Court File and Parties

COURT FILE NO.: CV-14-501818 DATE: 2018/12/05 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

RONI EXCAVATING LIMITED Plaintiff – and – PLUS DEVELOPMENT GROUP CORP. Defendant

COUNSEL: Robert J. Kennaley and Joshua W. Winter for the Plaintiff R. Donald G.W. Rollo, Dean Melamed and Mahdi Hussein for the Defendant

HEARD: November 26, 2018

PERELL, J.

REASONS FOR DECISION

A. Introduction

[1] Plus Development Group Corp. (“Plus Development”) brings a motion to oppose the confirmation of a Report by Master Albert dated April 5, 2018 made on a reference for a trial under the Construction Act. The Master’s Reasons for Decision are reported as Roni Excavating Ltd. v. Plus Development Group Corp., 2018 ONSC 2219 (Master), in which Master Albert awarded the Plaintiff Roni Excavating Ltd. $523,241.99, plus costs and disbursements.

[2] For the reasons that follow, Plus Development’s motion is dismissed and the Report is confirmed.

B. Facts

[3] Plus Development owns a property at 251-255 King Street, Toronto. In 2013, it was developing the property as a high-rise condominium. Walter Aronovitch is President of Plus Development and the majority owner. Ali Mohtahshami is Vice-President and the minority owner.

[4] Plus Development retained The Moro Group (“TMG”) as its construction manager for the project. Ivan Rak was the project manager for the project. Vijay Chansingh was the site superintendent.

[5] The property had four existing basements and the construction project required the excavation of approximately 9,281 cubic metres of soil of which the existing basements comprised 700 cubic metres. An archeological excavation had removed 450 cubic metres of soil from the property.

[6] On January 14, 2013, Roni Excavating Limited submitted a bid to be the excavation subcontractor on the project. Giocondo Niro is the owner of Roni Excavating, which he founded three decades ago. He is an experienced excavator, and the condominium project was a small job.

[7] There was a controversy between the parties about whether environmental assessment reports, which reports indicated that there was contaminated material on site, were made available to Roni Excavating before its bid and before it commenced work.

[8] Mr. Niro’s evidence was that the reports were not provided and rather he was told by Mr. Rak that the soil was clean as defined by the Ministry of the Environment (“MOE”) regulations. Mr. Niro’s evidence was that he was told that all the material to be excavated qualified as “MOE Table 2” materials and thus the soil could be disposed of at a site not designed for contaminated materials. It is less expensive to deposit clean material than contaminated materials, which must be deposited at sites designed to accept such materials.

[9] Master Albert found as a fact that the soils reports had not been provided to Roni Excavating and that Mr. Rak’s representation about the quality of the soil was false.

[10] Master Albert believed the evidence of Mr. Niro about what he was told by Mr. Rak.

[11] At trial, Plus Development sought to introduce as evidence emails that referred to what reports were included in the bid packages that were sent to Roni Excavating. At the trial, since the emails were hearsay, Plus Development proffered the emails as “business records” under Evidence Act but in an evidentiary ruling Master Albert refused to admit the email messages as business records made in the normal course of business.

[12] Relying on what it had been told by Mr. Rak and without knowledge of what the soils reports indicated about the soil on the property, Roni Excavating, prepared its bid on the basis that the site contained MOE Table 2 materials, but the bid also provided that the excavation of non-MOE Table 2 materials would be charged as an extra. Roni Excavating submitted its quote on January 22, 2013.

[13] In early 2013, Mr. Rak told Mr. Niro that Roni Excavating’s bid had been accepted. Plus Development, however, did not prepare and present a formal contract for signature until later in the year, i.e., November 2013, when the excavation job was nearing completion. The contract was signed by Mr. Niro and backdated to February 13, 2013. The contract was never signed by Plus Development.

[14] The parties agree that their relationship was governed by the terms of the written contract notwithstanding that by the time the contract had been delivered by Plus Development and signed by Roni Excavating, the parties knew that Mr. Rak’s representation about the soil was incorrect.

[15] Roni Excavating's fixed price quote excluded materials that did not qualify as MOE Table 2 materials and the quote provided a list of rates that would be charged for labour and materials for extras to the contract. Roni Excavating’s quote was reflected in the written contract. Paragraph 43 of Schedule B to the contract provided that the contract price is based on material meeting MOE Table 2 criteria and that Roni Excavating shall dispose of contaminated soil at a rate of $47 per metric tonne. Under the contract between the parties, the parties agreed that no extras shall be deemed effective until Roni Excavation received authorization in writing from Plus Development.

[16] In a submission that I will discuss further below, Plus Development argues that Roni Excavation is an experienced and knowledgeable excavation contractor and as such it ought to have reviewed the environmental reports. Plus Development submits that had Roni Excavating read the reports, then there would and should have been a site meeting to determine the logistics of removing any contaminated material on the site. Plus Development submits that proceeding as it did, Roni Excavating was reckless and, therefore, it cannot charge for the removal of any contaminated soil as an extra under the contract.

[17] Returning to the narrative, Roni Excavating commenced work in March 2013 and it disposed materials at four sites that accepted MOE Table 2 materials.

[18] Master Albert found as a fact that it was only after work was well underway, in the summer of 2013, that Roni Excavating saw the soil reports. Roni Excavating learned that the reports indicated that there might be non-MOE Table 2 materials on Plus Development’s property. These materials, however, had already been excavated, and the disposal site owner demanded that 49 truck-loads of material be removed from its site and deposited elsewhere.

[19] Around the same time, because of the smell of oil, Mr. Niro discovered contaminated soil at the construction site, and he ordered that work stop on the project while the matter was investigated by Plus Development.

[20] In September 2013, Plus Development’s principals met TMG to discuss the soils issue, but they did not invite Roni Excavation to the meetings. (Master Albert was critical of Plus Development not disclosing its documents about these meetings during the discovery stage of the action.)

[21] There were, however, phone discussions with Roni Excavating, and it refused to continue with the excavation work without written confirmation from TMG or Plus Development that it would be paid the contractual extra of $47.00 per metric tonne to remove contaminated materials, including materials already excavated.

[22] On September 25, 2013, Mr. Rak sent Mr. Niro an email message directing Roni Excavating to proceed with the removal of the contaminated soil at the contract rate of $47/m3. Mr. Niro was not satisfied with the description of the price in the email message, and Mr. Rak sent a correcting email specifying $47 per metric tonne. The correcting email, also sent on September 25, 2013, stated:

Further to our conversation, please proceed with the removal of the contaminated soil from the site at the contract rate of $47 per metric tonne. This includes contaminated materials already removed and dumped at the regular site. Any double handling is at no extra cost to the project. Please submit the tickets from the dump site to confirm the quantity of material disposed. Please ensure that trucks are on site today.

[23] Mr. Aronovitch testified that TMG’s approval was given under duress because Plus Development was concerned about project delays that might bankrupt the project.

[24] In a submission rejected by Master Albert, Plus Development argued that Roni Excavation’s work was not authorized. She found as a fact that Plus Development agreed to pay extra for materials that exceeded Table 2 measurements and that TMG confirmed this agreement in the emails of September 25, 2013.

[25] Roni Excavating resumed work on the project on September 26, 2013. It retrieved the already deposited materials. Until further testing identified the clean materials on the site, Roni Excavating deposited materials at the sites designated for contaminated soil.

[26] Roni Excavating filed in evidence documents indicating the quantities of the materials for which it claimed an entitlement to charge as an extra.

[27] Roni Excavating completed the excavation but Plus Development refused to pay. Litigation followed.

C. Procedural History

[28] On February 26, 2014, Roni Excavation registered a construction claim for lien for $857,374.49 for contract work and extras.

[29] Plus Development counterclaimed for $500,000.00 for delay and for alleged deficiencies.

[30] After Roni Excavation brought a motion for a summary judgment, Plus Development abandoned its counterclaim. It paid Roni Excavation $332,131.80, and the parties agreed that the balance of Roni Excavating’s claim would be determined at trial.

[31] On September 23, 2015, the action was referred to a Master for trial. The trial proceeded as a summary trial with affidavit evidence in chief followed by cross-examinations. The trial duration was four days.

[32] Messrs. Rak and Chansingh were not called as witnesses.

[33] In her detailed Reasons for Decision, Master Albert directed Plus Development to pay Roni Excavation $523,241.99 plus prejudgment interest at the Courts of Justice Act rate of interest of one and three-tenths percent (1.3%) from April 9, 2014, being the date the action was issued, to April 5, 2018, plus post-judgment interest.

D. Discussion

1. Plus Development’s Submissions

[34] Plus Development submits that the Master erred by accepting Mr. Nero’s hearsay evidence about what Roni Excavating knew about the soil conditions on the site and that she erred in refusing to admit the business records evidence that would have discredited Mr. Nero’s evidence.

[35] Plus Development submits that Roni Excavating did know that there might be contaminated materials on the site or that Roni Excavating was reckless in not knowing that there might be contaminated materials on the site. Plus Development submits that by proceeding as it did Roni Excavating failed to meet the standard of behavior expected of an experienced excavator and, therefore, it cannot charge for the removal of any contaminated soil as an extra under the contract.

[36] Further, Plus Development submits that Roni Excavating had the onus of proving that it could charge as an extra for the contaminated soil removal and that the Master: (a) erred by finding that Roni Excavating had satisfied the onus of proof; or, (b) she erred by placing the onus on Plus Development to refute that the charge for the removed soil was an extra.

[37] Further still, Plus Development submits that the Master improperly assessed the evidence about the extent of contaminated material on the property.

[38] Finally, Plus Development submits that Roni Excavating is not entitled to charge for the extra because under the contract between the parties, the parties agreed that no extras shall be deemed effective until Roni Excavating received authorization in writing from Plus Development.

2. Analysis

[39] There is no merit in Plus Development’s appeal, which focuses on the Master’s evidentiary rulings and her findings of fact. This appeal must fail because Plus Development has not identified any palpable or overriding error of fact and there was ample evidence to support the Master’s findings of fact.

[40] The Master’s evidentiary rulings were correct. Mr. Nero’s evidence about what he was told by Mr. Rak was not admitted as hearsay proof that there might, in truth, be contaminated materials on the property. It was admitted as non-hearsay evidence of what Mr. Rak said and explains why Mr. Nero did not read the soils reports at the outset.

[41] I agree with the Master’s conclusion that the email message was not a business record, but, in any event, there was no palpable or overriding error, and there was a sound basis for the Master to find as a fact that Roni Excavating did not know about the soils problem until it actually saw the soils reports in the summer of 2013 or when Mr. Nero perceived the smell of oil and ordered a work stoppage.

[42] I agree with Roni Excavation’s argument that even if it had been proven that Roni Excavating had the soils reports in early 2013 that would have not changed the ultimate result that under the contract it was entitled to charge as an extra for the removal of the contaminated material.

[43] As the Master noted in her Reasons for Decision, the quote and the contract contemplated an extra charge for material that exceeded MOE Table 2 limits. As she noted in her Reasons for Decision, had Roni Excavating known about the contaminated materials, it would have disposed of them at a proper site and the price would have been the same as ultimately charged.

[44] Moreover, whether or not Roni Excavating met the standard of a reasonably competent excavator is beside the point, because both parties knew all it needed to know on September 25, 2013, when Plus Development’s agent and project manager directed Roni Excavating to remove the contaminated soil from the site at the contract rate of $47 per metric tonne.

[45] There is no basis for economic duress, and it is worth noting that it was after work had resumed that Plus Development sent the formal written contract that confirms the $47 per metric tonne price. The formal contract was sent for execution at a time when Plus Development knew that Roni Excavating was removing materials that had not been identified as clean materials and for which it would be charging as an extra.

[46] The Master made no error, much less a palpable or overriding error, in concluding that the extra was authorized by Plus Development, and, thus, there is no merit to Plus Development’s submission that Roni Excavating is not entitled to charge for the extra. The payment for the extra was approved in writing by Plus Development. The emails of September 25, 2013 and the context of them support the Master’s finding that Plus Development authorized the extra.

E. Conclusion

[47] The Master’s Report should be confirmed and there should be judgment accordingly.

[48] If the parties cannot agree about the matter of costs, they may make submissions in writing beginning with Roni Excavating’s submissions within twenty days of the release of these Reasons for Decision, followed by Plus Development’s submissions within a further twenty days.

Perell, J. Released: December 5, 2018