COURT FILE NO.: CV-11-437166
DATE: 20180404
ONTARIO
SUPERIOR COURT OF JUSTICE
In the Matter of the Construction Lien Act, R.S.O. 1990, c. C.30
BETWEEN:
D & M Steel Ltd.
Plaintiff
– and –
51 Construction Ltd. and Jing Yin Temple
Defendants
Adam Wainstock for the Plaintiff
Leo Qu, self-represented, for the Defendant 51 Construction Ltd.
Roy Wise for the Defendant Jing Yin Temple
HEARD: March 20, 2018
PERELL, J.
REASONS FOR DECISION
A. Introduction
[1] There are two motions before the court to oppose the confirmation of a Master’s Report in this construction lien reference under the Construction Lien Act.[^1]
[2] The Plaintiff D & M Steel Ltd., a subcontractor, sued 51 Construction Ltd., the general contractor, and Jin Yin Temple (“the Temple”), the owner of the property. The Temple counterclaimed against D & M Steel Ltd. There were crossclaims between the Defendants. The claim, counterclaim, and the crossclaims were referred to Master Albert for a determination and a Report.
[3] After a 10-day trial, the Master held that: (a) 51 Construction and the Temple owed D & M Steel $1,130 for extras under the construction subcontract payable out of the holdback, but the balance of D & M Steel’s contract claims should be dismissed; (b) 51 Construction and D & M Steel were jointly and severally liable to the Temple for delay damages of $7,912.80 including HST for the storage of the roof tiles; (c) 51 Construction and D & M Steel were jointly and severally liable to the Temple for inspection costs of $560; and (d) the balance of the counterclaims and crossclaims should be dismissed.
[4] The Master awarded the Temple costs of $52,279.79 allocating $44,437.82 to D & M Steel and $7,841.97 to 51 Construction.
[5] D & M Steel opposes confirmation of the Master’s Report dated June 3, 2016,[^2] and it seeks a judgment of $153,411.66 inclusive of HST, plus pre-judgment and post-judgment interest against 51 Construction and the Temple.
[6] D & M Steel’s claim may be broken down into $74,113.53 plus HST for unpaid contract work and $61,649 plus HST for extras. The precise breakdown of D & M Steel’s claim is as follows:
D & M Invoice 6224R1/2 $65,000.00
Unbilled amount completed $8,000.00
D & M Invoice 6172 1 month trailer rental $1,113.53
Extras on invoice 6242:
Ground floor $885.00
TRI extension $7,250.00
Mezzanine floor and low roof $2,804.00
Elevations $2,162.00
Roof $7,167.00
Columns $208.00
Corners at high and low roof $11,000.00
Additional Detailing $2,750.00
Additional delivery $660.00
Material increase cost $25,763.00
Rolling Deck corners on site $1,000.00
SUBTOTAL $135,762.53
HST $17,649.13
TOTAL $153,411.66
[7] During its argument of the motions, D & M Steel abandoned its opposition with respect to the item of $560 for inspection costs.
[8] In its motion opposing the confirmation of the Report, the Temple moves for confirmation of the Master’s Report subject to a “conditional opposition” that the Master’s Report be varied to grant its counterclaim for $161,027.80. The opposition to confirmation is conditional because if the Master’s Report is confirmed, then the Temple will abandon its opposition to it.
[9] 51 Construction, which was represented by its principal Leo Qu, adopted the position of the Temple.
[10] For the reasons that follow, I dismiss D & M Steel’s motion. I also dismiss the Temple’s conditional opposition, but I confirm the Master’s Report with the following variation. I strike the judgment against 51 Construction and D & M Steel for delay damages of $7,912.80 for storage of the roof tiles. In all other respects, the Master’s Report is confirmed.
B. Facts
[11] The Temple had a project to design and construct a new building for its congregation at 722 Brimley Road, Toronto, and in September 2010, the Temple retained 51 Construction as its general contractor to construct a new building.
[12] On September 27, 2010, the Temple signed a CCDC2 stipulated price contract for the fixed price of $2,588,566.00 plus HST. 51 Construction budgeted $493,250 for the structural steel component of the building. The contract contained a schedule requiring structural steel installation to be completed by December 10, 2010.
[13] D & M Steel is owned by Silvestro Manini, who has has been in the metal fabricating business for 50 years. He is President of D & M Steel, which has been a structural steel fabricating company since 1981. He and the company have a diversified range of experience and have carried out more than 100 projects.
[14] On October 4, 2010, D & M Steel submitted to 51 Construction, on a pre-printed form, a quote to supply and install the structural steel for the Temple’s building.
[15] D & M Steel’s quote, which was based on the May 2010 structural drawings, was for a price of $515,000 plus HST.
[16] On the same day, Mr. Qu, on behalf of 51 Construction, accepted the quote, and it faxed acceptance to D & M Steel. Mr. Qu testified that there was only one page to the quote. Master Albert held that although the quote referred to a second page, the second page was not a part of the accepted contract.
[17] Had the second page of the pre-printed form formed a part of the contract between D & M Steel and 51 Construction, it would have contained the following stipulation about the terms of payment:
- Terms of Payment: Except where material and labour covered by this quotation are a subcontract of a general contract, terms of payment are Net 30 Days, after completion of the work described in this quotation. If material and labour covered by this quotation are a subcontract of a general contract, payment is to be made by the contractor to the subcontractor on the fifteen (15th) day of every month covering 90% of the value of the labour and material completed by the subcontractor to the end of the previous month. The balance of 10% will be paid thirty-seven (37) days after the final completion of the work covered by the quotation and the Architect’s complete approval thereof...
[18] The crucial issue in the construction lien action was what the terms of payment for the subcontract between D & M Steel and 51 Construction were. Since the second page of the quote was not a part of the contract, the Master concluded that the terms of payment were that the project would proceed in four phases and D & M Steel would be entitled to a progress payment after the completion of each phase. She stated at paras. 49-53 of her Report:
In the absence of agreed upon payment terms for monthly progress billings and payments, the issue is whether there was an implied agreement to pay progress billings discernable from the conduct of the parties.
The evidence of Mr. Manini, installer Mario Phillipe, and Temple director Ben Law was that the project was to proceed in four phases: the ground floor, the mezzanine floor, the roof trusses, and then the roof canopies. Mr. Manini testified that the contract provided for progress payments at each phase so that he could buy materials for the next phase.
The onus lies with D&M to prove that it was entitled to issue interim invoices prior to completing the Main Contract. ….
The evidence tendered at trial regarding invoicing and payments corresponds to the phases described by the witnesses. Mr. Qu's initial position was that the project was not to be done in phases and that the unpaid invoices were not payable prior to final completion. However, in cross-examination Mr. Qu admitted that he paid the first invoice after the first phase and that he asked the Temple to pay the second and third invoices on behalf of 51C after the corresponding second and third phases. I accept this evidence as an admission by Mr. Qu of an implied agreement as between D&M and 51C that progress billings were payable as D&M completed each of the four phases. I also accept Mr. Qu's evidence that the final payment was not due until the last phase had been completed.
It follows from the conduct of the parties that D&M and 51C had impliedly agreed that progress payments would be made based on stages of completion. ….
[19] A few days after the initial quote, the parties agreed to include in the steel work for the Temple, the supply and installation of four steel decks for the ground floor, the mezzanine, the roof, and the canopy. This work had been omitted from the original quote, and on October 15, 2001, D & M Steel submitted a second quote for the steel decks. The quote was for $44,000.
[20] The second quote, which did contain the second page of the printed form, appears to have been accepted by 51 Construction, but Mr. Qu testified that his signature had been forged. The Master had no evidence to resolve the matter of whether the signature was forged, but she decided, in any event, that the second quote did not create a separate written contract.
[21] Rather, the Master found that the parties came to an oral agreement that 51 Construction would supply the steel as an extra to the existing contract. The extra was that with the steel supplied by 51 Construction, D & M Steel would install steel decks for $13,100. At paras. 30 and 31 of her Report, the Master stated:
I do not need to find that Mr. Qu's signature was forged to reject the October 15, 2010 quote as forming a binding written contract between D&M and 51C. D&M has not met its onus of proving that the October 15, 2010 document was executed by both parties. I find that D&M's October 15, 2010 quote does not constitute a binding written contract between the parties.
Nevertheless, the quote to supply and install the deck resulted in a verbal or implied contract to supply the decks as an extra. …. I find that after receiving the October 15, 2010 quote 51 Construction instructed D&M Steel to proceed to install the decks and D&M partially installed the decks. I find that there is an implied contract to pay D&M an additional amount for the steel decks as an extra to the Main Contract.
[22] The structural steel work was scheduled to begin on October 1, 2010 and to be completed by December 10, 2010.
[23] D & M Steel sub-subcontracted the structural steel erection to Vaamp Construction.
[24] The steel work contract began, but its work was not completed by December 10, 2010.
[25] On December 14, 2010, D & M Steel sent its first invoice to 51 Construction for $160,000.00 plus HST. That invoice was for “supply of all materials for the ground floor and partial installation”. The invoice was paid without holdback.
[26] It may be noted that for this invoice and for the invoices that followed, the payments were made without holdback.
[27] In January 2011, D & M Steel sent a second invoice, which was revised on March 15, 2011. The second invoice was for $140,000.00 plus HST for “structural steel fabricated below roof trusses, all columns on site, partially installed, drafting.”
[28] 51 Construction, which had depleted the moneys it had received from the Temple, did not pay D & M Steel’s second invoice.
[29] When the Temple learned that D & M Steel had not been paid for the second invoice, it paid the invoice, and the parties entered into what they described as the Tripartite Agreement dated April 4, 2011. Under this agreement, the Temple agreed to guarantee 51 Construction’s payments, and D & M Steel agreed to complete the structural steel work. This agreement changed the schedule for the completion of the structural steel from December 2010 to June 2011.
[30] The Master held that the Tripartite Agreement did not change the relationships of owner, contractor, and subcontractor. She stated at paras. 42 and 43 of her Report:
I find that the three-party agreement maintained the relationship of the parties as owner, general contractor and subcontractor. It is a guarantee whereby the Temple guaranteed payment of 51 Construction's obligations to D&M pursuant to the Main Contract, with a corresponding deduction from monies otherwise payable by the Temple to 51 Construction. D&M agreed to accept payments from the Temple as payments made on behalf of 51 Construction.
The three-party agreement did not create a direct contractual relationship between D&M and the Temple for the supply of construction services and materials.
[31] On May 10, 2011, D & M Steel sent its third invoice to 51 Construction for $169,500 plus HST “to supply and partially install roof trusses and purlins for 3rd phase of project.” The Temple paid the third invoice.
[32] On July 14, 2011, D & M Steel sent its fourth invoice for $65,000 plus HST for “partial installation of canopy frames and roof deck.” The Master found (paragraph 55 of her Report) as a fact that at the time D & M Steel issued its Progress Invoice #4, the roof canopy and the deck extra had not been completed. She found that this work was not completed until after D & M Steel and its sub-subcontractor left the job.
[33] On July 15, 2011, 51 Construction advised D & M Steel that it would pay the fourth invoice when D & M Steel finished its work and the work passed inspection.
[34] On July 17, 2011, by invoice 6172 dated May 17, 2011, D & M Steel billed $1,258.29 ($1,113.53 plus HST) for extras for trailer storage incurred from April 2 to May 2, 2011 for inability to unload steel.
[35] On August 2, 2011, D & M Steel wrote the Temple to advise that Vaamp (the steel erector) had been expecting a payment since mid-July and if not paid immediately, the sub-subcontractor would not come back to the site.
[36] Around this time, Vaamp was owed approximately $80,000 on a $126,000 sub-subcontract.
[37] On August 8, 2011, both D & M Steel and its subcontractor Vaamp abandoned the project notwithstanding delivery of all materials and notwithstanding the non-completion of the roof canopy and the deck. The Master held that on the abandonment of the subcontract and the sub-subcontract, $13,100 plus HST of the contract price remained outstanding.
[38] By August 8, 2011, D & M Steel had received $450,000 plus HST in payment for the three invoices leaving outstanding $65,000 plus HST for the fourth invoice.
[39] The Master concluded that D & M Steel had repudiated its subcontract. She stated at paras. 57-58 and 61-62 of her Report:
51 Construction's failure to pay Progress Invoice #4 was not a breach by 51C of the Main Contract or the agreement for the deck extra. Rather, 51C was justified in refusing to pay the invoice prior to completion of the roof canopy and the deck. I find that D&M breached the Main Contract and the contract for the deck extra by abandoning the job on August 8, 2011 without completing the work.
A contractor who abandons a project prior to completion is in breach of the contract. When the contract is for a fixed price the contractor abandons at his own peril.
D&M walked away from the job at its own peril. The Act provides a remedy whereby D&M could have secured its claim for payment and complete the scope of work contractually required. In this case the fourth phase, requiring completion of the roof canopy structure, and installation of the deck extra, were incomplete when D&M abandoned the job for non-payment. D&M was not entitled to payment prior to completion of the final phase of the fixed price Main Contract and the fixed price deck extra.
As the party in breach, D&M is not entitled to any further payment for services supplied pursuant to the Main Contract or the deck extra.
[40] On August 12, 2011, the Temple terminated the structural steel portion of the contract it had entered into with 51 Construction.
[41] On August 25, 2011, D & M Steel issued invoice 6242 for $72,058.97 ($63,769 plus HST) for extras. The Temple had no prior knowledge of D & M Steel’s claim for extras. The matter of extras was not raised when the Tripartite Agreement was signed. The Temple never discussed extras with D & M Steel. Mr. Qu of 51 Construction denied ever authorizing or discussing extras with D & M Steel during the project.
[42] At the trial, D & M Steel tendered in evidence the "extras spreadsheet," with D & M Steel's own calculation of values for unit costs, taking into account weight, materials, hours, fabrication costs, installation costs and profit at 10 per cent. No time sheets or evidence of actual costs incurred was tendered. Nor did D & M Steel tender any independent evidence of value of the extras claimed. There was no contemporaneous documentary evidence to corroborate an agreement between the parties for extras. D & M Steel did not quote prices for extras or obtain approval in advance. D & M Steel did not issue invoices for extras at the time they were carried out, but rather waited many months, until after the contract was terminated, to invoice for extras. There are no emails, notes, letters, quotations, time sheets, order forms or other such documentary evidence to support D & M Steel's claim for the extras invoiced on August 12, 2011.
[43] On September 16, 2011, D&M Steel registered a construction lien for $161,570.26. 51 Construction counterclaimed for completion costs, damages and lost opportunity. The Temple counterclaimed and crossclaimed against 51 Construction for deficiencies, completion costs, and delay.
[44] On November 30, 2011, the Temple hired CanTrust Construction to complete the construction of the temple. The Temple paid $161,027.80 on account of structural steel work not completed by D & M and 51 Construction.
[45] On December 1, 2011, the Temple terminated its contract with 51 Construction.
[46] In October 2012, the Temple opened.
[47] The trial of the construction lien and contract claims proceeded on June 9, 11, 12, 16, 17, 18, 19, 23, 24 and 26, 2015. The Master released her Report on February 25, 2016.
[48] Master Albert found that: (a) 51 Construction and the Temple owed D & M Steel $1,130 for the extra to roll the roof corners; (b) 51 Construction and D & M Steel were jointly and severally liable to the Temple for delay damages for storage of $7,912.80 including HST; (c) 51 Construction and D & M Steel were jointly and severally liable to the Temple for inspection costs of $560; (d) the balance of D & M Steel’s claim of should be dismissed; and (e) the balance of the counterclaim and crossclaims should be dismissed.
C. LAW
1. Damages and Quantum Meruit Claims for a Construction Contract
[49] Owner breach: if the owner without justification ceases to make required payments under the contract, cancels it, or through some act without cause makes it impossible for the contractor to complete its work, then the owner has breached the contract and it has no claim for damages, and the contractor is justified in abandoning the work and the contractor is entitled to enforce its claim for lien to the extent of the actual value of the work performed and materials supplied up until that time, and the court may award the innocent contractor damages for breach of contract or damages on a quantum meruit basis in lieu of or in addition to damages for breach of contract.[^3]
[50] In a quantum meruit claim, deficiencies in the work actually performed are deducted from the value of the work done, but no account is taken of the owner's costs to complete.[^4]
[51] Contractor breach: mere bad or defective work or insignificant non-completion will not, in general, entitle an owner to terminate a contract, but the owner will have an obligation to pay for the work and make a claim for damages for the defective work. An owner will not be able to terminate the contract because of some minor or inconsequential failure to complete, although the owner may have a claim against the contractor for damages for non-completion or for defective workmanship, which will generally be the cost of completing the non-completed items or remedying any defects.[^5] If the contractor breaches the contract, an owner who alleges that the work performed or the materials supplied are defective must provide proper evidence on the basis of which his or her damages can be assessed.[^6]
[52] If there are defects in a contractor's workmanship, but not enough to amount to a fundamental breach entitling the owner to terminate the contract, the contractor should be permitted to remedy the defects and failure by the owner to permit such corrections will disentitle or reduce the amount of damages the owner can claim to remedy the defects as a result of its failure to mitigate.[^7]
[53] Contractor breach: if a contractor abandons the contract, repudiates the contract, fundamentally breaches the contract, or performs the contract in a way that it is so defective as to amount, in substance, to a failure or refusal to carry out the contract work, the owner is entitled to terminate the contract, to claim damages for breach of contract, and to be discharged from its obligations to pay including any obligation to pay on a quantum meruit or for work already performed.[^8]
[54] Contractor breach: if the contractor demands payment before it is due under the contract or if a contractor refuses to proceed unless paid this may be conduct that evidences an intention no longer to be bound by the terms of the contract amounting to a fundamental breach or repudiation of the contract.[^9]
[55] Contractor breach: unless the breach is a repudiation, fundamental breach, or abandonment of a contract, if a contractor breaches what is called a “severable,” “divisible” or “non-entire” construction contract or if the contractor breaches an “entire contract” that it has substantially performed, then subject to the owner’s claim for damages for defective, delayed, or incomplete performance, the breaching contractor is entitled to be paid for its performed work or to a quantum meruit for the substantially completed work.[^10]
[56] If there is a fresh implied promise to pay on a quantum meruit basis, where a contractor, by reason of its failure to perform, has lost his right to payment under the contract, it may nevertheless be entitled to recover something for the work actually done and accepted by the owner.[^11]
2. Extras under a Construction Contract
[57] A contractor is only obliged to perform and may only charge for work and material included in its contract with the owner. The term, "extra" refers to extra work outside the scope of the contract, for which an additional charge is made by the contractor or subcontractor; an item specifically provided for in the contract is not an extra.[^12]
[58] A contract may provide that the owner may order extras and specify a manner of payment but in the absence of such a provision, there must be a new express or implied agreement covering any extras.[^13] A contractor or subcontractor may charge for an extra where the owner or contractor expressly or impliedly instructed the contractor or subcontractor to do the extra work or to supply the extra materials.[^14] If no price is fixed for the performance of the extra work, the court will imply a promise to pay a reasonable amount on a quantum meruit basis.[^15] Conversely, when the contractor or subcontractor does work or supplies materials not called for by the contract (plans or specifications) without instructions, express or implied or without the consent of the other contracting party, the contractor is not entitled to charge for the additional work or materials.[^16]
[59] The cost for the additional work must be reasonable in the context of the construction project.[^17]
[60] Notwithstanding that a contract may require formalities in relation to requests for extras, where an owner has acquiesced in the provision of extras, it may be found to have made an implied promise to pay for them.[^18] An owner or contractor cannot orally request extra work be performed outside the scope of a contract, and then not pay for the work by relying on the written terms of the contract requiring confirmation of extras in writing. Orally requesting extra work outside the contract constitutes waiver by conduct.[^19]
3. Jurisdiction – Confirmation of Master’s Report
[61] Rule 54.09 of the Rules of Civil Procedure states:
54.09 (1) Where the order directing a reference does not require the referee to report back, the report or an interim report on the reference is confirmed,
(a) immediately on the filing of the consent of every party who appeared on the reference; or
(b) on the expiration of fifteen days after a copy, with proof of service on every party who appeared on the reference, has been filed in the office in which the proceeding was commenced, unless a notice of motion to oppose confirmation of a report is served within that time.
(2) A motion to oppose confirmation of a report shall be made to a judge other than the one who conducted the reference.
(5) A judge hearing a motion under subrule (2) or (4) may require the referee to give reasons for his or her findings and conclusions and may confirm the report in whole or in part or make such other order as is just.
[62] Rule 54.09 permits a party to a reference to oppose the confirmation of the Master's report. The case law establishes that the review of the decision or report is in the nature of an appeal with the onus on the party opposing confirmation to demonstrate that the Master's decision is wrong. The court hearing a motion to oppose the confirmation of a report on a reference ought not to interfere with the results unless there has been some error in principle demonstrated by the Master's reasons, some absence or excess of jurisdiction, or some patent misapprehension of the evidence, and the award should not be disturbed unless it appears to be unsatisfactory on all the evidence.[^20]
[63] The onus of proof is on the party opposing confirmation.[^21]
[64] The case law about the standard of review under Rule 54.09 of a Master's decision on a reference is consistent with the law that governs the scope of appellate review of a trial judgment. That case law establishes that trial judgments should be upheld by appellate courts unless there is a "palpable and overriding error."[^22] A "palpable error" is one that is obvious, plain to see or clear. An "overriding error" of fact is an error that is sufficiently significant to vitiate the challenged finding of fact. The appellant must demonstrate that the error goes to the root of the challenged finding of fact such that the fact cannot safely stand in the face of that error.[^23]
[65] Where questions of fact are involved, and the Master has seen and heard the witnesses, the conclusions of the Master will not be readily interfered with.[^24]
D. Discussion
1. The Temple’s Conditional Appeal
[66] The Temple’s so-called conditional opposition is without merit regardless of the outcome of D & M Steel’s opposition motion.
[67] As the detailed account above reveals, the central dispute in this litigation was whether D & M Steel was justified in abandoning the work site and justified in not completing the contract, in which case, its claim for payment could succeed, or whether D & M Steel had repudiated the contract, in which case, the Temple’s counterclaim could succeed.
[68] At the construction lien trial, after both D & M Steel and 51 Construction had submitted their cases, the Temple called Henry Yang, the principal of CanTrust in aid of proving its counterclaim.
[69] Mr. Yang was the Temple’s third of five witnesses. D & M Steel, however, objected to Mr. Yang’s testimony because the Temple had not provided a proper will say statement, had refused to answer certain questions during its examination for discovery about the calculation of its counterclaim, and had not answered its undertakings.
[70] The Temple responded to D & M Steel’s objections with a mid-trial motion and with a request to adjourn the trial to allow it to introduce new evidence in relation to the undertakings and the calculation of the counterclaim. The Master dismissed the Temple’s motion in reasons delivered as an appendix to her Report.
[71] In findings that the Temple does not contest, Master Albert concluded that the supposedly new evidence arose from proper but refused questions during the examination for discovery of the Temple's representative, Benjamin Law, and that an adjournment would prejudice D & M Steel, which had already presented its case-in-chief.
[72] The Master also held that the PrideMax Construction Group Inc. quote, which broke down the work carried out by CanTrust was not referred to in the CanTrust Witness Statement that she had ordered be delivered before the trial and that the six-page breakdown on which the CanTrust witness proposed to testify had been prepared by another corporation.
[73] The Master refused to admit the evidence, and she refused to grant an adjournment.
[74] The Temple now submits that the breach of the obligation to respond to undertakings was not deliberate and was caused by the inadvertence of counsel and an adjournment should have been granted in the interests of justice and on terms that the Temple indemnify the other parties for wasted costs.
[75] There was no error in the Master’s decision to refuse an adjournment and to refuse to admit the evidence, and there is no basis to reverse her amply justified decisions. It would not have been in the interests of justice nor would it have been in the interests of the administration of justice in general or in the particular circumstances of this proceeding to adjourn the trial in aid of saving the Temple from its numerous failures to comply with the rules and procedure for the construction lien claim.
2. The Temple’s Claim against 51 Construction and D & M Steel for Delay Damages
[76] Turning to D & M Steel’s objection to the Master’s decision to allow a portion of the Temple’s claim for delay damages, there is merit to this objection.
[77] As noted above, part of the Temple’s counterclaim against D & M Steel, is a claim for damages for the delay in completing the building for the Temple. For this claim, the Master awarded $7,912.80 including HST for the storage of the roof tiles. I agree with D & M Steel’s argument that the Master erred in granting this claim.
[78] From a legal perspective, the only pleaded basis for this claim was for damages for breach of contract. Negligence or any other cause of action was not pleaded. The problem, however, is that D & M Steel had no contractual relationship to the Temple, whose liability, if any, was associated with its statutory responsibility to hold back funds when paying the general contractor.
[79] Thus, there is no basis for a breach of contract damages counterclaim against D & M Steel. There is also no basis for 51 Construction to make a crossclaim against D & M Steel for contribution and indemnity for its contractual liability for delay damages, because this claim was never pleaded by 51 Construction against D & M Steel.
[80] From a factual perspective, it is also significant that the only aspect of the delay claim that was allowed concerned the storage costs for the roof tiles. From a factual perspective, there are serious problems with this claim.
[81] It was alleged that the roof tile work was delayed pending the completion of the steel work that remained to be done after D & M Steel abandoned the project. The claim was for six months of storage costs ($1,167.08 + HST per month) from December 2011 until May 2012.
[82] The problem with this delay claim is that D & M Steel quit the site in August 2011 and shortly thereafter the Temple terminated 51 Construction’s responsibility to find a subcontractor for the steel work. But nobody took responsibility for the completion of the steel work until December 2011, when the Temple hired CanTrust to complete the construction of the building. There is little explanation as to why it took almost six months before CanTrust was ready to install the roof tiles. Thus, the delay associated with having to store the roof tiles has more to do about delays in mitigating than it does to delays caused by D & M Steel or 51 Construction’s breaches of contract.
[83] Thus, the Master erred in allowing the Temple’s claim against 51 Construction and D & M Steel for delay damages, and I would vary the Master’s Report accordingly.
3. The Claim for Payment under the Construction Contract
[84] Turning to the far more substantial objections, D & M Steel objects to the Master’s denial of its $74,113.53 plus HST claim for unpaid contract work. There is no merit to D & M Steel’s argument, which is that the Master erred in finding that D & M Steel repudiated the construction subcontract.
[85] The Master’s decision contains no error, and her decision was both factually and legally correct. Based on D & M Steel’s repudiation of the contract, it was not entitled to damages or to a quantum meruit.
[86] There is no palpable and overriding factual error in the Master’s decision as to what constituted the terms of payment for the construction contract. She overlooked no relevant evidence, and after reviewing the evidence of the documentation, the witnesses’ accounts of the events, and the conduct of the parties, she concluded that there was one contract that did not contain the terms of payment found on the second page of D & M Steel’s pre-printed form.
[87] There was ample evidence to support her finding that the parties agreed orally and by their conduct that there would be four progress payments and that payment was only required after the work for each phase was completed. It followed from this finding of fact that D & M Steel repudiated the contract when it demanded payment that it was not entitled to. It further repudiated the contract when it abandoned the project before completing its work. Significant work remained to be done and the retarded pace of the work was imperilling the opening of the Temple’s building which had been an important matter throughout the contract. D & M Steel was never discharged from performing its side of the contract bargain.
[88] It follows as a matter of straight-forward contract law, that the breaching party to a contract is not entitled to be paid under the contract nor is it entitled to advance a claim for quantum meruit. It is trite contract law that if there is a fundamental breach or repudiation of the contract, the innocent party is discharged from performance and the innocent party is entitled to claim damages for breach of contract.
[89] Regardless of whether the construction contract was interpreted to be an entire or a non-entire agreement, in the immediate case, the Temple dropped the ball in proving its counterclaim for damages and its crossclaim against 51 Construction, but had the Temple succeeded in proving its claims, it would not have been confronted with an offsetting claim from D & M Steel which had no right to demand payment and which had abandoned and repudiated its obligations under the construction contract. The Master made no error in fact or law in reaching these decisions.
4. The Claim for Extras
[90] D & M Steel’s argument that it should be paid for extras of $61,649 plus HST is also without merit.
[91] First, for the above reasons, the Master was correct in holding that by repudiating the contract, D & M Steel was not entitled to any payments including payment for extras.
[92] Second, the Master was correct in holding that apart from the matter of repudiation, D & M Steel had not proven a claim for extras for a variety of reasons. The items alleged to be extras fell within the scope of the contract and accordingly were not extras. The items alleged to be extras were not treated as being extras by the parties. There was no express agreement about the extras. The items alleged to be extras did not qualify to be extras because there was no agreement about them.
[93] Third, assuming that the items constituted extras, D & M Steel did not prove their value either as a matter of contract or as a matter of quantum meruit. This was not a situation where the Master was required to do the best she could from the evidence proffered to make an award. She found the evidence unreliable and uncertain. D & M Steel failed to meet the standard of proof.
E. Conclusion
[94] For the above reasons, with the one variation with respect to the disallowance of an award of damages of $7,912.80 including HST for the storage of the roof tiles, I confirm the Master’s Report.
[95] If the parties cannot agree about the matter of costs, they may make submissions in writing beginning with the Temple’s submissions within 20 days of the release of these Reasons for Decision followed by D & M Steel’s submissions within a further 20 days.
Perell, J.
Released: April 4, 2018
COURT FILE NO.: CV-11-437166
DATE: 20180404
ONTARIO
SUPERIOR COURT OF JUSTICE
In the Matter of the Construction Lien Act, R.S.O. 1990, c. C.30
BETWEEN:
D & M Steel Ltd.
Plaintiff
– and –
51 Construction Ltd. and Jing Yin Temple
Defendants
REASONS FOR DECISION
PERELL J.
Released: April 4, 2018
[^1]: R.S.O. 1990, c. 30.
[^2]: D & M Steel Ltd. v. 51 Construction Ltd., 2016 ONSC 1335 (Master).
[^3]: Alkok v. Grymek, 1968 CanLII 10 (SCC), [1968] S.C.R. 452; RPC Construction Ltd. v. Zhou, 2017 ONSC 4044 (Master); Summers (c.o.b. Classic Renovators and Contractors) v. Harrower, [2005] O.J. No. 5770 (S.C.J.); Safinco Mechanical Ltd. v. Toronto District P.S.B. (2002), 14 C.L.R. (3d) 306 (Ont. S.C.J.), aff'd (2003), 24 C.L.R. (3d) 166 (Ont. C.A.); Biotechnik Inc. v. O'Shanter Development Co., [2002] O.J. No. 2899 at para. 8 (Div. Ct.); LDR Contracting Inc. v. Filion (1997), 30 C.L.R. (2d) 16 (H.C.J.); Komorowski v. Van Weel (1993), 1993 CanLII 8470 (ON SC), 12 O.R. (3d) 444 (Gen. Div.); Foderaro v. Future Homes Construction Ltd. (1991), 46 C.L.R. 1 at 13 (Ont. Gen. Div.); Monett v. All Seasons Siding (1991), 43 C.L.R. 185 (N.S. Co. Ct.); H.A.R. Construction v. DeMerchant Construction (1990), 38 C.L.R. 9 (N.B. C.A.); Wells Construction Ltd. v. Thomas Fuller Construction (1987), 22 C.L.R. 144 (Nfld. S.C.); Cragnoline v. Southwick (1916), 27 O.W.R. 445 (H.C.J.).
[^4]: Alkok v. Grymek, 1968 CanLII 10 (SCC), [1968] S.C.R. 452; Komorowski v. Van Weel (1993), 1993 CanLII 8470 (ON SC), 12 O.R. (3d) 444 (Gen. Div.).
[^5]: Heyday Homes Ltd. v. Gunraj, [2004] O.J. No. 429 (Master); Downie & Hatt v. Norman (1964), 1964 CanLII 941 (NS CA), 50 M.P.R. 150 (N.S. C.A.); Hoenig v. Isaacs, [1952] All E.R. 176 (C.A.); H. Dakin v. Lee, [1916] 1 K.B. 566 (C.A.).
[^6]: Summers (c.o.b. Classic Renovators and Contractors) v. Harrower, [2005] O.J. No. 5770 (S.C.J.).
[^7]: 2016637 Ontario Inc. o/a Balkan Construction v. Catan Canada Inc., 2013 ONSC 4727 at para. 47.
[^8]: Bradley v. Horner (1957), 1957 CanLII 434 (ON CA), 10 D.L.R. (2d) 446 (Ont. C.A.); Cornelis Grey Construction Inc. v. Folz, 2018 ONSC 647 at para. 42; Kaplun v. Mihhailenko, [2005] O.J. No. 1978 (Master); Heyday Homes Ltd. v. Gunraj, [2004] O.J. No. 429 (Master); 3027539 Nova Scotia Ltd. v. Mogon (2003), 2002 NSSC 96, 23 C.L.R. (3d) 88 (N.S.S.C.); Heyday Homes Ltd. v. Gunraj, [2004] O.J. No. 429 (Master); Corazzin v. Dunovan (1994), 9 C.L.R. (2d) 277 (B.C. S.C.); Greystone Construction Ltd. v. MacLean (1994), 15 C.L.R. (2d) 86 (N.S. S.C.); Angus v. Pinalski (1991), 41 C.L.R. 284 (B.C. S.C.); MacLean v. Winters(1990), 1989 CanLII 9856 (NS SC), 35 C.L.R. 148 (N.S. Co. Ct.); H. Dakin & Company Limited v. Lee (1961), 1 K.B. 566.
[^9]: Gokdenz Construction Ltd. v. Dlakis, 2011 ONSC 7135 (Master); Voka Steel Inc. v. Edgecon Construction Inc. (c.o.b. as Edgecon Contracting), 2011 ONSC 1938 (Master); Kaplan v. Mihhailelnko (2005), 43 C.L.R. (3d) 223 (Ont. Master); Heyday Homes Ltd. v. Gunraj, [2004] O.J. No. 429 (Master).
[^10]: Heyday Homes Ltd. v. Gunraj, [2004] O.J. No. 429 (Master).
[^11]: Heyday Homes Ltd. v. Gunraj, [2004] O.J. No. 429 (Master); Tanenbaum v. Wright-Winston, 1963 CanLII 110 (ON SC), [1963] 2 O.R. 320 (H.C.J.); Hoenig v. Isaacs, [1952] All E.R. 176 (C.A.).
[^12]: Anowara Construction Ltd. v. Tom Jones Corporation (2006), 54 C.L.R. (3d) 165 (Ont. S.C.J.); Chittick v. Taylor, 1954 CanLII 492 (AB KB), [1954] A.J. No. 23 at para. 5 (Alta. S.C.).
[^13]: 2016637 Ontario Inc. o/a Balkan Construction v. Catan Canada Inc., 2013 ONSC 4727 at para. 11.
[^14]: Anowara Construction Ltd. v. Tom Jones Corporation (2006), 54 C.L.R. (3d) 165 (Ont. S.C.J.); Chittick v. Taylor 1954 CanLII 492 (AB KB), [1954] A.J. No. 23 at para. 5 (Alta. S.C.).
[^15]: 2016637 Ontario Inc. o/a Balkan Construction v. Catan Canada Inc., 2013 ONSC 4727 at para. 11-12; DIC Enterprises Ltd. v. Kosloski (1987), 26 C.L.R. 85 at para. 30 (Sask Q.B.).
[^16]: Anowara Construction Ltd. v. Tom Jones Corporation (2006), 54 C.L.R. (3d) 165 (Ont. S.C.J.); Chittick v. Taylor 1954 CanLII 492 (AB KB), [1954] A.J. No. 23 at para. 5 (Alta. S.C.).
[^17]: Deminico v. Earls, [1945] O.W.N. 375 (H.C.J.).
[^18]: Colautti Construction Ltd. v. Corporation of the City of Ottawa (1984), 1984 CanLII 1969 (ON CA), 7 C.L.R. 264 at para. 30 (C.A.); 2016637 Ontario Inc. o/a Balkan Construction v. Catan Canada Inc., 2013 ONSC 4727 at paras. 11-12; RPC Construction Ltd. v. Zhou, 2017 ONSC 4044 at para. 60 (Master).
[^19]: 2016637 Ontario Inc. o/a Balkan Construction v. Catan Canada Inc., 2013 ONSC 4727 at para. 14; DIC Enterprises Ltd. v. Kosloski, [1987] S.J. No. 532 at paras. 30-32 and 34 (Sask. Q.B.); Hydrastone Inc. v. Clearway Construction Inc., 2015 ONSC 2669; Domco Construction Inc. v. Aliva Holdings Inc., 2003 SKQB 506.
[^20]: Luxterior Design Corp. v. Gelfand, 2018 ONSC 1621; Thyssenkrupp Elevator (Canada) Inc. v. 1147335 Ontario Inc., 2015 ONSC 503; RSG Mechanical Inc. v. 1398796 Ontario Inc., 2014 ONSC 3936, aff’d 2015 ONSC 2070 (Div. Ct.); International Wall Systems Ltd. v. English Lane Residential Developments Ltd., [2011] O.J. No. 5813 (S.C.J.); R.P. International v. DiFlorio, 2010 ONSC 4648; Jordon v. McKenzie (1987), 26 C.P.C. (2d) 193 (Ont. H.C.J.); Capsule Investments v. Heck (1990), 1990 CanLII 6982 (ON SC), 72 O.R. (2d) 481 (H.C.J.), affd. (1993), 1993 CanLII 8465 (ON CA), 12 O.R. (3d) 225 (C.A.); Komorowski v. Van Well (1993), 1993 CanLII 8470 (ON SC), 12 O.R. (3d) 444 (Gen. Div.); Heyday Homes Ltd. v. Gunraj, [2005] O.J. No. 2986 (S.C.J.).
[^21]: Xhebraj (c.o.b. NX Building and Maintenance Services) v. Bassi, 2015 ONSC 2781 at para. 6, aff’d 2016 ONSC 1207 (Div. Ct.).
[^22]: Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235; Waxman v. Waxman, (2004), 2004 CanLII 39040 (ON CA), 44 B.L.R. (3d) 165 (Ont. C.A.); Luxterior Design Corp. v. Gelfand, 2018 ONSC 1621.
[^23]: Waxman v. Waxman (2004), 2004 CanLII 39040 (ON CA), 44 B.L.R. (3d) 165 at para. 297 (C.A.).
[^24]: Pagebrook Inc. v. Lawson, 2009 ONCA 371; Xhebraj (c.o.b. NX Building and Maintenance Services) v. Bassi, 2015 ONSC 2781 at para. 7, aff’d 2016 ONSC 1207 (Div. Ct.).