of linings where bulkheads are to be removed or where sections of existing pipeline are to be removed and replaced with new pipe. The full scope of the work is as shown on the contract drawings and as detailed in the specifications. The above general description of the work is not necessarily complete.”
[11] The subcontract further provides at article 1.2 that the subcontract work shall be performed in accordance with “(b) the plans, specifications and other documents as described by the parties in Appendix “A” attached.” Article 1.2 and 1.3 of the subcontract bind the subcontracting parties to the terms and conditions of the prime contract.
[12] The specification drawings incorporated by reference into the subcontract, prepared by Mike Baldesarra, P. Eng., of Chisholm, Fleming and Associates and tendered as exhibit 5 at trial (the “Drawings”), include drawing 287M-1[^3], depicting the westerly end of the tunnel. This sheet includes the words “commencement of contract”. The specification drawings also include drawing 287M-17, the easterly end of the tunnel, with the words “end of contract”.
[13] Article 2 of the subcontract addresses the schedule of work. The first two alternatives do not apply as there was not an existing schedule of work in place when the parties executed the subcontract, nor was there a mutually agreed upon schedule.
[14] Article 2.1(c) provides a third alternative: where the contractor does not provide a schedule then the work is to start on or about August 1, 2006 and be substantially complete by September 30, 2006, for a duration of up to 45 days. In fact, the subcontract work started on or about November 20, 2006 and ended six months later. The start date was delayed because the site was not ready for Hydrastone to begin due to Technicore’s delay in laying tunnel.
IV. Analysis
A. Hydracore’s claim for extras
[15] Hydrastone’s total claim for extras is $180,818.69, with a breakdown as follows:
a) December 13 - 15, 2006 $28,963.83 for remobilization
b) January 2 – 5, 2007 $43,103.37 for equipment repairs due to flooding
c) February 15 – 20, 2007 $24,403.50 for remobilization
d) April 3 – 5, 2007 $8,578.88 for cleaning sludge from pipe
e) April 16 – 27, 2007 $53,724.62 for hand lining vertical section of pipe
f) April 30 – May 2, 2007 $18,608.62 for remobilization
g) September 1 - 17, 2007 $3,435.87 to re-inspect the tunnel
[16] Hydrastone relies on Goldsmith, Canadian Building Contracts (3rd ed., 1983) at pages 81 to 84 as cited by Justice Walker in DIC Enterprises Ltd. v Kosloski[^4] at paragraphs 30 and 32 to 37. Goldsmith describes extra work not expressly provided for in the contract and how to distinguish such additional work as being either (i) work properly called for in the contract or (ii) work that is substantially different from, and wholly outside the scope of the work contemplated by the contract. The contractor is required to perform the former but cannot be compelled to perform the latter without a new agreement. Determining the category depends on the wording of the contract, the nature of the work and the surrounding circumstances.
[17] The subcontract provides at article 9 that all extras must be in writing. Mr. Villani, Clearway’s General Manager, admitted that the parties never followed article 9.
[18] Goldsmith writes that a condition requiring extras to be in writing can be waived by the conduct of the parties or by acquiescence. Justice Walker, in the DIC case, supra, explains that waiver may occur if the owner (in this case Clearway is the owner under the Construction Lien Act[^5]) ordered the work, or if the parties consistently ignored the requirement that extras be in writing. It is not in dispute that parties to a contract, by their conduct, can waive the requirement that extras be agreed to in writing. I find that by their conduct the parties to the subcontract in this case waived the requirement that extras be in writing.
a. Hydracore’s claim for extras for multiple mobilizations
[19] The first issue is whether additional mobilizations of machinery and equipment fall outside the scope of the subcontract that required Hydrastone to supply all services and materials necessary to line the tunnel between Bayview Avenue and Brookshire Boulevard. Did Hydrastone and Clearway contract for the tunnel lining operation to begin at one end of the tunnel and proceed continuously without interruption to the other end of the tunnel? If not an express term of the contract is a single mobilization, or a limited number of mobilizations, an implied term of the contract?
[20] Hydrastone claims that the subcontract provides for continuous lining of the tunnel, thereby minimizing the cost of mobilizations. Hydrastone claims that the additional, unanticipated mobilizations are outside the scope of the contract and that Hydrastone is entitled to be paid an extra of $71,975.95 for three unanticipated remobilizations.
[21] The work did not start on August 1, 2006, the start date specified in the contract, because the pipe to be laid by Technicore, the tunnel subcontractor, had not been completed. Delays by Technicore also had an impact on how Hydrastone’s work could be carried out: it dictated where the tunnel lining operation could begin and the segments of the tunnel ready for lining. Because of the order and timing of Technicore’s laying of tunnel, the mortar lining did not proceed in one continuous operation but rather in several disjointed segments.
[22] Clearway denies liability for remobilization costs. The basis of its position is threefold: (i) the subcontract did not call for the job to proceed continuously; (ii) if it did, given that the watermain was six kilometers long, Hydrastone would have had to remobilize along the way at least for their work trailer and the tunnel lining materials, if not for the tunnel lining machinery, and (iii) remobilizing machinery and equipment is within the scope of the contract work which requires Hydrastone to “supply all material, labour, tools and equipment necessary for the proper performance of the subcontract work” to line the tunnel[^6].
[23] The factual basis for Hydrastone’s position that the contract provided for one continuous run from Bayview Avenue to Broookshire Boulevard is that the plans and specifications provide at sheet 1 of drawings 287M[^7] at the westerly end of the tunnel elevation drawings the words “commencement of contract” and at sheet 17, drawing 287M-17, at the easterly end of the tunnel elevation drawing, the words “end of contract”. Hydrastone asserts that this means that the tunnel lining subcontract work was to start at the westerly end and proceed continuously without interruption to the easterly end. The drawings were incorporated by reference into the subcontract between Hydrastone and Clearway.
[24] As the party claiming payment for extras the burden lies with Hydrastone to prove on a balance of probabilities that the parties agreed that continuous lining of the tunnel from the west to the east was a term of the contract such that additional, unanticipated mobilizations could be charged as extras.
[25] The problem with Hydrastone’s position is that the subcontract did not specify as a term or condition that the subcontract price was dependent upon the tunnel lining commencing at one end and proceeding continuously to the other end without taking the machinery out of the tunnel. Nor is there an express provision in the subcontract that calls for one or a specified number of mobilizations as included in the contract price, with additional mobilizations chargeable as extras. Nor do the drawings specify an order of progression for the lining work for the length of tunnel to be lined.
[26] The only reference in the subcontract and the drawings is that the tunnel was to be lined between Bayview Avenue and Brookshire Boulevard, one boundary being the “commencement” and the other being the “end”. Those words indicate the outside boundaries of the tunnel lining project. The drawings suggest that the contract will begin at Bayview Avenue and end at Brookshire Boulevard and it is undisputed that the contract work did not begin at Bayview Avenue. However those words do not indicate that even with those commencement and end points, the tunnel lining must proceed continuously without interruption between the two points. In the absence of any such specifications, and in the absence of any term in the subcontract on the issue, the words “commencement” and “end” in on drawings 287M-1 and 287M-17 cannot reasonably be interpreted to mean that the parties agreed that the tunnel lining project would proceed continuously without interruption or without the need to remobilize one or more times between the two points. Such a term is neither express nor implied. The notations on the drawings identify the boundaries for the job but not a requirement that the job be performed in a continuous fashion.
[27] The parties did not execute a written change order acknowledging the additional mobilizations as extras. By email dated December 13, 2006 Mr. Russell of Hydrastone expressed his concern over the increased costs of unexpected remobilizations to Mr. Villani of Clearway. He provided a breakdown of the additional costs to Hydrastone of $8,072.64 for the unexpected remobilization of November 20 to 22, 2006. He further provided estimated costs for future remobilizations on a “per day” basis.
[28] Hydrastone then issued an invoice on December 28, 2006 for two items, including the $8,072.64 charge for the November 2006 remobilization.
[29] There is no documented response from Clearway to Hydrastone’s December 13, 2006 email. Mr. Russell’s evidence is that Mr. Villani instructed him to reverse the charge and to write up and submit all of Hydrastone’s claims for extras for remobilizations at the end of the job. Mr. Villani’s evidence is that he gave no such instructions and advised Mr. Russell that it was not Clearway’s responsibility. He further testified that he undertook, on Hydrastone’s behalf, to submit Hydrastone’s claims for extras for remobilizations as a claim against Technicore and the City of Toronto at the end of the job. While there was mention at trial of a lawsuit against Technicore that settled, there was no evidence of the terms of the settlement and whether it included payment of Hydrastone’s claims for extras for remobilization. Technicore is not a party to the action at trial before me.
[30] Next, on January 8, 2007, Hydrastone issued a statement reversing the $8,072.64 charge for the November 20 2006 remobilization. I find this reversal of the charge consistent with Clearway’s evidence that it took the position with Hydrastone that the claim was not an extra to the subcontract between them. It is also consistent with Clearway’s evidence, through Mr. Villani, that Clearway would advance a claim to Technicore and the City of Toronto at the end of the job for the additional costs incurred by reason of Technicore’s failure to complete the tunneling on schedule.
[31] There are no emails, faxes, letters or other documents from Hydrastone to Clearway after the initial email of December 13, 2006 advising Clearway of extra charges for subsequent unanticipated mobilizations.
[32] The onus is not on Clearway to prove that it is not required to pay for the re- mobilizations as extras. To the contrary, the burden lies with Hydrastone to prove that it is entitled to charge extra for the unanticipated mobilizations and to prove the quantum of its claim.
[33] In a letter dated February 28, 2007[^8] from Mr. Villani to the consultant for the City of Toronto, engineer Mike Baldesarra of Chisholm, Fleming and Associates, consulting engineers, summarizing ten additional project costs, Clearway acknowledges that Technicore’s delay caused increased costs for Hydrastone’s tunnel lining operation. In particular Mr. Villani wrote the following at page 4 of his letter:
“Item 8: The delays sustained by our tunnel subcontractor have also had other ill effects on our construction program not anticipated at the time of tender. More specifically, these delays have adversely affected the sequencing of the work. Most notably, but not limited to, is with respect to our cement mortar lining operation. The said operation has been discontinuous in nature, requiring far more effort than anticipated; this because segments of pipeline remain uncompleted. Our cement lining subcontractor has incurred (and will continue to incur) considerable costs related to following sic: the need to dismantle and relocate the required equipment to portions of the pipeline as they are (and continue to become) available.”
[34] Mr. Villani concludes that portion of his letter to the City of Toronto’s consultant with the sentence:
“… we are requesting additional payment in the amount of $1,267,912.69”.
[35] In the statement of amounts claimed by Clearway that accompanied Mr. Villani’s letter to the City of Toronto, the costs associated with item 8 are described as “Leslie Street – Costs related to the revised sequencing of our work including but not limited to cement mortar lining operation” with “TBA” shown as the amount for item 8.
[36] There is no evidence as to whether any of this additional payment pertaining to item 8 and claimed by Clearway from the City of Toronto was paid to Clearway.
[37] I find that this letter is consistent with Mr. Villani’s evidence that he undertook to request payment from Technicore and the City of Toronto for the increased costs arising from additional mobilizations, but that Clearway did not agree with Hydrastone to be responsible for the amount claimed.
[38] Hydrastone produced its bookkeeping documents that Mr. Russell described as Hydrastone’s internal statements, maintained as Word document files and prepared by Hydrastone contemporaneously with the events that gave rise to its claims for extras. I refer to these documents as the “Statements”. The Statements record the additional costs that Hydrastone claims it incurred, including the date, location, description, workers, hours worked, equipment rental and value of work. The amounts shown in the Statements for labour include a markup. Hydrastone produced time sheets as backup to the regular and overtime labour hours. The time sheets do not distinguish between hours spent by workers on tasks that Hydrastone characterizes as “extras” to the contract as distinct from contract work.
[39] The Statements were not provided to Clearway contemporaneously with the supply of services and materials that Hydrastone claims as extras, or at any time prior to the litigation. No invoices were issued to Clearway at the time the work was carried out or the Statements were recorded by Hydrastone in its records. Hydrastone provided no evidence about whether it carried the items it claims as extras as work-in-progress or as accounts receivable in their financial records.
[40] The extras recorded for re-mobilizations add up to $71,975.95[^9]. After issuing the first invoice for re-mobilization and then reversing it, Hydrastone did not issue any further invoices for these extras or provide any particulars to Clearway until September 21, 2007.
[41] Hydrastone knew or ought to have known when it prepared its cost estimate before tendering on the job, and when it signed the subcontract, that it's price for lining the tunnel took into account the sequencing of work. It knew or ought to have known of the potential for disruptions, including the possibility of additional mobilizations. Hydrastone could have protected itself in the subcontract by specifying that mobilizations beyond a specified number would be charged as extras if caused by disruptions in the sequencing of the job. Hydrastone could have inserted as a condition of the subcontract price that it was predicated on one continuous run from the entry point at Bayview Avenue to the exit point at Brookshire Boulevard, with any deviation giving rise to additional costs chargeable as extras. Hydrastone did not insert such clauses in the subcontract and did not enter into any addendum or other agreement with Clearway once the problems and delays became apparent.
[42] If, as Hydrastone maintains, the contract required Hydrastone to mobilize and begin at Bayview Avenue on August 1, 2006, and if the contract work was delayed until November 20, 2006 and required to start at Brookshire Boulevard, with mobilization at highway 404, Hydrastone was aware from the start that mobilization was going to be an issue. That would have been the time to address the issue of the additional costs attributable to mobilizations. There are no documents (emails, letter, faxes) of any negotiations between the parties at that time.
[43] The subcontract requires Hydrastone to apply mortar lining to the tunnel for the watermain. Applying the DIC case, supra, and the principles recited therein from Goldsmith on Contracts, I find that additional work of re-mobilizing was not specifically called for in the subcontract but that it is work properly called for in order to fulfill Hydrastone’s obligations under the subcontract. It is not work that is substantially different from and wholly outside the scope of the work contemplated by the subcontract. On that basis Hydrastone was required to perform remobilizations as subcontract work that falls within the fixed price of the subcontract.
[44] For these reasons the Hydrastone’s claim for extras for remobilization must fail.
b. Hydracore’s claim for extras for hand lining the tunnel at Leslie Street
[45] Drawing 287M-1 of exhibit 5 shows that the slope designed for the segment of the tunnel at Leslie Street between points C1 and C2 was to have a grade of 21.2 percent. Clearway admits that following a burst watermain in the Leslie Street area the tunnel had to be redesigned and the slope became steeper than that specified in the specifications upon which the subcontract had been priced. Evidence suggests that the increase in slope was ten percent, but no expert evidence was proffered on that point.
[46] The relevant fact for the purpose of this trial is that Hydrastone’s tunnel lining machine could not be used for the segment of the tunnel where the slope had increased. The issue is whether the tunnel lining machine could have been used to line the tunnel had it been constructed with the originally designed slope.
[47] Clearway’s position is that even though the segment was built at a steeper slope than specified, the slope as originally designed would also have required hand lining. On that basis Clearway denies that this is properly an extra. Clearway provided no expert evidence that the original specifications would not have allowed Hydrastone to use the tunnel lining machine to line this segment of the tunnel.
[48] Hydrastone’s evidence is that the slope of the tunnel as specified originally would not have required hand lining this segment of the tunnel and the change in slope required hand lining thereby increasing Hydrastone’s costs. Hand lining is a slower and more labour intensive process than lining by machine.
[49] Mr. Villani addressed the issue of additional hand lining in his letter of February 28, 2007 to the City’s consultant Mr. Baldesarra. Mr. Villani wrote the following at pages 4 and 5:
“Additionally, a significant amount of hand work will be required in excess of that anticipated as a result of the increased number of closure pieces required to complete the pipeline….
“The unforeseen circumstances that developed at the location of the Leslie Street undercrossing were as a result of a changed soil condition.”
[50] On this issue I prefer the evidence of Mr. Russell over that of Mr. Villani and find that the increased costs for hand lining because the tunnel was built at a steeper slope than specified is an unforeseen extra to the scope of work in the subcontract.
[51] Applying the test set out in Goldsmith on Contracts, as cited in the DIC case, supra, I find that additional work of hand lining the tunnel in the area of the increased slope was not specifically called for in the subcontract and that it is work that is substantially different from and wholly outside the scope of the work contemplated by the subcontract. On that basis Hydrastone’s claim for an extra for this item is proper, subject to proving quantum.
[52] The amount claimed for labour hours is supported by time sheets. However there is no evidence to allocate the hours claimed as overtime to the extra of hand lining this segment of the tunnel as distinct from contract work. Only a half hour is claimed as overtime, so re-designating that half hour as a regular half hour rather than an overtime half hour I find that the labour component of the claim to be $35,617.92.
[53] Also included in Hydrastone’s claim for this extra is an expense statement for equipment rentals. No backup invoices were supplied to support the rental claims for the CML lining machine for the 10 days in April or for the bins, trailer, fencing and other rentals claimed. The rental costs appear to be calculated based on a claim for a 10 day delay keeping the items on site during the extra time required for hand lining this segment of the tunnel. Hydrastone provided no evidence of the time that would have been required to line the tunnel using the tunnel lining machine had the tunnel been constructed to the original specifications. I find that Hydrastone has not proven the costs claimed for equipment rental for this extra. Allowing ten percent for overhead I find that the total amount proven and allowed for this extra is $39,179.71.
c. Hydracore’s claim for damages arising from the January 2007 flood
[54] Over the December 2006 holiday break Hydrastone’s equipment was damaged due to flooding. The source of the flooding is unclear. Hydrastone attributes it to heavy rains and Clearway’s inadequate pumps and supervision of equipment over the holidays. Clearway claims that there was no flooding and in any event Hydrastone was responsible for its own equipment over the holiday period.
[55] The damage claim of $43,103.37 includes 326 hours for labour for a total claim for labour of $18,800.85 plus a claim for repairs and rentals that includes a $14,146.59 claim to repair the CML Lining Machine that was damaged in the flood. No invoices were provided. On cross-examination Mr. Russell admitted that he did not pay $14,146.59 to CML to repair the CML tunnel lining machine. Nor did Hydrastone produce its contract for the machine rental or provide evidence of insurance coverage.
[56] Mr. Russell’s evidence is that Mr. Bastone of Clearway had promised him that Clearway would cover Hydrastone’s costs arising from the flood. There is no documentation to that effect: no letter, email or fax reducing to writing Clearway’s alleged undertaking to pay for the damage to Hydrastone’s equipment. Mr. Villani and Mr. Bastone, the site supervisor, deny having made such a promise. Had Clearway given the undertaking to pay that Hydrastone alleges, one would expect to see a confirming email or letter documenting the agreement to pay and the amounts discussed.
[57] I find that Hydrastone has not met its burden of proof. The evidence as to whether there was a flood over the holidays conflicts. The evidence of whether Clearway was responsible for keeping Hydrastone’s equipment safe over the holidays conflicts. The evidence of whether Hydrastone actually incurred the repair costs claimed is absent. The evidence of whether Hydrastone incurred the additional rental costs that it claims is missing. Even if I were to accept Hydrastone’s evidence that there was a flood and its machinery was damaged, there is insufficient proof of the amounts claimed in damages.
[58] Hydrastone did not make a claim for the extra costs attributable to the flood at the time it was incurred. Rather, Hydrastone waited until the end of the job to invoice for this item as an extra. This is clearly not a claim that belongs with the claims deferred as claims against the City of Toronto and Technicore arising from Technicore’s delay in tunneling.
[59] I find that Hydrastone has not proven its entitlement to claim damages, labour costs and rentals attributable to the January 2007 flood as an extra. Furthermore, a claim for flood damage is not a claim made in contract, either as a contract item or as an extra. Rather it is a claim in negligence. Hydrastone did not claim in negligence in this action. On that basis as well the claim cannot succeed.
[60] Hydrastone’s claim for $53,724.62 for damages arising from the January 2007 flood fails.
d. Hydracore’s claim for an extra for cleaning sludge from tunnel
[61] Hydrastone claims $8,578.88 as an extra incurred in April 2007 to clean up sludge from a segment of the tunnel so that it could apply the mortar lining. The claim is made up of 54 hours of labour plus the cost of machine and equipment rentals (an allocation of rental fees for tunnel lining equipment for standby time) plus overhead.
[62] Clearway’s denies this claim on the basis that it has workers available to clear sludge and prepare the tunnel and that in this case Hydrastone did not ask Clearway to clear the sludge but went ahead and spent three days carrying out this task itself. Clearway asserts that it is not properly an extra.
[63] Hydrastone’s evidence on this issue is based on third degree hearsay: Mr. Russell testified that his foreman told him that he spoke to an unidentified person from Clearway who told the foreman that Clearway could not attend right away to clean the sludge from the tunnel. On that basis Hydrastone proceeded to clean out the sludge.
[64] There are no records to corroborate Mr. Russell’s evidence: no contemporaneous notation in a site log, no email and no fax. Mr. Russell’s diary includes the notation “cleaning sludge” but makes no mention of any authorization by Clearway to do so, or any advice from Clearway that it was asked and did not have the resources to carry out the task. When asked on discovery for particulars of his staff’s conversations with Clearway on this issue, Mr. Russell responded that his staff could not recall any conversations and that he could not confirm any details. At trial Mr. Russell was far more confident, testifying that Clearway was contacted. This discrepancy in his evidence reduces its probative value.
[65] I find that Hydrastone proceeded to clear the sludge without having it approved as an authorized extra. Hydrastone’s claim for this item fails.
e. Hydracore’s claim for an extra to re-inspect the tunnel
[66] Hydrastone claims an extra of $3,435.87 for 57 hours of labour plus gas for Mr. Russell and Mr. Duell of Hydrastone to re-inspect the tunnel between September 1 and 17, 2007. The tunnel had been inspected once already after Hydrastone completed its work but then the City of Toronto requested another inspection in September 2007.
[67] Inspecting the tunnel is time consuming. As the inspectors walk through six kilometers of tunnel, Hydrastone’s forces patch and repair areas of the tunnel lining pointed out by the City inspectors or as noticed themselves. The inspection took 17 days.
[68] Hydrastone’s position is that because the pipe had been left dry for so long after completing the tunnel lining it dried out, causing cracks that had to be repaired during this inspection. There is no expert evidence on whether a mortar lined tunnel cracks if left dry and if so the timeframe within which this occurs.
[69] Mr. Russell admitted that the two people who carried out the inspection, himself and his general manager Mr. Duell, are both salaried so that there are no records of any payment for the labour costs claimed. Nor are there any time sheets.
[70] I find that the subcontract requires Hydrastone to participate in inspections as required. The re-inspection in September 2007 falls within the scope of the subcontract and is not properly an extra.
B. Clearway’s backcharges
[71] Clearway initially counterclaimed for one million dollars. It reduced its counterclaim to $110,120.52 after ascertaining its position in other litigation arising from this project.
[72] The remaining counterclaim is for backcharges for Hydrastone’s use of Clearway’s equipment and to repair damage that Clearway attributes to Hydrastone, as follows:
a) CAT 963 track loader: $91,798.00
b) Regrade topsoil: $12,259.00
c) Road cleaning: $ 260.00
d) Asphalt repair: unspecified (small amount)
[73] Clearway admits that its claim for backcharges was an afterthought and is retaliatory to Hydrastone’s claim for extras.
a. The CAT Track Loader
[74] When Technicore’s delays caused a revised sequencing of Hydrastone’s tunnel lining and the need to remobilize equipment, machinery and materials to different locations, Hydrastone used Clearway’s CAT track loader for the moves. Clearway did not ask for payment in advance or at the time. Nor did Clearway invoice Hydrastone for using the CAT track loader at the time. There are no documents to corroborate that the parties entered into an equipment rental agreement.
[75] I conclude that it was in the interest of both Hydrastone and Clearway, as contractor and subcontractor on a City of Toronto project, for Hydrastone to get its equipment and machinery set up in the new locations as efficiently as possible and to that end Clearway offered Hydrastone the use of its CAT 963 Track Loader to facilitate the moves. The parties did not contract for Hydrastone to pay for its use for that purpose. I find that Clearway is not entitled to a backcharge for Hydrastone’s use of the CAT track loader.
b. Regrade topsoil, asphalt repair and road cleaning
[76] For the duration of the project the contractors had use of a temporary working easement to move their equipment and machinery. They were supposed to stay within the boundaries of the temporary working easement to avoid damage to adjacent roads and landscaped areas.
[77] Clearway claims that it was required to pay to repair landscaping and asphalt and to clean dirty roads in areas adjacent to the temporary working easement for the project worksite and claims that Hydrastone is responsible for the damage.
[78] Regarding the landscaping claim to regrade topsoil, the evidence is scanty at best that Hydrastone caused the damage that gave rise to the need to regrade the topsoil. There was a lot of heavy equipment and more than one subcontractor on site. There are no photographs of Hydrastone’s equipment outside the boundaries of the temporary working easement zone. Nor is there any first had evidence (viva voce or by affidavit) of anyone who can testify that they observed Hydrastone’s equipment out of bounds of the temporary working easement zone. There was hearsay evidence to that effect but of inadequate probative value to prove the claim.
[79] I find that Clearway has failed to prove its claim for a backcharge for topsoil and asphalt repairs.
[80] As to the very nominal claim for road cleaning, none of the witnesses testifying at trial observed Hydrastone as the cause of the mud and debris that dirtied the roads. Hydrastone was not the only contractor on the job. The only evidence on this issue was hearsay. Clearway has not proven this claim for a backcharge.
[81] For these reasons Clearway’s counterclaim is dismissed.
IV. Conclusion
[82] For the reasons stated I find that Hydrastone is entitled to $39,179.71 as an extra for the additional unanticipated hand lining that was required due to redesigning the slope of the tunnel. The balance of Hydrastone’s claim is dismissed. I further find that Clearway’s counterclaim must be dismissed as unproven.
[83] Accordingly, THIS COURT ORDERS THAT Clearway Construction Inc. shall pay to Hydrastone Inc. the sum of $39,179.71 plus prejudgment interest at the Courts of Justice Act rate of 4.5 percent from October 18, 2006 to the date that the reference report is signed and post judgment interest from that date until payment.
V. Costs
[84] The parties should attempt to resolve the issue of costs themselves. If the parties cannot resolve the issue of costs, brief written submissions of no more than three pages, with attachments including Offers to Settle, if any, are to be provided by May 8, 2015 with a right of reply by May 15, 2015.
[85] Once costs are determined the court will schedule an appointment to settle the reference report, unless the parties request an order on consent prior to the appointed date.
Master C. Albert .
Released: April 23, 2015
CITATION: Hydrastone Inc. v. Clearway Construction Inc., 2015 ONSC 2669
COURT FILE NO.: CV-07-343729
DATE: April 21, 2015
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Hydrastone Inc.
Plaintiff (defendant by counterclaim)
- and -
Clearway Construction Inc., City of Toronto and The Queen in the Right of the Province of Ontario as represented by the Ministry of Public Infrastructure Renewal
Defendants (plaintiff by counterclaim)
L. Klug, for Hydrastone Inc.
Fax: 905-889-8747
M. Drudi, for Clearway Construction Inc.
Fax: 905-850-9146
REASONS FOR JUDGMENT
Master C. Albert
Released: April 23, 2015
[^1]: The action was discontinued against the Province of Ontario on February 17, 2009 and discontinued against the City of Toronto on April 23, 2009. [^2]: Clearway [^3]: Exhibit 5 [^4]: 1987 CarswellSask 412 [^5]: R.S.O. 1990, c.C.30 [^6]: Article 1.1 of the subcontract, exhibit 1, page 22 [^7]: Exhibit 5 [^8]: Exhibit 2, Tab A [^9]: $28,963.83 (December 2006) + $24,403.50 (February 2007) + $18,608.62 (April 3 2007)