Court File and Parties

COURT FILE NO.: CV-14-516286 and COURT FILE NO.: CV-14-517716 DATE: July 17, 2018

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN: Tony’s Touch Plumbing Ltd. Plaintiff (Defendant by counterclaim) R. C. Belsito for Tony’s Touch

- and - Hatcho Nersesian Defendant (Plaintiff by counterclaim) J. Siegel and A. Fox for Nersesian

AND BETWEEN: Level V Design & Build Inc. Plaintiff (Defendant by counterclaim) M. Carabetta for Level V Design

- and - Hatcho Nersesian Defendant (Plaintiff by counterclaim) J. Siegel and A. Fox for Nersesian

HEARD: June 12, 14 and 19, 2018 Master C. Albert

[1] The lien claims of Tony’s Touch Plumbing Ltd. (“Tony’s”) and Level V Design & Build Inc. (“Level V”) arise from the construction of a new home on property owned at the time by Hatcho Nersesian. By reason of section 60 of the Construction Lien Act, R.S.O. 1990, c.C.30 (the “Act”) and the May 12, 2016 order of Justice Diamond and the December 1, 2015 order of Justice Akhtar the actions were heard together as a reference trial.

[2] Tony’s claims payment for supplying plumbing and HVAC services and materials. Level V claims payment for services and materials supplied and for a project management fee of 10 percent of the total cost of construction. Mr. Nersesian disputes the claims of both lien claimants. He alleges that Tony’s overcharged and its work was deficient and incomplete. He admits a portion of the amount claimed by Level V for services and materials and he also admits that Level V was entitled to a portion of the project management fee claimed.

[3] For the reasons set out below I find that Mr. Nersesian must pay Tony’s $23,245.97 for unpaid services and materials supplied. I further find that Mr. Nersesian must pay Level V $26,966.02 for unpaid project management services and for construction services and materials supplied.

I. Background

[4] Mr. Nersesian owned the property at 32 Larkfield Drive, Toronto from May 31, 2004 until he sold it in June 2016. In 2013 he investigated renovating the existing home but he ultimately decided instead to demolish the existing home and replace it with a new home. Demolition commenced in 2013 and by 2014 a new 4,000 square foot home had been built, complete with basement spa, indoor pool and a car elevator for his Ferrari. Mr. Nersesian hired contractors for most of the work performed but he performed some of the work himself. The matters in issue in this trial involve Tony’s, the plumbing/HVAC contractor, and Level V, supplier of some labour and materials and project management services.

[5] The parties contracted informally and their documentation is sparse. The parties disagree as to the terms of the contracts and the amounts charged and paid.

Tony’s: Overview

[6] In the case of Tony’s, written quotes and invoices were issued. The scope of work changed as the work progressed and the parties’ agreements regarding the changes is in dispute. The court must determine whether Tony’s and Mr. Nersesian entered into contracts for the plumbing work as to one contract and the HVAC work as to another contract and if so, the terms of the contracts including scope of work included in the contract price and agreements as to extras.

[7] On September 23, 2014 Tony’s registered a claim for lien of $28,430.47 as instrument AT3696054. Tony’s perfected the claim with a certificate of action registered as instrument AT3754266 on December 1, 2014. Tony’s lien claim was vacated upon the posting of security in the amount of $35,538.09 to account 541338 pursuant to the June 10, 2016 order of Master Muir.

Level V: Overview

[8] In the case of Level V, the issue is whether the project management contract ended at the weather tight stage (for which no date was provided in evidence) or whether it continued in whole or in part through to completion of the home. On October 31, 2014 Level V registered a claim for lien for $107,059.25 as instrument AT3728734. Level V registered a certificate of action as instrument AT3764093 on December 11, 2014. Level V’s lien claim was vacated upon the posting of security in the amount of $133,824.06 to account 541339 pursuant to the June 10, 2016 order of Master Muir.

[9] Level V’s position initially was that Mr. Nersesian had paid Level V $23,000.00 in cash for project management services. By the end of trial Level V conceded payments received of $26,900.00, thereby reducing its claim for lien by $3,900.00. In its opening statement Level V clarified that its claim is for $96,400.00. In closing argument Level V claimed $121,268.11. Level V’s alternative claim in respect of the project management fee is for $35,000.00 if the court finds that Level V was entitled to such a fee only for trades introduced to the project by Level V.

[10] Level V’s claim also includes a claim for $11,241.82 for unpaid labour and materials pursuant to invoices 1057 and 1058, and for $13,546.00 for invoice 1077.

Mr. Nersesian’s counterclaims: overview

[11] Initially Mr. Nersesian claimed over $200,000.00 in backcharges for deficiencies and incomplete work, claiming $200,000.00 from Tony’s and $150,000.00 from Level V. He significantly reduced the counterclaims, first to $21,890.00 and by the end of trial Mr. Nersesian had reduced his claims to $13,527.34 against Tony’s and $8,363.00 against Level V.

The parties’ conduct

[12] The parties’ conduct of this litigation has made it unnecessarily complex. Had Mr. Nersesian’s grossly inflated counterclaims been pleaded in the amounts actually claimed at trial this dispute over modest sums of money would have been more likely to settle without incurring the delay and expense of multiple attendances to prepare for trial and then a multi-day trial. The parties spent disproportionately excessive amounts of time arguing over items of trifling value. These factors will be relevant to fixing costs.

[13] The Level V claim and counterclaim is further compromised by the parties’ mutual conduct in ensuring that there would be no paper trail regarding the project management aspect of their relationship: there is no documentation to corroborate the terms of the contract. Payments were in cash with almost no written receipts. The court draws the inference that Level V insisted on such an arrangement to shield income from tax and other obligations. Mr. Nersesian went along with the request. The consequence of their conduct is that the parties are left without a documentary trail and the party having the onus of proof has little to corroborate the claim.

The reference trial

[14] In Tony’s action Justice Diamond directed a reference to the master by order dated May 12, 2016. In Level V’s action Justice Akhtar directed a reference to the master by order dated December 1, 2015. By reason of section 60 of the Construction Lien Act the two actions were heard together in the same reference. On June 16, 2016 Master Albert ordered the trial to commence by way of first hearing for directions on September 26, 2016.

[15] Pursuant to section 67 of the Act and issues of proportionality, I directed that the reference proceed to trial as a hybrid trial, with the evidence in chief of some of the witnesses by affidavit.

II. Issues

[16] The issues regarding Tony’s claim and Mr. Nersesian’s counterclaim are:

a) What are the terms of the contract? Was Tony’s entitled to interim payments? b) Is Tony’s entitled to be paid for extras arising from changes to the scope of work? c) Who breached the contract: Tony’s for refusing to work unless paid or Mr. Nersesian for refusing to pay Tony’s interim account? d) How much, if anything, is owing to Tony’s on the contract? e) Is Nersesian entitled to backcharge Tony’s for deficient or incomplete work? f) Is Tony’s liable for section 35 damages for registering an exaggerated lien claim?

[17] The issues regarding Level V’s claim and Mr. Nersesian’s counterclaim are:

a) What are the terms of the contract or contracts? Is Level V entitled to a 10 percent fee on the total cost of construction or only on the contracts that Level V arranged? b) How much did Mr. Nersesian pay Level V for project management? While initially the parties disagreed over the sum of $3,900, by the end of trial the parties agreed that Mr. Nersesian had paid Level V $26,900 in cash for project management. c) Is Nersesian entitled to backcharge Level V for deficient or incomplete work? d) Is Level V liable for section 35 damages for registering an exaggerated lien claim?

III. Analysis

(a) Tony’s Claim: the contract

[18] What are the terms of the plumbing and HVAC contracts? Was Tony’s entitled to interim payments?

[19] Level V introduced Tony’s to Mr. Nersesian and the project. When Mr. Nersesian asked Tony for plumbing and HVAC quotes the final mechanical drawings were not yet available. Decisions by the owner as to whether to install radiant heat, forced air furnaces and driveway melt had not been made. Tony’s provided quotes based on the mechanical drawings as they existed at the time of the quotes, including the number of plumbing fixtures reflected in the drawings, a factor relevant to the extent of roughed in plumbing required.

[20] Tony’s provided two very detailed quotes on May 20, 2014: quote 167 for $17,402.00 for plumbing and quote 169 for $36,160.00 for HVAC, both inclusive of HST. It is implicit that the prices quoted were only for the items identified in the quotes. Additional work would be extra.

[21] The plumbing quote specified the items to be roughed in and the fixtures to be installed on a room by room basis. The HVAC quote specified that the quote was based on the preliminary drawings prepared by Elite HVAC Designs and provided to Tony’s on May 20, 2014. Mr. De Iuliis, principal of Tony’s, gave evidence that at that time Mr. Nersesian had not yet decided to include radiant floor heat or driveway melt or a forced air furnace and the quote does not include those items. I accept his evidence on this issue, as corroborated by the written quotes. Mr. Nersesian accepted the quotes and contracted with Tony’s.

[22] To accommodate Tony’s cash flow problems the parties agreed that Mr. Nersesian would purchase materials directly and Tony’s would credit him with the price paid when invoicing. Mr. Nersesian asserts that Tony’s did not credit him sufficiently with purchases he made for items that were included in the quotes, and that Tony’s failed to attend at the site and complete the job within the timeframe that he expected. He fired Tony’s and did not allow Tony’s an opportunity to rectify deficiencies or to complete the work.

[23] The evidence of Mr. De Iuliis and Mr. Nersesian conflicts on some of the facts. I find that Mr. De Iliis is a naive businessman who failed to clearly document his contract and his work. However he was a straightforward and forthright witness. In my observation he is a credible witness. Mr. Nersesian on the other hand was evasive in cross-examination, changed his evidence from the time of his discovery to trial and tended to exaggerate or omit relevant facts. He focused on very small sums in issue. He acted vindictively in reporting Tony’s to the TSSA authorities and to the professional governing body. Where the evidence of Mr. De Iuliis and Mr. Nersesian conflicts and must be decided on the basis of credibility I prefer the evidence of Mr. De Iuliis.

(b) Tony’s claim: extras

[24] Tony’s plumbing quote provided for 27 fixtures to be roughed in and installed. Mr. Nersesian added three fixtures to the scope of work, for which Tony’s increased the price from $16,780.50 to $18,645.00.

[25] Mr. De Iuliis’ evidence is that Mr. Nersesian approved the extras and understood that they would cost extra to the price initially quoted. I find that the parties agreed that Mr. Nersesian would pay extra for the upgrades and extras that Mr. Nersesian instructed Tony’s to carry out.

[26] Extras to the plumbing contract that Mr. Nersesian instructed Tony’s to carry out and for which Tony’s claims payment are summarized at paragraph 17 of Mr. De Iuliis’ affidavit:

a) S/I check valve $ 750.00 b) 2 Liberty sump pumps $1,100.00 c) 500’ of ¾” watts oxybarrier $ 550.00 d) Wall mount rain head (2X) $200.00 e) Cast iron plumbing $4,600.89

[27] As to items (a) through (d), I accept Mr. De Iuliis’ evidence and find that Tony’s either supplied these items as extras or credited Mr. Nersesian (in the case of a sump pump).

[28] As to (e), the cast iron plumbing pipes, Mr. De Iuliis’ evidence is that the plumbing quote included standard household plastic plumbing pipe known as ABS. Mr. Nersesian asked Tony’s to upgrade the drains to cast iron. Cast iron piping is more cumbersome and labour intensive and consequently more expensive to work with. The amount claimed by Tony’s reflects the extra charge for the additional cost to upgrade from the original specification of regular plastic pipe to upgraded cast iron pipe. I accept Mr. De Iuliis’ evidence that Mr. Nersesian approved the additional cost prior to Tony’s performing the upgrade.

[29] Regarding the HVAC contract, Mr. Nersesian provided the first set of mechanical drawings to Tony’s on May 20, 2014, the second set on June 4, 2014, the third set on June 11, 2014 and the fourth and final set on August 7, 2014. The revised drawings include radiant heat and vary as to the extent to which radiant heat and snow melt would be installed. They also reflect extras for the new swimming pool room. The multiple revisions corroborate that Mr. Nersesian requested and Tony’s supplied extras.

[30] Also in relation to the HVAC contract, Mr. Nersesian decided to add extra gas lines to the boiler room, the stove, the outdoor barbeque and two fireplaces. These items were not included in the original quote. Tony’s increased the price from $36,160.00 to $41,697.00. Mr. De Iuliis sent a revised quote for $41,697.00 to Mr. Nersesian on June 17, 2014 with the added items “gas lines to boiler room, stove, outdoor BBQ & 2 fireplaces”. Mr. Nersesian questioned the revised price but did not reject it nor did he instruct Tony’s not to perform the additional work that he had requested.

[31] I find that by requesting these additional items that went beyond the scope of the original contract and by allowing Tony’s to proceed to carry out the additional items, Mr. Nersesian agreed either expressly or implicitly to pay Tony’s to supply and install the items, and that he accepted the revised quote.

[32] Mr. Nersesian asked for two further items: additional HRV (heat recovery ventilator) and rough-in for exhaust and intake vents and return duct for the new indoor swimming pool room, priced at $1,400.00 and $3,500.00 respectively. For the same reasons as expressed in the previous paragraph, I find that Mr. Nersesian agreed to pay Tony’s extra for these items.

[33] Mr. Nersesian also instructed Tony’s to install radiant floor heating in a portion of the basement, garage and pool area. Tony’s provided a quote and on September 9, 2014 invoiced $7,137.25 (including HST) for the radiant heating and Mr. Nersesian paid that invoice. This item is not in dispute in this action.

[34] By September 9, 2014 Tony’s knew about all of the changes and extras to the scope of work. He provided a further revised quote for HVAC, increasing the price modestly from the $41,697.00 quoted on June 17, 2014 to $41,910.45. The changes were: (i) $1,400 added for additional HVR and $3,500 for pool room intake and exhaust, and (ii) a credit of $4,711.11 for Mr. Nersesian purchasing materials directly.

[35] Also on September 9, 2014 Tony’s issued its invoice for the plumbing contract, including in the total the extras that Mr. Nersesian had requested and Tony’s had supplied. The total amount invoiced on September 9, 2014 for plumbing was $26,782.01.

(c) Tony’s claim: Who breached the contract?

[36] The issue is whether Tony’s breached the contract by insisting on an interim payment before continuing, or whether Mr. Nersesian breached the contract by refusing to pay and then terminating the contract in writing by email.

[37] The contract was oral. The parties’ conduct included Tony’s requesting and Mr. Nersesian paying progress payments. This conduct corroborates Tony’s version of the oral contract that it included interim progress payments for services and materials supplied prior to completion.

[38] Mr. Nersesian wanted Tony’s to compete the work as quickly as possible and was distressed that Tony’s’ workers were not on site and working more quickly. Mr. De Iulliis’ response to that complaint is that he could not have the plumbing and HVAC work inspected before the permits were issued, and permits were not issued until July 15, 2014 after Mr. Nersesian’s designer had completed the final set of drawings. Tony’s could not call for an inspection prior to that date. Mr. De Iuliis also explained that the sequencing of work precluded him from completing certain items. He testified that he could not carry out portions of Tony’s scope of work before other trades had completed the preparatory work required. Construction involves sequencing of trades, and until the work prerequisite to a certain trade has been completed the trade waiting next in line cannot do their work.

[39] Mr. Nersesian accuses Tony’s of delay but neither contract specified a completion date. In the absence of a fixed completion date the applicable test is that of reasonableness.

[40] On July 21, 2014 Mr. Nersesian wrote to Mr. De Iuliis by email demanding that the contracts be completed by the next day failing which he would terminate Tony’s and hire another contractor to complete the work. I find that unilaterally imposing a deadline of one day in the absence of a contractual completion date was unreasonable. Even if the parties had agreed on a completion date at the outset, Mr. Nersesian’s changes to design and scope of the project would have extended the time to compete the work. While Mr. Nersesian may have been impatient wanting the new house to be completed as quickly as possible, he cannot expect the impossible from his contractors. He did not act reasonably.

[41] I accept and prefer Mr. De Iuliis’ evidence on the issue of sequencing and find that he did not unreasonably delay completion of either the plumbing or the HVAC contract.

[42] Despite the threat to terminate Tony’s on July 22, 2014, Mr. Nersesian allowed Tony’s to continue to supply services and materials. Mr. Nersesian increased the scope of work on July 26, 2014 by requesting additional changes to accommodate the mechanical changes to the garage door required for the lift for Mr. Nersesian’s Ferrari.

[43] After Tony’s sent Mr. Nersesian invoices on September 9, 2014, Mr. Nersesian, the same day, sent an email to Mr. De Iuliis demanding that the work be completed by September 12, 2014, allowing only three days to complete the balance of the work. Mr. Nersesian did not dispute or challenge the amounts charged in the invoices.

[44] Mr. De Iuliis’ evidence is that the remaining work could not be completed until contractors prior in sequence completed their work. He provided as examples that faucets could not be installed before sinks were installed, and sinks could not be installed without vanities and countertops, all of which had to be completed by other trades. While the rough-in plumbing had been completed, the final installation could not be completed without vanities, countertops and in the case of some items, the drywall and tiling. Mr. Nersesian’s demand that Tony’s complete all of its work by September 12, 2014 was unreasonable.

[45] Throughout the project when Tony’s asked Mr. Nersesian for a progress payment for services and materials supplied, Mr. Nersesian paid. I conclude from their conduct that the parties had agreed to interim progress payments upon request for work completed.

[46] In September 2014 the parties reached an impasse. Tony’s was experiencing cash flow problems and asked for interim progress payments of $10,000.00 on each of the two contracts for work already completed. Mr. Nersessian was frustrated over the amount of time it was taking and he was not prepared to pay Tony’s anything more prior to completion. Tony’s was not prepared to purchase additional materials for the project without a progress payment.

[47] By email dated September 13, 2013 Mr. Nersesian wrote to Mr. De Iuliis: “You failed to complete the job therefore you are fired”.

[48] Absent a contractual completion date, the issue is whether Tony’s carried out the work within a reasonable timeframe. Taking into account all the changes to the scope of work and Mr. Nersesian’s unreasonable deadlines of one day and three days imposed without regard to sequencing of work, I find that Tony’s carried out the work within a reasonable timeframe and did not cause unreasonable delay. I find that by unilaterally imposing an unreasonable three-day deadline on Tony’s and then terminating the contract for failure to meet that deadline, Mr. Nersesian breached his contracts with Tony’s.

[49] As of September 9, 2014 when Mr. Nersesian demanded that Tony’s complete the work within three days I find that Tony’s was not in a position to complete the job because of sequencing: several items that had to be completed by other trades before Tony’s could complete the plumbing and HVAC contract work.

[50] I find that by terminating Tony’s on September 13, 2014 without allowing Tony’s to complete the job and respond to the items listed in Mr. Nersesian’s September 13, 2014 email as deficiencies, Mr. Nersesian breached the contracts between himself and Tony’s.

(d) Mr. Nersesian’s counterclaim against Tony’s: deficiencies and incomplete work

[51] Mr. Nersesian terminated Tony’s contract in writing on September 13, 2014 because Tony’s had not completed the job within the unreasonable three-day timeline that Mr. Nersesian imposed. In the September 13, 2014 email firing Tony’s Mr. Nersesian listed 13 items that he alleged were incomplete. He threatened to charge Tony’s for the cost of another contractor completing the items. He did not allow Tony’s an opportunity to return and complete the work listed in the email.

[52] On December 14, 2014 Mr. Nersesian filed a conduct complaint against Tony’s with the Ontario College of Trades. The College considered the complaint and issued decisions on September 29, 2015, December 22, 2015 and January 26, 2015. Mr. Nersesian filed only the January 26, 2015 decision as an exhibit at trial. The College dismissed the complaint with a written caution admonishing Mr. De Iullis for referring to Mr. Nersesian as “a moron”, clearly inappropriate and derogatory language. The College reminded Mr. De Iuliis about the limitations to the scope of work permitted under his licence, and recommended that Mr. De Iuliis put his contracts in writing to avoid disagreements. The evidence is of little probative value other than to illustrate the acrimony between the parties.

[53] On December 18, 2014, after other contractors had performed work on the HVAC system that Tony’s had initially installed, an inspector from the Technical Standards and Safety Authority (“TSSA”) conducted a site inspection. Inspector Edward DeGouveia noted in his report that Tony’s was not a registered contractor under Ontario Regulation 212/01 regarding gaseous fuels. The inspector recommended that Tony’s obtain a licence. Mr. De Iuliis’ evidence is that at all times Tony’s retained a licenced installer and he filed as evidence the licence of Mike Ryan with whom Tony’s had contracted to carry out the work that was required to be done pursuant to a licence. At trial Mr. DeGouveia acknowledged that it is acceptable for an unlicenced contractor to retain a licenced contractor to complete the items that require a licenced contractor.

[54] Mr. Nersesian relies on the TSSA report as evidence of Tony’s deficiencies. The TSSA report lists several code contraventions, described below with the court’s findings. The TSSA report also records hearsay information from unnamed sources, which is of no probative value.

TSSA Report and the court’s comments:

• CSST tubing used as a connector in contravention of code 6.2.21 : I find that Mr. Nersesian has not proven that Tony’s installed this connection. If it did, Mr. Nersesian gave Tony’s no opportunity to repair it.
• No tags on gas manifold in contravention of code 6.18.5 : I find that Mr. Nersesian terminated Tony’s prior to final testing when tags are attached.
• No pressure test tags on piping in contravention of code 6.22.6 : I find that Mr. Nersesian terminated Tony’s prior to final testing when tags are attached.
• CSST tubing not capped in contravention of code 6.12.1 : I find that Mr. Nersesian has not proven that Tony’s installed this connection. If it did, Mr. Nersesian gave Tony’s no opportunity to rectify it.
• Venting termination of appliances noncompliant with manufacturers certified instructions and too close to HRV intake in contravention 4.1. 3: I find that Tony’s followed revised design instructions after Mr. Nersesian modified the location of the furnace to accommodate the car elevator and spa. Mr. Nersesian admitted to changing the design to accommodate the car elevator.
• Furnace installed in garage, duct work not sealed in contravention of code 4.16. 4: I find that Tony’s followed revised design instructions after Mr. Nersesian modified the location of the furnace to accommodate the car elevator and spa. Encasing the furnace with drywall or another materials is the task of a different trade and not within the scope of either of Tony’s two contracts.
• Horizontal furnace improperly installed in contravention of code 7.16.4: The comments regarding the previous item apply.

[55] Regarding the items listed in the TSSA report Mr. Nersesian failed to prove that the reason for the deficiencies were as a result of Tony’s work and not as a result of the work of subsequent contractors who worked on the HVAC system after Tony’s was fired on September 13, 2014. The report relies on hearsay from unnamed sources. The intervening three months are not accounted for and Mr. Nersesian has failed to meet the onus of proving that Tony’s is responsible for the deficiencies.

[56] Mr. Nersesian looks to Tony’s to pay for changes, repairs and completion costs arising from the items listed in the TSSA report and for other items, identified in Mr. Nersesian’s trial materials as follows:

HVAC contract: (1) $1,186.50 to replace furnace venting, repair and test gas piping; (2) $3,531.25 for garage furnace ductwork, to reposition furnace and to replace air filter; (3) $3,095.60 to frame and drywall bulkheads around the garage furnace; and (4) $550.00 to repair and reinstall gas pipe leak.

Plumbing contract: (5) $12,763.35 for 2 air conditioning units, for which Tony’s credits $2,000.00; (6) $500.00 to supply and install a sump pump, for which Tony’s credits $175.00 per pump; (7) $420.00 to remove and reinstall 2 garden hose bibs; and (8) $2,018.99 to replace and install wall hung toilets.

[57] Regarding HVAC items (1) through (4), the basis of Mr. Nersesian’s claim is that portions of the HVAC work failed to meet code requirements. After terminating Tony’s on September 13, 2014 Mr. Nersesian hired B & B Plumbing and McKinnon Heating and Cooling to carry out repairs and changes and to arrange for hook-ups. Mr. Nersesian failed to mitigate and allow Tony’s an opportunity to return and effect the repairs. Tony’s is not liable for these backcharges.

[58] In addition, regarding items (2) and (3), Mr. Nersesian changed the design and instructed Tony’s to install the furnace in the garage to accommodate the elevator to the basement for his Ferrari. Tony’s was not the designer. If the designer erred in placing the furnace in the garage, rectification is not Tony’s responsibility. Also, if a furnace in a garage must be enclosed then it would not be Tony’s responsibility to build the enclosure. Tony’s contract did not require Tony’s to frame and enclose the garage furnace. Even if Tony’s had been given the opportunity to rectify this item it would not have been within the scope of Tony’s contract to do so.

[59] As to item (5), the $12,763.35 claim for air conditioning units, I accept Tony’s evidence that his quote and pricing allowed $1,000 for each of two air conditioning units. Mr. Nersesian provided no evidence that the air conditioning units he obtained from another contractor were of the same grade as those for which he had contracted with Tony’s. The huge price differential suggests an upgrade. Mr. Nersesian has not met the onus of proving that the completion charge is for equivalent work to that specified in his contract with Tony’s. A credit for air conditioners is discussed later in these reasons.

[60] As to item (6), the $500.00 sump pump claim, I accept Tony’s evidence that the price allocated to each sump pump was $550.00 including both rough-in and the sump pump, and that Tony’s had installed all of the rough-in. Only installation of the actual sump pumps remained outstanding. Mr. De Iuliis allowed a credit of $175 for the uninstalled sump pump. Mr. Nersesian has not proven that the sump pump that was installed was of the same quality as that contemplated in his contract with Tony’s.

[61] As to item (7), $420.00 to remove and reinstall two garden hose bibs, if it was within the scope of Tony’s contract, Mr. Nersesian failed to mitigate and permit Tony’s to return to remove and reinstall the two hose bibs.

[62] As to (8), $2,018.00 to replace and install toilets, Mr. Nersesian provided no evidence that the toilets supplied by Tony’s were defective and if so the efforts made to repair or replace them under warranty.

[63] For all of the items for which Mr. Nersesian claims backcharges I find that Mr. Nersesian failed to mitigate and allow Tony’s an opportunity to return and effect the repairs. On that basis alone Tony’s is not liable for the backcharges.

[64] An owner who terminates a contractor and does not allow the contractor an opportunity to return and remedy deficiencies or complete incomplete items is not entitled to backcharge the original contractor for the cost incurred to retain another contractor to rectify and complete the original contractor’s work: see Wiebe v Braun 2011 CarswellMan 324 at paragraph 32, citing and applying the Ontario trial decision in Obad v Ontario Housing Corp. [1981] O.J. No. 282 (Ont. H.C.) at paragraphs 47 and 48. As noted, the effect of an owner ejecting a contractor from the job was to prevent the contractor from continuing to work on the job. By engaging other contractors to complete the job the owner effectively prevented the original contractor from completing the contract. Similarly, even though the owner may be entitled to set off the cost to rectify deficiencies, he has an obligation to mitigate his damages and allow the original contractor to correct his own work and perform warranty work.

[65] I find that Mr. Nersesian prevented Tony’s from completing the contract work and failed to adequately mitigate damages for deficiencies by preventing Tony’s from returning to rectify deficiencies and complete the contractual scope of work.

[66] Mr. Nersesian disputes the quantum of the credit that Tony’s allowed for the return of materials, testifying that he should have been credited with an additional $300.00. This is an example of the very small monetary amounts over which Mr. Nersesian takes issue, forcing Tony to go to trial. For accounting purposes I accept and prefer the evidence of Mr. DeIuliis and find that the amounts credited (other than for air conditioners) are appropriate.

[67] In summary, Mr. Nersesian has failed to prove that he is entitled to any of the backcharges claimed against Tony’s.

(e) Tony’s claim: calculating the amount owing

[68] Tony’s final HVAC invoice #460 is dated August 12, 2014 but was not delivered until September 9, 2014. It is for $41,910.45 and credits Mr. Nersesian with $4,711.11 for the furnace and the materials paid for by Mr. Nersesian directly to the supplier.

[69] Tony’s final plumbing invoice #461 is dated August 12, 2014 but was not delivered until September 9, 2014. It is for $26,782.01 and includes the fixed price of $16,500.00 (being the original quote plus the added price for rough in and installation of three additional fixtures) plus the agreed upon extras for the check valve, two sump pumps, oxybarrier, wall mount of rain head (twice) and cast iron piping, plus HST.

[70] I find that the final invoices for plumbing and HVAC reflect the parties’ agreement as to price and had Tony’s completed all of the work listed then Tony’s would have been entitled to be paid the amount invoiced.

[71] Tony’s also invoiced Mr. Nersesian $7,137.25 for the extra for radiant heating. Payments admitted by Tony’s include payment in full of the invoice for radiant heating.

[72] The total amount invoiced on September 9, 2014 is $75,829.71. Tony’s admits receiving payments that total $43,049.24, including payment of $7,137.25 in June 2014 for radiant heating.

[73] However, Tony’s did not complete all of the work invoiced because Mr. Nersesian ejected Tony’s from the job prior to completion. Mr. Nersesian is entitled to credits for amounts paid, materials purchased and incomplete items.

[74] Deducting payments received from amounts invoiced, the balance before deducting credits for materials purchased by Mr. Nersesian and incomplete items is $32,780.47.

Credits

[75] Mr. Nersesian is entitled to credits for items included in the quotes and invoices but not supplied by Tony’s. The applicable additional credits are calculated as follows:

a) Tony’s installed ductwork but did not supply the air conditioning units. In cross-examination Mr. De Iuliis admitted that the $2,000.00 credit he allowed might be low. However, I do not accept that Mr. Nersesian’s proposed backcharge of $12,763.35 is reasonable or proven. Likely the actual value is somewhere between these two positions. A find a reasonable credit for the air conditioners is $6,000 plus HST. The result is that $6,780.00 must be deducted from Tony’s final HVAC invoice. b) Tony’s roughed in the pipes but due to sequencing of work the fixtures could not be installed. I accept Tony’s quantification of this credit of $1,500.00 for plumbing fixtures as reasonable. With HST the total credit is $1,695.00. c) I accept Tony’s quantification of a $150.00 credit for a check valve as reasonable. The quantum is small. The parties should have been able to resolve small quantification issues about which they are quarreling without taking up valuable court resources to adjudicate trifling amounts. With HST the total credit is $169.50. d) I accept Tony’s quantification of a $350.00 credit for 2 sump pumps and alarm boxes ($175.00 each) as reasonable. Mr. Nersesian claim of $500.00 is not proven. Tony’s installed the rough-in for the sump pumps and Mr. Nersesian is only entitled to a credit for the actual pumps and alarm boxes. Furthermore, the same comment applies here as previously regarding the parties’ taking up valuable court resources to litigate very small amounts. With HST the total credit is $395.50. e) I accept Tony’s quantification of a $350.00 credit for thermostats and HRV controls as reasonable. Again, the parties should not be taking up valuable court resources to litigate such a small amount. With HST the total credit is $395.50.

[76] The total of the allowable credits in favour of Mr. Nersesian for incomplete work is $9,534.50, including HST.

[77] Mr. Nersesian is also entitled to credit for materials that he purchased directly. Tony’s HVAC final invoice #460 included the cost of furnaces and materials. Mr. Nersesian purchased the furnaces and materials directly from Tony’s’ supplier, using Tony’s trade discount. In Tony’s final HVAC invoice #460 Tony’s credits Mr. Nersesian and deducts $4,711.11 before charging HST for furnaces and materials paid for directly by Mr. Nersesian. Mr. Nersesian challenged this credit but did not provide evidence of probative value to prove that he is entitled to a larger credit. I accept $4,711.11 as reasonable. No further adjustment is required to invoice #460 as the credit is deducted from the amount invoiced before adding HST.

[78] In the result, Mr. Nersesian must pay Tony’s $23,245.97 calculated as follows:

Invoice 460 (HVAC), with $4,711.11 credit: $41,910.45 Invoice 461 (plumbing): $26,782.01 Invoice 462 (radiant heating): $ 7,137.25 Credits for services and materials not supplied: ($ 9,534.50) Credits for amounts paid: ($43,049.24) Unpaid balance owing to Tony’s: $23,245.97

(f) Tony’s: section 35 damages

[79] Section 35 of the Construction Lien Act provides that a person who preserves a claim for lien for an amount which the person knows or ought to know is grossly in excess of the amount which the person is owed is liable to any person who suffers damage as a result (“section 35 damages”).

[80] Mr. Nersesian counterclaimed for section 35 damages alleging that Tony’s registered an excessive lien. He produced no evidence at trial of any damages arising from the registration of an allegedly excessive lien claim. Nor is there any evidence that Tony’s knowingly registered a grossly inflated lien claim.

[81] In JDM Developments Inc. v J. Stollar Construction Limited at paragraphs 85 and 86 Justice DiTomaso found that section 35 applied in the case before him but declined to award damages because the party claiming such damages had provided no evidence of section 35 damages. Similarly in the case before me, there is no evidence of damages.

[82] I find that Tony’s did not knowingly register a grossly excessive lien claim. If it had, Mr. Nersesian would not have been entitled to damages because he has not provided any evidence of having suffered section 35 damages.

(g) Level V’s claim: the contract

[83] The terms of the contract between Level V and Mr. Nersesian are in dispute. The issue is whether Level V is entitled to a fee of 10 percent of the total cost of construction as project manager or whether Level V is entitled to a 10 percent fee calculated on the price of services and materials supplied by contractors introduced to the project by Level V and used by Mr. Nersesian after the home had reached the weather tight stage. There is no evidence of the date on which the project reached the stage referred to as “weather tight”.

[84] Frank Pinto is the sole employee of Level V. He is not the owner but he is the person who enters into contracts, carries on the business and makes the decisions for Level V. He had been in project management for over 20 years and in the construction industry for 35 years.

[85] The evidence of Mr. Pinto and Mr. Nersesian conflicts on some of the key facts. I find that Mr. Pinto’s evidence was vague and evasive at times. He was imprecise and when asked a direct question he would provide an evasive answer or divert the question. Mr. Nersesian, as already stated, was also evasive in his answers on cross-examination. He would answer a question with a question rather than answer the question asked. Where the evidence of Mr. Pinto and Mr. Nersesian conflicts and there is no corroborating evidence then the party with the burden of proof is at a disadvantage and on some issues unable to meet the onus of proving a necessary fact on a balance of probabilities.

[86] Level V is in the business of renovating and building custom homes, subcontracting most of the work and, when needed, supplying labour and materials directly.

[87] Initially Mr. Pinto met with Mr. Nersesian to discuss renovating the existing home on the property. They discussed a budget of $994,965.00 including a management fee of $75,000.00 including HST. The renovation project did not proceed. Instead, Mr. Nersesian decided to tear down the existing home and build a new custom home. The first set of architectural drawings for a new home is dated on or about September 25, 2013.

[88] Mr. Nersesian admits that Level V was the project manager up to the weather tight stage of construction, defined as including excavation, foundation, framing, roof and windows. Where the parties disagree is in regard to the post-weather tight stage. The issue is whether the parties agreed that Level V would be paid a project management fee of 10 percent of the total cost of construction through to completion, or 10 percent of only those contracts that Level V arranged and Mr. Nersesian accepted from the weather tight stage to completion. The onus is on Level V, as the party claiming payment, to prove firstly that it is entitled to a 10 percent project management fee on all contracts through to completion, and secondly, the quantum to which it is entitled.

[89] The contract for project management services between Mr. Nersesian and Level V was verbal. The parties agreed that it would be on a cash basis without invoices, receipts or a paper trail. They disagree as to which of them insisted on this arrangement. It doesn’t matter: in the absence of documentation the party having the burden of proof is at a disadvantage.

[90] Mr. Pinto stated in evidence that “Level V did not issue Hatcho (Nersesian) any invoice for its Management Fee because the agreement between Hatcho and Level V was that the Management Fee would be paid in cash. Given the nature of the arrangement, Level V did not want to communicate in writing with Hatcho with respect to the Management Fee. Moreover, Level V did not keep a record on the computer with respect to keeping a record of the Management Fee given that it was being paid in cash.”

[91] The parties also disagree as to the terms of the contract regarding price and scope of work. There is no written quote for demolishing the existing house and building a new house. There is no written contract, invoice or other corroborating document to assist the court in determining the terms of the contract regarding the 10 percent project management fee. All payments were in cash and no written receipts were provided.

[92] Parties who make “off the books” contractual arrangements must live with the consequences. When matters go awry, the parties to such an arrangement are devoid of evidence to corroborate their assertions.

[93] According to Mr. Pinto’s evidence in chief the contract with Mr. Nersesian was for Level V to act as project manager for the entire project, from demolition of the existing structure to completion of the new custom home. The price was based on a formula: Level V would be paid 10 percent of the cost of the entire project.

[94] Mr. Pinto testified that the duties and responsibilities of a project manager include obtaining quotes from trades, overseeing all trades, attending the site for city inspections and monitoring the status of the project. The evidence is clear: Level V did not provide these services. Level V did not monitor the status of the project: if it had done so it would have known the identity of the trades supplying services and materials and would not have had to rely on Mr. Nersesian’s productions. Level V would have had site logs or site notes or a log or a journal for the project. As project manager Level V would have monitored the percentage completion for the purpose of approving payment to the trades. Level V had no evidence of carrying out any of these tasks of a project manager.

[95] Mr. Pinto relies on the budget he presented to Mr. Nersesian to renovate the house previously existing on the property, where the renovation budget included a management fee that applied to the entire project. That project did not proceed. The budget relied on by Mr. Pinto is not evidence of a contract for a project management fee to demolish the existing house and build a new one through to completion.

[96] Mr. Nersesian’s version of the contract is different. According to Mr. Nersesian, Level V was to provide project management services as well as some labour and materials until the building was weather tight, for which Level V would be entitled to charge for labour and materials provided as well as a management fee of 10 percent for trades that Level V introduced to Mr. Nersesian and that Mr. Nersesian hired on the project. Thereafter, Level V would only be entitled to a 10 percent fee based on the contract price of trades that Level V introduced to Mr. Nersesian and that Mr. Nersesian contracted with for the project.

[97] In cases where project management services are in issue the court generally receives evidence that includes the project manager’s site journal, site logs, scheduling charts or other such documents to record the progress of the job and next steps. Level V produced none of these types of documents to corroborate the work it claims to have performed as project manager.

[98] Near the beginning of the project Mr. Pinto arranged for services to be shut off: Enbridge gas, for example. Mr. Pinto also produced letters regarding attempts to conduct “locate” searches by Rogers and Enbridge to avoid damaging communication lines and gas lines on the property at the excavation stage. It appears from these documents that the property was excavated to a level below the neighbouring properties. In a City of Toronto Field Review Report dated January 10, 2014 the inspector noted that the excavation had undermined the foundations of adjacent properties. Mr. Pinto was involved in the follow up. He tenders this evidence to establish his role as project manager at the early stage of the project. He provided no documents to illustrate that Level V supplied project management services at the later, post-weather tight stage of construction. Level V has not proven that it carried out the duties of a project manager for the entire project.

[99] Mr. Pinto recites a litany of trades hired by Mr. Nersesian, fired and replaced; multiple extras and changes made by Mr. Nersesian, and general complexities arising from the continuous changes to the scope of work and the job. I have no doubt that the job was frustrating for Mr. Pinto because of Mr. Nersesian’s lack of commitment to a design and his frequent changes. However, that does not translate to additional payment unless Level V, as the party with the burden of proof, can establish the terms of the contract, the value of services and materials supplied and the amounts owing under the contract.

[100] Had Level V been the project manager then by reason of the duties normally performed by a project manager on a construction project he would have had information regarding the trades working on the site, the amounts they invoiced and the amounts Mr. Nersesian paid to them. The fact that Level V had none of this information and looked to Mr. Nersesian to provide it supports the conclusion that Level V did not provide the services of a project manager.

[101] Mr. Nersesian’s version of the contract is that if Level V introduced him to a trade willing to do the job for less money, then he would pay Level V a 10 percent commission. I conclude that the contract between the parties after the weather tight stage was for Level V to receive a 10 percent commission for the trades that Level V introduced to the project and that Mr. Nersesian contracted with to supply services and materials.

[102] Level V left the project on September 26, 2014. In Mr. Pinto’s words, “things became extremely strained towards the end of September 2014. Level V’s last date at the property was September 26, 2014”.

[103] Based on the totality of the evidence, I find that Level V has not met the burden of proving that it was entitled to a 10 percent project management fee through to completion. After the weather tight stage Level V was only entitled to a 10 percent project management fee on the amount paid by Mr. Nersesian to trades introduced to him by Level V.

(h) Level V: Calculating Level V’s fee

[104] Level V tendered the report of Joseph Emmons of Abacus Construction Consulting Inc., a quantity surveyor, in an effort to prove the cost of construction through to completion. Having found that Level V is not entitled to a project management fee on the total cost of construction, the expert report is of no assistance to the court.

[105] Had Level V proven an entitlement to a 10 percent commission on the total cost of construction I would have found the report fundamentally flawed because the opinions expressed rely on hearsay evidence and unproven facts, pricing construction of a hypothetical house rather than the house that was actually built.

[106] Having found that Level V is entitled to a fee of 10 percent of the amount Mr. Nersesian paid to the trades up to the weather tight stage, and 10 percent of the amount Mr. Nersesian paid to trades introduced to Mr. Nersesian by Level V and hired and paid by Mr. Nersesian after the weather tight stage, the next challenge is to quantify the fee.

[107] Mr. Pinto testified that he did not know how much Level V was entitled to be paid because (i) he did not know the cost of the construction, since Mr. Nersesian contracted with and paid the trades directly; (ii) Mr. Nersesian paid some of the trades in cash, and (iii) the project changed in scope. Mr. Pinto guessed the amount to which Level V was entitled to be paid and on October 31, 2014 Level V registered a construction lien for $107,059.29, basing its calculation on the cost of construction through to completion.

[108] As to items (i) and (ii), Mr. Nersesian undertook on discovery to provide a list of trades and the amounts he paid them, including cash payments. The response provided by Mr. Nersesian (attached as exhibit 19 to Mr. Pinto’s affidavit, trial exhibit 5) is a chart listing 29 items, reproduced in an almost illegibly small font. According to Mr. Pinto’s evidence the items listed in the chart total $329,945.60.

[109] Mr. Pinto takes issue with a number of the items listed on the chart, alleging that they are not credible, or that the backup documentation provided is inadequate. The problem with Mr. Pinto’s challenge is that if he was in fact the project manager carrying out the duties and responsibilities of a project manager he would have lists of the trades, the dates they worked on the project, the nature of their work and if he was at all supervising the invoicing by the trades he would know how much they charged.

[110] The Construction Lien Act provides that a contractor is entitled to a construction lien for services and materials supplied to an improvement. The onus is on Level V to prove on a balance of probabilities that it supplied the project management services for which it claims payment. In fact the evidence is to the contrary.

[111] In this case Level V provided no evidence of supervising trades other than Tony’s. There are no emails, reports of percentage completion of any of the trades for which Level V was project manager, spreadsheets, site notes, journals or invoices. The evidence of amounts charged by trades that worked on the project after the weather tight phase was provided by Mr. Nersesian. If Level V had been the project manager at that stage then it ought to have had records to corroborate the services Level V supplied as project manager. The onus is on Level V to prove on a balance of probabilities that it supplied project management services for which it is entitled to payment and construction lien remedies if it was not paid.

[112] The parties agree that Mr. Nersesian instructed the trades not to communicate with Level V’s Mr. Pinto and Mr. Pinto admitted that he did not communicate or in any way manage the trades. I find as a fact that Level V did not provide project management services once the project had reached the weather tight stage. Mr. Pinto further admitted that he did not manage Tony’s HVAC contract because he had recommend to Mr. Nersesian that he not use Tony’s on the basis that Tony’s did not have the capacity to carry out the job, and Mr. Pinto admitted that he wanted to distance Level V from that trade and the potential problems that might arise.

[113] At best the contract between Level V and Mr. Nersesian for the period after the weather tight stage was for Level V to receive a 10 percent commission on contract work performed by contractors introduced to the project by Level V and used by Mr. Nersesian. Level V has not provided evidence of any trade that falls into this category, nor has he provided evidence of the value of contract work supplied by such trades.

Amount paid to Level V for project management services

[114] Initially the parties disagreed on the amount that Mr. Nersesian had paid to Level V: Mr. Nersesian claims to have paid Level V $26,900.00 and Level V’s initial position was that it had been paid only $23,000.00. At trial Level V advised the court that it would accept as an agreed fact that Mr. Nersesian had paid Level V $26,900 for project management services.

[115] This court finds that Mr. Nersesian has paid Level V a total of $26,900.00 for project management services.

[116] Level V claims an additional management fee for Rock Concrete. Mr. Nersesian paid Level V $8,500.00 for the Rock Concrete contract. I am not satisfied that Level V has proven an entitlement to any additional project management fee for the Rock Concrete contract. The evidence that Level V relies on is supposition and conjecture.

[117] Level V claims an additional management fee of $1,879.33 for windows but has not proven its entitlement to the additional payment. There is no evidence of services and materials supplied and payments made to a window installer.

[118] Level V claims an additional management fee of $1,678.20 for project managing the Tony’s plumbing contract and an additional $500.00 for project managing Tony’s HVAC contract. Mr. Pinto admitted that Level V did not manage Tony’s but did provide evidence of arranging for inspections of the HVAC and plumbing work. Allowing Level V the benefit of the doubt, and consistent with Mr. Nersesian’s position that Level V was entitled to a 10 percent commission on trades it introduced to Mr. Nersesian, and the undisputed evidence being that Level V introduced Tony’s to Mr. Nersesian, I accept that Level V is entitled to the additional amount of $2,178.20 for managing the Tony’s plumbing and HVAC contracts.

[119] I accept that Level V is entitled to a 10 percent project management fee for the Orol carpentry contract, and that this fee is included in labour and materials invoice 1077 discussed below under “labour and materials”.

[120] The total additional project management fee that Mr. Nersesian is required to pay to Level V is $1,678.20 in respect of Tony’s, the Orol fee having been included in the invoice for labour and materials.

(i) Level V: Calculating payments owing to Level V for labour and materials

[121] Mr. Nersesian claims to have paid Level V $101,873.63 for labour and materials supplied to the project. Mr. Pinto disagrees. Mr. Nersesian did not have documents to support his assertions that he paid more than is reflected in the written invoices.

[122] Mr. Pinto asserts that Mr. Nersesian paid Level V $39,760.00 for labour and $32,095.72 for materials, leaving as owing $690.00 for labour as reflected in invoice #1057 and $10,551.82 for materials as reflected in invoice #1057. Unlike the management fee for which the parties agreed there would be no paper trail, the parties did have a paper trail in respect of the labour and materials contract.

[123] Paul Kivisto, the person who prepared the accounting for Level V passed away. Mr. Pinto explained the Level V’s accounting and invoices and Mr. Nersesian’s payments for labour and materials supplied by Level V up to the weather tight stage.

[124] Level V maintained a running invoice for labour (invoice #1057) and another running invoice for materials (invoice #1058). The invoice numbers remained the same throughout the project but the amounts recorded as amounts charged and amounts paid were updated to reflect ongoing charges and payments. The last invoice for labour (invoice #1057) is dated September 26, 2014 and reflects a balance owing of $690.00 after accounting for all amounts charged and paid to that date. The last invoice for materials (invoice #1058) is dated September 26, 2014 and reflects a balance owing of $10,551.82 after accounting for all amounts charged and paid to that date.

[125] I accept these invoices as accurately reflecting the state of accounts as between the parties for the services and materials supplied by Level V for actual construction (as distinct from project management services). The invoices are documents created at the time of the events and Mr. Nersesian provided no evidentiary basis to reject the accuracy of the invoices.

[126] I find that Mr. Nersesian owes Level V payment of $11,241.82 for labour and materials supplied and not yet paid for.

[127] Level V also claims payment from Mr. Nersesian for the amount of $13,899.00 plus a mark-up of 10 percent for carpentry services supplied by Orol to install the elevator shaft and window valences, as reflected in the September 26, 2014 invoice #1077 from Level V to Mr. Nersesian, plus a project management fee on top of this amount. The invoice reflects $10,500.00 for Orol’s carpentry services plus $1,800.00 for window installation. Including HST, the total amount of the invoice is $13,899.00. The evidence shows that Level V paid Orol $11,526.00 on September 18, 2014. Mr. Nersesian admits at paragraph 26 of his affidavit evidence in chief that he owes Level V $13,546.00 on invoice 1077, which is more than the amount proven as paid by Level V to Orol plus a 10 percent fee.

[128] Regarding Level V’s claim for payment for the Orol contract and window installation, I accept Mr. Nersesian’s admission and find that he owes Level V the admitted sum of $13,546.00. I find that Level V is entitled to be paid $13,546.00 for invoice 1077, including the 10 percent project management fee.

(j) Level V’s claim: Accounting

[129] The court accepts as an agreed fact that Mr. Nersesian paid Level V $26,900.00 in cash in respect of the undocumented project management fee. I find that Level V has only proven on a balance of probabilities that it is entitled to be paid an additional amount for project management fees for the Orol contract and the Tony’s contract. Level V has not proven entitlement to a project management fee for any other items.

[130] For the reasons given, Mr. Nersesian must pay Level V the following amounts:

a) $2,178.20 (the $1,152.60 for the Orol contract having been included in the labour and materials invoice) for unpaid project management fees; b) $11,241.82 for unpaid labour and materials supplied by Level V; and c) $13,546.00 for the services and materials (and project management fee) supplied by Orol and paid for by Level V.

[131] The total amount that Mr. Nersesian must pay to Level V is $26,966.02.

(k) Level V’s claim: Backcharges claimed by Mr. Nersesian

[132] By the end of trial Mr. Nersesian’s counterclaim for backcharges was reduced. The only backcharges claimed against Level V, being the four HVAC backcharges that Mr. Nersesian also claimed against Tony’s, are items for which Mr. Nersesian did not allow Tony’s to return and correct or complete. The items for which Mr. Nersesian claims backcharges from Level V are:

HVAC contract: (1) $1,186.50 to replace furnace venting, repair and test gas piping (2) $3,531.25 for garage furnace ductwork, to reposition furnace and to replace air filter (3) $3,095.60 to frame and drywall bulkheads around the garage furnace (4) $550.00 to repair and reinstall gas pipe leak

[133] The reason for claiming the same backcharges from Level V is that Level V introduced Tony’s to Mr. Nersesian and on that basis Mr. Nersesian does not dispute that Level V is entitled to charge its 10 percent project management fee on the services and materials supplied by Tony’s. Interestingly, however, Level V tried to distance itself from Tony’s, with Mr. Pinto testifying that he did not recommend to Mr. Nersesian that he hire Tony’s for the HVAC work because in Mr. Pinto’s view Tony’s did not have the capacity to carry out the HVAC contract work. Nevertheless, Level V took the position at trial that it was entitled to the 10 percent project management fee for the Tony’s contracts. If it is entitled to the fee, then it is also subject to and must answer the allegations that it did not properly manage the contract, resulting in additional cost to the owner.

[134] Regarding the four items claimed as backcharges from Level V, for the reasons expressed for disallowing the backcharges as against Tony’s, I find that Level V is not liable for these backcharges.

[135] I find that Level V is not liable to Mr. Nersesian for any of the backcharges claimed against it.

(l) Level V: section 35 damages

[136] In the portion of these reasons concerning Tony’s lien claim and Mr. Nersesian’s counterclaim I set out the test for awarding section 35 damages.

[137] Mr. Nersesian counterclaimed for section 35 damages against Level V alleging that Level V registered an excessive lien. As was the case with the claim against Tony’s, Mr. Nersesian produced no evidence at trial of any damages arising from the registration of an allegedly excessive lien claim. Nor is there evidence of sufficient probative value to find that Level V knowingly registered a grossly inflated lien claim.

[138] Once again, JDM Developments Inc. v J. Stollar Construction Limited applies. In order to award section 35 damages the party claiming such damages must prove his damages.

[139] Mr. Nersesian’s counterclaim for section 35 damages against Level V must fail.

IV. Conclusion

[140] In summary, Mr. Nersesian must pay to Tony’s Touch the sum of $23,245.97 and to Level V the sum of $26,966.02.

Costs

[141] The evidence in this trial was weak: all parties rely to a large extent on verbal agreements, unwitnessed conversations and undocumented cash payments. Initially the parties insisted on calling multiple witnesses, requiring a five day trial. By the trial date, however, the witness list had shrunk and the trial evidence required three days, with a fourth day of attendance required to argue costs and settle the reference report. The parties prepared voluminous affidavits of evidence in chief for the main witnesses, running up costs disproportionate to the matters in issue. All parties faced significant risk of failure at trial and it is due to their intransigent positions that these relatively small claims did not resolve prior to trial. Perhaps they had unrealistic expectations of the likely outcome. These factors will be relevant to costs.

[142] The parties shall reattend on July 18, 2018 at 10:00 a.m. to make submissions as to costs and the final reference report.

Master C. Albert. Released: July 17, 2018