CITATION: Dirm 2010 Inc. v. Prestressed Systems Incorporated, 2017 ONSC 2174
COURT FILE NO.: CV-13-487409
DATE: April 10, 2017
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Dirm 2010 Inc.
S. Mannella and D. Gurizzan, for Dirm
Fax: 905-856-1213
Plaintiff (defendant by counterclaim)
- and -
Her Majesty the Queen in Right of Ontario as represented by the Minister of Infrastructure, Ontario Infrastructure and Lands Corporation o/a Infrastructure Ontario, Humber River Regional Hospital, HCP Social Infrastructure (Canada) Limited, Innisfree Health (Humber) GPCO Ltd., Plenary Health Care Partnerships Humber GP Inc., PCL Constructors Canada Inc. and Prestressed Systems Incorporated1
P. Chandler for the PSI
Fax: 519-253-2321
Defendants (PSI as plaintiff by counterclaim)
HEARD: September 6, 8, 13, 14, 15, 16, 20, 27, 28, 29, 30, October 6, 7, 13, 14, 18, 20, 25, 26, December 6, 8, 9, 13, 14, 15, 16, 20, 22 and 23 2016
Table of Contents
I. Background. 4
II. Issues. 7
III. Witnesses. 7
a. Dirm’s witnesses. 7
b. PSI’s witnesses. 9
IV. Analysis. 16
a. The contract 16
b. Terminating the contract 20
c. Deficiencies. 21
d. Breach of contract 24
Default #1: Quality of the topping finish. 25
Default #2: Cracking. 38
Default #3: Topping Schedule. 41
Default #4: Remedial Plan. 43
Default #5: Site rules breached. 44
Default #6: Submittals. 47
Default #7: Communication Protocol 48
Default #8: Submittals: Deck Preparation. 48
Default #9: Oversized Vehicles. 49
Default #10: Failure to perform contracted services. 49
Cumulative effect of multiple breaches. 50
e. The Law.. 50
Repudiation or fundamental breach of the contract 50
Breach of contract 53
f. Remediation and completion. 54
- The Scott Schedule. 54
a. Items 1, 2, 3 and 4: Cracks. 55
b. Item 5: Ponding, levels 2, 3 and 4. 59
c. Item 6: Finish quality, levels 2, 3 and 4. 59
d. Item 7: Aesthetics levels 2, 3 and 4. 61
e. Item 8: Slurry and splatter, levels 2, 3 and 4. 61
f. Item 9: Damaged wire screens. 63
g. Item 10: Debris. 63
h. Item 11: Expansion joints, levels 2, 3 and 4. 64
i. Item 12: Control joints, levels 2, 3 and 4. 64
j. Item 13: Delay from removing Dirm.. 65
k. Item 14: Completion costs, Dirm scope of work. 65
- Additional costs claimed by PSI and evidence of quantification. 67
g. Delay. 67
h. Mitigation. 69
i. Extras claimed by Dirm.. 70
Scarification. 70
Foam experiment: Change double tee joint foam prep. 71
Additional Rebar 71
Overtime for Saturday work. 71
Saturday pump rental charges. 72
Concrete delivery on Saturday. 72
Labour to remove bracing and shoring posts. 73
Extra cylinders. 73
Corrosion inhibitor 73
j. Value of contract work completed. 74
V. Accounting. 74
a. Allowed extras. 75
b. Dirm invoices for work completed. 75
c. Lost profit 77
d. Backcharges. 77
e. Grand total calculation. 78
VI. Conclusion. 78
VII. Costs and Report 79
Master C. Albert
1This case highlights the consequences of miscommunication in contracting.
2Dirm 2010 Inc. (“Dirm”) claims $1,667,940.66 plus HST and lien remedies for services and materials supplied to Prestressed Systems Incorporated (“PSI”) arising from a contract to supply and install concrete topping to levels 2, 3 and 4 of the east parking garage structure of the new Humber River Hospital (the “Project”). PSI counterclaims for $2,000,000.00, alleging inter alia, that Dirm’s work was of no value and portions of the topping had to be removed and replaced.
3The question is whether Dirm reasonably performed its contractual obligations, for which it is entitled to be paid, or whether Dirm’s performance was so deficient as to warrant PSI terminating the contract, repairing the deficiencies, completing the contract work and backcharging Dirm.
4The trial was conducted pursuant to the May 21, 2013 judgment of reference of Justice McEwen in action CV-13-4728602, as well as section 60 of the Construction Lien Act, R.S.O. 1990, c.C.30, (the “Act”). By the time the reference reached trial Dirm and PSI were the only remaining parties3 in the stream two lien claim actions.
5For the reasons set out below I find that Dirm performed the contract until it was terminated by PSI without justification. At the time of termination Dirm had completed approximately 90 percent of the contractual scope of work. Some of Dirm’s work required rectification. Dirm is entitled to be paid for the contract work performed plus allowable extras plus the profit it would have earned on the portion of the contract that PSI did not allow Dirm to complete, less reasonable costs to rectify deficiencies.
I. Background
6The Humber River Regional Hospital occupies a site in the Keele and Wilson area of Toronto. The portion of the site that is the subject of this litigation is described as the east parking garage, a four storey above-ground parking structure. The top floor, referred to as “level 4”, is uncovered. I refer to it as the “parkade” or the “east parkade”.
7The Project is a “3P” project: a public-private partnership. The owner is a consortium lead by Plenary Group. Plenary Group contracted with PCL Constructors Canada Inc. (“PCL”) for the design, construction and long-term maintenance of the Project (the “Design Build contract”). PCL in turn contracted with PSI as the structural subcontractor for the east and west parking structures4. PCL in turn subcontracted with Dirm to provide the concrete topping for levels 2, 3 and 4 of the east parking structure (the “east parkade”). Dirm in turn sub-subcontracted with Holcim to supply the concrete and with Pumpcrete to provide the pumping equipment.
8Dirm, having supplied and installed the concrete topping, invoiced for its work but has received no payment. PSI’s position is that its cost to repair Dirm’s work exceeded the amount Dirm invoiced.
9PSI, based in Windsor, Ontario, is in the business of designing, manufacturing and installing precast and prestressed concrete structures. Its project managers work out of Windsor, other than Stuart Venner, who works out of Barrie, Ontario. According to senior manager Randy Primeau, PSI builds up to six parking structures every year.
10Dirm is in the concrete business, supplying concrete slabs and toppings. Benny DiSotto runs the company and his brother, Tony DiSotto, supervises projects on site. Their father started the business. Sons Benny and Tony joined their father and later took over the business.
11The contract between PCL and PSI (the “PCL/PSI contract), dated February 23, 2012, was fully executed by October 15, 2012. It is over 80 pages in length. Article 1(b) provides that PSI agrees to perform the work in a “prompt and diligent manner and in accordance with the Contractor’s (PCL) schedule for the Project, so as not to interfere with or delay the work of the contractor or the work of any other subcontractors.”
12Article 1(a) provides that PSI has the requisite experience, skill and knowledge to perform the contract. Randy Primeau of PSI admitted that PSI does not have skill and experience in concrete topping and relies on its topping subcontractor.
13Article 1(d) provides that PSI is deemed to have full knowledge of the Design Build Contract. Paul Phillips of PSI explained that a design build contract is one where, at the time of bidding and contracting, a full set of design documents is not available. In essence, the design of the project is incomplete when construction begins and the parties are expected to work together to complete the design while construction is underway. Mr. Primeau admitted that as of February 2012 only 50 percent of the design had been completed.
14Article 2(c) requires PSI to include in its contracts with subcontractors the terms and conditions of the PCL/PSI contract, to the extent provided for in the Design Build Contract or the PCL/PSI contract. A significant issue in this lawsuit is whether Dirm was bound by the terms and conditions of the PCL/PSI contract. Randy Primeau of PSI admitted that PSI did not provide a copy of the PCL/PSI contract to Dirm.
15Mr. Phillips testified that at the time PSI submitted its tender bid to PCL, despite PSI having internally carried out its own costing analysis, PSI did not know the cost of concrete topping.
16Special Condition 5 of the PCL/PSI contract requires PSI to designate a site superintendent. It provides:
- It is required that during the execution of the work the Subcontractor maintains one person designated as its superintendent. This will be the same person during the course of the work unless consent is granted to change personnel. The superintendent must be fully qualified and experienced in his trade.
17Mr. Primeau admitted that PSI’s practice was to pass this obligation onto its trades and require subcontractors to supervise their own work. He further admitted that the PCL/PSI supervision clause was not carried forward into PSI’s contract with Dirm.
18Stuart Venner admitted that even though the PCL/PSI contract was on PSI’s server he never provided Dirm with a copy of it. Mr. Venner further admitted that he never received a copy of the PSI/Dirm contract.
19PSI manufactured the precast components of the east parkade structure in late 2012 and early 2013 and delivered them to the site beginning January 2013. PSI’s subcontractor, Assemblers Inc., installed the precast components on site. The application of concrete topping, sealant and expansion joints by Dirm could not begin until production and erection of the precast structure was complete.
II. Issues
20The three questions essential to resolving this dispute are:
a) What are the terms of the PSI/Dirm contract?
b) Who breached the contract?
c) What is the quantum of damages flowing to the innocent party?
21The analysis that follows examines the evidence regarding:
a) formation of the contract, Dirm’s scope of work pursuant to the contract and allowable extras,
b) the circumstances leading to PSI ejecting Dirm from the Project, whether Dirm’s work was deficient and rectification measures, and
c) quantification of (i) contract work carried out by Dirm, (ii) extras, (iii) contract work not yet completed when Dirm left the Project and (iv) rectification of deficiencies.
III. Witnesses
a. Dirm’s witnesses
22Benny DiSotto is vice president and chief estimator for Dirm. He has been in the family business since 1999. He received a certification from Humber College in 1996 as a civil engineer technologist.
23Benny DiSotto presented initially as a straightforward and reliable witness. However, he was caught in several contradictions that reduced the reliability of his evidence. For example:
a) He denied that the specifications in PSI’s request for quote formed part of the contractual obligations as between PSI and Dirm but later admitted that they did.
b) He admitted that Dirm required a purchase order to respond to PSI’s request for particulars of its pour schedule and truck placement, after having stated that Dirm did not require a purchase order.
c) He refused to admit that Dirm was required to be LEED5 compliant, calling it a courtesy, when it was clearly spelled out as a specification in the PSI request for quote to which Dirm had responded.
d) His position that Dirm had no responsibility to provide product specifications to PSI was incorrect. The request for quote, to which Dirm responded, provides that LEED submittals are required. Even if not expressly provided, it would be an implied term of a LEEDS compliant project that trades working with chemical products provide product specifications upon request.
24Where Benny DiSotto’s evidence conflicts with that of another more reliable witness I generally prefer the evidence of the other witness.
25Tony DiSotto, Dirm’s on-site supervisor, also has a certification from Humber College as a civil engineering technologist. He has 35 years of experience in construction, with 30 of experience in concrete construction and finishing.
26Tony DiSotto’s recollection of events was very clear. He was on site daily, all day. He was directly involved in the day-to-day details of the project. As a witness, he is a man of few words until riled up. When the questions annoyed him, or answers seemed obvious, Tony DiSotto became impatient and sarcastic. While his impatience did not detract from the reliability of his evidence, it illustrates to me that he was likely difficult to work with when the project hit rough patches. He described PCL’s and PSI’s supervisory staff as young and inexperienced. His attitude likely escalated conflict on site.
27As a witness Tony DiSotto was not forthcoming. He filtered what in his mind was important, omitting what he characterized as unimportant until such information was extracted in cross-examination.
28Tony DiSotto strikes me as someone who works hard, tries to find the best and most efficient way to complete a task and lacks patience for time wasting exercises and inexperienced workers and supervisors. He was on site daily from early morning to late in the day, supervising Dirm’s workers and performing the work himself. He maintained site notes6 recording site events daily. I find him to be a hardworking, no-nonsense person. With a few minor exceptions, his evidence is reliable regarding site events, concrete topping and finishing.
29At the time of the project Terry Szewchuk was employed by Dirm as a project coordinator for this Project. He has since left Dirm’s employ. He earned a Bachelor of Architectural Science from Humber Polytechnical in 2011, majoring in project management.
30Mr. Szewchuk gave his evidence in a precise, thoughtful and careful manner. He spoke slowly and took great care to deliver the facts accurately. Neither lawyer could put words into his mouth. He has an excellent memory. I find Mr. Szewchuk to be a credible and reliable witness.
31Paul Belanger is a civil engineer and an expert in concrete parking structures, having investigated some 500 such structures in a career that spans some 30 years. Dirm advanced Mr. Belanger as an expert in concrete including concrete technology, concrete finishing and concrete pricing. PSI did not challenge the witness’ expertise. The court accepts Mr. Belanger as an expert in concrete.
32As a witness Mr. Belanger was well prepared, knowledgeable and credible. He did not present as an advocate but rather as an impartial expert. Mr. Belanger prepared two reports, tendered as exhibits 7 (the May 16, 2014 report) and exhibit 8 (the November 20, 2015 report).
33Wayne Gomes is employed by BASF Canada, a product supplier. Dirm called him as a witness to testify about products and materials for expansion joints and sealants. I found him to be a credible and reliable witness.
34At the time of this Project Domenic Attisano was employed by Limen Structures as vice president of estimating. He is a civil engineering technologist certified by Humber College and has 34 years of experience with concrete structures. After PSI ejected Dirm from the site he was asked by the bonding company that had posted the performance bond on behalf of Dirm to provide an estimate to rectify and complete Dirm’s contract work.
35Mr. Attisano testified in a straightforward and credible manner. I find him to be a reliable witness.
b. PSI’s witnesses
36Chad Alderson has been employed by PCL for ten years and at the time of this project he was a site superintendent. He is soft spoken and at first appears trustworthy and responsible. However, as his evidence continued he became increasingly arrogant and tailored his answers to favour PSI. For example, when asked about lifting a curing blanket to see the concrete finish he refused to admit that such blankets are extremely light weight and easily lifted7. Rather he remarked that curing blankets could be lifted “subject to union rules” and after seven days “it is a possibility” that you can look at the topping. Such answers are unhelpful and convey more about the speaker than about the facts recited. I do not find his evidence reliable.
37Paul Phillips is vice president and general manager of PSI. He has been employed by PSI since 1987 and has been general manager since 2008. He is responsible for estimates and pricing, contracting and assigning project managers to jobs. He assigned Kristina Gibson as project manager and then transferred the project to Start Venner. He did not recall that the reason for transferring the job to Mr. Venner was Ms Gibson’s maternity leave. I question his memory and find it surprising that he did not recall the reason for transferring the project to Mr. Venner.
38Mr. Phillips was evasive in some of his answers, particularly on cross-examination. When asked directly on several occasions to specify the budget amount that PSI had carried for topping in its tender bid to PCL, he danced around the question before finally admitting that the Dirm contract price was $250,000.00 below PSI’s budget and PSI had been trying to knock Dirm down further.
39I find that Mr. Phillips was less than forthright in his business dealings with Dirm. He admitted that despite Mr. Phillips’ June 12, 2013 email to Benny DiSotto promising to pay Dirm’s April 2013 invoice if Dirm signed the controversial purchase order by June 14, 2013, only two days later PSI decided that it would not pay Dirm at all.
40Mr. Phillips contradicted himself in his evidence. For example, he testified that Dirm did not work prior to April 15, 2013, but later he admitted that Dirm had done some work in April 2013, just not to the extent that Dirm had invoiced.
41In total I find the evidence of Mr. Phillips questionable. He tailored his evidence in an effort to better his own and PSI’s position in this litigation. He provided answers that in his mind might improve the outcome for PSI. As a long time employee of PSI and the person ultimately responsible for PSI’s contracting error, it is understandable that he would want the best possible outcome for himself and PSI. However, at trial a witness is expected to tell whole, unbiased truth. I have taken these findings into account in weighing the evidence of Mr. Phillips against contradictory evidence of other witnesses in this trial.
42Randall (Randy) Primeau, presently a senior manager for PSI, has been employed by PSI since 2004. In 1986 he received a diploma in civil engineering technology from St. Clair College. He is LEEDs8 certified. Mr. Primeau is PSI’s main contact with its customers. He reviews subcontracts (in this case the subcontract with Dirm) and arranges for submittals9. He also assigns project managers – in this case Kristina Gibson and subsequently Stuart Venner. He described the Project as “very complex”.
43As a witness in chief Mr. Primeau was precise, knowledgeable, articulate and well prepared. In cross-examination, however, he refused to admit the obvious until backed into a corner with no way out, thus reducing his credibility as a witness. For example he described Dirm’s failure to provide requested submittals as a breach of its contract but when taken to an email from PSI demanding submittals he admitted that two of the three items requested were requests only and not requirements10. When taken line by line to another email request from PSI for submittals Mr. Primeau admitted that Dirm replied within a reasonable time, but was of the view that one response was inadequate. He also admitted that Dirm had no contractual obligation to provide submittals.
44Towards the end of his cross-examination Mr. Primeau discredited himself and came across as vindictive towards Dirm. He was testifying about cracking that he had observed on all three levels of the structure when he walked the site on June 6, 2013. He insisted that there were no curing blankets covering levels 2 and 3 and that lighting was adequate to see the cracks. Then the June 7, 2013 email of Loris Pella (representing the owner) was put to him, wherein Mr. Pella writes that the lower floors were still covered and the lighting level was lower. In response Mr. Primeau stated that they had lifted curing blankets to view the finish.
45Mr. Primeau, by the end of his evidence, came across as an advocate for his employer with a vested interest in the outcome of the litigation. His evidence was coloured by his self interest in the outcome.
46Kristina Gibson, PSI’s project manager at the beginning of the PSI/Dirm relationship, earned the designation of civil engineering technologist from St. Clair College in 2003. She presently works as a project manager for Contract Glaziers Inc.
47At the relevant time Ms Gibson reported to Randy Primeau and Paul Phillips. She participated in communications with Dirm regarding the topping subcontract. When examined in chief Ms Gibson was forthcoming, thoughtful and careful in her evidence. In cross-examination, however, she was impatient, annoyed and unable to recall much of what was asked of her, particularly regarding meetings and protocols followed by PSI.
48Ms Gibson had been careless in her failure to follow up with the Dirm purchase order. She did not recall reviewing it as an outstanding item with Mr. Venner when transitioning her work to him in anticipation of her leave of absence.
49Ms. Gibson had a poor memory of the Project. She became more careless as her evidence continued, insisting that a purchase order incorporating the terms of the PCL/PSI contract into the PSI/ Dirm contract was in place notwithstanding that she had never provided a copy of the PCL/PSI contract to Dirm.
50When asked about the appendix referred to in the purchase order and whether it had been sent to Dirm in October 2012 she stated initially that it had not been sent and she should have removed the reference to the appendix from the template she used to prepare the purchase order. Later, after Dirm’s counsel took her to the appendix, reproduced as an appendix to the Golder report, she changed her answer to state that the terms and conditions in the appendix were included in the purchase order sent to Dirm by email in October 2012.
51Overall, I found Ms Gibson’s evidence largely unreliable and unhelpful. Where her evidence conflicts with that of a more reliable witness I prefer that of the latter.
52Bruce MacPherson has been employed by PCL for 27 years and is presently a project director, as he was in 2013. He has a Bachelor of Environmental Studies (1992) from the University of Waterloo. He was on site daily and supervises a staff of up to 90 people at PCL. He answered questions clearly, succinctly and in a straightforward manner. I find Mr. MacPherson to be a credible and reliable witness.
53Peter Waisanen, a concrete specialist employed by EXP Services, has been a professional engineer since 1978. He provided engineering services to the Project in July, August and December 2013. He was tendered by PSI as a fact witness, not as an expert. He gave evidence about his observations over several site visits. While tendered as a fact witness his evidence strayed into opinion. Not having been tendered as an expert witness, his opinions regarding hydro demolition and bonding strength are inadmissible.
54Taylor Rogers was employed by PCL as a project coordinator. This Project was his first and he is no longer with PCL. He was responsible for documentation, including tendering work, under the supervision of PCL’s project manager Rob Corstorphine.
55When Mr. Rogers was unsure of an answer he guessed. For example, he guessed initially that the Project was not a fast track project but when caught he deferred to Bruce MacPherson’s characterization of the project as a Fast Track project. His conduct in that regard suggests to me that some of Mr. Rogers’ evidence is not based on actual knowledge of the facts but rather on guesswork. I find him unreliable as a witness.
56Stuart Venner is PSI’s project manager. He took over the project from Kristina Gibson in December 2012. He worked with her for a few weeks before she left on maternity leave. Mr. Venner’s background is in millwork: woodworking and cabinetry. While he had 20 years of experience in woodworking and project management prior to joining PSI in 2012, this was his first project involving concrete. Mr. Venner had six weeks of “on site” training before he was put in charge of the precast structure and concrete topping for the east parkade as project manager.
57As a witness, Mr. Venner lacked credibility. I find his evidence unreliable. He exaggerated or understated facts when it suited him, he tailored his evidence to suit what he believed would be helpful to his employer’s case, and he repeatedly contradicted the evidence he gave at his examination for discovery on March 25, 2015. Examples of evidence and behavior that diminish Mr. Venner’s credibility are:
a) When unsure about the facts he mumbled his answers. He was evasive. He was asked repeatedly whether the main reason for terminating Dirm’s contract was its failure to respond to PSI’s request for a remediation plan and he refused to give a straight answer, replying that Dirm’s lawyer should ask PSI’s in-house lawyer Mr. Auger. When faced with his answer from his examination for discovery, being that the main reason for terminating Dirm was its failure to respond to requests for a remediation plan, he responded that he had speculated at the examination for discovery.
b) Mr. Venner exaggerated when he testified at trial that it took “a half hour” to resolve the wash issue (explained later in these reasons) that arose from the manufacture or assembly of the precast concrete structure. Mr. Venner grossly underestimated the time it took to resolve the issue. The evidence is clear that it took several proposals by the consulting engineer and up to 23 days to resolve the wash issue11. Mr. Venner blamed Dirm for the delay when the evidence shows that Dirm discovered the building code clearance issue and offered solutions to the problem.
c) At trial Mr. Venner testified that the reason for not having a mock-up prepared prior to the first topping pour was because all parties had overlooked it. He denied that it was because everyone knew what the swirl finish should look like. Yet at his examinations for discovery Mr. Venner had testified that the reason for not preparing a mock-up was because everyone understood what the swirl finish should look like.
d) At trial Mr. Venner said he had no comment about whether Dirm had corrected the curing blanket issue12. At discovery Mr. Venner had testified that Dirm had replaced the curing blankets within several hours. At trial PSI attempted to expand the curing blanket issue as a significant problem caused by Dirm, when in fact, on the totality of the evidence, it was a one-time-occurrence in a “high wind warning” situation on a single date. I draw the inference that Mr. Venner’s reluctance at trial to admit that Dirm remedied the issue within a reasonable time was in furtherance of his efforts to advocate his employer’s case, rather than to provide unbiased factual evidence.
e) Mr. Venner worked out of his home in Barrie, Ontario, one hour away from the Project site. In fact, one reason he took a job with PSI was so that he could work from home. He attended the site on a weekly basis at first, up until April 18, 2013. Thereafter, he testified at trial, he was on site three or four times a week. At his discovery he testified that he attended the site daily. At trial he explained that the reason for the discrepancy in his evidence was that perhaps his memory was better in March 2015. I question the reliability of Mr. Venner’s evidence and its probative value.
f) At trial Mr. Venner testified that Dirm was to communicate with PSI and not deal directly with PCL. Later he testified that he was available by phone and he expected that Dirm would deal directly with PCL’s supervisors on site regarding issues that arose on site. At discovery Mr. Venner had testified that supervising Dirm’s work entails PSI being on site daily to field questions and ensure that Dirm is proceeding as required by the schedule and the plan. When this evidence was put to him at trial he changed his trial evidence to accord with his discovery evidence, once again discrediting his reliability as a witness.
g) One of PSI’s complaints, and a justification relied on by PSI to terminate Dirm’s contract, was that Dirm failed to deliver submittals as required. Mr. Venner agreed at trial that the minutes of the pre-mobilization site meetings on March 7, 2013 are silent about any concerns regarding a late start due to the absence of submittals from Dirm. Yet in his examination in chief Mr. Venner testified that Dirm’s delay in delivering submittals delayed the Project. Mr. Venner admitted that Dirm submitted a topping plan before the first pour.
h) At trial Mr. Venner testified that there were photographs of debris and materials to show that Dirm failed to clean up, contrary to the site rules and Dirm’s contract. He further testified that garbage was a low priority. Yet it was one of the alleged site rules that PSI claims Dirm breached, justifying in part PSI’s termination of Dirm’s contract. At discovery when Mr. Venner was asked to undertake to produce photographs of debris and materials that Dirm had failed to clean up he testified that there were no such photographs. I find this to be another instance of Mr. Venner attempting to characterize Dirm as uncooperative, thereby advocating rather than stating facts truthfully as a witness is required to do.
i) On several occasions Mr. Venner, who has no credentials in concrete construction or engineering, disputed the findings of Dr. Maher, the expert relied on by PSI in this litigation. Mr. Venner exaggerated the area of cracking beyond that identified by Dr. Maher in his report. He also disagreed with Dr. Maher regarding the cause of craze cracking, thus demonstrating Mr. Venner’s testimonial arrogance.
j) When preparing to terminate Dirm’s contract PSI served a notice of default on Dirm giving Dirm three days to remediate the defaults listed in the letter. At trial, when asked if that was possible, Mr. Venner replied that it would be a “challenge”. After further questioning he admitted that it would be impossible for Dirm to remediate the defaults in three days. This is another example of Mr. Venner’s attempts to colour his evidence to favour PSI.
k) Mr. Venner admitted to giving Dirm “the runaround” about paying the April 2013 invoices because he was concerned that Dirm’s behavior would be unpredictable and Dirm would obstruct the job, with only one more pour to be done13. In my view treating a subcontractor in this manner is dishonest.
58Mr. Venner undermines his credibility and the reliability of his evidence with his evasive and contradictory answers. I conclude that he tailored his evidence at trial to advocate his employer’s case. I find that Mr. Venner is not a credible witness and his evidence is unreliable.
59Greg Sgro is an employee of United Floor, the contractor retained to remediate Dirm’s topping finish. He has 13 years of experience with United Floor, the most recent eight years as a field operations manager in the concrete floor division. He manages up to six parking deck topping contracts a year. He described his involvement with the Project in a straightforward manner. However, I recognize that as a witness he has an interest in justifying the scope of the work performed by United Floor and the amount that it charged PSI. He is not an impartial witness.
60Dr. Michael Maher is a professional engineer with the firm Golder Associates. He has been with Golder Associates since 1978. He completed a Ph.D. in Geotechnical Engineering and Pavement Design from the University of Dublin in 1980, writing his thesis on the topic of construction materials in road pavement, aggregates and concrete. His experience in concrete includes quality control on large construction projects, including bridges and garages. He has experience in forensic engineering. Dirm did not challenge his qualifications as an expert in concrete. The court accepts Dr. Maher as an expert in concrete.
61Dr. Maher was retained jointly by PCL and PSI regarding the east parkade. While his credentials are stellar, the foundation upon which he based some of his opinions is shaky at best. For example, he treated sample #2 identified in the Project consultant HDR’s report as a mock-up, notwithstanding that he admitted that a mock up is prepared prior to commencing work. He believed that the sample was identified after Dirm had completed only two or three pours when in fact the samples were not identified to Dirm until after Dirm had completed at least six pours.
62Another example of the shaky foundation upon which Dr. Maher based his report is the documentary foundation upon which he relied. He was informed by PCL and/or PSI that a particular purchase order was the contract between PSI and Dirm. That purchase order had never been executed and in fact Dirm had rejected it as not reflecting the terms of the parties’ agreement. That issue is canvassed in detail later in these reasons. In relying on the purchase order as the contract Dr. Maher provided opinions based on an erroneous factual foundation and a misunderstanding as to whether the terms and conditions of the PCL/PSI contract had been incorporated by reference into the PSI/Dirm contract.
63Dr. Maher interpreted what he understood to be the PSI/Dirm contract and made assumptions as to what was enforceable without informing himself as to the actual terms of the PSI/Dirm contract. It causes me to question whether there are other instances where facts upon which Dr. Maher relies in forming his opinions are predicated on incorrect assumptions and erroneous or incomplete facts.
64Dr. Maher tried to guess when he did not know answers. When asked about whether the HDR report specifying a sample area to match had been provided to Dirm he replied “my information is that it was provided to Dirm”. He could not state who had informed him of a significant fact that he had relied on in forming his opinions about whether Dirm’s work conformed to the HDR sample. He admitted that he had assumed that Dirm had agreed to the sample as a mock up.
65What these examples illustrate is that Dr. Maher relied on facts unsupported by evidence in forming his opinions, thereby reducing the reliability and probative value of his evidence and opinions.
66Alfredo Castillo is the owner of TolCas United Precast, a contractor hired by PSI to carry out repairs to chips in the precast structure of the east parkade prior to Dirm applying the topping. He started his company in 2011. After PSI terminated Dirm’s contract TolCas was brought in again to remove concrete slurry and splatter. I find Mr. Castillo to be a credible and reliable witness, albeit a witness with an interest in justifying the amount his company charged PSI.
IV. Analysis
a. The contract
67The parties disagree over what constitutes the contract. Dirm’s position is that the contract is made up of PSI’s request to Dirm to submit a quote, Dirm’s quote and PSI’s responding email accepting Dirm’s quote and reflecting minor agreed upon changes. PSI’s position is that the contract is reflected in an unsigned purchase order dated September 27, 2012 and sent to Dirm on October 24, 2012 (the “P.O.”), incorporating by reference the terms of the prime contract between PCL and PSI (the “PCL/PSI contract”).
68Plenary Group contracted with PCL as general contractor. PCL subcontracted with PSI on or about October 15, 2012 for approximately $17 million for PSI to act as general contractor under PCL on certain phases of the Project, including the east and west parkades. The PCL/PSI contract called for completion of the east parking garage by October 31, 201214.
69Several witnesses, including Benny DiSotto and Kristina Gibson, testified that on May 15, 2012 PSI sent an email to Dirm inviting Dirm to provide a quote to supply the concrete topping and related items for the 2nd, 3rd and 4th levels of the east parking garage. Attached to the email was a May 11, 2012 letter from PSI setting out the scope of work, as follows:
Prepare substrate in accordance with CSA A23.1-09. Clause 7.6.4 for bonded toppings including sand/cement or latex modified grout procedure.
Supply and place one layer of 4 x 4 – W2.9 x W2.9 (102 x 102 – MW18.7 x MW18.7) black welded wire mesh in concrete topping, as per approved working drawings.
Place chord reinforcing in concrete topping as per approved working drawings. Reinforcing supplied by others.
Supply, install and dismantle construction and expansion joint bulkheads where required.
Supply, place and finish 76 mm concrete topping, with 50mm wash as shown, including an approved corrosion-inhibiting admixture at a dosage rate of 10L/m3, in accordance with CSA A23.1. emphasis added
Concrete must be 35mPa, type C-1 on levels 2, 3, 4 and adjacent ramps. Submit proposed concrete mix for review.
The 4th floor topping must consist of a high albedo colour. Submit a cost as a separate item and submit a proposed concrete mix for review and approval.
Saw cut control joints, in line with precast tee joints, including placement of sic
approved filler
Wet cured toppings, including saturated fabric, for a minimum period of 7 days.
Conform to LEED Product Requirements: Section 01 60 13, LEED Product Requirements
Conform to LEED Waste Management and Disposal Requirements: Section 01 74 19, Waste Management and Disposal
Provide completed LEED submittals: Provide completed and signed LEED Conformance Submittal Form appended to this section and any necessary Documentation noted therein.
Supply and apply approved sealer to all toppings as well as 600mm up vertical surfaces, including any necessary surface preparation.
Supply and install sealant to all control and isolation joints.
Supply and install expansion joints and related accessories, as shown.
Provide a separate cost line for caulking all 4 stair/ elevator cores, vertical joints inside and out.
Storage of chord steel on un-topped double tees must be approved by PSI prior to work.
70In the PCL/PSI tender package TP 03.04 “Instructions to Bidders” for the precast parking structures, produced at trial, under “Specific Requirements” in respect of topping, item 22 provides15:
- Subcontractor to include an 80mm thick concrete topping, Type C1 concrete mix applied on site, containing 10L/m3 of corrosion inhibitor and reinforced with one (1) layer of 6x6 6/6 flat sheet black welded wire mesh including accessories on all precast decks. Emphasis added
71The PCL specification calls for a different topping thickness that what PSI specified to Dirm.
72Benny DiSotto and Kristina Gibson exchanged several telephone calls and emails. Ms Gibson couriered to Dirm a full size set of project drawings16. Benny DiSotto testified that the specifications in the letter and the drawings were sufficient for him to price the job and provide a quote. Dirm did not produce the drawings at trial17. Some of the drawings were filed in a somewhat illegible reduced format18. The only other specifications that pertain to concrete topping and produced at trial pertain to LEED requirements for minimizing environmental harm.
73Dirm submitted a quote on May 25, 2012 for $1,501,220.00 plus HST. Benny DiSotto and Tony DiSotto then travelled to Windsor to meet with PSI’s Paul Phillips on two occasions. The second meeting was on August 12, 2012. They discussed Dirm’s quote and agreed on some changes. For example, PSI wanted a hand floated swirl finish instead of a broom finish, and tooled joints instead of saw cut joints.
74Mr. Phillips’ testimony corroborates the evidence of Benny DiSotto and Tony DiSotto regarding the agreed upon changes to Dirm’s original quote. On August 13, 2012, Mr. Phillips sent Dirm an email that reflected their discussions, including Dirm’s agreement to perform the work for the reduced price of $1,450,000.00 plus HST. Mr. Phillips admitted that PSI was prepared to award the contract to Dirm based on the conditions set out in the email. The August 13, 2012 email states “Your contact person from this point forward will be our Project Manager, Kristina Gibson. She will prepare a formal purchase order which will be sent to you in the near future.” The email does not mention that the terms and conditions of the voluminous19 PCL/PSI contract would apply to Dirm, nor had the parties discussed the PCL/PSI contract in their meetings.
75While there is no document wherein Dirm formally accepts the conditions set out in the August 13, 2012 email I find that Mr. Phillips’ email papers over the agreement reached at the Windsor meetings.
76Both parties expected PSI to prepare and send a purchase order for Dirm to execute. According to Benny DiSotto, he expected to receive a purchase order but it was not a requirement for Dirm to carry out the work. Mr. Phillips acknowledged, based on his experience, that once a quote has been accepted the parties know the essential terms of the contract even though a formal written contract has not yet been executed. Applied to the PSI/Dirm negotiation, PSI’s request for quote, Dirm’s responding quote and PSI’s acceptance of Dirm’s quote reflecting their agreed upon changes from the August 12, 2012 Windsor meeting embody the parties’ agreement and the formation of their contract despite the absence of a formally executed purchase order. I refer to the agreement reached as a result of these negotiations as the “PSI/Dirm contract”.
77Over two months later, on October 24, 2012, PSI sent a purchase order (the “P.O.”) to Dirm. Dirm’s position is that the P.O. did not accurately reflect the agreed upon terms of the PSI/Dirm contract. Benny DiSotto called Ms Gibson to inform her that he would not sign the P.O. as drafted because it was different from the agreement reached by the parties in August 2012. Ms. Gibson undertook to follow up with Mr. Phillips but then she dropped the ball. It was not until eight months later, in June 2013, after at least 14 out of a total of 17 pours had been completed, that Mr. Phillips realized that Dirm had not signed the P.O. Until then PSI conducted itself as if Dirm was bound by the P.O.
78One reason Dirm did not execute the P.O. is that it incorporated by reference into the PSI/Dirm contract the terms and conditions of the PCL/PSI contract. Some of those terms and conditions were onerous terms to which Dirm had not agreed.
79The more onerous provisions of the PCL/PSI contract that the P.O. purported to incorporate into the PSI/Dirm contract include:
a) The Project was a “fast track” design-build project, meaning that at the time of contracting the design was incomplete.
b) The PCL/PSI contract included a construction schedule with a substantial penalty clause of $174,000.00 per day for failure to meet the completion deadline, which according to the PCL/PSI contract was supposed to have been October 31, 2012 for the east parkade, an impossibility by the time PSI lined up Dirm to carry out the work.
c) The PCL/PSI contract included a guarantee by PSI to perform all remedial work.
d) The PCL/PSI contract included a “pay when paid” provision.
e) The PCL/PSI contract specified a 5020 year anticipated life for the parkades.
80None of these more onerous terms had been included in the agreement that the DiSotto’s had negotiated with Mr. Phillips in August 2012. Dirm’s pricing had not taken these conditions into account as they had not been disclosed when Dirm was pricing the job. In fact, the actual PCL/PSI contract was never provided to Dirm until it was delivered as a production in this lawsuit.
81Mr. Phillips admitted that he knew that the PCL/PSI contract included a guarantee and a penalty which, had Dirm signed the P.O., would have bound Dirm. He admitted that these items had not been discussed with Dirm. They were not included in the PSI request to Dirm to submit a quote, nor were they discussed as part of the negotiated terms agreed to by PSI and Dirm. Nor were they included in the email accepting Dirm as the topping subcontractor.
82In June 2013 PSI tried to persuade Dirm to execute the P.O. by withholding payment until Dirm signed it. Shortly after Dirm refused to sign the P.O. PSI terminated Dirm’s contract and ejected Dirm from the site.
83While Dirm had expected to sign a P.O. (Benny DiSotto admitted that he had written into the margin of his own copy of the August 13, 2012 email in response to a request for a pour schedule “not until receipt of P.O.”), PSI never presented Dirm with a P.O. that reflected the agreed upon terms of their agreement.
84Dirm never executed the P.O. that PSI presented to Dirm on October 24, 2012. Ms Gibson testified that in the lead up to her maternity leave from PSI she was very busy and overlooked resolving the P.O. issue. Mr. Venner as subsequent project manager conducted himself as if Dirm had executed the P.O.
85Chad Alderson of PCL testified that PCL maintained a website with a virtual filing cabinet of contract documents, including specifications, drawings and schedules. PCL had provided these documents to PSI by way of access to the electronic filing cabinet. Mr. Alderson did not know whether Dirm had been given access to the website. According to Benny DiSotto PSI did not provide Dirm with access to the virtual filing cabinet of Project documents.
86Randall Primeau of PSI admitted that the PCL/PSI contract price of $17 million took into account that this was a fast track project, with incomplete design elements and a hefty liquidated delay damages penalty. The “design-build” element and the penalty clause were not disclosed in PSI’s request to Dirm for a quote, or in PSI’s email accepting Dirm’s quote. Mr. Primeau admitted that he did not bring these two onerous provisions to Dirm’s attention.
873P projects are a relatively new phenomenon in the construction industry. Public bodies contract with private entities to minimize their risk, including the cost of future maintenance and repairs. Dirm was not privy to important and critical provisions of the PCL/PSI contract and, given the relatively novel use of 3P projects, Dirm could not be expected to know that in providing a quote and anticipating a purchase order for the agreed upon price Dirm would be contracting to bind itself to penalties and a longer-than-usual expected life of the topping, neither of which had been disclosed to Dirm.
88Considering the totality of the evidence, I find that the contract between PSI and Dirm is reflected in the August 13, 2012 email from Mr. Pillips to Dirm. The P.O. that PSI sent to Dirm in October 2012 contains different terms and conditions and does not reflect the agreement reached between PSI and Dirm. Dirm is not bound by the terms and conditions in the P.O., nor is it bound by the terms and conditions in the PCL/PSI contract.
89I reject PSI’s position that the terms and conditions of the P.O. incorporating by reference the PCL/PSI contract formed part of the PSI/Dirm contract.
b. Terminating the contract
90On Tuesday, June 18, 2013 PSI sent a letter21 to Dirm notifying Dirm of its default and giving Dirm only three days to rectify the ten defaults listed (the “Default Notice”). Interestingly, after PSI ejected Dirm from the project, PSI took six months to decide on a remediation plan and one and a half years to remediate and complete the contract work.
91The Default Notice lists the following ten defaults as follows:
The unacceptable quality of the topping provided,
Failure to rectify shrinkage cracks in an approved manner on a timely basis,
Failure to provide a topping schedule,
Failure to provide an approved and timely remedial plan to allow for the scheduled opening of the parking deck on July 15, 2013,
Failure to abide by rules and by-laws, including parking, clean-up and pump set-up,
Failure to submit safety documentation,
Failure to follow communication protocol,
Failure to submit deck preparation details and to resubmit when rejected (this appears to be a contradiction on its face),
Use of oversized vehicles on deck, and
Failure to supply the services and materials required by the contract.
92Mr. Phillips instructed PSI’s counsel Mr. Auger to send the Default Notice22 to Dirm. Mr. Phillips explained that his reason for PSI allowing Dirm only three days to “completely correct, replace and/ or re-execute all such faulty or defective work” and, when Dirm failed to do so, removing Dirm from the site, was to allow PSI to complete their contract with PCL in time.
93Mr. Venner admitted that it would have been impossible for Dirm to correct the ten defaults in three days. Clearly the three days that PSI allowed Dirm in the Default Notice prior to terminating the contract was an unreasonable timeframe within which to expect Dirm to correct the defaults specified in the Default Notice.
94At trial, Mr. Venner reviewed the items of default listed in the Default Notice and admitted that Dirm was not solely responsible for delay, that epoxy would have been an acceptable solution for the cracks but the product proposed by Dirm was unacceptable (default #2), that there was only one instance when curing blankets had blown off, that at the time the Default Notice was served there were no remaining pours so that “failure to provide a topping schedule” was not a default (default #3), that there were no outstanding submittals from Dirm (defaults #6 and 8), Dirm’s parking of vehicles on site was no longer an issue (default #5), that clean up of debris was no longer an issue (default #5), that Dirm communicating directly with PCL was no longer an issue (default #7), that providing deck preparation details was no longer an issue (default #8), and that there was no evidence of the weight of the offending buggy and, in any event, it was an isolated incident (default #9).
95Dirm’s last pour was on June 5, 2013. On Saturday, June 22, 2013 PSI issued a notice terminating Dirm’s contract and removed Dirm from the Project, instructing Dirm to cease operations and demobilize23. PSI terminated Dirm and removed Dirm from the site and the Project prior to Dirm completing the PSI/Dirm contract work.
96Paul Belanger, the concrete expert produced by Dirm at trial, valued the work completed by Dirm up to the time Dirm was removed from the Project as between $1,209,000.00 and $1,230.000.00 plus HST.
c. Deficiencies
97PSI alleges that Dirm’s work was deficient and that a portion of Dirm’s concrete topping had to be removed and replaced. PSI counterclaims against Dirm for the cost of doing so.
98In assessing whether PSI is entitled to backcharge Dirm for deficiencies I must consider whether PSI provided specifications or standards for Dirm to meet in applying the concrete topping, and whether PSI notified Dirm of deficiencies and allowed Dirm a reasonable opportunity to rectify the problems.
99It is not disputed that PSI terminated Dirm’s contract before Dirm could complete the contract work and rectify the items complained about by PSI. According to Tony DiSotto, the remaining contract work would have been completed by July 3, 2013 had Dirm remained on the job. Dirm's proposed method of rectification was unsatisfactory to PSI.
100One issue to consider is supervision. According to Ms Gibson, at the start-up meeting on June 13, 2012 for the east and west parkades24 attended by representatives of PCL and Assemblers Inc. (the precast concrete installer), PSI was instructed by PCL that PSI must report defects to PCL within 30 days.
101Both PCL’s project manager Randy Primeau and PCL’s site superintendent Chad Alderson testified that the PCL/PSI contract required PSI to designate a superintendent to supervise the project. The contractual language requires a superintendent “fully qualified and experienced in his trade” to supervise the project25. Mr. Primeau admitted that PSI did not have anyone in-house experienced in concrete topping. He testified that PSI expected Dirm to provide an on-site supervisor to supervise its own work and that doing so satisfied the PCL/PSI contract requirement to supervise subcontractors. Mr. Primeau also admitted that a supervisor should be site-based.
102The flaw in PSI’s position is that Dirm’s supervision of its own work does not address whether PSI accepts or rejects the work product. Tony DiSotto supervised Dirm’s performance of the day-to-day contract work. It was up to PSI to supervise and determine whether Dirm’s performance was acceptable to PSI as the payor.
103Ms Gibson, project manager with PSI when the project started, acknowledged that PSI did not designate a site supervisor. PSI looked to Mr. Venner to perform all of those functions. Mr. Venner worked primarily from his home office in Barrie Ontario. In other words, according to PSI, Dirm’s Tony DiSotto supervising Dirm’s work on site was sufficient supervision by PSI of Dirm’s work. On April 18, 2013, prior to the first pour, Mr. Alderson asked Mr. Venner to attend at the site daily due to the intensive coordination required for the concrete pours. The evidence suggests that Mr. Venner’s attendance on site increased but it was not daily.
104Dirm’s theory is that PSI’s failure to provide qualified site supervision resulted in PSI’s rejection of Dirm’s work much too late in the performance of the contract. Had PSI supervised Dirm’s work in a meaningful way, as it was contractually required to do, PCL’s and PSI’s concerns with Dirm’s work would have been communicated earlier and could have been addressed as the job progressed, before completing the pours. I find that PSI did not properly supervise Dirm's work.
105Another issue is whether PSI brought deficiencies and concerns to Dirm's attention within a reasonable time. Prior to each concrete topping pour the parties (PSI, Dirm and others) participated in a “prepour” meeting on site. The purpose of the meeting was to ensure that the site was ready for the next pour and that outstanding items identified at the previous prepour meeting had been completed. The participants in the meeting would walk the site and note observations. Dirm, usually Terry Szewchuk but sometimes Tony DiSotto, completed the prepour checklist with representatives of either PSI or PCL or both, checking off all of the applicable items on the checklist prior to each pour. Dirm had developed the format of the checklist based on industry samples and experience.
106PSI was often not on site for the prepour meetings and Mr. Szewchuk or Tony DiSotto would have to deal directly with PCL’s representatives.
107Two boxes on the checklist are of particular interest in this trial: the box indicating “no incomplete preceding work” and the box indicating “concrete spillage cleaned up”. Dirm completed multiple checklists together with one or both of PCL and PSI. In each case the person completing the form checked the boxes indicating that there was no incomplete preceding work and that concrete spillage had been cleaned up. Neither PCL nor PSI challenge the information recorded in the prepour chacklists.
108Mr. Alderson of PCL was of the view that Mr. Venner had the experience, skills and knowledge to oversee Dirm’s work, including quality control, to identify deficiencies and have Dirm rectify them at the earliest opportunity. This was Mr. Venner's first experience as project manager of a concrete job. He had only received a few weeks of in-house training before he was put in charge of supervising the Dirm contract. Mr. Alderson admitted that Mr. Venner did not implement quality control measures but rather reacted to PCL’s requests and concerns.
109Dirm called Domenic Attisano as a witness. In 2013 Mr. Attisano was vice president of estimating with Limen Structures. Limen had been retained by the bonding company to provide an estimate of the cost for Limen Structures to complete Dirm’s contract work and rectify the deficiencies complained about by PCL. Limen did not get the job but Mr. Attisano provided relevant factual information. He has no stake in the outcome of the litigation. Mr. Attisano has 34 years of experience working with concrete, including concrete finishes and toppings. He viewed the condition of the east parkade in July 2013 and made observations about its appearance. He testified not as an expert but as a fact witness.
110In preparing the Limen quote Mr. Attisano identified five items requiring work:
Cut and bevel joints, perimeter and precast tee’s (completion work);
Install backer rods and caulking26 (completion work);
Supply and install Hydrozo sealer (completion work);
Remove rejected concrete topping at 9 double tee locations27 (~6,500 square feet);
Correct one expansion joint: saw cut concrete and chip, re-form and pour.
111According to Mr. Attisano the cost to remove and replace concrete topping, or to rectify the finish, would have been much less had deficiencies been identified and rectified before the concrete had cured, or even shortly thereafter, before reaching full strength, which takes 28 days. Dirm’s objection to the manner in which PSI handled the concerns over the quality of Dirm’s topping finish is that PSI did not bring problem areas to Dirm’s attention until the job was almost complete, long after the topping had cured and reached full strength.
112Having walked levels 2, 3 and 4 with Mr. Venner on July 15, 2013, Mr. Attisano observed that the hand swirled finish was “pretty well consistent throughout”. He noted that there were some high and some low points, but that the swirl was of a relatively consistent texture, consistent with the control area that Mr. Trigg had identified as sample #2 in the HDR report, discussed later in these reasons.
113Mr. Attisano also noted that there had been what appeared to be hand scraping of ridges, which according to Mr. Venner had been done in one day.
114Mr. Attisano provided a quote28 to the bonding company for Limen to complete the work and rectify deficiencies. Limen quoted $836,400, of which $100,000 pertained to repairing deficiencies. Mr. Attisano testified that the 6,500 square foot area of rejected topping on level 4 is a small area compared to the size of the entire east parkade. The balance of the quote was for completion work and is consistent with the value calculated by Dirm’s expert, Mr. Belanger.
d. Breach of contract
115The PSI/Dirm contract specified (i) a 76 millimetre (“mm”) concrete topping except for the wash29 areas where it was to be 50 mm, (ii) wire mesh to be suspended within the topping and (iii) the topping mix to include a corrosion inhibitor.
116On Tuesday, June 18, 201330, two days prior to Dirm’s final invoice for 100 percent of the job (despite Dirm not having completed all of the contract work) PSI issued the Default Notice allowing Dirm only three days to rectify the defaults. The defaults listed in the notice are set out earlier in these reasons.
117On Saturday, June 22, 2013 PSI issued a Declaration of Default terminating Dirm’s contract, instructing Dirm to cease operations and demobilize31.
118The issue is whether Dirm’s performance of the contract work was a substantial failure in performance sufficient to justify PSI treating the contract as repudiated by Dirm. If so, Dirm was in breach of the contract and PSI was justified in terminating Dirm. If not, PSI was in breach of the contract.
119In taking steps to caution and then terminate Dirm, it is clear that PSI conducted itself in the belief that the terms and conditions of the PCL/PSI contract had been incorporated into the PSI/ Dirm contract. The problem for PSI is that the PCL/PSI contract terms had not been incorporated into the PSI/Dirm contract. PSI’s Declaration of Default is faulty because it assumes that the P.O. is the contract when in fact Dirm had rejected the P.O. because it did not reflect the agreed upon terms of the PSI/Dirm contract as negotiated in August 2012.
120The real question, then, is whether the manner in which Dirm carried out its contractual obligations was in breach of the terms of the PSI/Dirm contract, not whether Dirm was in breach of terms and conditions of the PCL/PSI contract.
121PSI argues that if the individual items complained of in its Declaration of Default are insufficient to justify PSI terminating the PSI/Dirm contract, the cumulative effect of all of the breaches is sufficient to justify terminating the contract.
122PSI relies on the 1990 British Columbia case of Angus v Pinalski32. That case turned on its detailed facts, as does the case before me. In Angus the contractor’s work was such that the municipality issued a “stop work” order, which the contractor violated by continuing to work as if the stop work order had not been issued. The building inspector identified serious structural and foundation issues. The court found that the contractor’s work was of such a low standard that the owners were entitled to treat the contract as fundamentally breached by the contractor.
123The complaints relied on by PSI in the present case as breaches of site rules such as site clean-up, attempts by Dirm to expedite the pours by (i) locating the pump on an adjacent site, and (ii) using a buggy to move materials (both initiatives aborted when PSI asked Dirm to stop), and other such complaints, are not of the same fundamental and serious nature as were the cumulative complaints in Angus. The case is distinguishable.
124Reviewing each of the grounds of default relied upon by PSI, I find that none of the ten defaults listed in the Default Notice and relied on by PSI in the Declaration of Default constitute a substantial failure of performance of the PSI/Dirm contract sufficient to justify PSI terminating its contract with Dirm. I further find that the cumulative effect of the default items listed, where Dirm’s performance was deficient or contrary to the contract, does not constitute a substantial failure of performance by Dirm, particularly in light of PSI’s failure to allow Dirm a reasonable opportunity to rectify and complete the contract work.
1. Default #1: Quality of the topping finish
Hand floated swirl finish
125PSI’s initial bid request specified a broom finish, referring to Canadian Standards Association (“CSA”) standard CSA S413-07 clause 10.7. The PSI/Dirm contract changed the finish to a hand floated swirl finish. The CSA standards do not distinguish between a broom finish and a hand swirl finish
126In assessing whether this complaint is sufficient to constitute a substantial failure of performance sufficient to warrant terminating the contract, I must have regard to the evidence regarding the hand floated swirl finish required by the PSI/Dirm contract.
127A hand floated swirl finish is achieved by skilled workers on their hands and knees passing a spin float by hand over the surface of the concrete when it is sufficiently but not completely dry, racing the clock to finish before the concrete dries. In a structure the size of this parking garage many hand finishers are required. In the words of Dr. Maher “any hand floated floor finish will be less uniform than what can be achieved by machine finishing, especially over large areas”33.
128PSI complains about the inconsistencies in the size and shape of the hand swirls. There is no doubt that there are areas where the hand floated swirl finish is inconsistent. Different individuals with different hand strokes finished different areas at different times. Variations in the swirl ought to be expected. The issue is whether the variations and functionality of the hand floated swirl finish provided by Dirm were so extreme as to constitute a breach of its contractual obligations.
129Tony DiSotto was Dirm’s on-site foreman. He was directly involved in pouring and finishing the concrete. He explained that concrete topping requires seven days to cure using curing blankets, and 28 days to reach full strength. He further explained that the appearance of the topping finish, namely the size of the swirls, the texture of the finish and the height of the peaks, is visible immediately after the hand swirl has been applied. One need only lift the curing blankets to see the finish.
130The first default listed is that Dirm failed to provide a topping finish of the quality required by the contract. Much of the evidence given by 17 witnesses (including two experts) over 21 days of trial focused on the quality of the topping finish. After Dirm had completed almost all of the pours PSI complained that (i) the swirls in the hand swirl finish were not uniform, (ii) the height of the ridges was too high in places and too smooth in places, (iii) the wire mesh was not placed properly and (iv) the finish was not aesthetically pleasing.
131What transpired prior to PSI communicating its complaints to Dirm is relevant.
132Dirm began the concrete pouring and finishing phase of the contract work on level 4, with the first three pours on May 6, 7 and 8, 2013. PCL instructed the project consultant, HDR, to inspect the topping finish. On May 13, 2013, the date of Dirm’s fourth pour, HDR’s Todd Trigg conducted a site inspection with PCL’s Taylor Rogers. Notwithstanding that Dirm’s Tony DiSotto was working on site that day supervising the fourth pour, PSI did not notify him that HDR was inspecting Dirm’s work, nor was he invited to participate in the walk-through with Mr. Trigg and Mr. Rogers. Perhaps if Mr. Rogers had been more experienced in concrete construction projects he would have understood the wisdom of having the contractor participate in a walkthrough that concerned the contractor’s work.
133HDR prepared a report34 of Mr. Trigg’s observations and delivered it to PCL who provided it to PSI on May 17, 201335. PSI sent the HDR report to Dirm on May 21, 201336. By that date Dirm had already completed eight concrete pours out of a total of 17 pours, including almost all of level 4.
134The HDR report identifies three sample areas of concrete topping finish taken from the pours that had been completed as of May 17, 201. HDR characterized the three sample areas as “acceptable” (sample #1), “most desirable” (sample #2) and at “the smooth end of the range of acceptable” (sample #3). HDR did not identify a sample that was at the rough end of the acceptable range. Roughness is required to ensure that there is sufficient grip but the surface cannot be so rough as to create a tripping hazard. Conversely, if the surface is too smooth it could be slippery in certain conditions and thus would be unacceptable. All three samples identified by HDR were within the range of “acceptable”. HDR did not identify as unacceptable any part of the hand swirl finish, either due to high ridges or excessive smoothness or for any other reason regarding the areas that Dirm had poured as of May 17, 2013
135Taylor Rogers, PCL’s project co-ordinator, clarified that the area of the sample that HDR identified as the “most desirable finish” for Dirm to match was approximately three feet by four feet out of a surface area described by several witnesses as larger than three football fields.
136Compared to the vast area of the east parkade, the three HDR samples were tiny. The author of the HDR report, Mr. Trigg, did not testify at trial to explain his sample selection.
137The PCL/PSI contract included the following clause in the appended tender package documents:
- The construction schedule is paramount. The contractor (PSI) is to provide a detailed schedule identifying design, engineering, submittals, fabrication and installation. This schedule is to include shop drawings, samples, mock ups and tests required. This schedule must also include manpower requirements and crew breakdowns for the execution of the work. This schedule must comply with the overall project schedule.
138The minutes of the PSI start-up meeting of June 13, 2012 reflect that PCL expected PSI “to construct all mock-ups required so as to allow time for consultant review (min 5 days), adjustments to mock up and procurement of materials so as to allow product to arrive to site in a timely fashion”.
139The sample areas identified by HDR in its report were not mock-ups as required by the PCL/PSI contract, but PSI treated them as if they were. The explanation given by Stuart Venner at trial for not having Dirm prepare a mock up for Dirm’s topping finish was the fast-track schedule and PSI’s concern about finishing the job in time for the scheduled opening of the parkade on July 15, 2013.
140Engineer Paul Belanger opined that the three samples identified in the HDR report are not mock ups because they were identified and communicated to the subcontractor after completion of almost half of the pours, and not in advance of the first pour. Having failed to arrange for a mock up of the concrete topping finish, it seems to me that PSI attempted to justify its conduct by aggressively attacking Dirm at trial, characterizing the HDR samples as mock ups and alleging that Dirm failed to match the samples that HDR had identified as acceptable.
141The HDR report did not identify any areas that had already been poured and finished by Dirm that were unacceptable. While the concrete, or some of it, may have been covered by curing blankets at the time of Mr. Trigg’s inspection, the blankets are very light weight (a sample piece of a curing blanket was tendered as exhibit 5) and could have been lifted to view the surface of the concrete underneath. If the topping already poured by Dirm on level 4 had been unacceptable to HDR it is reasonable to expect that Mr. Trigg would have identified it in his May 2013 report. Mr. Trigg did not testify at trial. I draw the inference that Mr. Trigg found the topping finish in pours 1 through 4 acceptable.
142As already noted, prepour meetings were conducted on the morning of each concrete pour. The dates of the pours were close together such that the concrete topping from a prior pour would not have bonded and achieved full strength by the time of the next prepour meeting. The dates of the pours are listed in Appendix “C” to these reasons.
143As part of its business practice Dirm used a form titled “prepour checklist” on the morning of each day of a concrete pour. Either Tony DiSotto or Terry Szewchuk completed the prepour checklist and on most “pour” days PCL’s Andrew Smith was present and went over the checklist with one or both of Mr. DiSotto and Mr. Szewchuk.
144Mr. Szewchuk explained that the form has boxes to check to indicate “no incomplete preceding work” and “prior poured concrete roughened to spec”, referring to the hand swirl finish. The prepour checklists show that concrete from completed pours had been roughened as specified. At no time during or as a result of any of the prepour meetings did PCL or PSI complain to Dirm about the quality of the hand floated swirl finish, the appearance or the texture, nor did PSI or PCL ask Dirm to refinish any portion of the topping previously poured. I find this to be compelling evidence that as the pours continued neither PCL nor PSI complained about the quality of the finish for any of the completed pours.
145According to Tony DiSotto, had PSI communicated its dissatisfaction with the topping finish as the pours progressed and prior to the concrete curing (7 days) and achieving full strength (28 days), and had PSI or PCL identified the locations of concern, Dirm could have corrected the problem relatively easily. Once the topping cures and achieves full strength, the complexity and cost of refinishing it increases significantly. Tony DiSotto admitted that PSI made some general complaints about the topping in June 2013 after all the pours had been completed, but PSI identified no specific locations. Given the vast size of the east parkade a complaint that fails to identify the location in issue is too vague to be considered a serious complaint.
146I find that had PSI or PCL identified areas of concern over the quality of the topping surface while the concrete pours were underway Dirm would have known about it and Mr. Szewchuk and Tony DiSotto would have been part of the team working towards a resolution.
147PSI first communicated its dissatisfaction with the quality of the topping finish on June 7, 2013 when Mr. Venner notified Benny DiSotto by email that PCL had complained about the quality of the topping finish. PSI wanted Dirm to provide a remediation plan37. I find it significant that PSI, required by the PCL/PSI contract to supervise Dirm’s work, had not independently identified complaints about the quality of the topping finish but only reacted to PCL’s complaints.
148To justify PSI’s complaint Mr. Venner relies on Todd Trigg’s letter to PCL of July 18, 201338, drafted after PSI had terminated Dirm’s contract. In the letter Mr. Trigg comments on the hand floated swirl finish, writing that “it does not meet the approved mock up standard”. Mr. Trigg does not explain how or where the topping finish is non-compliant. He treats the samples identified in his May 2013 report as mock ups when clearly they are not mock ups.
149Dr. Michael Maher, called as an expert witness by PSI, was retained jointly by PCL and PSI regarding the east parkade. Dr. Maher attended at the site for the first time on March 12, 2014. His assistant Michael Navara (who did not testify at trial) conducted field investigations between March 18 and 26, 2014. They also carried out core tests.
150Dr. Maher based his opinions on his and Mr. Navara’s observations and on documents provided to him by PCL and PSI. Included in the documents relied on by Dr. Maher and forming the foundation upon which his opinions are based are the HDR report, the July 18, 2013 letter from Mr. Trigg, the PCL/PSI contract and the unsigned October 2012 P.O. He was not provided with the PSI request to Dirm for a quote, Dirm's responding quote and PSI's August 2012 email that embodies the PSI/Dirm agreement.
151Dr. Maher relied on the July 18, 2013 HDR letter in forming his opinions. He introduces his report with the statement: “In a letter dated July 18, 2013, HDR Architecture Associates Inc. (HDR), the architectural design firm retained by PCL, notified PCL that the floor finish on the concrete topping in the Parking garage did not meet the approved Mock-Up standard.” In fact no mock up, as that term is used in the industry and in the PCL/PSI contract, had been prepared. Mock ups are prepared for approval before a job begins.
152I find that the July 18, 2013 HDR letter relied on by Dr. Maher was misleading in ways that may have influenced Dr. Maher's conclusions.
153Dr. Maher noted that under the PCL/PSI contract, (i) PCL had the power to make all decisions if there was a disagreement, (ii) PSI was responsible for all remedial work for deficiencies and (iii) the expected lifespan of the structure (including topping) was 50 years. The PCL/PSI subcontract #427024-OS dated February 23, 2012 specifies as Special Condition #4739.:
“Provide quality of materials and products consistent with a structure with an intended lifespan of 50 years”.
None of these terms and conditions had been included in the PSI/Dirm contract.
154Dr. Maher also relied on several other documents, some of which he attached to his April 2, 2014 report40. One document, attached as Appendix B to his report, is the specification for “Cast-in-place concrete”, dated July 19, 2013, one month after PSI had terminated Dirm. This document did not exist when Dirm contracted with PSI or when Dirm carried out the work. To the extent that it informed Dr. Maher in formulating his opinions it calls into question the probative value of his report and his opinions.
155Dr. Maher prepared his first report on April 2, 2014. He, or his assistant, conducted a follow-up inspection on July 19, 2014, took photographs and prepared a second report dated September 5, 201441. By then the surface of the east parkade had already been scraped. Dr. Maher also prepared a later report dated February 12, 2016 but that report had not been served prior to trial. Dirm objected to its admissibility and after hearing submissions from counsel I ruled the report inadmissible. Detailed reasons delivered orally at trial are attached to these reasons as Appendix “B”.
156Dr. Maher testified in chief that he had been retained to look at the cause of the problems with the topping and whether the topping complied with the specifications in the P3 contract between PCL and the owner. Dr. Maher’s reference point for his opinions was the obligation under the P3 contract that required the east parkade, including the concrete topping, to be built to an intended lifespan of 50 years. This is an extraordinary lifespan for such a structure, beyond the usual lifespan. The PSI/Dirm contract did not require Dirm to apply a topping that would meet a 50 year lifespan. In the face of silence in the PSI/Dirm contract on that issue the industry standard for expected lifespan would apply. No one testified as to the precise number of years that would be, other than it is significantly less than 50 years
157To the extent that Dr. Maher based his opinions on specifications in the PCL/PSI contract that had not been incorporated into the PSI/Dirm contract, it undermines the probative value of his opinions.
158In preparing his first report Dr. Maher mapped the entire garage with a rating system illustrated on the enlarged diagram tendered as exhibit 442. He explained that the purpose of mapping and rating the topping on level 4 was to evaluate Dirm’s work. He relied on HDR’s sample #2 as a mock up, despite acknowledging that mock ups are prepared before work begins. He admitted that in this case no mock up “in the true sense” had been prepared. He treated the HDR samples as mock ups knowing that sample #2 had not been identified to Dirm as the area to match until after Dirm had completed most of level 4. In fact, the HDR report was not provided to Dirm (and therefore the sample to match was not provided to Dirm) until May 21, 2013, by which date Dirm had completed eight out of 17 pours.
159Dr. Maher did not base his ratings solely on the HDR sample. He rated the topping as follows:
Rating 1: good; curved ridges, roughened finish, uniform swirls
Rating 2: Fair, “not bad except for aesthetics”
Rating 3: Poor, unacceptable, including trip hazards or areas aesthetically different from HDR’s sample #2.
160Dr. Maher admitted that in preparing the mapping he (or his assistant) did not inspect the parkade's floor area in its entirety.
161Dr. Maher measured the areas on all three levels that he had rated as 1, 2 or 3. He gave rating 3 (unacceptable) to areas that did not meet the HDR sample #2. He admitted that within areas that he categorized as rating 3 (unacceptable) there were areas of acceptable finish. He assigned rating 3 to an area if the majority of the area, not necessarily the entire area, was unacceptable. Some of the areas rated as 3 by Dr. Maher were within HDR's "acceptable" range based on samples #1 and #3 in the HDR report.
162By rating “unacceptable” (Dr. Maher’s rating 3) areas that HDR had rated acceptable (HDR report, samples #1, #2 and #3), Dr. Maher applied an unacceptable rating to areas that were acceptable to the Project consultant.
163Dirm’s concrete expert, engineer Paul Belanger, attended at the site on July 31, 2013, April 15, 23 and 29, 2014 and November 18, 2015. He reviewed documents, including the HDR report and the Golder report prepared by Dr. Maher. Mr. Belanger’s first report, dated May 16, 2014, was based on his inspection after Dirm had left the project but before PSI had removed the topping from level 4. His second report, dated November 20, 2015, was prepared after sections of the topping had been replaced.
164Mr. Belanger provided his comments on Dr. Maher’s rating of Dirm’s topping finish as reflected in Dr. Maher's mapping diagram filed as trial exhibit 4. Mr. Belanger related Dr. Maher’s rating system to his own opinion as to whether areas rated by Dr. Maher as 1, 2 or 3 fell within an “acceptable” standard when compared to the three samples of acceptable finish identified in the HDR report.
165Mr. Belanger explained that according to Dr. Maher’s report, exhibit 4 is intended to show the areas marked in yellow as having a good quality finish, the areas shown in orange as having a fair quality finish and the areas shown with no colour as having a poor quality finish.
166Mr. Belanger does not agree with Dr. Maher’s rating of the finish. He produced photographs that depict the areas that Dr. Maher categorized as orange (fair quality) and opined that the finish is of the same quality as that which Dr. Maher had categorized as yellow (good quality finish), testifying that the photographs show that the finishing texture does not vary from the area marked as yellow and the area marked as orange by Dr. Maher. There is a swirl finish throughout. This is clear from Mr. Belanger’s photographs attached to his report43 as photographs 8, 9 and 11.
167Mr. Belanger testified that Dr. Maher categorized as classification rating 3, “unacceptable”, areas consistent in appearance with what HDR had described as acceptable. He disagreed with Dr. Maher’s opinion that these areas, acceptable to HDR, provided an unacceptable topping finish. According to Mr. Belanger, Dr. Maher should have calibrated his opinion of what was acceptable with HDR’s standards of acceptability. For that reason, Mr. Belanger opined that the Golder report as to acceptable finish is unreliable. I agree.
168I find that Dr. Maher’s rating system is flawed and cannot be relied on as evidence of the unacceptable areas for purposes of determining the scope of necessary repairs.
169PCL’s site superintendent Chad Alderson preferred the aesthetics of the hand floated swirls on level 4 to levels 3 and 2. He attributed the diminishing quality as the job progressed to the increased speed with which the finishers were required to work to keep up with the accelerated pour schedule implemented to meet PSI’s completion date. In his view Dirm should have doubled the number of finishers to keep up with the pour schedule and maintain the swirl pattern to match the control area. His evidence was pure speculation. It is relevant only as to his observation that the finish on level 4 was the best of all three floors. Mr. Alderson’s complaints are purely aesthetic concerns.
170PSI’s Mr. Venner required Dirm to increase the amount of corrosion inhibitor in the mix. The request was made by Mr. Venner on April 15, 2013, prior to the first pour44, long after the parties had agreed to the terms of the contract. Changing the mix also changed the cost to Dirm and the manner in which the concrete mix could be applied. The responsibility for the consequences of those changes does not rest solely with Dirm.
171The evidence of several witnesses, including Mr. Belanger, leads me to conclude that the increased amount of corrosion inhibitor that PSI required Dirm to use in the concrete topping mix resulted in a thicker concrete topping that was stickier and harder to work with. The stickier concrete sticks to the floats when applying the hand swirl finish, creating ridges. It dries differently from concrete with a lesser component of corrosion inhibitor, and consequently the hand finishers had to work faster to create even swirls and avoid unacceptable peaks and ridges.
172Dirm had a responsibility to bring to PSI’s attention the consequences of the change in the corrosion mix and how it would affect the job: the timing, the more labour intensive application and the price. The only issue raised by Dirm was the price.
173Taylor Rogers, PCL’s project coordinator, testified about the swirl finish, based on his own observations. He considered the size and shape of the swirls. He observed that the topping finish was not consistent with HDR’s sample #2. I note that Mr. Taylor produced no site notes or logs, he is not an expert, this was his first construction project and he has no formal education in construction45. The probative value of his opinion regarding the quality of the topping finish is limited by his lack of experience and qualifications.
174PSI’s position is that the aesthetics of the hand floated swirl finish were an important component of the PSI/Dirm contract. PSI’s complaints are largely about the lack of uniformity in the hand swirls. It is unreasonable for PSI to expect that multiple individuals would provide identical swirls in the hand finish. The broom finish originally specified but later changed by PSI to a hand floated swirl finish would have created a more uniform appearance. I conclude that by changing the finish from a broom finish to a hand swirl finish PSI knew or ought to have known that the finish would not appear as uniform as it would have been had the finish been either by broom or by machine.
175Mr. Belanger opined that in a parking structure aesthetics regarding the uniformity of the swirl finish are not a priority but conditions that would lead to “trip, slip and fall” incidents are important.
176Tony DiSotto, who was on site daily, testified that no one from PSI or PCL complained to him about ridges being too high. According to him, a walk through would have required less than 10 minutes per level and Mr. Venner never invited him on a walk through to point out unacceptably high ridges in the topping finish as the job progressed.
177I reject PSI’s complaints about the difference in the size and arc of the swirl as a reasonable basis for rejecting the topping finish.
178The area in question is a parking garage. Several witnesses testified that the primary purpose of the hand floated swirl finish is its texture: the surface should be sufficiently rough to prevent slip and fall accidents, but at the same time it should not be so rough as to create a tripping hazard from swirl ridges that are too high. The aesthetics, while important, are secondary to the functionality of the finish.
Ridges: Parkade open for use by site workers
179Paul Belanger opined that in the absence of a specification as to the required finishing texture, the texture must be considered from a performance perspective, taking into account both pedestrian and vehicular traffic. He opined that in this parking structure he did not have concerns that the surface texture would cause skidding or interfere with quick stops by vehicles. For pedestrian traffic he stated that the surface needs to be slip resistant and flat enough to avoid trip hazards. He stated that when he attended the site on July 31, 2013 it was open for use by pedestrian traffic and he did not observe any pedestrian safety issues. In Mr. Belanger’s opinion “the floor surface as viewed on July 31, 2013 does not present any hazards of slipping, tripping and falling subject to the completion of the floor joint seal installations (not yet completed prior to PSI terminating Dirm from the job).
180Mr. Waisanen, a professional engineer and a concrete specialist for 17 years with EXP Services, testified not as an expert but as a fact witness. He attended the site and took photographs in July and August 2013. He acknowledged that site workers were parking their vehicles in the east parkade by August 2013. Apparently PCL opened the east parkade for use as paid parking for site workers at $10 per day. Mr. Waisenen further acknowledged that as a professional engineer he has a duty to report public safety issues. He did not report the east parkade as a public safety hazard. The ridges were not so high as to constitute a public safety issue requiring PCL to close it as paid parking for site workers.
181Mr. Waisanen’s evidence is corroborated by that of Mr. MacPherson, PCL’s project director. He was located on site during construction and acknowledged that the east parkade would not have been opened for use by site workers in August 2013 if the ridges had been a tripping hazard.
182Dr. Maher acknowledged that prior to his first inspection the high ridges in the topping had been bladed off and the parkade was open for use as a parking facility by the site workers.
183As already noted, Tony DiSotto testified that PCL and PSI did not identify ridges as a concern as the job progressed.
Wire mesh
184Wire mesh is supposed to be suspended within the concrete topping to provide strength. Ideally it would be suspended at the midway point in the topping thickness. Dr. Maher took 12 core samples, four for each level of the structure. In Dr. Maher’s opinion, as expressed in his April 2, 2014 report46 the core samples confirmed that the wire mesh had been placed adequately in accordance with the project specifications.
185Mr. Belanger testified and Dr. Maher did not significantly challenged the expert evidence that when hand lifting wire mesh in a concrete topping it is virtually impossible to suspend it at the midpoint of the topping thickness due to gravity. Had this been an issue it would have been raised in a prepour site meeting. It was not raised in any of the 18 prepour site meetings.
186Further evidence that mesh was not an issue is that Mr. Attisano of Limen, asked by the bonding company to provide a quote to complete and rectify Dirm’s work, was not asked to provide a quote regarding the location of wire mesh within the concrete topping. I draw the inference that mesh was not an issue in July 15, 2013.
187Mr. Waisanen of EXP Concrete returned to the site in December 2014 and observed that the topping that Dirm had applied had been removed entirely in the northeast section of level 4. PSI had used hydro demolition to remove the topping, a process that applies tremendous force using water pressure to break up and remove concrete. Mr. Waisanen testified that he observed that the wire mesh was not in the centre of the topping in some places but rather it was resting on the precast slab.
188Nevertheless, PSI maintains that it was Dirm’s faulty work that caused wire mesh to rest on the precast rather than be suspended in the concrete topping. What PSI fails to take into account is that the hydro demolition process itself would have disrupted the wire mesh placement. I prefer the evidence of Mr. Maher based on his core sample testing, carried out prior to any hydro demolition, that the wire mesh placement by Dirm was adequate.
189PSI relies on the placement of the mesh within the topping as a breach of contract by Dirm, justifying PSI terminating the contract. I reject that proposition because the placement of the mesh within the topping was not discovered until late in 2014, well over a year after PSI terminated the contract. It could not have been a reason for terminating the contract in June 2013.
190I conclude that placement of the wire mesh was not a deficiency nor would it have justified PSI terminating the contract.
Wash areas
191Mr. Belanger and Mr. Szewchuk explained that “wash” refers to areas where the concrete topping must be raised to force water to flow into drains. The wash is designed to provide slope and thereby prevent ponding.
192Mr. Primeau of PSI admitted that there was a construction error arising from as error in the drawings. He blamed Ms Gibson for not finding the error at the design stage. The designer of the parking structure had failed to take into account the thickness of the concrete topping at the wash areas near the beams, leaving insufficient clearance to meet building code requirements. The error was not discovered until after the structure had been erected and Dirm was in the middle of pouring the topping. Dirm had to stop the pours to allow time for PSI to correct the design issue. Dirm did not cause this delay.
193PSI asked Dirm to create the additional clearance required out of the topping thickness. According to Tony DiSotto, that was impossible in areas where the concrete was to be placed over the top of beams because it would have changed water flow and drainage. The water course and slope had to be changed.
194A design solution approved by the project engineer was required before Dirm could proceed. On May 16, 2013, by which date Dirm had completed five pours, Mr. Venner asked to meet with Tony DiSotto to review the redesign of the wash areas. The solution ultimately implemented required installation of an additional 12 drains.
195Mr. Primeau insisted that Dirm was not cooperative. The evidence is to the contrary. Tony DiSotto provided suggestions as to how the issue could be resolved. I find that Mr. Primeau’s characterization of Dirm as uncooperative in the face of a problem clearly caused by PSI’s consultants highlights the animosity that PSI personnel had for Dirm towards the end of the relationship. Such animosity colours the evidence of the PSI witnesses and in the case of Mr. Primeau, reduces his credibility and the probative value of his evidence. PSI does not dispute that in erecting the precast concrete structure the space required for a concrete topping of the contractually required thickness at the wash areas could not be achieved without contravening the building code.
196Mr. Venner admitted that Dirm discovered the wash issue and that it had been caused by PSI’s error. He testified that Dirm stopped work until the wash issue was resolved. In Mr. Venner’s view that should have taken a half day. In reality it took many meetings, discussions and email exchanges among the participants and at least three designs before the issue was resolved. It could not have been resolved in a half day. Mr. Venner’s evidence that it should have been resolved in a half day highlights his bias against Dirm and discredits him as a witness.
Ponding
197Dr. Maher, in his September 5, 2014 report47, mapped ponding in a few areas on each level. He attributes the ponding to an inadequate slope of the drains and localized depressions. I accept this evidence in the context of the redesign required at the wash areas to accommodate PSI’s design error. If the result is ponding at the wash areas due to the redesign, PSI is responsible.
198Mr. Belanger had also observed “a few areas of excessive ponding”, which he attributed to expansion joints. In his opinion a reasonable repair would be to fill in the depressed areas. He noted that one area of ponding appeared to be newly created at the time of his visit and could not have been caused by Dirm.
Joints
199PSI complains that Dirm provided saw cut joints at the perimeter whereas the contract specifications required tooled joints. That is correct. PSI’s May 11, 2012 request for quote and Dirm’s May 25, 2012 quote both specify saw cut control joints, but following the Windsor meeting the PSI/Dirm contract as reflected in PSI’s August 13, 2012 email from Paul Phillips awarding the concrete topping contract to Dirm, the specification is changed to “tooled joints, not saw cut joints as shown”.
200It is not in dispute that Dirm provided saw cut joints. The difference is that hand tooled joints require a special tool to make indents by hand in the concrete, whereas saw cut joints are cut mechanically with a saw. Saw cut joints take less time than tooled joints.
201Tony DiSotto explained that because of the changes required to the design to provide sufficient height at the wash areas (it is not disputed that the design issue was PSI’s responsibility), certain joints could no longer be hand tooled and had to be saw cut using machinery. Tony DiSotto testified that he walked the deck with Mr. Primeau on three occasions and Mr. Primeau did not object to the saw cut joints.
202According to Tony DiSotto, the machinery used to saw cut joints is loud. If PSI had been supervising Dirm, Mr. Venner as project manager would have been aware that Dirm was saw cutting the joints rather than tooling joints. The time for PSI to complain about it was while the work was in progress, not after the fact when PSI was trying to amass multiple complaints to justify terminating the PSI/Dirm contract.
203PSI did not complain about Dirm’s failure to comply with the contract requirement of tooled joints until very late in the performance of the contract, due most likely to PSI’s failure to properly and knowledgeably supervise the job.
204Relying on the contract specifications and the evidence I find that Dirm provided saw cut joints where the contract required tooled joints. I further find that the PSI personnel who conducted inspections failed to identify this as an issue to Dirm in a timely manner, thereby allowing Dirm to continue to provide saw cut joints. Had PSI complained, Dirm could have changed the saw cut joints to tooled joints, but additional time would have been required. I conclude that the saw cut joints do not constitute a fundamental breach of contract by Dirm that would entitle PSI to treat the PSI/Dirm contract as at an end.
Slurry and splatter
205PSI alleges that Dirm left behind significant amounts of slurry and splatter to be removed. Those terms were interpreted differently by the various witnesses and were used interchangeably.
206Expert Paul Belanger defined slurry as the fine component in concrete that he calls splatter: the concrete that splashes onto other surfaces while it is being applied. According to Mr. Belanger slurry is what gets splattered.
207Mr. Attisano of Limen Structures defined slurry as “cream of cement” like juice that sits on top of concrete and splatter as concrete splashed against vertical surfaces.
208PCL’s site superintendent Chad Alderson described slurry as water and cement within concrete. He testified that he saw slurry on perimeter beams and running down between joints onto finished brick. He testified that Dirm left more slurry than he had seen on previous jobs but acknowledged that it is a contractor’s choice when to remove slurry and Dirm was terminated before completing the contract.
209PCL’s project co-ordinator Taylor Rogers observed slurry drips on the underside of double tees and spandrels. This was Mr. Rogers’ first PCL project and he had no prior training or experience in concrete. His lack of experience diminishes the probative value of his evidence regarding his personal observations about the quality of Dirm’s work product.
210Mr. Rogers prepared minutes of a June 17, 2013 meeting to which Dirm was not invited. The participants decided that Dirm should remediate all slurry. Dirm did not receive a copy of the minutes. The next day, on June 18, 2013, PSI issued the Default Notice. Significantly, despite the long list of complaints against Dirm in the Default Notice, removing slurry and splatter was not one of them.
211Mr. Venner testified that the issue of slurry had not been raised with Dirm prior to terminating Dirm’s contract because it was not in Mr. Venner’s “radar”. The more likely reason is that it was not an issue and that PSI is greatly exaggerating slurry and splatter to justify terminating Dirm without paying Dirm for any of the services and materials supplied. It is significant that “concrete spillage cleanup” had not been noted as an issue in any of the prepour checklists.
212PSI did not give Dirm an opportunity to return and remove the slurry and splatter using its own forces. Instead Mr. Primeau authorized and paid TolCas United Precast (“Tolcas”) $1,458,210 for 968 hours of work by to remove slurry and splatter and claims a backgharge fot it from Dirm.
213Some of PSI witnesses referred to photographs filed as exhibits at trial48 as illustrating slurry and splatter left behind by Dirm. In rebuttal, Tony DiSotto reviewed the photographs and explained them as follows, referring to exhibit 12:
Tab 3 shows a stairwell brick. It was not in Dirm’s scope of work but Dirm would have cleaned it up if asked.
Tab 4 shows slurry from cutting the beam, not concrete slurry which would have a “belly”. It did not arise from Dirm’s work but Dirm could have cleaned it up if asked.
Tab 5 shows splashed concrete that Dirm would have cleaned up if asked.
Tab 6 shows slurry from drilling holes. Mr. DiSotto explained that the drilling would have occurred after Dirm had left the job because the concrete was a different colour. He guessed that the holes may have been cut by an electrician or mechanical worker.
214Tony DiSotto denied leaving slurry, insisting that Dirm washed up every night with a power washer, cleaning spillage every night. He testified that if there was slurry it was left by other trades. He gave as an example electricians and plumbers, who wet down concrete in order to drill, leaving concrete drips. Tony DiSotto described that in July 2013 when he was allowed back on site he saw workers wet cutting through concrete causing concrete drips.
215Tony DiSotto further testified that PSI did not complain to Dirm about slurry while Dirm was on the job. Had there been complaints about slurry he estimated that it would have taken “one man 10 minutes to clean up”. I suspect that Tony DiSotto was talking about spillage and underestimates the time it would take to clean it up. I also accept that Dirm cleaned up after itself and that if PSI had raised spillage, splatter or slurry as an issue before terminating Dirm’s contract, Dirm would have removed it.
216Mr. Attisano, an impartial witness with no interest in the outcome of this trial, testified that when he walked the site on July 15, 2013 he did not see signs of slurry and splatter. The job looked clean. Also, it is significant that when the bonding company asked Limen for a quote to rectify and complete Dirm’s contract work, Limen was not asked to include removing slurry and splatter in the quote.
217Mr. Primeau testified that he and Mr. Venner spent three hours drafting the June 7, 2013 email to Dirm outlining PSI’s concerns with Dirm’s work49. The email lists eight specific concerns. Slurry and splatter are not listed as a concern. Mr. Primeau took no photographs of slurry or splatter yet he authorized the 968 hours of work that PSI paid TolCas to remove it. Mr. Primeau did not verify the hours claimed by TolCas, he did not review time sheets or the reasonableness of the number of hours and the overtime hours reflected in the TolCas invoices, and he could not explain why PSI did not enter into a fixed price contract with TolCas to remove slurry and splatter. I conclude that slurry and splatter morphed into a mountain from a molehill between June 7, 2013 and the date PSI issued the Default Notice, and further grew from that date to the date of trial.
218I find that the evidence that Dirm caused excessive slurry and splatter is weak, particularly since PSI did not note it as an issue in prepour checklists, did not list it specifically as a default in the notice of default and failed to give notice to Dirm that it was a deficiency that needed to be rectified. If it was, PSI failed to allow Dirm an opportunity to clean it up. Dirm’s actions in relation to slurry and splatter was not a fundamental breach of the contract sufficient (alone or in conjunction with any other item) to allow PSI to treat the contract as at an end.
2. Default #2: Cracking
219On the issue of cracking, Mr. Belanger explained the different types of cracking: plastic shrinkage cracks, also called craze cracks, are those that develop while the concrete is still in a plastic state, not yet completely dry. They are caused by rapid drying of water in the concrete mix. They do not occur after the concrete has hardened. Plastic shrinkage cracking is a concern because it provides a pathway for salt and water to penetrate the steel in the concrete, causing corrosion. Plastic shrinkage cracking is only an issue on level four of the structure. It did not occur on levels two and three.
220Dr. Maher mapped cracking in his report50 at pages 25 to 27. He calculated 10 meters of dry shrinkage cracks on level 2, 9 meters on level 3 and 32 meters on level 4. He admitted in cross-examination that some of the dry shrinkage cracks could have resulted from movement of the precast concrete due to misalignment. That would be a deficiency caused by the erection subcontractor and not the topping subcontractor.
221Dr. Maher measured 285 square meters out of an area of 7,000 square meters, or roughly four percent of craze cracking on level 4.
222In his report Dr. Maher mentioned delamination but he testified that it was not a significant issue in this case. Delamination refers to horizontal separation within the concrete caused by corrosion of reinforcing steel. It is diagnosed by hammer tapping.
223Mr. Belanger testified that he did not find the small area of delamination referred to in the Dr. Maher’s report as existing at level two near a doorway51 or anywhere else, despite visual and hammer inspections. Mr. Belanger did find an area of horizontal separation, resulting from the absence of having yet completed the joints in the area of the doorway. That work would have been completed by Dirm had PSI not terminated the PSI/Dirm’s contract prior to completion.
224Dr. Maher testified that plastic shrinkage cracks are a property of concrete and cannot be stopped but can be controlled. He explained that to minimize plastic shrinkage cracks the concrete surface must be maintained wet during the curing process. Windy conditions can cause more cracks because the wind dries the surface.
225Dr. Maher testified that plastic shrinkage cracks lead to additional maintenance and should be minimized if one is trying to achieve a maintenance free parking deck. Failure to maintain would accelerate deterioration. I note that achieving a maintenance free parkade was not a condition, a requirement or a specification of the PSI/Dirm topping contract. However because PCL had contracted with Plenary Group to maintain the structure for 30 years, PCL expected a parkade that would require minimal maintenance.
226Dr. Maher returned to the site in July 201452 and prepared a surface map depicting differences from his earlier inspection: one new crack had appeared on level 2, one crack shown on the earlier mapping was not shown on the later mapping, and there were some new craze cracks. I attribute these differences to two main factors: (i) mapping is imperfect, as illustrated by a crack shown on the earlier map that was not shown on the later map, and (ii) PSI ejected Dirm prior to completion and did not immediately hire a contractor to complete the work. Contract work yet to be completed by Dirm when they were terminated included applying sealer.
227PCL project director Bruce MacPherson identified cracking as an issue of concern based on feedback he received from the project team. He did not personally recall cracking on levels 2 and 3. He admitted that cracking was only in localized areas and agreed with Dr. Maher that the extent of the cracking was minor given the vast area of the three levels of the east parkade.
228PCL’s Taylor Rogers admitted that he used the terms “shrinkage cracks”, “craze cracks” and “spider cracks” interchangeably. He testified that the area of cracking was confined to level 4 between grid lines 4 and 8 as shown on trial exhibit 4.
229PSI relies on HDR’s July 18, 2013 report wherein HDR opined that the floor finish “does not meet the approved mock up standard” and “does not meet FF requirements in spec section 35 35 10 Concrete Floor Finishing Schedule.”
230The HDR report is flawed in two respects: the first is that according to Mr. MacPherson the FF requirements pertain to flatness of a floor and according to the Golder report the FF requirements do not apply to a hand finished floor. Thus the FF requirements do not apply to Dirm’s work. HDR based its opinion on inapplicable standards. The author of the HDR report, Mr. Trigg, did not testify. The second flaw in the July 2013 HDR report is that Dirm was never provided with the specifications referred to therein, either by PSI or by PCL. It is unreasonable to expect a contractor to comply with undisclosed specifications.
231According to Mr. Belanger plastic shrinkage cracks can be minimized by blocking wind during the curing phase, when curing blankets are placed over the concrete. PSI blames Dirm’s failure to properly apply and maintain curing blankets on freshly poured topping as the cause of shrinkage cracks. Despite the volumes of evidence about Dirm’s failure to maintain the curing blankets, the only incident that any of the witnesses could identify arose on May 15, 2013, one day after Dirm had carried out its fourth pour, with winds of 50 to 70 kilometers an hour. Despite Dirm’s caution that it should not pour that day PSI instructed Dirm to proceed with the pour and the result was that the curing blankets were blown off for a period of several hours. The curing blankets were promptly repositioned properly the next day. Mr. Belanger opined that he did not see any evidence of inadequate curing of concrete.
232Mr. Belanger calculated that plastic shrinkage cracks were present in roughly 240 square meters (1500 square feet53) of the level four topping, covering approximately three (3%) percent of the surface area of level four, being less than one percent of the entire surface subject to the Dirm topping contract.
233According to Mr. Belanger, the plastic shrinkage cracks could have been corrected by applying an epoxy topping that bonds to the concrete to prevent water and salt penetration. In fact, on June 14, 2013 Dirm had proposed to rectify shrinkage cracks using a gravity fed epoxy. Mr. Belanger testified that using an epoxy would have resulted in a slightly different colour of topping over approximately 285 square meters (3068 square feet) of the garage floor. PSI rejected this solution in part because it would not have been aesthetically pleasing. To put this in perspective, given that the Dirm contract covered an area the size of at least three football fields, the problem area was small. I find that it was not reasonable for PSI to reject this remediation option for purposes of claiming the cost of repairs from Dirm.
234PSI rejected the epoxy option because PCL had rejected it54. Mr. Belanger observed that epoxy repairs had been carried out in the west parkade. It is unclear why PSI was not prepared to mitigate damages and accept an epoxy repair for the east parkade when it had accepted epoxy repairs for the west parkade. PSI could have avoided the costly removal of topping and consequential damage to the level 4 topping.
235The evidence of Mr. Belanger and Mr. Gomes on lifespan is that the epoxy membrane lasts longer than the concrete topping itself and the usual lifespan of epoxy is 20 to 25 years. Dr. Maher rejected this option as an appropriate remedy in part because it would not have provided the 50 year lifespan required by the PCL/PSI contract. The PSI/Dirm contract did not specify a 50 year lifespan.
236The second type of cracking described by Mr. Belanger is dry shrinkage cracking. Dry shrinkage cracks occur after concrete has dried. Such cracks can be caused by tensile load, particularly if joints are not aligned. Mr. Belanger observed thousands of meters of joints that needed to be sealed, but indicated that dry shrinkage cracks in this structure were insignificant. A flexible sealant is required. I note that Dirm was ejected from the Project prior to completion, with sealing joints remaining to be completed.
237Mr. Belanger’s solution for dry shrinkage cracks was to create additional control joints in the topping to line up with the control joints in the precast double tee’s. PSI considered this solution unacceptable as aesthetically displeasing. I find PSI’s basis for rejecting this reasonable solution unreasonable given that this is a parking garage described by some witnesses as the size of three football fields and by others as the size of five football fields. A few additional control joints would not materially detract from the aesthetics of the parking structure.
238Mr. Belanger expressed his opinion that PSI’s concerns could have been addressed at the time the work was underway had PSI provided meaningful oversight of the job and communicated its complaints as the job progressed.
239I find that the quality of Dirm’s work, including plastic shrinkage cracks, craze cracks and dry shrinkage cracks was not so deficient as to amount to a fundamental breach of the PSI/Dirm contract that would entitle PSI to treat the contract as at an end. To the extent that there were deficiencies they could have been rectified to the specifications of the PSI/Dirm contract had PSI acted reasonably.
3. Default #3: Topping Schedule
240On any construction site, and particularly on a large complex construction site, coordinating the work is crucial for two main reasons: (1) to ensure safety to the workers and (2) to maximize time and complete the project on schedule.
241PSI asked Dirm to provide a detailed schedule for its portion of the project. Dirm did not comply. It did not provide a detailed schedule to PSI particularizing the dates of pours, areas of proposed pours and other information requested by PSI to allow it to coordinate the multiple trades on site.
242Dirm did provide a very sparse outline of the order of proposed pours, but it did not include the detailed information that was required for PSI and PCL to co-ordinate the trades. Dirm’s view was that on a daily basis Tony DiSotto or Terry Szewchuk would speak to PCL’s representative to tell them what it was proposing to do the next day. According to PSI and PCL that practice did not allow sufficient time for the efficient coordination and scheduling of work on site to meet the objectives of safety and efficiency.
243The issue is whether Dirm’s failure to provide a detailed schedule was a reasonable basis to terminate its contract: did Dirm fundamentally breach the contract by failing to deliver a detailed schedule?
244If its failure to deliver a detailed schedule is not a fundamental breach of contract, is it a component of a cumulative effect of multiple breaches that, when taken together, constitute a fundamental breach of the contract?
245There was much communication between PSI and Dirm regarding the concrete pour location and schedule. PSI asked for it repeatedly beginning August 16, 2012 and again on September 5, 12 and 24, 2012. On October 2, 2012 Benny replied by email “I appreciate your patience, I will have it to you by the end of the week”, thereby admitting that it was overdue. However at trial he insisted that supplying a pour schedule and location was not a contractual requirement but merely a courtesy. That evidence detracts from his credibility as a witness.
246In a large project with multiple trades, deadlines to meet and a need to coordinate the work it is disingenuous to suggest that a pour location and schedule was merely a courtesy and not a requirement. If it was not a contractually specified requirement it certainly was an implied requirement that Dirm coordinate its work with the other trades on site. PSI, as the project manager, could not complete its site coordination without Dirm’s pour schedule.
247Mr. Primeau stressed that it was important for all subtrades, including Dirm, to co-operate by providing their work schedules as requested. He testified that Dirm was unresponsive to requests for submittals, including scheduling and sequence-of-work information. Dirm’s response was that they provided the requested schedules. In fact they did, but in a superficial manner, lacking the details required for PSI and PCL to perform their co-ordinating functions.
248Mr. Primeau admitted that the PSI/Dirm contract did not provide for submittals. He further admitted that the PCL/PSI contract price included the cost of submittals such as shop drawings and other technical information. He further admitted that if the PSI/Dirm contract had called for submittals the price would have included them. It follows that the absence of any requirement for Dirm to provide submittals suggests that submittals were not included in the contract price.
249Scheduling was of particular concern to PSI because its contract with PCL included a severe delay penalty with hefty per diem delay damages specified. That penalty clause was not included in the PSI/Dirm contract, although PSI conducted itself as if it was.
250PSI's frustration and the hard line positions it took resulted from their misunderstanding of the terms of the PSI/Dirm contract and could have been avoided had the parties communicated more effectively in an effort to mutually solve the problems experienced on the job. Instead both parties dug their heels in deeper and the conflict escalated.
251There were other submittals required before Dirm’s work on site began, including a safety plan, a workplace violence policy statement, a lifting plan for any crane requirements, a trucking plan, a site logistics plan and a quality assurance/ quality control plan. PSI was becoming increasingly frustrated by Dirm’s failure to provide satisfactory information because, according to Mr. Primeau, PCL had withheld payment to PSI pending receipt of submittals.
252I find that Dirm's failure to co-operate and provide a detailed topping plan was a breach of its contractual obligations but not a fundamental breach of the contract going to its root and entitling PSI to treat the contract as at an end. It would be a contributing factor in considering whether the cumulative effect of multiple breaches constituted a fundamental breach of contract.
4. Default #4: Remedial Plan
253On or about June 7, 2013 PSI asked Dirm to provide a remediation plan. Dirm’s Mr. Szewchuk responded by email on June 13, 2013 with Dirm’s proposal.
254In its email of June 7, 2013 listing eight concerns, PSI allowed Dirm only three days to come up with a remediation plan55. By contrast, PSI had allowed Assemblers Inc., the subcontractor hired to erect the structure, three months to submit a remediation plan. In my view allowing only three days over a weekend to submit a remediation plan was unreasonable. Mr. Primeau insisted that three days over a weekend was a reasonable amount of time to prepare and deliver a remediation plan.
255Regarding item #1 (cracks) Dirm proposed a gravity fed epoxy and provided a video about the proposed product. PCL rejected the proposed epoxy but Dirm stood firm that it was the appropriate method to remediate cracks. This is supported by engineer Paul Belanger. The only reason epoxy was rejected by PSI’s expert is that it would not have provided the 50 year lifespan that Dr. Maher understood to be a contractual requirement. PSI and Dr. Maher misunderstood Dirm’s contractual obligations: PSI (standing in the shoes of PCL for this purpose) expected a 50 year solution when Dirm had not agreed to supply a topping that would meet a longer-than-expected lifespan.
256PSI took the position at trial that it was up to Dirm, not PSI, to determine how to remediate the deficiencies in PSI’s Notice of Default. PSI relies on the decision of the Supreme Court of Canada in Auto Concrete Curb. Ltd. v South Nation River Conservation Authority56 for the proposition at page 204 that:
“It has long been established that barring specific arrangements to the contrary, the method by which a contractor chooses to execute the work falls within its sphere of responsibility, and that neither the owner nor the design professionals employed by the owner have a duty to advise the contractor as to what method to choose, or how to go about accomplishing the work by whatever method the contractor in fact chooses.”
257While PSI may have been correct in law that it did not have a duty to dictate a remediation plan to Dirm, efforts and initiatives towards a mutually acceptable solution would have achieved a better result for all parties than ejecting Dirm and embarking on lengthy and costly litigation. In my view it would have been reasonable for PSI, after rejecting Dirm’s proposal, to counter with its own proposal for resolving the issue.
258Regarding item #2 (texture) Dirm proposed that wear and tear would even out the differences in the hand swirl finish. PSI did not accept this response as adequate. Regarding item #3 (perimeter joints) Dirm responded that all perimeter joints were tooled while pouring but may have been filled in with paste that Dirm proposed to clean out. Mr. Venner’s response was that this applied to only five percent of the perimeter joints and Dirm’s response was unsatisfactory.
259Mr. Szewchuk also provided Dirm’s responses to items 4, 5, 6, 7 and 8. Regarding item 4 (joint details), Mr. Szewchuk referred PSI to the erection drawings. Regarding item 5 (sealing and caulking), Mr. Szewchuk advised PSI that it would commence 28 days after the slab pour beginning with level 4. The 28 day time period was required for the concrete topping to achieve full strength. He provided a schedule for the order of work.
260Regarding items 6, 7 and 8, Dirm provided responses as requested. For item 6 (remove slurry) Mr. Venner testified that even though he saw it in a few locations he had not really focused on slurry.
261In PSI’s demand that Dirm’s proposed remediation plan be submitted to PSI for approval, and in its conduct throughout the project that PSI and PCL approve of the methods proposed by Dirm to address various issues as they arose (examples include the “wash” issue and the proposed epoxy remedy for cracks that was rejected by PSI without explanation), I find that in this case, to borrow the words of Chief Justice McLachlin in the Auto Concrete Curb case, there were “specific arrangements to the contrary”. Dirm’s response to PSI’s request for a remediation plan did not constitute a fundamental breach of the PSI/Dirm contract that would warrant PSI treating the contract as at an end.
5. Default #5: Site rules breached
262PSI terminated Dirm’s contract for several reasons including that, in their view, Dirm was not a “team player”, working together with other project participants to solve problems as they arose.
263PSI complains that Dirm breached site rules, including parking rules, clean-up and pump set-up. PSI relies on Dirm’s failure to abide by PCL’s rules regarding parking, as well as a specific parking incident, as contributing Dirm’s breach of contract sufficient to warrant PSI terminating the contract.
264PSI’s failure to adequately supervise Dirm’s work is a contributing factor to the site problems experienced. Taylor Rogers, PCL’s project co-ordinator, testified that PCL’s contract with PSI required PSI to supervise the work of its subcontractor, Dirm and that PSI was required to have a supervisor on site. Mr. Venner, the PSI project manager, was not on site regularly. He generally worked out of his home in Barrie Ontario, a one hour drive from the site in favourable traffic conditions, and attended the site on a weekly basis until instructed by PCL to be on site daily. PSI’s position was that Dirm was required to supervise its own work.
265One incident that PSI relies on as a breach of site rules concerns parking vehicles on site. Mr. Rogers and Mr. MacPherson both testified that there were between 1000 and 1800 workers on site daily and insufficient parking for everyone. Dirm had parked too many vehicles on site – often up to six vehicles rather than the permitted two vehicles - and it was incumbent upon PCL to enforce its parking rules consistently as against all contractors and workers on site. Dirm’s position was that it required its trucks and vans on site for access to its tools and equipment.
266PSI’s witnesses were outraged that Dirm had the audacity to park more vehicles on site that the site rules permitted. The evidence of several witnesses was that other site workers accessed the site without parking their vehicles on site and Dirm’s workers should have done so as well.
267An explosive incident occurred on May 27, 2013. Dirm had parked more vehicles on site than permitted and PCL's Mr. Taylor sent an email to Mr. Venner threatening to call Toronto parking enforcement authorities if the unauthorized vehicles were not removed from the site. Mr. Taylor heard a kafuffle from his site office and saw multiple police officers on site and a confrontation between Tony DiSotto and a parking enforcement officer who was in the process of ticketing Dirm's vehicles.
268It incensed Tony DiSotto that a City of Toronto Parking Authority officer had entered the active 15 acre construction site without hardhat, safety boots or safety vest to single out and ticket only Dirm’s vehicles.
269Mr. Rogers testified that Dirm’s workers had physically blocked the parking enforcement officer from leaving and she had called the police for backup. Dirm’s position on the incident was that Dirm needed the vehicles for access to tools and equipment, and PCL and PSI had overreacted by selectively ticketing Dirm vehicles when other unauthorized vehicles were also on site.
270Mr. Rogers admitted in cross-examination that he did not recall that any other vehicles had been ticketed that day.
271Dirm should not have prevented the officer from leaving. Regardless of whether Dirm was right or wrong in bringing its work vehicles to the site to have access to tools required for the job, this event illustrates the antagonistic relationship between Dirm and PSI. Rather than find a way to lower the temperature between the two parties, they continued to antagonize each other to such an extent that they could no longer work together.
272Another incident concerned Tony DiSotto’s attempt to stage a pour on level 4 by setting up the pump truck on the adjacent construction site (the forensic complex) with a different general contractor. Tony DiSotto’s friend was in charge of that project. PCL was not involved in that project. Tony DiSotto explained that he went to his friend and asked if he could set up the concrete pump on the forensic site and pour a portion of the topping from that site, because it would be a closer distance to the Project pour site than if he were to set up his equipment on the Humber River Hospital site. His friend consented and Tony DiSotto told PCL’s Peter Jagarnauth about the arrangement. PCL, upon hearing about the informal arrangement, vetoed the idea immediately and Dirm did not set up a pump on the adjacent site.
273From Tony DiSotto’s perspective and “let’s just get it done” approach to the Project, it was a simple solution to speed up and simplify the pour. From PCL’s perspective, according to the evidence of Chad Alderson, it contravened Ontario Health and Safety Act guidelines, which requires a separation of contractors. The proposed pour from an adjacent site raised issues of safety and liability.
274Tony DiSotto was naïve in his attempt to speed up the job by seeking out the unconventional solution of locating the concrete pump truck on the adjacent site. He failed to take into account liability issues that are of concern to PSI and PCL. However, it was proposed in an effort to solve the timing problem and not an attempt to undermine Dirm’s contractual obligations. The pump was never set up on the adjacent site. At trial Mr. Primeau called Dirm’s conduct “idiotic”. His attitude provides insight into PSI’s communication style vis-à-vis Dirm.
275In my view this event was not a deliberate act of misconduct by Dirm. Rather it was an exercise of poor judgment on the part of Tony DiSotto, in an effort by him to get the job done quickly and efficiently. PSI made much more of the incident than was warranted. It is not a breach of the PSI/Dirm contract, nor is it a “little breach” contributing to the cumulative effect of multiple breaches.
276Another site rule that PSI’s witnesses described as having been breached by Dirm is what they characterized as the “housekeeping” rule. The PCL/PSI contract required PSI to maintain the site with broom cleaning daily within four hours of working57. PSI relied on what it characterized as Dirm’s poor housekeeping to justify, in part, PSI terminating Dirm for breach. Yet Mr. Primeau admitted that Dirm was not provided with a copy of the PCL/PSI contract prior to this litigation. There were no specific housekeeping provisions in the PSI/Dirm contract imposing a “within four hours” requirement.
277Mr. Primeau also admitted that there were no instances of PSI serving a 24 hour notice on Dirm to clean up the site, and there were no instances of PSI cleaning up for Dirm and backcharging for it. I find that Mr. Primeau’s evidence is consistent with a finding that Dirm maintained adequate housekeeping on site.
278PSI relies on what it characterized as Dirm’s poor housekeeping to justify, in part, PSI terminating Dirm for breach of contract.
279I find that the level of cleanliness provided for in the PCL/PSI contract did not apply to Dirm as it was never incorporated into the PSI/Dirm contract. Nevertheless, a reasonable level of site cleanliness is, in my view, an implied term of the PSI/Dirm contract. I further find, based on the totality of the evidence, including that PSI never stepped in and cleaned up or backcharged Dirm, that Dirm maintained the worksite to a reasonable level of cleanliness. PSI cannot rely on the housekeeping rule to justify terminating Dirm’s contract.
6. Default #6: Submittals
280PSI was concerned about submittals because it wanted to get paid by PCL. Notwithstanding that PSI had not carried the requirement for submittals over from the PCL/PSI contract to the PSI/Dirm contract, it conducted itself as if such a requirement existed. In doing so PSI contributed significantly to the deteriorating working relationship between PSI and Dirm. For example, Mr. Venner sent an email to his superior, Mr. Primeau, in February 2013 stating that Dirm was falling way behind in its submittals, thereby painting Dirm as unco-operative. Mr. Venner suggested to Mr. Primeau that PSI put pressure on Dirm because this could impact PSI’s payment from PCL58. Mr. Primeau admitted that the sole issue was PSI’s concern that it get paid.
281On January 29, 2013 Mr. Venner asked Benny DiSotto to submit Dirm’s topping plan by February 5, 2013. Dirm was not yet on site. The precast structure had not yet been completed to the stage that Dirm could begin and PSI had instructed Dirm not to start before April 15, 2013 to avoid the additional expense of warming equipment required for winter weather conditions.
282Mr. Primeau acknowledged that the submittals requested of Dirm were not specifically provided for in the PSI/Dirm contract. Nevertheless, in my view, it would be an implied term of the contract that the concrete topping subcontractor communicate to PSI its plan for carrying out the contract in terms of timing, order of work and locations, particularly considering the large and complex site where multiple teams would be carrying out many different aspects of the Project. Dirm knew or ought to have known that coordination would be critical and could not be done with last minute planning.
283One of the issues that lead to the deterioration of the relationship between PSI and Dirm was that the parties had different expectations as to what was to be provided. In an email dated January 29, 201359 from Mr. Venner to Benny DiSotto (copied to Mr. Primeau), Mr. Venner asked Dirm to provide advice on “what will give the topping a 50 year life expectancy as opposed to the current 40”. Paul Belanger, Dirm’s expert, testified that a sealant generally has an expected life of 25 years and a topping will last maintenance free only as long as the life of the shortest component.
284He further testified that different materials have different lifespans. Epoxy is tougher than concrete with a 20 to 25 year lifespan. Similarly a urethane membrane would have a 20 to 25 year lifespan, but in high traffic areas a urethane membrane repair would have a lifespan of only 10 to 15 years. He opined that epoxy repairs should last the life of the concrete.
285Dirm was unable to comply with requested submittals in part because PSI demanded more than what it had contracted for from Dirm. PSI refused to approve products that did not provide an expected life that was greater than the expected life of a topping. Not having contracted with Dirm for a topping with a 50 year lifespan, PSI cannot expect Dirm to supply a product that does so for the same cost. Furthermore, PSI cannot characterize Dirm’s failure to provide advice regarding a 50 year lifespan or failure to provide submittals that would support a 50 year lifespan when the submittals demanded by PSI exceeded what was called for in the contract.
286Dr. Maher initially opined that concrete should have a lifespan of 50 years but later admitted that cracks (which he testified are inevitable) lead to concrete deterioration before the expiry of the 50 year expected lifespan of concrete.
287I conclude that in an ideal world, even if concrete is expected to have a lifespan of 50 years, that would only apply if the concrete is in a vacuum without any environmental or usage factors contributing to its deterioration. I do not accept Dr. Maher’s opinion that concrete is expected to last 50 years. I prefer and accept the evidence of Mr. Belanger. Maintenance and repairs would be required within that timeframe.
288There are many instances of Dirm cooperating when PSI asked Dirm for assistance in understanding issues or providing information. There are also instances where PSI was not satisfied with Dirm’s responses and Dirm endeavoured to provide better responses. There are yet other instances where Dirm was lacking in its responses or unresponsive. Overall, however, having considered the voluminous evidence tendered at trial, I find that Dirm was generally cooperative and tried to be helpful in responding to requests for information and submittals from PSI, including requests for submittals that were not required by the contract. Ultimately, by the end of his cross-examination, Mr. Primeau reluctantly admitted that Dirm had been cooperative.
289Dirm's conduct regarding submittals was not a fundamental breach of contract and did not justify PSI treating the contract as at an end.
7. Default #7: Communication Protocol
290PSI complained in the Notice of Default that Dirm breached the communication protocol by communicating directly with PCL rather than through PSI. However, Mr. Venner testified that he expected Dirm to communicate directly with PCL’s on-site supervisor regarding site items and he further testified that at the time of the notice Dirm was not in breach of this protocol.
291I find that Dirm was not in breach of the communication protocol and PSI was not justified in terminating the PSI/Dirm contract on this ground.
8. Default #8: Submittals: Deck Preparation
292PSI complains that Dirm failed to provide submittals for deck preparation and failed to resubmit when PCL/PSI rejected Dirm’s initial proposal. This appears to be a contradiction on its face.
293In an email chain dated from February 12 to 15, 2013 Mr. Venner asked Dirm to provide submittals on a list of items that included a safety plan, MSDS, a workplace violence policy, a lifting plan, a trucking plan and a quality control/assurance plan. The submittals (or many of them) and a topping plan and pour schedule remained outstanding as of the pre-mobilization meeting on March 7, 2013.
294Dirm had provided a schedule but it did not provide the details that PSI wanted. The parties did not agree on the level of detail required and the contract was unhelpful in that regard, as it did not provide any specifics. In such circumstances reasonable industry practice would apply. This default is a rewording of default #3. My comments and findings under that heading also apply to this listed default item.
9. Default #9: Oversized Vehicles
295PSI complains that Dirm used an oversized buggy on deck, causing a safety concern.
296Taylor Rogers, PCL’s project co-ordinator, testified that he observed Dirm workers driving a buggy on the un-topped double tee’s despite issues regarding excessive load on the deck prior to application of the topping. Mr. Rogers provided no evidence regarding the weight of the buggy and whether in fact it exceeded permitted load for the unfinished double tee’s. He confirmed that Dirm used the buggy only once and did not use it again after he instructed the driver to remove it.
297Dirm’s position is that the buggy was brought in to speed up the job, which had been delayed due to the “wash” issue (discussed in detail elsewhere in these reasons). Tony DiSotto initially denied that the buggy was on deck but on this issue his evidence conflicts directly with that of Mr. Rogers. I accept the evidence of Mr. Rogers as corroborated by an email over that of Tony DiSotto and find that Tony DiSotto's evidence on this issue compromises his credibility..
298I find that PSI has not proven that the lone incident of Dirm driving a buggy on the unfinished deck constituted a danger to the structure by reason of excessive load. This incident does not constitute a breach of contract nor would it be a contributing factor to a breach of contract resulting from the cumulative effect of multiple smaller breaches.
10. Default #10: Failure to perform contracted services
299PSI complains that Dirm failed to deliver the contracted services and materials. One issue discussed at trial was the product to be used as a sealant.
300PCL’s Mr. Rogers testified that PCL rejected Dirm’s proposed use of Blueskin and tuck tape to seal gaps even though an engineer had given an opinion that the product would be appropriate for the intended purpose. Mr. Taylor suggested that Dirm contact Tremco about its foam sealer “Deck O Foam Joint Filler”, but he did not instruct Dirm to use the Tremco product.
301Dirm’s concern regarding the Tremco product was that it would be labour intensive. In cross-examination, Mr. Rogers admitted that had PSI complied with its contract with PCL and submitted all proposed products by December 2012 as required, then the issue could have been resolved without the time pressure experienced by addressing the issue in April 2013.
302Although PSI relied on these events as a default justifying termination of Dirm's contract I do not accept that Dirm failed to perform contracted services because it was precluded by PSI from using an appropriate product in favour of a product that would have increased Dirm's costs and could have caused additional delay.
11. Cumulative effect of multiple breaches
303PSI argues that if the individual defaults listed in the Notice of Default do not constitute breaches of the PSI/Drm contract sufficient to warrant PSI treating the contract as at an end then the cumulative effect of the multiple smaller breaches would be sufficient. I disagree.
304Out of the ten listed defaults I have found that Dirm was in default only of default item #3: topping schedule, repeated also as default #8 but in fact the same issue. There are no other “small breaches” to which this breach could be added to consider whether the cumulative effect of small breaches add up to a fundamental breach.
305The issue is whether the single breach was a fundamental breach that would entitle PSI to treat the PSI/Dirm contract as at an end.
e. The Law
1. Repudiation or fundamental breach of the contract
306The issue is whether the manner in which Dirm carried out the contract work amounts to repudiation or fundamental breach of the contract by Dirm. The test is “substantial failure of performance”: Did Dirm’s conduct constitute a substantial failure of performance sufficient to justify PSI treating the contract as at an end and terminating Dirm?
307In Rand General Contractors Inc. v. Taskforce Engineering Inc.60, Justice Boswell succinctly summarizes the law of repudiation. I find his summary thorough and helpful. As the starting point Justice Boswell relies on the decision of the Supreme Court of Canada in Guarantee Company of North America v Gordon Capital Corporation61 at paragraph 40:
[R]epudiation occurs by words or conduct evincing an intention not to be bound by the contract…[S]uch an intention may be evinced by a refusal to perform, even though the party refusing mistakenly thinks that he is exercising a contractual right…The effect of a repudiation depends on the election made by the non-repudiating party. If that party treats the contract as still being in full force and effect, the contract remains in being for the future on both sides. Each (party) has a right to sue for damages for past or future breaches…if, however, the non-repudiating party accepts the repudiation, the contract is terminated, and the parties are discharged from future obligation.”
308Justice Boswell goes on to recite the Ontario Court of Appeal’s characterization of repudiation as a “substantial failure of performance” in Place Concorde East Ltd. Partnership v Shelter Corp. of Canada Ltd.62. In that case Justice LaForme describes repudiation as an
“exceptional remedy that is available only in circumstances where the entire foundation of the contract has been undermined, that is, where the very thing bargained for has not been provided”.
309Also cited by Justice Boswell is the decision of the Ontario Court of Appeal in 968703 Ontario Ltd. v Vernon63 wherein Justice Weiler set out five guiding factors to consider in determining whether or not a breach of contract is a substantial failure of performance justifying future non-performance of an innocent party’s obligations (in the case before me that would be PSI’s obligation to pay Dirm and allow Dirm an opportunity to rectify deficiencies and complete the contract work). These five factors are relied on by the Court of Appeal several years later in Spirent Communications of Ottawa Ltd. v Quake Technologies (Canada) Inc.64, when considering the issue of fundamental breach of contract.
310The factors, as applied to the PSI/Dirm contract, are:
a) How much of the contract did Dirm perform? The evidence shows that Dirm completed approximately 90 percent of the contract work prior to PSI issuing the Notice of Default.
b) How serious was the breach to PSI? Based on my review of the allege breaches listed in the Notice of Default, most of the listed defaults were minor in nature, and regarding the more significant alleged breach (the ridges and aesthetics of the topping and the plastic shrinkage cracks) PSI did not allow Dirm a reasonable opportunity to rectify. PSI recites as a serious factor that it did not receive payment from PCL for years because of Dirm’s inadequate work. The flaw in PSI’s argument is that PSI relies on the provisions of the PCL/PSI contract that had not been incorporated into the PSI/Dirm contract. PSI cannot rely on its obligation to PCL to provide a topping that met a higher standard than was called for by the PSI/Dirm contract, as a basis for rejecting Dirm’s work product and proposed remediation.
c) What is the likelihood that Dirm would repeat the breach? There is no evidence that Dirm would repeat any of the items listed in the Notice of Default as breaches. The evidence is to the contrary. Examples include the buggy incident and the proposed pump truck placement events.
d) How serious are the consequences of the breach? There were several options for repair of the topping texture. Dirm had advanced proposals and as of the date of the Notice of Default PSI had not decided on a method of repair. Having heard the evidence of the experts, Mr. Belanger and Dr. Maher, there were methods of repair available that could have been performed by Dirm. While the condition of the topping was unacceptable to PSI, it did not warrant complete removal and replacement. As to the breach of contract regarding the pouring schedule for the topping, by the time PSI issued the Default Notice all pours had been completed. It was no longer an issue.
e) How much of the contract work has not yet been performed? This factor does not apply because the contract was 90 percent complete and there is no evidence that Dirm was not prepared to complete the contract work.
311To justify its repudiation of the contract, PSI must prove, on a balance of probabilities, that Dirm undermined the entire foundation of the PSI/Dirm contract: that Dirm failed to provide a concrete floor topping.
312PSI had not paid Dirm for any of the extensive services and materials supplied despite vice-president Paul Phillips having approved at least two payments.
313I find a particular email very disturbing. Project manager Stuart Venner sent an email on June 5, 2013 to his manager, Randy Primeau, as follows65:
“I gave them (Dirm) a bit of a run around today not wanting to address the April invoice issue yet while they are still pouring…their response would be too unpredictable! The last pour is almost done now.”
314On June 7, 2013 Mr. Primeau recommended that PSI not pay Dirm at all. Then, on June 12, 2013, one week after the final pour, Mr. Phillips told Dirm that PSI would only pay if Dirm signed the P.O., binding Dirm to terms that were far more onerous than the PSI/Dirm contract terms, including the requirement of a 50 year lifespan for the topping and delay damages of $174,000.00 per day. I find PSI’s threat of non-payment tantamount to extortion66. Mr. Phillips admitted in cross-examination that by June 14, 2013 PSI had decided that it would not pay Dirm at all.
315The Notice of Default followed shortly thereafter on June 18, 2013 and PSI terminated the Dirm’s contract on June 22, 103.
316In my view, the evidence does not support PSI’s position that it was entitled to treat the contract as repudiated by Dirm such that PSI could treat the contract as at an end and eject Dirm from the Project without allowing Dirm an opportunity to rectify the deficiencies for which PSI claims damages in this trial. The parties were exploring an appropriate method of remediation for the items that PSI found unsatisfactory. The reasons that PSI did not accept Dirm’s proposed methods of remediation pertain to the PCL/PSI contract and not the PSI/Dirm contract: PSI was seeking a 30 year maintenance-free product with a 50 year expected life, rather than a product having the usual expected life of a concrete floor topping. The 50 year requirement was part of the PCL/PSI contract but not part of the PSI/Dirm contract. PSI’s desire for a maintenance free product arose because of PCL’s P3 contractual obligation to maintain the structure for 30 years before handing the facility back to the owners. Neither of these obligations had been carried over into the PSI/Dirm contract nor had Dirm priced the contract on that basis.
317PSI’s motivation to terminate Dirm stems from the June 7, 2013 meeting when Dirm refused to sign the P.O. Thereafter PSI was determined to get rid of Dirm, elevating small site issues to major breaches in an attempt to justify terminating Dirm. PSI did not have sufficient cause to terminate Dirm.
2. Breach of contract
318PSI argues that Dirm’s refusal to sign the P.O. constitutes a breach of contract. I disagree. The P.O. that PSI presented to Dirm to be signed did not reflect the agreement reached by PSI and Dirm. While the email referred to a P.O. to be signed by the parties, PSI never provided Dirm with a P.O that reflected the terms of their agreement. Rather, PSI presented a P.O that was far more onerous than the agreed upon terms and conditions, including the delay damage penalty of $174,000.00 per day that PSI acknowledged had not been agreed to by Dirm. Dirm’s refusal to sign the P.O was not a breach of contract by Dirm.
319PSI argues that Dirm’s failure to provide a “good and workmanlike” hand swirl finish, namely one that is aesthetically pleasing and provides appropriate grip, and one that is free from cracks, coupled with the many “little breaches” constitute a fundamental breach of contract. It is undisputed that there is an implied undertaking in every construction contract that the contractor will perform the work with care and skill, “in a workmanlike manner, reasonably fit for the purpose for which the (services and materials) are supplied”67.
320For reasons already expressed, I find that Dirm supplied a work product that was reasonably fit for the purpose for which it was intended, although in need of completion and some repairs.
321By terminating the contract and ejecting Dirm from the site prior to completion and without payment PSI repudiated the PSI/Dirm contract. As the non-repudiating party, Dirm was entitled to elect whether to continue to perform the contract and sue for damages, or to treat the contract as at an end. Having been terminated by PSI and ejected from the site Dirm did not have the option of completing the contract work or rectifying deficiencies.
322I conclude that Dirm did not repudiate the contract by the manner in which it performed the contract. I further conclude that PSI breached the contract by ejecting Dirm without sufficient cause and refusing to pay Dirm for the services and materials supplied pursuant to PSI’s contractual obligations.
f. Remediation and completion
323In issues are (i) whether the steps taken by PSI to mitigate its damages and remediate the deficiencies were reasonable and if so (ii) quantifying appropriate backcharges.
1. The Scott Schedule
324PSI set out its claim for remediation and completion costs in a Scott Schedule, filed as exhibit 9 at trial. PSI claims the amounts shown in the Scott Schedule as backcharges against amounts otherwise owing to Dirm. My findings on each item listed in the Scott Schedule follows.
325Mr. Phillips reluctantly admitted in cross-examination that remediation was not completed until late 2014, one and a half years after PSI ejected Dirm from the project. Mr. Venner explained that the reason for delaying remediation of the topping until November 2014 was that PCL would not approve a remediation plan. Because PSI had a contractual completion date of February 2015, failing which it would face significant delay penalties, PSI carried out the repairs during harsh winter weather, adding to the cost of remediation68. Query whether it is appropriate to visit these increased costs on Dirm when PSI and its contracting partner PCL caused the delay.
326PSI relies on invoices from contractors hired to carry out remediation work to prove the cost of remediation69. One such contractor is TolCas United Precast (“TolCas”). TolCas performed remediation work as well as additional work. Mr. Primeau testified that he, together with Mr. Venner, reviewed the TolCas invoices and attempted to allocate the multiple items listed in each invoice to either remediation of Dirm’s work or to other work.
327PSI’s Mr. Phillips had requested quotes from contractors to remediate and complete Dirm’s work. PSI filed a spreadsheet setting out the quotes received70. The spreadsheet is largely illegible (having been significantly reduced in size) and Dirm objected to its admissibility to the extent that it purports to provide opinions of value. I accepted the spreadsheet solely as evidence that PSI obtained quotes and not as to the opinions of values disclosed in the spreadsheet. For that reason its illegibility was not an impediment to admitting the document as evidence. Its probative value as to quantification is minimal.
328The spreadsheet records quotes provided by Limen, United Floor, Bravo Cement, Structform and Multiseal. Mr. Phillips explained that PSI contracted with United Floor because it was the lowest bidder and PSI had previously worked with United Floor without incident. I find that PSI’s reasons for selecting United Floor are reasonable.
329Mr. Phillips testified that United Floor carried out remediation and completion work and PSI paid their invoices. The United Floor invoices71 include items that go beyond remediation and completion. In oral testimony PSI attempted to identify items that should be deducted from these invoices for purposes of quantifying PSI’s backcharges and counterclaim.
330PSI relies on its accounting statement, filed72, for its calculation of reductions to the Dirm contract price for remedial work. PSI’s accounting includes PCL and PSI’s legal and other fees for this litigation, which PSI advised the court are not claimed as backcharges. PSI did not provide an accounting statement that backs out the items that it no longer claims against Dirm. The accounting statement also includes a number of items backcharged to Dirm that I find are not appropriate backcharges.
331The amount claimed by PSI is excessive because it is based on a performance standard that is higher than required by the PSI/Dirm contract. The challenge in this case is for the court to determine a fair and reasonable quantification to rectify the deficiencies in the concrete topping to the standard required by the PSI/Dirm contract rather than the PCL/PSI contract. Dirm submits that there is no way to calculate that difference and offers no solution.
332In addition to the evidence of actual repair and completion costs, Mr. Belanger, Dr. Maher and others provided evidence of the estimated cost of repairs and cost to compete items not yet finished when PSI terminated Dirm from the Project. What follows is a discussion of the evidence and my findings regarding the items claimed by PSI and listed in the Scott Schedule.
a. Items 1, 2, 3 and 4: Cracks
333Items 1, 2 3 and 4 of the Scott Schedule pertain to plastic shrinkage cracks, drying shrinkage cracks, control joint cracks and craze cracks on levels 2, 3 and 4. PSI claims $86,345.00 for the first three items and $352,703 for item 4, craze crack repairs.
334PSI rejected the topping finish on level 4 due to what Mr. Primeau describes as extensive shrinkage cracks. Options to remediate the shrinkage cracks included using a gravity fed epoxy or alternatively removing and re-pouring the topping in the affected areas. A third option suggested by Mr. Belanger was to apply a membrane over top.
335Dirm proposed to repair the shrinkage cracks using a gravity fed epoxy: WR Meadows REZI-WELD LV. PSI rejected epoxy as an option because PCL had rejected it following a site meeting on June 17, 2013. According to Mr. Belanger, filling the cracks with epoxy after removing water and salt would have been the appropriate repair.
336Mr. Primeau (PSI) wanted a full remediation plan to address the cracks, the aesthetics and high points in the topping finish and the tooled versus saw cut joints. After PSI terminated Dirm for default it submitted a remediation plan to PCL.
337Notwithstanding that Dirm had applied the topping in May and June 2013 and was terminated in June 2013, PSI did not remediate the topping on level 4 until late in 2014, more than a year later. During this period levels 2 and 3 were used for paid parking by site workers.
338The reason for the delay in effecting the repair was that PCL and PSI could not agree on the method of remediation. Different approaches would give rise to different lifespans and maintenance requirements for the parking structure. A less expensive remediation would give rise to higher annual maintenance costs and a shorter lifespan, consistent with the anticipated useful life of a concrete parking structure but shorter than that contemplated in the PCL/PSI contract.
339The interests of Dirm, PSI and PCL were not aligned. PCL, as a partner in the P3 project, was obliged to maintain the parking structure for 30 years. Paul Belanger’s evidence is that at most an epoxy sealant would last 25 years. The expected useful life of a concrete topping is only as long as its longest component.
340It was in PCL’s interest to ensure that the parking structure, and its components, had the longest possible lifespan. PSI was aligned with PCL in this regard. However, Dirm had not contracted to provide a topping that would have a longer-than-normal lifespan. Nor had Dirm charged for it. Had Dirm contracted with PSI to provide a longer-than-expected lifespan its price would have been higher. PSI mistakenly believed that it had incorporated the terms of the PCL/PSI contract into the PSI/Dirm contract. The issue is whether it is reasonable to backcharge Dirm to remediation to a higher standard.
341Dr. Maher recommended options for remedial work to meet PCL’s obligations to the owner under the P3 contract. The significance for trial purposes is that Dr. Maher relied on the higher standard and did not know that the PCL/PSI contract had not been incorporated into the PSI/Dirm contract.
342Dr. Maher rejected an epoxy solution because it would not have as long a lifespan as replacing the concrete. Epoxy would have to be replaced after a period of time and would be inconsistent with PCL’s and consequently PSI’s expectation of a low maintenance or maintenance free parkade over the 30 year period that PCL was contractually required to maintain the facility. Dr. Maher admitted that a low viscosity epoxy injected into cracks would have a very good result and a reasonably long lifespan.
343Dr. Maher also rejected epoxy because in his opinion some cracks could be missed when using epoxy to repair a large area. He testified that if some cracks are missed then it could corrode the mesh and damage the concrete. He recommended that an appropriate repair would be to remove the top half of the 76 millimeter topping depth and replace it. He described three methods of removing concrete topping as chipping, hydro demolition or pneumatic equipment.
344Mr. Belanger did not agree with Dr. Maher’s reason for rejecting an epoxy sealant as a remediation plan. He testified that it is not difficult to ensure that all cracks are addressed. Competent workers and a competent site review at the time of applying sealant would avoid missing cracks and would remediate the cracks at a far more reasonable cost than total removal. Alternatively, according to Mr. Belanger, a membrane could be applied over the entire surface at a fraction of the cost of removing and replacing the concrete.
345PSI retained United Floor to remove the topping from 12 of the precast double tee’s on level 4. Greg Sgro of Untied Floor testified that United Floor quoted $146,000.00 for the job using hydro demolition. That is a method whereby the operator breaks the concrete surface by shooting water from high pressure hoses.
346According to Mr. Belanger hydro demolition was not an appropriate method to use in this case. Due to the force exerted by using hydro demolition, the process itself could cause damage, including displacing mesh.
347Dr. Maher testified that another option would have been to add another finish on top of the topping but there was insufficient headroom to do so. That is the case because the structure, as designed by PCL and erected by PSI, barely met the building code clearance requirements and in the areas of the washes it failed to meet the clearance requirements such that those areas had to be redesigned. PSI’s own performance of the contract eliminated this repair option.
348I find that in rendering his opinion as to the recommended repair Dr. Maher gave a disproportionately high priority to the 30 year maintenance requirement in the P3 contract, a condition that had not been incorporated into the PSI/Dirm contract as a requirement for the topping.
349I find that PSI is only entitled to a topping consistent with what it had contracted for from Dirm, and if it rectifies to provide a superior product then the enhancement must be at its own expense. In this case much of the remediation cost was attributable to PSI remediating to a topping that would survive the first 30 years with minimum maintenance. I prefer and accept as appropriate the rectification solution proposed by Dirm’s expert. Hydro-demolition was not necessary to remediate to the standard required by the PSI/Dirm contract.
350PSI includes in its accounting statement a backcharge for payments to EXP Services Inc. to conduct tests after hydro demolition to measure the integrity of the precast structure. Having found that hydro demolition was not necessary, and having rejected it as the appropriate repair to bring the topping to the level required by the PSI/Dirm contract, I similarly reject and disallow the claim for testing the integrity of the structure, such testing required only because PSI had applied invasive hydro demolition to remove the topping. The claim of $11,343.24 paid to EXP Services Inc. is disallowed.
351Regarding quantifying item 1, the Scott Schedule shows a claim by PSI for $86,345 for items 1, 2 and 3 combined.
352Mr. Belanger estimated the cost of an epoxy repair based on two workers at $350.00 per day for one week for a total cost of $3,500.00 plus HST = $3,955.00. In my view his estimate is unrealistic or fails to take into account all of the cracking repairs required for Scott schedule items 1 through 4.
353The TolCas invoices to PSI to apply epoxy to repair cracking add up to $59,960.00 plus HST as follows:
a) $47,448.00 + HST to repair cracks with epoxy73
b) $5,520.00 + HST to repair cracks with epoxy74
354$6,992.00 + HST to repair cracks with epoxy75
355I accept as a reasonable quantification for item 1 the $59,960.00 + HST reflected in the TolCas invoices as the cost incurred to apply epoxy to repair the plastic shrinkage cracks.
356Regarding item 2, drying shrinkage cracks, the evidence of the experts is that the cause of the immediate drying shrinkage cracks was the improper location of joints by the contractor assembling the structure. I accept Mr. Belanger’s evidence that drying shrinkage cracks that occur after the initial work are repaired as a matter of routine maintenance. No backcharge is allowed for Scott Schedule item 2.
357Regarding item 3, control joint shrinkage cracks, PSI terminated Dirm before it could reach this item and as such it is a completion item. The party in breach is not entitled to backcharge for completion items.
358Regarding item 4, craze cracking on level 4, Mr. Belanger explained that craze cracking is another name for plastic shrinkage cracking. It is properly included in Scott Schedule item 1. PSI claims a backcharge of $352,703 to remove the topping using hydro demolition and to replace it, as well as the costs incidental to the invasive method of removal used. This was done in cold weather months, increasing PSI’s costs. Dr. Maher had recommended removal by chipping, using a small jackhammer. Hydro demolition causes more damage.
359Regarding the charges claimed by PSI to rectify the placement of wire mesh within the concrete topping, no measurements were provided. Measurements could have been taken during remediation. Photographs show that wire mesh is suspended in topping in most places. Dr. Maher’s core tests show that Dirm placed wire mesh appropriately. No backcharge is warranted for the placement of wire mesh.
360As already discussed under the heading “deficiencies”, Mr. Attisano provided a quote76 to the bonding company for Limen that included the cost to rectify specified deficiencies. Limen had quoted $836,400, of which $100,000 pertained to repairing two deficiencies: the 6,500 square foot area of rejected topping on level 4 and repair to expansion joints.
361I accept Mr. Attisano’s quote as reflecting the reasonable cost to repair these two items. Since he did not allocate the $100,000.00 repair cost as between the two deficiency items listed in the Scott Schedule (items 4 and 11), I accept $100,000.00 as the combined cost to repair the two items.
b. Item 5: Ponding, levels 2, 3 and 4
362PCL’s Mr. MacPherson charged PSI $25,515.00 for additional drains and $5,221.00 for the mechanical contractor arising from the ponding issue. PSI claims $33,856.00 from Dirm as a backcharge for this item.
363Ponding occurred due to the addition of drains at expansion joints, required because PSI erected the structure with insufficient clearance to comply with building code requirements at the wash areas without the installing additional drains. It is not attributable to Dirm. The appropriate repair is to eliminate the depression. No backcharge against Dirm is allowed.
c. Item 6: Finish quality, levels 2, 3 and 4
364PSI claims a backcharge for what it characterizes as a poor finish quality lacking uniformity. The parties tendered evidence about ridges in the concrete. The concern with ridges is that they could create a tripping hazard.
365According to Mr. Phillips, on the issue of the ridges, Dirm’s proposal to “do nothing”, that is to allow usage over time to wear down higher ridges, was unacceptable to both PSI and PCL. They required a written remediation plan, which was not forthcoming from Dirm.
366Peter Waisanen of EXP concrete described his observations of the topping surface on levels 2, 3 and 4 in July and August 2013 as depicted in his photographs77. He observed that the surface was uneven, with variations in the depth of ridges, roughness and swirl. He considers high ridges to be a tripping hazard. He observed that ridges had been ground down, thereby reducing or eliminating the tripping hazard. Dirm’s witnesses testified that had they not been ejected from the job in June 2013 then as part of deficiency rectification at the end of the job they would have used jackhammers to grind down high ridges. Dirm was not given the opportunity to do so.
367I find it significant that in a parking structure the size of multiple football fields Mr. Waisanen honed in on a few small areas to take close up photos of high ridges. In one photograph he took a picture of what he described as a two to three square meter area depicting roughness. He described another photograph as showing “ridging in the worst area” where the problem areas was no larger than a writing pen. Another photograph depicted a slight colour variation, most likely from a patch repair.
368Neither counsel asked Mr. Waisanen whether he had been instructed to take photographs only of problem areas, or whether he had been instructed to take photographs of representational areas of the parkade. I question whether, based on his evidence regarding these few small areas, it is reasonable to conclude that the entire garage was in the condition depicted in Mr. Waisanen’s photographs.
369I find that Mr. Waisanen conducted his inspection and took his photographs shortly after Dirm had been ejected from the project and PSI had undertaken remedial work to grind down high ridges. I conclude that Mr. Waisanen looked for the worst areas of what remained rather than “typical” areas.
370Dr. Maher testified that the high points on levels 2 and 3 had been “bladed off” prior to his first inspection and the parkade had been opened to parking by site workers. He opined that if 18 percent of the surface was bladed for safety reasons then it would have been unacceptable. He did not relate the 18 percent to the percentage of the surface bladed in the present case. As to opening the parkade for paid parking by workers, Dr. Maher opined that safety rules for site workers are not the same as for the public because they are trained to be aware of safety hazards, but he gave no evidence of the differences. I find Dr. Maher’s evidence on this issue vague, unsupported by a factual foundation and unhelpful.
371PSI remediated the rough ridges on levels two and three with a scraping machine using a blade to remove high points. Had Dirm not been terminated it could have remediated the high points in the same manner.
372PSI claims $62,013.00. Mr. Venner testified that the PSI claim to scrape the ridges and high points is made up of the United Floor invoice for $58,557.7378 and a rental invoice for $3,570.0079. Mr. Belanger had no opinion as to value because the high points had been removed prior to his first site inspection. I accept the evidence that high points and ridges had to be ground down and that PSI incurred the amount claimed. I accept $62,013.00 as a reasonable backcharge for this item.
d. Item 7: Aesthetics levels 2, 3 and 4
373Mr. Gomes of BASF Canada, supplier of construction materials, attended on site on July 19, 2013 at the request of PSI. He observed some low spots and pitted areas and recommended epoxy as an appropriate solution for rectifying pitting and low spots. He acknowledged that areas treated this way would not look similar to the rest of the parking deck.
374PSI claims $11,850.00 plus unidentified additional costs. Mr. Belanger had no additional evidence on this item. I find that this item is included in Scott Schedule item 6.
e. Item 8: Slurry and splatter, levels 2, 3 and 4
375Earlier in these reasons I outlined the evidence tendered on slurry and splatter and concluded that Dirm’s actions in relation to slurry and splatter did not constitute a fundamental breach of contract. In this part of these reasons I consider whether slurry and splatter left behind was a deficiency that required PSI to clean it up at Dirm’s expense.
376PSI claims approximately80 $148,210.00 for 968 hours of Tolcas’ labour plus materials and equipment rental to remove slurry and splatter.
377Mr. Castillo of TolCas reviewed his company’s invoices81, including the amounts charged to remove slurry. Tolcas charged for labour on an hourly rate basis, rather than quoting a fixed price for the entire job of removing slurry, because Stuart Venner had instructed Mr. Castillo to charge on an hourly basis. Mr. Castillo testified that normally TolCas contacts on a fixed price basis but in this case PSI did not ask for a fixed price quote to remediate slurry and splatter, although a few other items were performed by TolCas on a fixed price basis82.
378Mr. Castillo stated that time and materials contracts are used when the scope of work is not well defined. In this case the scope of work was well defined and could have been priced on a “per level” basis or for all three levels in one quote. I conclude from Mr. Castillo’s evidence that had PSI asked for a fixed price to remove slurry and splatter from all three levels TolCas would have provided a fixed price quote. Mr. Castillo did not state what the quantum of a fixed price contract would have been.
379The following TolCas invoices tendered in evidence appear to be for removal of slurry and splatter and related items, invoiced in July, August and October 2013, March 2014 and May 2015:
a) $11,090.0083 to remove slurry and related items, includes overtime84
b) $2,480.00 to remove slurry 85
c) $13,250.00 to power wash86
d) $6,160.00 to remove slurry and smooth rough spots, includes overtime87
e) $16,320.00 to clean slurry, smooth rough spots, includes overtime88
f) $15,760.00 to clean slurry, smooth rough spots, includes overtime89
g) $18,460.00 to clean slurry, power wash and grind concrete90
h) $14,620.00 to remove slurry and clean up91
i) $19,120.00 to remove slurry and clean fire extinguishers92
j) $2,461.01 to grout, clean slurry, check expansion joints93
k) $27,200.00 to remove slurry and clean up94
l) $4,240.00 to remove slurry and clean up95
m) $0.00 to remove slurry96
n) $700.00 to clean slurry97
380In total Mr. Primeau authorized 968 hours of work for TolCas to remove splatter and slurry. Neither he nor Mr. Venner verified the hours claimed by TolCas. They did not review time sheets or the reasonableness of the number of hours and the overtime hours reflected in the TolCas invoices. Mr. Primeau could not explain why PSI had not entered into a fixed price contract with TolCas to remove slurry and splatter.
381Mr. Belanger testified that in the normal course a contractor would remove slurry and splatter as the job progressed or at the end of the job. According to Mr. Belanger the cost to remove splatter should be in the range of $60.00 to $65.00 per hour, or $500.00 per day per worker. In Mr. Belanger’s opinion the PSI claim to remove splatter from walls is excessive. Mr. Belanger did not provide an alternative calculation of what would have been the reasonable cost to remove slurry and splatter.
382Because (i) the removal of slurry and splatter would have been carried out by Dirm in the normal course had PSI not ejected Dirm from the contract, (ii) slurry and splatter were not identified as a deficiency while Dirm was on the job, (iii) PSI did not provide Dirm with an opportunity to remove it, and (iv) PSI breached the contract, PSI’s claim for the cost to remove slurry and splatter is disallowed.
f. Item 9: Damaged wire screens
383PSI claims $24,000.00, relying on the TolCas invoice for $24,000.00 to install wire screens and smooth the ramp98. PSI never identified the wire screens as a deficiency issue or gave Dirm an opportunity to address it. The evidence is unclear as to whether it is a completion or a repair item. Mr. Belanger made no comment on this item. I find that PSI has not met the onus of proving that it is entitled to backcharge for wire screens.
g. Item 10: Debris
384PSI claims $5,250.00 to remove debris. PSI did not give notice or an opportunity to address this item. It is disallowed as a backcharge.
h. Item 11: Expansion joints, levels 2, 3 and 4
385PSI claims $114,400.00 to repair expansion joints. Expansion joints fall under both repair costs (regarding expansion joint work carried out by Dirm that required repairs) and completion costs (for expansion joints that Dirm had not yet reached prior to PSI terminating the contract). PSI is entitled to a backcharge to repair work to the expansion joints that Dirm had carried out and for which it had charged, but PSI is not entitled to the completion costs for expansion joints not yet installed because Dirm did not charge the full contract price. The cost to complete the expansion joints has been backed out of its contract price.
386Mr. Belanger referred to Appendix F of his report99 to explain the construction of an expansion joint. He testified that PSI’s complaint about the shape of the expansion joint that Dirm prepared was in fact a completion item and not a repair issue: had Dirm not been terminated it would have returned in the normal course to grind and cut the joint to create a durable seal. It is not a defect but rather an incomplete item.
387Mr. Sgro of United Floor Ltd. tendered invoices for expansion joints as follows:
a) $158,000.00 + HST to supply and install expansion joints, backer rods and joint filler
b) $68,600.00 +HST to install expansion joints
388These invoices appear to apply to the completion of unfinished work.
389I prefer and accept as remediation costs the estimate provided by Mr. Attisano of Limen, previously discussed in these reasons under the heading “deficiencies” and also as item #4 of the Scott Schedule. A component of the quote for $100,000.00 pertains to repairing expansion joints. Since Mr. Attisano did not allocate the $100,000.00 repair cost as between the two deficiency items listed in the Scott Schedule (items 4 and 11), I accept $100,000.00 as the combined cost to repair both items.
i. Item 12: Control joints, levels 2, 3 and 4
390PSI claims $79,000.00. Mr. Belanger did not comment on this item.
391Mr. Sgro testified that United Floor Ltd. invoiced PSI $79,000 to convert Dirm’s saw cut joints into V-grooves. The PSI/Dirm contract called for tooled joints. I find that this is an allowable backcharge quantified at $79,000.00.
j. Item 13: Delay from removing Dirm
392PSI claims $57,050.00 for delay. Mr. Belanger did not comment on this item. Based on my finding that PSI improperly terminated and ejected Dirm from the Project, PSI is not entitled to delay damages resulting from removing Dirm.
k. Item 14: Completion costs, Dirm scope of work
393At the time PSI ejected Dirm from the Project the scope of contract work left to be completed, as described by Randy Primeau, included:
a) Tooling joints at control joints and the perimeter,
b) Applying sealer and caulking, and
c) Installing expansion joints.
394Control joints are joints placed in locations where the concrete is likely to crack. The contract called for the control joints to be tooled but Dirm had saw cut them. To change saw cut joints to tooled joints they had to be opened up to install sealant and then cut a V notch to replace the thin saw cut. In item 12 of the Scott Schedule I allowed $79,000.00 as a backcharge to change saw cut joints to tooled joints at the control joints.
395When terminated Dirm had not reached the perimeter joints. They had to be cut and sealant applied. Mr. Phillips testified that PCL put PSI on notice that a remediation plan must be submitted in writing in time for the June 17, 2013 site meeting. Mr. Phillips further testified that PSI required Dirm to provide the plan in “bar chart” format, to include a plan for tooling joints, applying sealant and caulking. A proposal from Dirm in narrative form was unacceptable to Mr. Phillips.
396PSI had never complained about the saw cut joints at the perimeter and had not rejected them as Dirm was performing the contract work and did not raise tool joints as an issue until late in the performance of the contract, after most or all of the topping had been poured and many of the joints had been cut. Saw cutting joints is faster than tool cutting joints. Mr. Primeau admitted that saw cutting is noisy and visible to those on site and anyone familiar with the terms of the contract would have been aware that Dirm was saw cutting and not tooling the joints.
397The PCL/PSI contract called for PSI to have a supervisor on site. As project manager, Mr. Venner ought to have known that Dirm was saw cutting rather than tooling joints at the perimeter and should have raised the issue much earlier. PSI’s conduct gives rise to two interpretations: either PSI was content to allow Dirm to saw cut the joints because doing so would be faster and the opening date for the parking structure was approaching, or else PSI failed to properly supervise its subcontractor and was unaware that Dirm was saw cutting rather than tooling joints. Either way, PSI contributed significantly to this item and I find that PSI acquiesced in Dirm saw cutting the joints at the perimeter. Had PSI properly supervised the PSI/Dirm contract the issue of saw cut joints would have been addressed earlier and the extent to which joints at the perimeter had to be redone would have been minimal.
398Randy Primeau admitted that the size of the expansion joints increased beyond what was provided for in the specifications. This was attributable to erection of the structure by Assemblers Inc. Mr. Primeau further admitted that the increased size of expansion joints would result in increased cost and that it would be an extra. He further admitted that the reason Dirm did not install the expansion joints was because PSI terminated their contract before they had reached this component of the work.
399PSI hired United Floor to complete Dirm’s work and hired TolCas to remediate the items that required remediation.
400PSI claims $482,500.00 as completion costs. According to Mr. Belanger, the services and materials included in PSI’s claim for completion costs include expansion joints, control joints, perimeter joints, sealer and supervision. Regarding each of these items Mr. Belanger provided cost estimates at page 13 of his report for items not yet completed by Dirm when PSI terminated the contract:
Expansion joints (taking the higher end of the range): $55,000.00 plus HST. Mr. Belanger explains that the reason for PSI’s excessive claim is that they erected the structure to require larger than specified expansion joints.
Control joints and perimeter joints: Mr. Belanger estimates detailing should cost (taking the higher end of the range) $66,000.00 + HST.
Sealer: Mr. Belanger estimates that sealer should cost (taking the higher end of the range) $120,000.00 + HST.
Supervision: Mr. Belanger estimates that there should be no supervision costs as Dirm would have supervised its own work.
401The total for completion costs according to Mr. Belanger should be $241,000.00 + HST, as compared to PSI’s position that completion costs were $482,500.00 + HST.
402PSI tendered evidence of completion costs, including invoices from United Floor Ltd. The invoices are dated October 11, 15, 20 and 23, 2013, November 19, 2013, and May 27, 2015. Having found that PSI breached the contract by terminating Dirm prior to completion, and that PSI has not paid Dirm for contract work that Dirm did not carry out, and that Dirm is not claiming payment for contract work that it did not carry out, I find that PSI is not entitled to any completion costs. It is therefore not necessary to review the invoices for completion costs tendered in evidence by PSI.
2. Additional costs claimed by PSI and evidence of quantification
403PCL’s Mr. MacPherson backcharged PSI more than $200,000.00 for bonding costs, legal fees and expert’s fees arising from the construction lien litigation that ensued100. PSI included these charges in its accounting statement and seeks to pass the backcharge on to Dirm. PSI does not claim its own legal fees for the present action as a backcharge. I agree with PSI that it would be improper for PSI to include its own legal fees as a backcharge against the contract price. PSI is only entitled to costs of this litigation if it succeeds at trial and persuades the court as to the other relevant factors that would give rise to a costs award in its favour. Similarly, in the absence of a contractual provision that entitles PSI to pass through to Dirm the legal costs that PCL charged PSI, such charges are not proper backcharges.
g. Delay
404Included in the PCL/PSI contract was the tender package TP 03.04 “Instructions to Bidders” for the precast parking structures. Under “Specific Requirements”101 the contract provides that:
The construction schedule is paramount. The contractor (PSI) is to provide a detailed schedule identifying design, engineering, submittals, fabrication and installation. This schedule is to include shop drawings, samples, mock ups and tests required. This schedule must also include manpower requirements and crew breakdowns for the execution of the work. This schedule must comply with the overall project schedule.
The construction of the East Parking Garage is scheduled for May 10, 2012 – October 31, 2012.
The construction of the West Parking Garage is scheduled for Nov. 29, 2013 – May 30, 2014.
Subcontractor to include an 80mm thick concrete topping, Type C1 concrete mix applied on site, containing 10L/m3 of corrosion inhibitor and reinforced with one (1) layer of 6x6 6/6 flat sheet black welded wire mesh including accessories on all precast decks.
This subcontractor is to prepare the concrete topping drawings, including the drainage layout and engineering of the topping. Drain layouts and required sloping to be included as directed by Smith + Anderson.
Subcontractor is to include a floor deck crack control system, concrete sealer, saw cuts, joint sealers and expansion control joints.
405According to Ms Gibson, project manager for PSI at the beginning of the Project, PSI intended to begin installing the precast structure for the east parkade on July 23, 2012. She expected that Dirm could begin its topping work once the parkade was half erected, working to the expansion joint while PSI erected the other half of the parkade. Ms Gibson asked Dirm to provide a detailed schedule of its proposed pour sequence, so that she could coordinate the project with PCL, which in turn would incorporate the topping schedule into its master schedule. As this was a complex fast track project involving multiple trades and components, PSI’s request was reasonable.
406Regarding PSI’s anticipated erection schedule, subcontracted by PSI to Assemblers Inc., Ms Gibson admitted that the contract schedule for erecting the east parkade from October 15, 2012 to January 9, 2013, was not met. According to Mr. Venner Assemblers Inc. started erecting the precast east parkade structure in late January 2013 and completed the erection in April 2013. Mr. Venner admitted that as of the March 6, 2013 pre-mobilization meeting Dirm had not caused any delay.
407Ms Gibson, however, insisted that Dirm could have started to pour the topping before Assemblers Inc. completed the structure. Her evidence is beyond nonsensical and demonstrates her bias against Dirm.
408Ms Gibson admitted that PSI’s contractual completion dates for erecting the structure had not been carried over into Dirm’s subcontract for the topping. Rather, PSI contracted with Dirm to provide the topping in “spring 2013”. Ms Gibson explained that PSI was more flexible with Dirm than PCL was with PSI to account for weather and site conditions. Consequently PSI did not specify a deadline in its contract with Dirm.
409The PCL/PSI contract was not provided to Dirm or incorporated into the PSI/Dirm contract. PSI did not inform Dirm of the terms regarding a completion date other than “spring 2013”. Mr. Venner admitted that the schedule was of paramount concern to PSI and was unaware that the scheduling provisions of the PCL/PSI contract had not been carried over into the PSI/Dirm contract.
410PSI claims that Dirm caused delay on the Project. Dirm attributes delay to PSI’s delay in preparing the site for Dirm’s topping and concrete finishing work.
411On January 29, 2013 Mr. Venner asked Dirm to provide a topping plan. He also asked whether the topping schedule could be accelerated. Mr. Venner anticipated that Dirm would start on April 15, 2013 to avoid using a winter concrete mix, which would have been required had Dirm started prior to that date.
412Mr. Rogers of PCL, dealing with cement topping for the first time with this project, dealt largely with documentation, including contracting, submittals, tenders and scheduling. He also explained that the reason for delaying the start of Dirm’s work until after April 15, 2013 was to avoid paying a winter premium for pouring concrete in winter weather conditions. PCL wanted Dirm on site earlier to set up for pours to begin on April 15, 2013 but Dirm resisted.
413Tony DiSotto described site problems that delayed or prevented Dirm from working efficiently or at all. Concrete once poured must be watered to cure properly. He described that sporadically the site had no water, an element required to mix the concrete for the topping and to properly cure it once placed. Dirm’s workers had to turn water on from the street because it was not available on site. He also testified that groundwork necessary for Dirm to complete its work had not been completed by PSI or its other subcontractors prior to when Dirm was supposed to begin its contract work. Specifically, drains and sewers had not been completed.
414A project such as this requires sequencing of trades. Mr. Szewchuk testified that Dirm was delayed a few weeks in bringing materials to the site because the electrical and mechanical contractor had not completed its work and Dirm’s work could not begin prior to completion of that work.
415Mr. Venner admitted that there were other factors that contributed to delay, including weather, other trades working on site and design issues.
416Tony DiSotto further testified that Dirm could not gain access to the slab to begin mobilization and work prior to April 15th, 2013. Structural repairs had to be done to the precast structure’s double tee’s before the mechanical and electrical trades could begin. Dirm started on the slab the day after PSI’s expert CEG, attending from Texas, certified to PSI that the slab was ready for the topping to be poured. Before that date, according to Tony DiSotto, the slab had been cordoned off and only the erection workers were allowed access to complete the installation and welding. As a matter of safety, Dirm could not allow its workers on the slab before it had been certified as stable. Topping could not be poured until the welds, performed by a trade other than Dirm, had been approved.
417Mr. Venner admitted that as of April 2, 2013 the temperatures were below zero, there was no water access to the area where the concrete pours were to take place, erection of the deck structure was still ongoing and the clearance letter confirming that the structure was safe for the topping to be applied had not yet been issued by consultants CEG. The CEG letter of April 15, 2013102 identified items that required completion before applying concrete topping. Dirm could not begin pouring before these items had been completed.
418I find that as of April 15, 2013 the structure that PSI was required to erect had not yet been completed to the stage that would allow Dirm to begin pouring the concrete topping. Notwithstanding that the schedule as between PCL and PSI required the deck to be completed by January 2013, it would not have been possible and Dirm was not responsible for any delay prior to April 15, 2013, nor was Dirm responsible for whatever additional time it took for PSI to complete the items listed in the CEG letter.
h. Mitigation
419Had PSI complained to Dirm in a timely manner that the topping was unsatisfactory as to appearance of the swirl, degree of roughness or smoothness or texture, Dirm could have redone the finish prior to it bonding to the structure. PSI failed to do so, either because it did not have adequate supervision on site or because the supervisor on site, Mr. Venner, was too inexperienced to understand what he was inspecting. In failing to identify their concerns to Dirm about the topping in a timely manner PSI failed to mitigate its damages and bears responsibility for the increased cost of replacing the topping after it had cured and bonded.
420Also in issue is whether PSI mitigated reasonably by contracting with TolCas on a time and materials basis rather than by way of a fixed price contract. The Tolcas witness testified that the usual practice is to contract for a fixed price. PSI tendered no evidence of what the fixed price would have been.
421Yet another issue is the PSI claim for phasing costs incurred because PSI carried out the completion and remediation items after opening the parkade, rather than closing the parkade to carry out the work more efficiently and cost-effectively. The reason for doing so was that the PCL/PSI contract provided for an opening date for the parkade and, if delayed, a penalty payable by PSI to PCL calculated at $10.00 per worker per day103.
422I find that in approaching the remediation as it did PSI failed to reasonably mitigate its damages.
i. Extras claimed by Dirm
1. Scarification
423Dirm claims $34,978.61 + HST (total $39,525.83) to scarify the double tee’s manufactured by PSI. This is a process of roughing up the concrete to aid bonding. Benny testified that it was not in the original scope of work and that scarifying is usually done at the plant, with the double tee’s delivered to the site already roughed up. Scarifying double tee’s was not part of Dirm’s contract. Rather than having to replace the double tees or send them back to the plant to be scarified and returned, PSI asked Dirm to scarify them on site. Dirm claims the cost to do so as an extra to the contract. PSI does not dispute that this is an authorized extra. According to Tony DiSotto, as confirmed by Mr. Venner, PSI approved of the hourly rates reflected in the May 27, 2013 invoice104 as an extra.
424I find that scarifying the double tee’s is an agreed upon extra and Dirm performed the work. The claim of $34,978.61 + HST for a total of $39,525.83 for the extra is allowed.
2. Foam experiment: Change double tee joint foam prep
425Mr. Venner, at the request of PCL, instructed Dirm to try a new joint preparation product. Its purpose was to prevent concrete from seeping through double tee’s during concrete pours. PSI and PCL had rejected the blueskin product proposed by Dirm.
426Dirm carried out the requested testing but it was unsatisfactory. But for PCL/PSI asking Dirm to try the alternative product Dirm would not have incurred the expense.
427Dirm invoiced105 for and claims $8,646.54 + HST for a total of $9,770.59 for this item. The cost is made up of expansion foam, caulking and labour at union rates at $85.00 an hour. According to Tony DiSotto, PSI decided not to use the product because of its high cost and inferior performance.
428I find that PSI requested and authorized this additional work and agreed to pay for it. It is an allowable extra at $8,646.5 + HST.
3. Additional Rebar
429The original detailing for the wash areas (the sloped areas around the drains) did not require rebar. PSI’s design for the wash areas had to be revised because, as designed, the structure would have contravened the building code clearance requirements at the wash areas.
430PSI’s redesign for the wash areas called for rebar where the previous design, upon which Dirm had based its quote, had not required rebar. Dirm invoiced106 for and claims $6,389.40 + HST for a total of $7,220.02 for the additional rebar (materials only), which I find is an allowable extra.
4. Overtime for Saturday work
431The PSI/Dirm contract is clear that Saturday labour is not included in the contract price. Mr. Phillips of PSI admitted that Dirm was not required to work on Saturdays and the contract price did not include weekend overtime charges.
432As PSI’s deadline for turning over the east parkade to PCL approached, time pressure to complete the structure increased. On or about May 15, 2013 Mr. Venner asked Dirm to provide PSI with its additional costs if PSI were to accelerate the schedule. There is no mention in the email request that Dirm had caused delay and would be expected to absorb acceleration costs. Rather, PSI requested a quote so that PSI could decide whether to approve acceleration costs.
433In an effort to meet the deadline PSI instructed Dirm to work on two Saturdays: May 25, 2013 and June 1, 2015. I find that PSI thereby authorized the Saturday work. At PSI’s instruction Dirm prepared for a pour and arranged for labour to work on Saturday, May 25, 2013. The pour was cancelled due to PCL having obstructed the area with blocks, but according to Tony DiSotto, Dirm incurred labour costs to clean the area in preparation for the pour that proceeded on Monday May 27, 2013. The Saturday pour on June 1, 2013 proceeded at the request of PSI. I find that PSI approved the acceleration costs as an extra. Dirm worked on Saturdays and charged the overtime as an extra.
434PSI argued that Dirm was not entitled to overtime charges as an extra because Dirm was behind schedule and had to work on Saturdays to catch up. Dirm was behind schedule for several reasons, including (i) PSI requiring Dirm to wait for April 15, 2013 to start to avoid paying for winter weather equipment, (ii) delays on the project by other trades precluded Dirm from completing the work earlier, (iii) delays in PCL/PSI approving proposals by Dirm and (iv) the “wash” design issue. I find that the reasons that Dirm was behind schedule are attributable to PSI’s management of the Project and not to Dirm delaying its supply of services and materials.
435Dirm invoiced for107 and claims $31,535.00 + HST for a total of $35,634.55 for Saturday labour. I find that this is an allowable extra to the fixed contract price.
5. Saturday pump rental charges
436Dirm had arranged for a concrete pump for the May 25, 2013 pour that had to be cancelled. Dirm invoiced for the cancellation charges it incurred and the June 1, 2013 pump rental charge. PSI did not complain about the invoice. Dirm invoiced108 for and claims $5,413,11 + HST for a total of $6,116,81 for the pump charges. I find that this is an allowable extra.
6. Concrete delivery on Saturday
437Dirm incurred additional costs for delivery on a Saturday for the June 1, 2013 pour. Saturday work was additional to the scope of work in the contract. Dirm invoiced109 for and claims $2,392.00 + HST for a total of $2,702.96 for the additional charges for Saturday concrete delivery. I find that this is an allowable extra.
7. Labour to remove bracing and shoring posts
438Tony DiSotto testified that Mr. Venner instructed Dirm to remove the precast bracing and shoring posts from the structure. Dirm provided the labour and claims the labour costs as an extra at $85.00 an hour. This work was outside the scope of the PSI/Dirm contract. Dirm performed the work as required on multiple days from May 17, 2013 to June 14, 2013. Mr. Venner admitted that PSI did not dispute the quantum of the invoice.
439Dirm issued its invoice110 for and claims $23,715.00 + HST for a total of $26,797.95. I find the rates reasonable and the invoice allowable as an extra.
8. Extra cylinders
440PSI’s Stuart Venner asked Dirm to provide 29 additional cylinders to test the strength of the concrete. The concrete is placed into the cylinders and the cylinders are then sent out to a lab for testing. Dirm claims that this is extra to the contract and invoiced for the cylinders111 on June 21, 2013. The invoice was issued after Dirm had received the notice of default and prior to the termination of its contract. Dirm claims $11,940.00 + HST for a total of $13,492.20 for this item as an extra. According to Tony DiSotto, Dirm did not give PSI the test results because PSI refused to pay for the testing. Because PSI asked for the additional testing the extra would have been allowed had Dirm provided PSI with the test results. Not having provided the test results I find that this is not an allowable extra.
9. Corrosion inhibitor
441Dirm claims $92,931.00 + HST (total $105,012.03112) for corrosion inhibitor. Mr. Venner testified that he had approved this item in advance but thought that the amount claimed was not appropriate.
442Mr. Venner had instructed Dirm to increase the amount of corrosion inhibitor used113. Dirm first provided a quote for the extra114 and then after supplying the materials Dirm issued its invoice on May 24, 2013 for the item as an extra. I find that it was a requested and approved extra for which Dirm was entitled to charge.
443I find that Dirm is entitled to $92,931.00 + HST for a total of $105,012.03 for this extra.
j. Value of contract work completed
444PSI terminated Dirm’s contract before Dirm could complete the entire scope of work required. Dirm does not claim the full contract price but rather claims payment for the contract work and extras that it completed.
445To perform the calculation it is necessary to value the contract work not completed by Dirm.
446Benny DiSotto listed the contract work that Dirm had not completed before it was terminated but for which it had invoiced as (i) control joints and filler, (ii) expansion joints and (iii) applying sealer to the surface of the topping. He values these items as $134,110 of the contract price.
447According to Mr. Belanger the value of the incomplete work ranges from $220,000.00 to $241,000.00, broken down as follows115:
a) $60,000.00 to $66,000.00 for sealing construction joints, including detailing,
b) $50,000.00 to $55,000.00 for expansion joints and
c) $110,000 to $120,000.00 applying sealer over the entire surface of concrete.
448Dr. Maher did not value the contract work actually completed by Dirm. Instead he valued the cost to complete the work to the higher standard contemplated in the PCL/PSI contract. I find that he predicated his opinion of value on an incorrect factual foundation resulting in a valuation that does not apply to the PSI/Dirm contract work.
449I accept as more reliable Mr. Belanger’s estimate of the value of incomplete work over that of Benny DiSotto or Dr. Maher. Given that Mr. Belanger provided a range, I have taken the midpoint of the range, being $230,500.00, as the value of contract work that Dirm did not complete but for which it invoiced.
V. Accounting
450The PSI/Dirm contract price was $1,450,000.00 plus HST.
a. Allowed extras
451For reasons explained earlier, the following extras are allowed:
a) Scarify: $34,978.61 + HST = $39,525.83
b) Foam experiment: $8,646.54 + HST = $9,770.59
c) Rebar at the wash areas: $6,389.40 + HST = $7,220.02
d) Saturday labour: $31,535.00 + HST = $35,634.55
e) Pump rental charges, Saturday pours: $5,413.11 + HST = $6,116,81
f) Saturday concrete delivery extra charges: $2,392.00 + HST = $2,702.96
g) Labour to remove bracing and posts: $23,715.00 + HST = $26,797.95
h) Corrosion inhibitor116: $92,931.00 + HST = $105,012.03
452For reasons explained earlier the extra of $11,940.00 + HST = $13,492.20 claimed for cylinders is not allowed.
453I find that the total for allowable extras is $206,000.66 + HST.
b. Dirm invoices for work completed
454Dirm issued invoices on the dates and in the amounts shown on the following chart. PSI has not paid any portion of any of the invoices.
| Date | Invoiced amount net of HST | Description |
|---|---|---|
| April 19, 2013, revised May 21, 2013 | $493,000.00 |
Original invoice for 48% replaced Revised invoice for 34% |
| May 24, 2013 | 92,931.00 | Extra: corrosion inhibitor |
| May 24, 2013 | $8,646.54 | Extra: experimental product |
| May 27, 2013 | 34,978.61 | Extra: scarify double tee’s |
| May 27, 2013 | 6,389.40 | Extra: rebar |
| June 20, 2013 | $451,800.00 (230,500.00) $221,300.00 |
Contract work invoiced Less: value of incomplete contract work (Belanger’s calculation) |
| June 21, 2013 | $31,535.00 | Extra: Saturday labour |
| June 21, 2013 | $5,413.11 | Extra: cancelled Saturday pour |
| June 21, 2013 | $2,392.00 | Extra: Saturday concrete delivery |
| June 21, 2013 | $23,715.00 | Extra: labour to remove bracing and shoring posts |
| Total contract work invoiced: Total extras invoiced: Total invoiced for work completed: |
$714,300.00 $206,000.66 $920,300.66 + HST = $1,039,939.70 |
455Regarding the April 19, 2013 invoice117 Dirm had anticipated completion beyond what they actually completed by the date invoices had to be submitted for review by the payment certifier in order to receive payment out of the following month’s draw.
456Dirm revised the invoice on May 21, 2013 to $493,000.00 to reflect 82 percent as the actual percentage of completion. Paul Phillips instructed Randy Primeau not to pay Dirm’s May invoice until the April invoice was resolved. Mr. Phillips assessed that Dirm had not completed 82 percent of the contract by May 21, 2013. As of that date Dirm had carried out 14 topping pours out of a total of 18 pours118.
457The May 24, 2013, May 27, 2013 and June 21, 2013 invoices are for allowable extras119.
458On June 20, 2013 Dirm invoiced PSI $451,800 plus HST for the balance of the contractual scope of work. Dirm was removed from the Project on June 22, 2013. As already explained the value of the contract work not completed but for which Dirm invoiced is valued at $230,500.00 + HST. I have deducted that amount from the June 20, 2013 invoice.
459The value of the services and materials actually supplied and invoiced by Dirm for contract work and allowable extras is $1,039,939.70 including HST. From that amount the reasonable costs to rectify deficient work must be deducted.
c. Lost profit
460As the innocent party Dirm is entitled to the lost profit on the balance of the contract work, which I have valued at $230,500.00.
461Dirm provided a calculation of profit based on a formula wherein the cost of labour and materials to complete the contract work is deducted from the value of the contract work not yet completed to arrive at a profit calculation for the incomplete contract work. Dirm calculates the cost of labour and materials to complete the contract work as $132,110.00 plus HST, based on labour rates of $650.00 per day for a total labour cost of $52,000.00 plus the cost of materials at $80,110.00 plus HST. Deducting this amount from the value of the remaining contract work Dirm calculates its lost profit as $98,390.00 plus HST. The flaw in Dirm’s calculation is that the rates used include a built in profit. They are also based on man-hours and days that are not verified or sufficiently supported to persuade the court that the balance of the work would have been completed with the labour costs estimated by Dirm.
462PSI calculates profit at the rate of 10 percent, based on Benny DiSotto’s calculations prepared at the time of providing Dirm’s quote120. Applying 10 percent to the outstanding contract work valued at $230,500.00 the lost profit would be $23,050.00 plus HST.
463I prefer and accept PSI’s calculation of lost profit as consistent with Dirm’s own calculations at the time of bidding on the contract. By allowing for profit at the rate of 10 percent of the contract price, it follows that the lost profit would be 10 percent of the value of the contract work that Dirm was not allowed to complete.
464I find that Dirm is entitled to lost profit on incomplete contract work quantified at $23,050.00 plus HST.
d. Backcharges
465The allowable backcharges, as explained in the discussion of the items claimed and reflected in the Scott Schedule, are:
a) $59,960.00 to repair plastic shrinkage cracks,
b) $100,000.00 to repair craze cracks and expansion joints,
c) $62,013.00 to repair the finish (grinding ridges and peaks and aesthetics), and
d) $79,000 to rectify the saw cut joints
for a total of $300,973.00 + HST.
e. Grand total calculation
466The total amount allowed for Dirm’s contract work (net of HST), before deducting backcharges for deficiencies, is:
| Contract work performed | $1,209,000.00 |
| Allowable extras | $232,780.74 |
| Lost profit | $23,050.00 |
| 1,464,830.70 | |
| Deduct: | |
| Allowable backcharges | ($300,973) |
| 1,163,857.70 | |
| Add HST @ 13%: | $151,301.50 |
| $1,315,159.20 |
VI. Conclusion
467PSI’s efforts to compel Dirm to execute the P.O, in June 2013 as a condition of payment for work completed exemplifies PSI’s conduct towards Dirm on the project. Once PSI realized that it had made a mistake in contracting, senior PSI personnel dug in their heels in an effort to have Dirm sign the P.O. and take on responsibilities that it had not agreed to and had not accounted for in the contract price.
468Thereafter PSI acted in a manner consistent with its unsuccessful attempt to force Dirm to execute the P.O. by refusing to pay Dirm and then exaggerating the scope of repairs required. PSI breached its duty of good faith in its dealings with Dirm, terminated the contract without proper justification without affording Dirm a reasonable opportunity to remediate deficiencies (three days is not reasonable), engaged in a remediation plan that was excessive in relation to the requirements of the PSI/Dirm contract specifications, refused to pay Dirm a penny for services and materials supplied at significant cost to Dirm, and forced Dirm to undergo a lengthy trial to collect what it is entitled to be paid for services and materials supplied.
469I find that PSI must pay to Dirm the sum of $1,315,159.20, inclusive of HST, plus prejudgment interest, for services and materials supplied and plus lost profit on the balance of the work that Dirm was not given the opportunity to complete, after deducting reasonable costs to rectify deficiencies.
VII. Costs and Report
470The 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 (the page count excludes attachments such as Offers to Settle and cases), are to be provided within 15 days (Dirm) with a response within a further 7 days (PSI) and a right of reply within a further 7 days (Dirm) .
471Once costs have been fixed the court expects counsel for Dirm to prepare a draft final report for review by opposing counsel and the court. If requested, I would be prepared to conduct the hearing to settle the final report by conference telephone rather than by appearance, to minimize costs and accommodate out of town counsel.
Master C. Albert .
Released: April 10, 2017
Appendix “A”: Trial Witnesses
| Name | Party | Relationship to issues |
|---|---|---|
| Benny DiSotto | Dirm | Dirm: principal |
| Tony DiSotto | Dirm | Dirm: project supervisor |
| Terry Szewchuk | Dirm | Dirm: project coordinator |
| Paul Belanger | Dirm | Belanger Engineering: expert called by Dirm |
| Domenic Attisano | Dirm | Limen: vice president |
| Wayne Gomes | Dirm | BASF: product supplier |
| Paul Phillips | PSI | PSI: VP and general manager |
| Randy Primeau | PSI | PSI: Manager, Project Management |
| Kristina Gibson | PSI | PSI: project manager |
| Stuart Venner | PSI | PSI: project manager |
| Bruce MacPherson | PSI | PCL: project director |
| Chad Alderson | PSI | PCL: site superintendent |
| Taylor Rogers | PSI | PCL: project coordinator |
| Dr. Maher | PSI | Golder: Engineer, expert called by PSI |
| Alfredo Costillo | PSI | Tolcas United Precast: concrete contractor |
| Peter Waisanen | PSI | EXP: concrete specialist |
| Greg Sgro | PSI | United Floor: project manager |
Appendix “B”
Procedural ruling delivered October 25, 2016
PSI moved mid-trial for leave to introduce an expert report not previously served on Dirm. The issue is whether leave ought to be granted to permit the defendant PSI to rely on an expert report that was first provided to the plaintiff on the 17th day of a long trial. The relevant history follows.
Dirm registered a construction lien on July 24, 2013 for $1,667,940.66 plus HST and issued a statement of claim on August 22, 2013. On October 9, 2013 PSI defended and issued a counterclaim against Dirm for $2 million + HST. Justice McKewen referred the lien proceedings to the master for trial by judgment of reference dated May 21, 2013. The Dirm lien claim was included in the reference by reason of section 60 of the Construction Lien Act, R.S.O. 1990, c.C.30. I fixed a trial date of September 6, 2013 by order of July 9, 2013, to be conducted as the first hearing for directions in the reference. Mr. Manella attended for Dirm. PSI was not in attendance but not all defendants had been served yet and PSI had not yet pleaded. I ordered that all defendants be served and fixed December 16, 2013 for the next hearing for directions.
On December 16, 2013 Mr. Manella appeared for Dirm and Mr. Chandler appeared for PSI. I ordered PSI to deliver expert reports by March 28, 2014 and Dirm to deliver responding expert reports by April 30, 2014.
The purpose of hearings for directions in construction lien reference proceedings is to ensure that all parties have full disclosure prior to trial. The reason for full disclosure is to avoid surprises at trial. Over the past several decades construction lien references in Toronto have followed a procedure of conducting hearings for directions and ordering the exchange of information before trial (witness statements, Scott Schedules and expert reports). There are several reasons for doing so:
a. To avoid surprise at trial
b. To know the case to meet at trial
c. To understand the strengths and weaknesses of your case, and
d. To promote the settlement of cases.
The third hearing for directions took place on May 26, 2014. Dirm and PSI were represented. I directed the parties to consider a meeting of their experts and imposed a deadline of September 30, 2014 to do so.
The fourth hearing for directions took place on November 17, 2014. Dirm and PSI were represented. I ordered examinations for discovery and directed the parties to deliver their lists of proposed trial witnesses.
The fifth hearing for directions was on June 15, 2015. Dirm and PSI were represented. The parties had exchanged witness lists. Dirm’s expert Mr. Belanger was on Dirm’s list and PSI’s expert Dr. Maher was on PSI’s list of witnesses. I fixed the trial date for a 30 day trial to begin September 6, 2016. A 15 month lead time was required to find a sufficient amount of trial time to conduct such a lengthy trial.
A 6th hearing for directions was convened on August 25, 2015. Dirm and PSI were represented. The parties had participated in a private mediation and had not settled. I ordered a settlement conference to be convened with a Master on November 23, 2015. While two sub-subcontractor claims settled, the litigation as between Dirm and PSI did not settle. The PSI expert report that is in issue on this motion is dated February 12, 2016 and was prepared after the mediation and the settlement conference.
The final hearing for directions proceeded on December 15, 2015. Dirm indicated that it had delivered a supplementary expert’s report. PSI asked for leave to deliver a supplementary responding report and I ordered a deadline of February 12, 2016 to do so. My order states:
“Experts reports (compliance with rule 53.03 is required)…PSI must serve its supplementary responding report, if any, by February 12, 2016”.
On or about February 12, 2016 PSI delivered an expert report in the form of a few pages, but it did not deliver the report dated February 12, 2016 that is the subject of this motion. In fact, PSI only discovered that it had failed to serve the February 12, 2016 report of Dr. Maher on the 17th day of trial.
The subject report contains factual information as well as opinions. The opinions expressed are, in some respects, different from those expressed in Mr. Maher’s original report. Most significantly, he opines specifically on whether the costly remediation and completion program undertaken by PSI, and for which PSI claims reimbursement from Dirm, was the appropriate course of remediation and completion in the face of an alternative less costly approach to remediation and completion.
The issue, then, is whether the court should grant leave for PSI to introduce the February 12, 2016 Maher report (the “2nd Maher Report) at this late date in the trial.
Rule 53 sets out the requirements for expert reports and provides at rule 53.03(3)(b) that an expert shall not testify with respect to an issue, except with leave of the trial judge, unless the substance of his or her testimony with respect to that issue is set out in an expert report served pursuant to rule 53.03, or in a supplemnentary expert report served on every other party to the action NOT LESS THAN 30 days before the commencement of trial. In this case the trial began on September 6, 2016. The last day to serve the report, in the absence of my directions that had imposed an earlier deadline of February 12, 2016, was August 7, 2016, 30 days before the first day of trial.
Rule 53.03(4) provides that the time for service of a supplementary report may be abridged by the court on motion. In this case PSI asks the court to abridge the time to serve the supplementary expert report to less than 0 days before trial and to permit it to be served on the 17th day of trial. Despite having searched for case law helpful to the issue, neither counsel could find any cases where leave to introduce an expert report was sought after the trial had commenced and had almost been completed.
The unfortunate reality in this case is that PSI’s counsel inadvertently served the wrong document on February 12, 2016 and was as surprised as Dirm’s counsel that the report PSI seeks to rely on at trial had not been served. There is no suggestion whatsoever that PSI is trying to ambush Dirm with this report. Despite the very able representation throughout this trial by PSI’s counsel, this oversight occurred and PSI now seeks to overcome the issue by serving the report towards the end of trial. PSI states that since the trial is scheduled to be on hiatus over the month of November, any prejudice otherwise experienced by Dirm would be overcome by the adjournment.
Rule 53.08(1) sets out the test for admissibility of evidence at trial, including expert reports, when deadlines have not been met. Paragraph 5 of the rule provides that where evidence is only admissible with leave of the trial judge, leave shall be granted on such terms as are just and with an adjournment if necessary, unless to do so “will cause prejudice to the opposite party or will cause undue delay in the conduct of the trial”.
PSI relies on the decision of Justice McKelvey in Talluto v Marcus 2016 ONSC 3340, released on May 16, 2016. That case arises from a motor vehicle accident and the expert report in issue concerned a new report on economic loss regarding pension issues. The report had been served one week before the scheduled trial sittings. The opposite party objected and the trial date was adjourned. The report introduced a new head of damages that had not been claimed previously. Justice McKelvey allowed the report to be admitted but adjourned the trial.
Justice McKelvey at paragraph 9 relies on the decision of Marchand v The Public General Hospital Society of Chatham 2000 CanLII 16946 (ON CA), 51 OR (3rd) 97 (ONCA) in applying the test that leave must be granted unless to do so will cause prejudice that cannot be overcome by an adjournment or costs.
At paragraph 10 Justice McKelvey cites the decision of Justice Wilson in Gardner v Hann 2011 ONSC 3350, adopting the comments of Justice Barr in Hunter v Ellenberger 1988 CarswellOnt 340 where the court noted that anytime a court excludes relevant evidence the court’s ability to reach a just verdict is compromised. The court further stated in that case that relevant evidence should not be excluded on technical grounds, such as lack of timely delivery of a report, unless the court is satisfied that the prejudice to justice in receiving the evidence exceeds the prejudice to justice in excluding it.
The case relied on by PSI and the cases cited therin are distinguishable in that they dealt with abridging the time for service of an expert report while still permitting the report to be delivered before trial. In that event an adjournment of the trial date sufficiently addresses the prejudice that would otherwise be experienced by the opposite party.
The present case is not as simple. The plaintiff Dirm has completed its case, having called six witnesses over the course of seven days of evidence, including the evidence of its expert witness Mr. Belanger.
The defendant PSI has already called nine witnesses over the course of eleven trial days of evidence, including its expert Dr. Maher, who is partway through his evidence in chief pending the court’s ruling on this evidentiary issue. PSI has only one witness left to call after Dr. Maher. Admitting the supplementary report at this stage of the trial is not a simple matter of adjourning the trial.
Dirm claims that it would be prejudiced if the February 12, 2016 report is admitted at this stage. Dirm claims that it would be fundamentally unfair to Dirm to suggest that an adjournment would override the prejudice of introducing new opinion evidence after the plaintiff has called all of its witnesses and cross-examined all but two of the defendant’s witnesses. Dirm developed its trial strategy and prepared and conducted the trial based on the witness statements and expert reports delivered prior to trial as directed by me in the reference directions given in the seven hearings for directions before trial. It would also have relied on the same body of evidence in the mediation and the settlement conference conducted before trial.
In conducting the trial Dirm presented evidence in chief and cross-examined in a manner that explored the facts underlying the opinions expressed in the expert reports served before trial started. Dirm has lost the opportunity to do so at this late stage of the trial. Recalling witnesses is not the answer because PSI now knows Dirm’s approach and trial strategy and the unfairness to Dirm cannot be undone by an adjournment or by allowing Dirm to recall witness who have already testified.
I find that the caselaw relied on by PSI is distinguishable and does not apply to the circumstances of this case. The prejudice to Dirm cannot be overcome by an adjournment or other procedural accommodation that would allow the supplementary report to be admitted at this time. To do so would be patently unfair to Dirm. It is unfortunate that this is the result because counsel have been extraordinarily cooperative and capable throughout this trial and the motion arises only through an oversight in Mr. Chandler’s office when the wrong document was served. However, the prejudice to Dirm is real. Starting the trial over again is not an option either. Even if trial time is reduced to 25 days it would be well over a year before it could reconvene. The Construction Lien Act mandates that construction lien actions be determined expeditiously (s. 67). A further delay of one year would be contrary to the statutory mandate that requires as expeditious a determination as is appropriate to determine the case. It would also not overcome the prejudice of the plaintiff having laid out its complete trial strategy and allowing the defendant a “do over” because of the defendant’s inadvertent failure to deliver the supplementary report of Dr. Maher before trial. This is a case where prejudice to justice in receiving the report exceeds the prejudice to justice in excluding it.
For all of these reasons the defendant’s motion for leave to admit the February 12, 2016 report of Dr. Maher is refused.
Appendix “C”
Dates of Concrete Pours121
| Pour Number | Date (2013) |
|---|---|
| 1 | May 6 Monday |
| 2 | May 7 Tuesday |
| 3 | May 8 Wednesday |
| 4 | May 13 Monday |