Court File and Parties

COURT FILE NO.: CV-14-20552 DATE: 20181204 ONTARIO SUPERIOR COURT OF JUSTICE

IN THE MATTER OF the Construction Lien Act, R.S.O. 1990, c. C.30

BETWEEN:

FRONT CONSTRUCTION INDUSTRIES INC. Plaintiff – and – 38-44 CHATHAM STREET EAST (2012) LIMITED Defendant

COUNSEL: Dante D. Gatti, for the Plaintiff James K. Ball, for the Defendant

HEARD: January 22, 23, 24, and April 26, 2018

REASONS FOR JUDGMENT

HOWARD J.

Overview

[1] This action involves a construction project on lands and premises municipally known as 38 Chatham Street East, in Windsor, Ontario. At the material times, the subject property was owned by the defendant, 38-44 Chatham Street East (2012) Limited, which operated as Green Corp. Construction Management (“Green Corp.” or the “Owner”).

[2] In or about September 2012, the Owner entered into a construction contract with the plaintiff, Front Construction Industries Inc. (“Front Construction” or “Front”), as general contractor, for the performance and provision of certain alterations to the building, to be known as the Chatham Wellness Centre, located on the subject property.

[3] Front Construction brings this action against the Owner for payment of the total sum of $62,536.46, consisting of the unpaid holdback of $53,576.92, together with amounts claimed for two extras, one for certain wrap-around siding or cladding work in the amount of $4,173.99, and the second for the supply and installation of certain drywall in the amount of $4,785.55.

[4] The Owner counterclaims for delay, claiming that because of the failure of Front Construction to diligently perform the work, resulting in many months’ delay in achieving substantial performance, the Owner lost a long-term leasing opportunity of the Chatham Wellness Centre, representing a net revenue loss of $290,000 per year for an initial five-year lease term and not less than $290,000 per year for a renewal term of ten years. The Owner claims an aggregate net revenue loss of $4,350,000 (plus HST), representing a present value of not less than $3,225,000 before future mitigation.

[5] Liability for payment of the statutory holdback is not in dispute. However, the Owner contests any obligation to pay anything for the two extras, and Front vigorously denies liability for the Owner’s delay claim.

[6] The trial of this matter was held in Windsor on January 22, 23, 24, and April 26, 2018. The court heard evidence from six witnesses over four days, with final submissions delivered on the last day.

[7] For the reasons that follow, I would allow the amounts claimed by Front Construction and dismiss the Owner’s counterclaim.

Factual Background

[8] I do not propose to summarize the evidence of each of the witnesses who testified before me over this four-day trial, nor to recount the history of the entire dealings between Front and the Owner. There is no need to repeat all of that detail here. My decision deals with the particulars of the material evidence only insofar as necessary to determine the legal issues in question or provide sufficient context for the determination of those issues.

[9] The principals of Front Construction who gave evidence at trial before me were Mr. Gary Anderson and Mr. Paul Merritt. Gary Anderson was the project manager/estimator for Front Construction on the Chatham Wellness Centre project, and Paul Merritt was the president of Front Construction.

[10] The parcel register for the subject property was entered into evidence before me. It indicates, inter alia, that on February 25, 2011, the subject property was transferred under power of sale from 38 Chatham Street East Ltd. (i.e., not the same entity, precisely, as the corporate defendant here) to Chatham Street Realco Inc. On October 24, 2012, title to the property was conveyed from Chatham Street Realco Inc. to Green Corp., the defendant Owner. The circumstances of these conveyances were not explained in the evidence before me.

[11] When Green Corp. acquired the property in October 2012, the president and sole director of Green Corp. was Mr. Kim Vangeloff, who was called as a witness for the plaintiff. The evidence of Mr. Kim Vangeloff was that his younger brother, Mr. John Vangeloff, was the person who looked after the day-to-day operations of Green Corp. – as he said, his brother “ran Green Corp.” The evidence of both brothers was that it was Mr. John Vangeloff who was the person involved with the construction of the Chatham Wellness Centre project, and he (John) was the person who was responsible for the day-to-day monitoring of the construction process. John Vangeloff, who was called as a witness for the Owner, described himself as just an employee of Green Corp.

[12] The evidence of the brothers Vangeloff, and of the plaintiff, is that Green Corp. also had a “partner” or “investor” in the Chatham Wellness Centre project in the person of Mr. Nigel Axton.

[13] It is common ground that, prior to the events in question here, an adult entertainment lounge had operated out of the previous building located on the subject property. The construction of the Chatham Wellness Centre project was widely regarded as part of the rejuvenation of the downtown core of the City of Windsor.

[14] Front Construction submitted a written bid for the Chatham Wellness Centre project dated September 13, 2012 (which, I note, was actually prior to the date upon which the Owner acquired title to the subject property). The stipulated price set out in the bid was $484,400. The contemplated work required Front to complete “shell construction” only for the three-storey building. In other words, Front was to be responsible for construction of only the basic structure; it was not responsible for improvements such as finished interior walls, finished floorings, or finished ceilings. It was contemplated that the Chatham Wellness Centre building would be leased out, and the tenants or subtenants would be involved in the finishing improvements.

[15] The consultant for Chatham Wellness Centre project was MMA Architects Inc. (the “Consultant”). The lead person at MMA Architects Inc. for the project was Mr. Stuart Miller.

[16] The evidence was that Mr. Miller of the Consultant worked in association with Mr. Leslie Wright, who was, at the material times, the “project consultant for the Owner,” operating out of his own firm, Innovative by Design. At the time of trial, Mr. Wright was employed by the City of Windsor within its Building Department as a plans examiner. The evidence of Mr. Wright was that, at the material times, he reported directly to the Owner but that he did have “a partner on the project,” being the architect Mr. Miller of the Consultant, who was described by all as “the payment certifier” for the project.

[17] While it is clear that Mr. Wright was not an employee of the Owner, it is also clear on all of the evidence before me that Mr. Wright, as the project consultant for the Owner, played a significant role in the construction process.

[18] As but one example, I note the email dated September 19, 2012, wherein Mr. Wright wrote to the investor Mr. Nigel Axton to advise that he had reviewed the bids for the project and had met with two lowest bidders, and that in talking with Front Construction, Mr. Wright thought that Front had a very well thought out plan, “which gives me a good comfort level that they have priced the work correctly,” and he then recommended that Front be awarded the contract. Mr. Wright said to Mr. Axton: “[w]ith your blessing, I would like to let Front Construction know they are the lowest bidder, and the other contractors know they were not (so they will stop calling and asking).”

[19] It is apparent that the Owner accepted Mr. Wright’s recommendation and acted on his advice concerning the question of who was to be retained as the general contractor for the project. That was obviously a very important decision. To my mind, that informs the question of Mr. Wright’s authority in the context of the Chatham Wellness Centre project.

[20] I also note that most of the critical correspondence in question passed between Front Construction, as general contractor, and Mr. Wright, as project consultant for the Owner. There was very little correspondence, if any, in evidence before me passing between Front Construction and Mr. Millar or the Consultant directly. Clearly, Mr. Wright was the front person for the Owner on the project.

[21] Consequently, following Mr. Wright’s recommendation, Front Construction was identified as the successful bidder, and subsequently Front and the Owner entered into a standard-form “CCDC 2” [^1] construction contract on September 25, 2012, which was subsequently revised, as described below, on October 19, 2012 (the “Contract”).

[22] Initially, the Contract specified that the date for substantial completion of the work was February 22, 2013.

[23] Articles 5.1 to 5.3 of the Contract addressed the question of how Front Construction was to be paid. In short, Front was to forward invoices or an “application for progress payment” to the Consultant, which would then be reviewed and, if acceptable, approved by the Consultant. If accepted, the Consultant would then issue a “certificate for payment,” which then triggered an obligation on the part of the Owner to make payment 20 days thereafter.

[24] The original bid submitted by Front Construction was based on Front’s supply and installation of an elevator manufactured and supplied by ThyssenKrupp Elevator. The quotation from ThyssenKrupp for the elevator, dated September 13, 2012, was $59,900 (plus HST).

[25] However, the Owner apparently wanted to accept the quotation for the supply of the elevator submitted by Otis Elevator Company (“Otis”). The quotation from Otis for the elevator, dated September 27, 2012, was $71,900 (plus HST).

[26] The quotation from Otis was $12,000, or over 20 per cent, more than that of ThyssenKrupp. The reasons why the Owner or its investors should insist on accepting the more expensive quotation from Otis rather than ThyssenKrupp were not fully developed in the evidence before me.

[27] In any event, for reasons known to the Owner, the Owner accepted the quotation from Otis, and the Contract was amended effective October 19, 2012, to provide for an increase in price for the supply an installation of the more expensive Otis elevator, as follows:

Amendment for Elevator – Revision, dated 19 October, 2012*

Owner, Greencorp Construction Management, has requested that the Elevator included in the Front Construction Industries Inc. tender submission price of 13 September, 2012, be revised from the model manufactured by ThyssenKrupp Elevator (Canada) Limited, to an alternate model as manufactured by Otis Canada Inc. As the prices for this alternate Otis elevator, is greater than the elevator from ThyssenKrupp, by an amount of $12,000, plus HST, and as per Otis Canada Inc. letter to Otis Elevator Company, Hamilton, dated 27 September, 2012, this CCDC 2 document has been revised, and the increase cost included in the “Contract Price” Section No. A-4.

[28] The Contract was also then revised to provide a new substantial completion date of March 8, 2013.

[29] The payment terms dictated by Otis were set out in its quotation of September 27, 2012, and provided that:

Description Percent of Total Contract Value/Billing Cycle

Engineering, Submission 25% Billed upon award. Due in 30 days or prior of Approvals & Shop to release of factory orders whichever occurs Drawings first.

Factory Materials 65% Billed the month before shipment occurs. Due the month material is delivered. Installation will not commence until the material is paid for.

Installation Labor 10% Billed each month as work progresses.

Retention 10% Due 30 days after turnover of equipment.

[30] As such, the payment terms proposed by Otis, and accepted by the Owner, were different than and represented a departure from payment provisions contemplated by the Contract. Perhaps not surprisingly, the Otis terms of payment were more favourable to the supplier than the standard CCDC 2 terms.

[31] By email dated November 15, 2012, from Mr. Anderson to Mr. Wright, with copy to Mr. Miller, Front Construction expressly drew the Owner’s attention to the particular payment terms outlined by Otis. Front advised the Owner’s representatives that it was issuing a purchase order based on Otis’ proposal and payment terms and that Front had asked Otis to proceed with shop drawings. Mr. Anderson advised Mr. Wright that, “[w]e will invoice accordingly to ensure an expeditious order.”

[32] No objection was made by the Owner. Indeed, by reply email dated November 16, 2012, Mr. Wright indicated his consent to Front’s plan for proceeding.

[33] Front issued a purchase order to Otis, no. 1304-6, dated November 15, 2012, in the amount of $71,900.

[34] Under the terms of the Otis quotation, Otis was to receive 25 per cent of the quoted amount “billed upon award.” The 25 per cent deposit on $71,900 would amount to $17,975.

[35] By cheque dated October 31, 2012, the Owner paid Front Construction the amount of $25,000 as “payment on account.” At the time, no certificate of payment for any amount had been issued by Front Construction, and Front, based upon the Contract’s billing and payment terms, was owed nothing.

[36] Otis then issued an invoice on December 12, 2010, for $18,280.58, which was received by Front on December 17, 2012. Under the terms of the Otis quotation, the 25 per cent deposit on $71,900 would amount to $17,975; that amount, less the holdback ($1,797.50), plus HST ($2,103.08), equals $18,280.58. By cheque dated January 8, 2013, Front Construction paid the Otis invoice for $18,280.58.

[37] In all of the circumstances, I find that the Owner made the payment of $25,000 on October 31, 2012, as payment on account of and in contemplation of the quotation from Otis dated September 27, 2012, required for the 25 per cent deposit required by the Otis terms of payment.

[38] Construction on the Chatham Wellness Centre project commenced and proceeded without incident. There were numerous site meetings held. Front Construction and the Owner agreed to some 26 change orders as the construction proceeded.

[39] I note that some of the change orders were not actually signed by the Owner (e.g., CO-08, 12-118, dated February 13, 2013; CO-15, 12-118, dated April 16, 2013; and CO-16, 12-118, dated April 16, 2013).

[40] As well, some change orders were not signed by the general contractor (e.g., CO-29, 12-118, dated January 29, 2014; and CO-30, 12-118, dated January 29, 2014).

[41] Further, a number of change orders were all signed by the Owner on the exact same day, being May 3, 2013, in some cases being months after the fact (e.g., CO-01, 12-118, dated February 18, 2013; CO-05, 12-118, dated February 22, 2013; CO-03, 12-118, dated February 18, 2013; CO-14, 12-118, dated April 11, 2013; CO-02, 12, 118, dated April 15, 2013; CO-10, 12-118, dated April 16, 2013; CO-06, 12-118, dated April 16, 2018; CO-12, 12-118, dated April 16, 2013; CO-13, 12-118, dated April 16, 2013; CO-09, 12-118, dated April 16, 2013; and CO-17, 12-118, dated April 18, 2013).

[42] Clearly, in the manner in which they dealt with the “paperwork” of the change orders, the parties mutually consented to depart from the strict provisions of the CCDC 2 standard-form Contract.

[43] I note that by email correspondence dated January 7, 2013, Gary Anderson for Front Construction advised Mr. Wright and the Consultant that, following his confirmation with Otis that morning, Otis was “heading into Fabrication with an onsite date of April 30th and completion date (including TSSA Inspection) for May 24th, 2013.”

[44] On January 31, 2013, Green Corp., as landlord, entered into a commercial lease with Chatham Wellness Centre Inc., as tenant (the “Head Lease”). Chatham Wellness Centre Inc. (the “Tenant”) was a special purpose corporation, the principal of which was Mr. William Arvanitis. Indeed, as counsel for the Owner submitted, “Mr. Arvanitis is the personification of that tenant.” [^2] Mr. Arvanitis signed the Head Lease on behalf of the Tenant. Mr. Arvanitis testified that he became aware of or involved in the subject property through discussions with Nigel Axton. Apparently, Mr. Arvanitis had previous dealings with Mr. Axton.

[45] The initial term of the Head Lease was for a period of five years, commencing July 1, 2013. The Tenant had the option to renew the tenancy for one further period of ten years. The Head Lease provided that the first six months of the tenancy would be rent free and that thereafter the Tenant would pay, inter alia, base rent of $24,166.67 per month (exclusive of taxes, maintenance, and insurance), or $290,000 per annum. It appears that the Tenant paid Green Corp. a deposit of $63,656.54, which was an approximate amount of first and last months’ rent (with HST).

[46] Apparently, it was never the intention of the Tenant to occupy the premises. Rather, the plan of Mr. Arvanitis was that the Tenant would sublet the premises and the Chatham Wellness Centre building would be akin to a medical arts building, with a pharmacy on the main floor, doctor’s offices on the top floor, and sports medicine facilities in the lower (below-grade) level.

[47] To that end, some months before the Tenant entered into the Head Lease, the Tenant signed three documents, each entitled “Occupancy Term Sheet Agreement,” with the Tenant signing as “Sublandlord” and each of the three intended subtenants of the building signing as “Occupant.” Each term sheet agreement contemplated a five-year term commencing, January 1, 2013.

[48] The first term sheet agreement, executed October 19, 2012, was signed by “Athlete’s Care Sports Medicine Centres Inc., in trust for a company to be incorporated” in respect of the lower level, and provided for annual rent of $94,500. Mr. Arvanitis testified that he is an investor in some of the properties of Athlete’s Care Sports Medicine Centres Inc. (“Athlete’s Care Centres”). Mr. Arvanitis said that he had an interest in 18 or 19 Athlete’s Care Centres.

[49] The second term sheet agreement, executed November 1, 2012, was signed by “Appletree Medical Group, in Trust for a franchisee to be incorporated” in respect of the second floor, and provided for annual rent of $52,500. Mr. Arvanitis testified that Appletree Medical Group is a large organization of owned and franchised medical clinics, operating in over 65 locations.

[50] The third term sheet agreement, executed November 1, 2012, was signed by “Appletree Medical Group, in Trust for a Pharmacy to be incorporated” in respect of the ground floor, and provided for annual rent of $157,500.

[51] By email correspondence dated April 11, 2013, Mr. Anderson for Front Construction wrote to the Otis representative to ask for an update as to when Otis expected to be arriving on site. Mr. Anderson also advised that, the “shaft has been completed for a month now and you are able to freely move in un-obstructed.”

[52] By email correspondence dated April 12, 2013, Mr. Anderson wrote to Mr. Wright and the Consultant to advise that “Otis’s response to schedule is that Materials will not be shipped until May 08th (see below), at which time they can begin installation. Nothing received with respect to actual completion from that date.”

[53] Just a few weeks later, on May 1, 2013, Front Construction received correspondence from multiple sources confirming that, as of May 1, 2013, the International Union of Elevator Constructors had gone on strike against the National Elevator and Escalator Association (N.E.E.A.), which is comprised of Otis, ThyssenKrupp, Kone, and Schindler.

[54] The evidence indicates that, according to Front Construction’s progress billings, as of the date of May 1, 2013 – that is, as of the commencement of the Otis elevator strike – 78% of the work on the Chatham Wellness Centre project had been completed.

[55] The evidence indicates that the Otis elevator strike concluded on or about July 2, 2013.

[56] On July 2, 2013, Gary Anderson sent an email to Otis to inquire about a revised schedule. “We were just about to have our order delivered to site when the Strike hit.” Mr. Anderson asked Otis to respond as soon as possible with an onsite date.

[57] Otis then issued an invoice dated July 13, 2013, for $47,529.50, which was received by Front Construction on July 17, 2013. Again, the Otis terms of payment provided that, following the 25 per cent deposit, a further 65 per cent of the quotation would be “[b]illed the month before shipment occurs. Due the month material is delivered. Installation will not commence until the material is paid for.” The July 13th invoice represented the further 65 per cent under the Otis terms of payment. In effect, Otis was requesting payment for 90 per cent of the quotation.

[58] On July 17, 2013 – the same day that Front Construction received the July 13th invoice from Otis – Mr. Anderson sent an email that evening to Mr. Wright and the Consultant. Mr. Anderson attached a copy of the Otis invoice of July 13, 2013, and Front’s progress invoice no. 1304-9 for work as of July 31, 2013. Mr. Anderson said: “[p]lease find attached our invoice for July as now triggered by Otis Elevator. Also find attached, Otis’s recent Invoice. I ask that you provide a payment Certificate and may wish to couple June and July’s together if it were to make it easier.”

[59] Mr. Wright responded to Mr. Anderson that same evening and asked about the status of the elevator and, specifically, whether it was on site now.

[60] Mr. Anderson replied early the next morning, on July 18, 2013, and expressed his frustration with trying to get a meaningful response from Otis as to when the elevator would be delivered to the site, as follows:

It’s rather frustrating Leslie, no response to E-Mails, no return calls from phone messages. The only contact is another Invoice (as per their terms of payment) which indicates that materials should be arriving to the site soon.

I’m picking up the phone right now to call again. If I find anything out I’ll keep you posted.

[61] It is a reasonable inference from the email correspondence to conclude that at some point Mr. Anderson actually got a response from Otis and was told that the elevator would be delivered on site in mid-September 2013. By email dated July 29, 2013, the Consultant wrote to Mr. Wright and indicated that in conversation with Mr. Anderson that afternoon, he (Mr. Miller) “was told that the expected delivery date is now mid September ‘13.”

[62] The evidence indicates that, according to Front Construction’s progress billings, as of Front’s progress invoice for July 2013, with the exception of the Otis elevator, almost all of the work on the Chatham Wellness Centre project had been completed.

[63] The evidence also indicates that, based on the spreadsheets maintained by Front showing the accounting detail for the Chatham Wellness Centre project, as of July 31, 2013, the cumulative amount that had been certified by the Consultant as owing by the Owner but which remained unpaid was $68,883.81. The cumulative amount owing based on the invoices rendered was $157,640.74.

[64] There was a subsequent email exchange between Mr. Anderson and Mr. Wright on August 22, 2013, in which Mr. Anderson confirmed the information that Mr. Miller had passed along to Mr. Wright, i.e., that the last word from Otis was that they were expecting to be on site mid-September. Mr. Anderson indicated that he had attempted to follow up with Otis since the July information but had nothing further to report.

[65] In the same email, Mr. Wright asked Mr. Anderson if there had been “any movement with payments from John [Vangeloff] and Nigel [Axton]?” and Mr. Anderson replied: “NONE.” Mr. Wright indicated he wanted to touch base with Mr. Anderson before he went to contact Messrs. Vangeloff and Axton, and said, “we seem to be in a holding pattern. However, there should be no reason for them not to pay their account up to-date.”

[66] It appears that, on all of the evidence before me, the elevator was delivered to the construction site on or before September 13, 2013. There are no bills of lading or shipping receipts or other documentation that directly confirms the precise date of delivery in evidence before me. It is clear that Front Construction’s forces were not on site when the elevator was delivered. The evidence of John Vangeloff was that he was in the vicinity of the work site when he saw the truck with the elevator and boom crane arrive, and he then walked over and allowed the truck entry onto the premises. Mr. Vangeloff does not remember the precise date or even the month; he just remembers that the weather was hot, such that he was wearing shorts.

[67] However, what is clear is that by letter dated September 13, 2013, the Consultant wrote to Green Corp. and indicated that it had made “periodic reviews of construction progress for this project,” and confirmed that the elevator equipment had been delivered. Mr. Miller said: “[w]e have reviewed the Contractor’s Progress Invoice No. 1304-9, dated 31 Jul, 2013, with the July Otis invoice for the Elevator, and now confirm that the elevator equipment is on site, ready for installation by the contractor as per work of this contract.” [Emphasis added.] Accordingly, the Consultant enclosed its certificate for payment no. 8, dated September 13, 2013, which included the amount invoiced by Otis for the elevator.

[68] It seems clear from the correspondence between the parties in August 2013 that the elevator had not been delivered at that point. The information from Mr. Anderson in July 2013, which Mr. Millar referenced in his email to Mr. Wright of July 29, 2013, was that the expected delivery date was then mid-September. Mr. Anderson himself confirmed the same mid-September expected delivery in his email to Mr. Wright of August 22, 2013. The date of September 13th is almost as close as one can get to “mid-September.” Moreover, we know from Mr. Miller’s letter to Green Corp. of September 13th that the elevator was on site as of that date. Given the hold-up that the elevator strike had caused to the project, one would think that Mr. Miller would be motivated to advise the Owner as soon as possible that the elevator was then on site and the project ready to proceed. I do not believe that is the type of information that the Consultant would sit on for a number of days or weeks, especially when the Consultant knew that, under the Otis terms of payment, the Otis invoice for the material was due the month that delivery was made. And the September 13th date is not inconsistent with the recollection of John Vangeloff, as the City of Windsor has been known to have hot weather in the month of September. On all of the evidence before me, I find that on a balance of probabilities the elevator was delivered to the site on or before September 13, 2013.

[69] On September 19, 2013, there was a further email exchange between Mr. Anderson and Mr. Wright about payment details, in the course of which Mr. Anderson advised Mr. Wright that Paul Merrick, the president of Front Construction, had picked up “the accounting ball” on the project as Mr. Anderson had to move forward onto other projects. Mr. Anderson confirmed that Front had received “no payments for months now and there hanging it all on the Elevator.” Mr. Anderson also advised Mr. Wright that Otis was then expected to be on site in the “first week of October.” Mr. Anderson said that he would pass along Mr. Wright’s inquiry to Mr. Merrick for reply.

[70] Mr. Merrick replied to Mr. Wright that same day, and in his email of September 19, 2013, advised Mr. Wright that the last payment certificate for which Front Construction was fully paid was certificate no. 5, which related to Front’s invoice dated March 31, 2013, that Green Corp. had made a partial payment on certificate no. 6 (having paid only $50,000 out of a $110,122.90 invoice), and that, excluding holdback, “we are currently owed approximately $152,000.00.” Mr. Merrick advised that Front’s last communication with John Vangeloff was about ten days previous, that Mr. Vangeloff was supposed to get back to Front, and that, accordingly, Front had requested a conference call with Mr. Axton, the investor.

[71] Mr. Merrick concluded his email to Mr. Wright by confirming that the elevator installation is currently scheduled for the first week of Ontario, and that “I would expect that Otis too, will be expecting payment prior to installation and turnover of the elevator.”

[72] Four days later, on September 23, 2013, Front Construction received correspondence from Otis inquiring as to when their invoice of July 10, 2013, for $47,529.50 would be paid and advising that: “[u]ntil we are in receipt of these funds we are unable to mobilize your site and commence the installation.”

[73] In my view, the position adopted by Otis in its mobilization warning was not fully consistent with its own payment terms. The payment terms of Otis provided that the further 65 per cent, i.e., the $47,529.50 amount, is “billed the month before shipment.” Otis did not comply with that term, in that, while Otis billed for the 65 per cent in July 2013, the shipment did not occur the month after the invoice, i.e., August 2013. I have found that the elevator was delivered on or before September 13, 2013. With delivery in September 2013, under its own terms of payment, Otis’ invoice was due the month the material is delivered. Presumably, that would mean the July invoice was due as of September 30, 2013. The terms of payment did not say “due upon delivery”; they said due the month the material is delivered. As such, the demand by Otis on September 23rd that it would not mobilize until it was paid strikes me as somewhat inappropriate. [^3]

[74] In any event, on the same day that Front Construction received the mobilization warning from Otis, Mr. Merrick emailed Mr. Wright and attached a copy of the September 23rd correspondence from Otis. Mr. Merrick said, “[y]our earliest response and update regarding the expected payment date of all overdue amounts will enable us to confirm Otis’ schedule accordingly.”

[75] Three days later, Mr. Wright replied to Mr. Merrick, saying in his email of September 26, 2013: “[t]hanks Paul for the update I will pass it on, and see what pressure I can apply to get some movement.”

[76] On September 30, 2013, Mr. Merrick also faxed a copy of Otis’ September 23rd mobilization warning directly to Green Corp. Mr. Merrick’s covering fax transmittal sheet stated: “[a]ttached find both our statement of overdue amounts together with a copy of Otis’ letter received on September 23rd [and] forwarded on that same date. Please advise when we can expect these amounts to be paid.” The attached statement of overdue amounts showed that Front Construction was then owed $160,784.47.

[77] Included in that $160,784.47 was Front Construction’s progress invoice no. 1304-9 dated July 31, 2013, which included the $47,529.50 amount required by Otis. Again, by its certificate for payment no. 7, dated July 30, 2013, delivered to Green Corp. that same day, the Consultant had certified that the amount was to be paid by the Owner.

[78] On October 1, 2013, the Owner issued a bank draft made payable directly to Otis in the amount of $47,529.50. The Owner also issued a second bank draft that day made payable to Front Construction for $12,593.40. (The explanation for the precise amount paid to Front was not in evidence before me.)

[79] Within a day or two of the Owner issuing the bank draft to Otis, Mr. Arvanitis entered into a second set of occupancy term sheet agreements for the building on behalf of the Tenant. The terms and occupants of this second set of term sheet agreements are almost identical to the first set of term sheets that had been executed the previous year.

[80] On October 2, 2013, Mr. Arvanitis signed a term sheet agreement with “Appletree Medical Group, in Trust for a franchisee to be incorporated” in respect of the second floor, and provided for annual rent of $52,500. The term was to commence November 1, 2013, with a six-month rent-free period, such that the first rent payment would be due May 1, 2014.

[81] On October 3, 2013, Mr. Arvanitis signed a term sheet agreement with “Appletree Medical Group, in Trust for a Pharmacy to be incorporated” in respect of the ground floor, and provided for annual rent of $157,500. Again, the term was to commence November 1, 2013, with the same six-month rent-free period.

[82] The third term sheet agreement was also signed on October 3, 2013, by Mr. Arvanitis and “Athlete’s Care Sports Medicine Centres Inc., in trust for a company to be incorporated” in respect of the lower level, and provided for annual rent of $94,500. As with the other two term sheets, the term was to commence November 1, 2013, with the same six-month rent-free period.

[83] It is common ground that work crews from Otis attended the subject property on November 11, 2013, and commenced installation of the elevator.

[84] Two months later, on January 15, 2014, the Consultant certified that the construction contract for the subject property was substantially performed as of that date.

[85] As indicated in the parcel register, the subject property was sold to Winthorp Valentine Inc. on January 11, 2016. The abstract indicates that the purchase price was $1,316,667. The principal of Winthorp Valentine Inc. is Mr. Arvanitis. He is a director and officer of the company and apparently holds the shares of the company in trust. [^4]

[86] It is common ground, however, that the building remains vacant to date. Mr. Arvanitis testified that the building was never occupied and that, even as of the date of trial, the building continues to be unoccupied.

Issues

[87] As I have referenced, there is no issue concerning liability for the statutory holdback. In its pleading, the Owner admits the statutory holdback is otherwise payable and clarifies that the amount in question is 53,576.92. [^5]

[88] As presented at trial, the material issues that remain to be determined are as follows:

a. Is the Owner liable for payment of the Side Cladding Extra? b. Is the Owner liable for payment of the Drywall Extra? c. Is Front Construction liable for the Owner’s delay claim?

Analysis

Is the Owner liable for payment of the Side Cladding Extra?

[89] The Owner takes the position with respect to both of Front Construction’s claim for extras that the Owner did not sign the requisite change order and did not consent to Front Construction completing the work.

[90] It is common ground that no signed change order exists for either claim for the extras. However, in my view, that is not determinative. There were various instances in the instant case where the parties had dealings with each other that were not in full and strict compliance with the CCDC 2 standard-form contract. Indeed, one of the central issues in this case – the Otis terms of payment – reflect an instance where the Owner agreed to contractual terms that departed from the CCDC 2 contract.

[91] Further, as I have referenced in para. [39] above, there were at least three instances where the change orders in questions were not actually signed by the Owner but the work was authorized (e.g., CO-08, 12-118, dated February 13, 2013; CO-15, 12-118, dated April 16, 2013; and CO-16, 12-118, dated April 16, 2013).

[92] Moreover, as referenced in para. [41] above, there were at least eleven instances where the change order was signed by the Owner, all on May 3, 2013, for work that was performed weeks if not months previously. In each of those instances, there is a handwritten notation on the change order, in what appears to be Mr. Miller’s handwriting, indicating that there was a verbal agreement on a specified previous date for the work to be performed. In other words, in all of those instances, the work was authorized and went ahead on the basis of an oral agreement, and then the Owner papered the change orders afterwards, signing them weeks or months later, all on May 3, 2013.

[93] Again, as I concluded in para. [42] above, it is clear from the manner in which they dealt with the “paperwork” of the change orders, the parties mutually consented to depart from the strict provisions of the CCDC 2 standard-form Contract.

[94] Finally, the evidence of Mr. Kim Vangeloff given at his examination for discovery and read in at trial was that Mr. John Vangeloff had the authority on behalf of the Owner to authorize work to be done on site. [^6]

[95] Thus, the real question is whether the work fell outside of the scope of the Contract and whether the Owner authorized the work in question.

[96] Both Gary Anderson and Paul Merrick gave evidence in support of the claim for extras by Front Construction. On the whole, I found each of them to be candid, credible, reliable, and sincere witnesses in their evidence before me.

[97] In contrast, I have some concerns regarding the evidence of Kim Vangeloff and John Vangeloff. First, neither gentleman had a particularly good memory of the critical events in question. That said, in fairness to them, they were, at times, being asked to recall events that happened some four to five years ago. The reliability concern was particularly acute with the evidence of Mr. Kim Vangeloff, who repeatedly said he could not remember the events. He testified that he himself was never on the project site and that all he really remembered was that “there was some hassle about the elevator not being installed and … the tenants moved on.”

[98] Second, reflecting on the evidence of the brothers Vangeloff taken collectively, it seems to me that theirs was an exercise of mutual finger-pointing – not in the sense that each brother was accusing the other of some kind of wrong-doing – but, rather, a mutual effort to evade responsibility and accountability. On the one hand, Kim Vangeloff repeatedly said that he was not on site, that he was busy with his restaurant businesses, that it was his brother John who was on the construction site, that it was his brother John who was in charge of supervising the day-to-day operations, and that his brother John was the one who ran Green Corp.

[99] On the other hand, in his testimony, John Vangeloff repeatedly attempted to minimize his own role in the events. At one point in his cross-examination, when he was being asked about any involvement that Kim Vangeloff had in the construction project, Mr. Vangeloff replied that, “my brother [Kim] runs Green Corp. Construction, and I work for it. … Well, he doesn’t run it, but I believe he owns the company, so. … I’m not the president of this company. I’m a worker, a labourer, and that’s what I do. … You’re asking me questions that should be asked of my brother … I’ve told you many times, I don’t deal with the paperwork or the money part of it.”

[100] In the circumstances, in those instances where the evidence of Kim Vangeloff or John Vangeloff conflicts with the testimony of other witnesses, I am not prepared to accept the evidence of Messrs. Vangeloff unless there is some external corroboration.

[101] The issue with the Side Cladding Extra involves the cladding where the east elevation of the building meets the front or south elevation. The evidence of Gary Anderson was that as the exterior façade of the exterior front wall was being completed, the aluminum cladding on the building’s front wall, once installed, produced an unsightly “gap” at the south-east corner of the building. Mr. Anderson testified that during the construction, the gap was noticed, and he was asked for, and subsequently did provide, the cost of installing wrap-around siding or cladding (a veneer attached to framing members affixed to the building) to address the unsightliness.

[102] It was the evidence of Mr. Anderson that John Vangeloff was present on site and agreed that Front Construction was to be paid an extra for the work. I accept Mr. Anderson’s evidence.

[103] The minutes of the meeting of May 3, 2013, corroborate Mr. Anderson’s testimony. Item no. 9.4 of the minutes reads as follows:

The building exterior south/east corner was discussed and the poor condition of existing masonry. Front Construction was directed to return the siding the width of the upper parapet. Front Construction shall first install plywood and apply blue-skin. A P.C.N. is to follow. [Emphasis added.]

[104] Front Construction then obtained a quotation from Behler (2011) Inc., dated May 9, 2013, for the cost of the work. The quotation dealt with four separate items, including the cost of the Side Cladding Extra, and totalled $6,808, which was the amount that Mr. Anderson inserted into Front’s Price Change No. 19, dated May 10, 2013.

[105] The quotation and Price Change No. 19 were then delivered to Leslie Wright. Mr. Wright disallowed one of the four items on the Behler quotation, indicated a revised change that totalled $3,693.80, plus HST, which was the cost of the Side Cladding Extra. Mr. Wright then prepared a draft change order CO-19 12-118, dated July 20, 2013, for those same amounts.

[106] As counsel for the Owner submitted, “John Vangeloff certainly agreed in his testimony that the siding where the elevations met was required.” [^7] However, the Owner further submitted that Mr. Vangeloff did not approve the work as an extra, and that one “may reasonably conclude from this testimony that he did not see the closure as an extra.”

[107] Respectfully, I disagree. In fairness to Mr. Vangeloff, he was quite clear in his evidence that he did not see himself as, or hold himself out as, being in the position of deciding what work was or was not an extra under the Contract. His evidence was that he left such questions to Mr. Wright and Front Construction.

[108] In cross-examination, John Vangeloff was asked whether Mr. Wright ever gave him some guidance from time to time as to whether or not certain work was an extra or not beyond the scope of work under the Contract, and Mr. Vangeloff replied that he did not remember. Mr. Vangeloff was then asked if Front Construction were to seek an extra, would he not consult with Mr. Wright as to whether or not the extra work being requested was already included within the scope of work under the Contract or was additional work. Mr. Vangeloff replied to the effect that he would not consult with Mr. Wright. “That would have to do with them: Leslie Wright and Front Construction.”

[109] In all of the circumstances, I am satisfied that Owner directed Front Construction to perform the work on the Side Cladding Extra and agreed that the work was an extra for which Front should be paid.

Is the Owner liable for payment of the Drywall Extra?

[110] The evidence of Gary Anderson and Leslie Wright was that while construction was ongoing, it was discussed that the walls of the stairwell were exposed, and there was discussion about covering that area with drywall. At the same time, there was also discussion about covering the ceiling in the stairwell with drywall.

[111] The construction drawings were adduced into evidence. The drawings did not call for the supply and installation of any drywall on the stairwell walls or ceiling.

[112] Mr. Anderson obtained a quotation from Rene G. Roy & Sons Ltd., dated May 7, 2013, which included, inter alia, the costs of the Drywall Extra. The quoted amount was $4,450 plus HST. Mr. Anderson prepared Front’s Price Change No. 18, dated May 8, 2013, and inserted that same amount.

[113] The quoted amount of $4,450 included work for the grid ceiling in front of the elevator. That work was not approved as an extra. The testimony of Mr. Wright, adduced on his cross-examination, was that the Ontario Building Code [^8] required the work, and hence it was no extra.

[114] Mr. Anderson prepared a revised Price Change No. 18R1, revised July 15, 2013, so as to delete the grid ceiling work. The revised amount was $3,850, plus 10 per cent for the general contractor’s mark-up on trades, for a total invoice of $4,235, plus HST, for a total of $4,785.55.

[115] The quotation and Price Change No. 18R1 were then delivered to Leslie Wright. Mr. Wright then prepared a draft change order CO-18 12-118, dated July 20, 2013, for those same amounts.

[116] The evidence of Mr. Wright was that drywall work was extra work. That is consistent with certain emails passing between Mr. Wright and Paul Merritt. In particular, by email dated February 24, 2014, Mr. Merritt wrote to Mr. Wright and said, with reference to Price Change No. 18R1, that:

As you will recall John (the Owner) agreed that this work “had to be done”, and you (the Consultant) agreed that this work “was an extra to Contract”. Accordingly, it was understood this issue was also to be addressed and finalized today.

When Gary asked John about these changes he was advised that we would have to speak to you about it. I would appreciate a call back at your earliest convenience. (I unsuccessfully attempted to call your office earlier.)

[117] I note that the last paragraph of Mr. Merritt’s email, to the effect that John Vangeloff told Gary Anderson that Front Construction would have to speak to Leslie Wright about the change order issues, is consistent with the evidence given by Mr. Vangeloff at trial, where, as referenced in para. [108] above, Mr. Vangeloff said in cross-examination that issues regarding change orders “would have to do with them: Leslie Wright and Front Construction.”

[118] In a subsequent email to Mr. Merritt dated February 27, 2014, Mr. Wright responded (in part) as follows:

On February 21, 2014 I agreed that the work for [sic] was extra to the contract but, at no time did I say it should be paid.

When you asked John, he commented the work needed to be done, but he could not say if it was in contract or not, and that he would argue in favour. As [you’re] well aware John does not sign the checks, therefore does not have final say on behalf of Greencorp.

[119] Respectfully, I do not find Mr. Wright’s response to be a completely fair answer to Front Construction. What it does establish, and this is consistent with all of the evidence, is that Mr. Wright believed the work to be an extra. One would think that is why he went to the trouble of preparing a draft change order, as, presumably, he would not take the time to create the paperwork if he thought the work was included in the scope of Contract (and I note that on other instances, including the grid ceiling, Mr. Wright just deleted the item if he thought it was included in the Contract).

[120] Mr. Wright’s response also confirms that John Vangeloff, a representative of the Owner who was authorized by the company’s president to approve changes on site, stated that the work needed to be done.

[121] The fact that Mr. Wright records that Mr. Vangeloff could not say if the work was “in Contract or not” is consistent with Mr. Vangeloff’s evidence that he left such questions to be worked out as between Front Construction and Mr. Wright, and in this particular instance, Mr. Wright himself indicated that the work was an extra.

[122] Finally, in my view, the latter response from Mr. Wright to Mr. Merritt to the effect that Front Construction is well aware that John Vangeloff “does not sign the checks” is no real answer to the general contractor. It returns to my earlier comments about representatives of the Owner being unwilling to assume responsibility for decision-making. In fairness to Mr. Wright, I appreciate that he was being careful and mindful of the limits of his own authority to speak on behalf of the Owner, and perhaps also the limits of others. However, when Mr. Wright takes the position with the general contractor that the work is an extra, when John Vangeloff takes the position that the question of extras is to be decided between Mr. Wright and Front Construction, when Kim Vangeloff takes the position that he was never on site, had little if anything to do with the project, and that his brother John was responsible for supervising the day-to-day construction and had authority to approve extras on behalf of the Owner, and when there is no evidence at all from the investor Mr. Axton on point, the reasonable expectation of the general contractor in those circumstances is that the extra had been approved by the Owner. As Professor Waddams would say, the main purpose of contract law is to protect the reasonable expectations of the parties. [^9]

[123] In all of the circumstances, I am satisfied that Owner directed Front Construction to perform the work for the Drywall Extra and agreed that the work was an extra for which Front should be paid.

Is Front Construction liable for the Owner’s delay claim?

[124] As indicated above, I would dismiss the defendant’s counterclaim. I see no merit in the Owner’s delay claim against Front Construction.

[125] The Owner theorizes that if Front Construction (acting through its subcontractors) had installed the elevator by December 1, 2013, the Owner’s prospective tenant would have proceeded with its lease with the Owner. [^10] That theory of the case is consistent with the evidence of Mr. Arvanitis, at least taken on face value.

[126] The central argument of the Owner in support of its delay claim is that Front Construction “sat on the invoice” from Otis, referring to the Otis invoice dated July 13, 2013, for $47,529.50, which was received by Front Construction on July 17, 2013. That is simply not correct.

[127] As I have found above, on July 17, 2013 – the same day that Front Construction received the July 13th invoice from Otis – Mr. Anderson sent an email that evening to Mr. Wright and the Consultant. Mr. Anderson attached a copy of the Otis invoice of July 13, 2013, and Front’s progress invoice no. 1304-9 for work as of July 31, 2013. Mr. Anderson said: “[p]lease find attached our invoice for July as now triggered by Otis Elevator. Also find attached, Otis’s recent Invoice. I ask that you provide a payment Certificate and may wish to couple June and July’s together if it were to make it easier.” [Emphasis added.]

[128] Front Construction did not “sit on the invoice.” They delivered a copy of it to the Owner’s representatives the very day they received it. They asked for payment of the invoice so that they could, in turn, pay the supplier. However, there was no such payment from the Owner.

[129] The Owner faults Front Construction for failing to pay the Otis invoice upon its receipt. [^11] The position of the Owner relies on strict compliance with the CCDC 2 contract: the general contractor receives an invoice from its supplier or subcontractor, the general contractor should pay the invoice in the first instance, and in due course its progress requisition would fall due and be payable by the Owner.

[130] I have some difficulty with that submission in the circumstances of the instant case. The Otis terms of payment, in themselves, represented a departure from the CCDC 2 contract. And it was the Owner who insisted on using Otis, and the Owner agreed to the Otis terms of payment.

[131] It therefore does not lie in the Owner’s mouth to fault Front Construction for failing to pay the Otis invoice upon receipt because, inter alia, under the Otis terms of payment, the invoice was not due and payable upon receipt, and thus Front Construction was under no obligation to pay it. The Otis terms of payment provided that the invoice was “due the month material is delivered.” No material had been delivered in July 2013. No material had been delivered in August 2013. No material was delivered until on or about September 13, 2013.

[132] The Owner’s argument is akin to saying, “well, Front could have paid the invoice if it wanted to.” The problem with that argument is that it proves too much. If the argument applies to Front, then it also applies to the Owner. The Owner could have paid Front for the Otis invoice when it was received, on the same day that Front got it, if the Owner wanted to.

[133] Moreover, at the time the Otis invoice was received, the cumulative amount that had been certified by the Consultant as owing by the Owner to Front Construction but which remained unpaid was $68,883.81. The cumulative amount owing based on the invoices rendered by Front was over $100,000.

[134] In the circumstances of the instant case, it does not lie in the Owner’s month to say that Front Construction ought to have paid the Otis invoice for $47,529.50, even though it was under no legal obligation to do so, when the Owner itself was in default and owed Front Construction much more than that amount.

[135] The Owner also submits that Front Construction did not inform the Owner “that, pending payment, the Contractor could not schedule mobilization of Otis’ installers.” [^12] That also is simply incorrect. The Owner knew that full well.

[136] Indeed, the Owner did not need Front Construction to tell it that; the Owner knew that for itself by reason of the Otis terms of payment, which the Owner had agreed to. Those terms plainly state that, “installation will not commence until the material is paid for.” Indeed, when Front Construction first reviewed the Otis quotation, Gary Anderson went out of his way to email the Owner’s representatives, Mr. Miller and Mr. Wright, to expressly draw their attention to the terms of payment that Otis was demanding. [^13]

[137] In my view, the Owner’s representatives knew that Front Construction was having difficulty getting the Otis forces to mobilize. On my review of the evidence, it is plain that Front Construction attempted to schedule the delivery of the elevator and its installation as early as reasonably possible in the circumstances. I have outlined above in some detail the efforts that Front went to, particularly Gary Anderson, to get some response from Otis. Mr. Anderson kept following up to the point of utter frustration, which he expressed to the Owner’s representatives. It is apparent that Otis, which was the supplier the Owner insisted on, was largely non-responsive.

[138] In any event, the elevator was delivered to the site on or about September 13, 2013. It is instructive to note what happened next. As I have said above, by letter dated September 13, 2013, the Consultant wrote to Green Corp. and indicated that it had made “periodic reviews of construction progress for this project,” and confirmed that the elevator equipment had been delivered, and enclosed its certificate for payment no. 8, dated September 13, 2013, which included the amount invoiced by Otis for the elevator.

[139] The Consultant having delivered certificate for payment no. 8 to the Owner, Front Construction was entitled to be paid for the amount certified, i.e., the amount invoiced by Otis for the elevator.

[140] Upon receipt of certificate for payment no. 8 from its Consultant, did the Owner issue payment to Front Construction for the amount invoiced by Otis for the elevator? Obviously not. Again, it does not lie in the Owner’s mouth to fault Front Construction for not paying the Otis invoice upon its receipt in July 2013, when it was under no obligation to do so, when the Owner itself failed to make prompt payment to Front Construction when it was obligated to so pursuant to its Consultant’s certificates for payment.

[141] We know that the Otis invoice was paid directly by the Owner on October 1, 2013, by bank draft. Otis then began to mobilize its installation forces. With the exception of the elevator installation, Front Construction had all but completed its work on the project.

[142] Indeed, by email dated October 11, 2013, from Mr. Anderson to Leslie Wright and John Vangeloff, Mr. Anderson advised that, following the installation of the elevator, Front would complete all remaining contractual work on the project within eight days (including, for example, completion of masonry around each of the elevator door frames, review and finishing of the floors after the elevator installation, etc.)

[143] But the other thing that then happened, in fact, the very next day after the Otis invoice was paid on October 1st, was that Mr. Arvanitis entered into the occupancy term sheet agreements with the three intended subtenants. The term sheet with Appletree Medical Group for the second floor was signed on October 2, 2013, and the term sheets for the other two floors were signed the following day, on October 3, 2013. As I have said, all three term sheets contemplated the term commencing November 1, 2013, but then followed by a six-month rent-free period, with the first rent payment due on May 1, 2014.

[144] Thus, I have some difficulty with the argument that it was Front Construction’s alleged delay in taking the necessary steps to have the elevator installed that caused the Tenant to abandon the project when it was after the October 1st direct payment to Otis – which largely resolved the elevator issue – that the Tenant entered into the new term sheets with the three subtenants.

[145] Moreover, had the Tenant actually been committed to the project, it seems to me that the proposed time schedule mapped out in the provisions of each of the term sheets would have likely worked out. That is, with the Otis forces on site installing the elevator in November, and with substantial completion certified on January 14, 2014, and with all of the subtenants having a six-month rent-free period, it seems to me they could have easily completed their finishing improvements within the rent-free period and made ready their space for occupancy as of the date their first rent payment was due, on May 1, 2014, if not long before that.

[146] However, the evidence of Mr. Arvanitis was that he could not hold the interest of his friends, colleagues, and contacts in Appletree Medical Group and Athlete’s Care Centres in the Chatham Wellness Centre project beyond December 2013.

[147] I have some difficulty accepting that explanation and the evidence of Mr. Arvanitis on point.

[148] First of all, in terms of Mr. Arvanitis not being able to hold the interest of his colleagues in the project, it seems to me there is not much objective evidence that there was any real interest in the project in the first place. That is, in my view, there is merit in Mr. Gatti’s argument that the complete dearth of objective evidence of any interest in occupying the premises casts serious doubt on the Tenant’s commitment to the Chatham Wellness Centre project and, in turn, Front Construction’s alleged responsibility for the Tenant having abandoned the project.

[149] For example, there was no evidence that any person or possible subtenant had inspected the building, set foot on the premises, liked the building structure and location, considered the building to be a viable business location, or had even notionally committed to occupying the building.

[150] There is nothing in the evidence that supports any such alleged interest in the project, in that, there are no emails, no draft leases, no evidence of negotiations, no business plans, no floor plans, no design plans, no building permit applications, no construction quotations, no evidence of any contact with contractors to complete leasehold improvements, or anything that would suggest that anyone was even seriously considering leasing any portion of the building.

[151] In my view, certainly as of October or November 2013, the building was available to any contractor or trade to finish the floors, ceilings, interior partitioning, painting, electrical, or whatever other finishing was necessary to have the subtenants go into possession, assuming such subtenants actually existed.

[152] There is certainly no evidence that any such subtenant, contractor, or trade was impeded in their preparatory work because the elevator had not been installed. There was no evidence that an elevator was even required for such work. Indeed, Gary Anderson testified that elevators are typically not used in such construction out of concern that the elevator interior may get damaged. Construction materials and finishings could have been walked through the front door and carried up or down one flight of stairs to complete whatever work was necessary in the upper and lower floors. If necessary, a lift could have been used to lift building materials through a second storey window. Front Construction managed to complete construction of the entire structure without the use of an elevator.

[153] In short, from at least October or November 2013, if not earlier, the building was available for any subtenant or interested party to enter and complete their leasehold improvements. On all the evidence before me, I conclude that up to and including the first day of trial, with or without a functioning elevator, before or after the date of substantial completion, there has been no real interest in occupying the building.

[154] Moreover, even after Mr. Arvanitis purchased the subject property in January 2011 through his company, Winthorp Valentine Inc., the building has remained vacant. As of the date of trial, the building continues to be unoccupied, even well after Mr. Arvanitis became the owner. It begs the question of whether Mr. Arvanitis was ever seriously intent on occupying the Chatham Wellness Centre building.

[155] My sense from listening to the evidence of Mr. Arvanitis is that there is some entire other explanation or dimension that was not put into evidence before the court.

[156] However, on all of the evidence before me it seems clear, and I find, that Mr. Arvanitis was not committed to implementing his plan for the Chatham Wellness Centre project.

[157] I find that Front Construction did not cause the delay in question and Front did not cause the Tenant to not take possession of the premises. The Tenant failed to take possession of the premises for its own reasons, which were largely unexplained by the evidence before me.

[158] At the end of the day there are a lot of unanswered questions left by the evidence presented at trial surrounding the Chatham Wellness Centre project. But the liability of Front for the Owner’s delay claim is not one of them.

[159] In the circumstances, I find no merit in the Owner’s delay claim, and I would dismiss its counterclaim.

Conclusion

[160] For all of these reasons, there shall be judgment in favour of the plaintiff against the defendant in respect of the following:

a. Amount for the unpaid holdback: $ 53,576.92 b. Amount for the Side Cladding Extra: 4,173.99 c. Amount for the Drywall Extra: 4,785.55 d. Total: $ 62,536.46

[161] The plaintiff is entitled to prejudgment interest on the amounts allowed, calculated in accordance with s. 128 of the Courts of Justice Act. [^14]

[162] The plaintiff was successful in the action and is presumptively entitled to its costs. If counsel are unable to agree on the question of costs, they may file brief written submissions with the court, of no more than five (5) double-spaced pages (exclusive of any costs outline, bill of costs, dockets, offers to settle, or authorities), in accordance with the following schedule:

a. The plaintiff shall deliver its submissions within thirty (30) days following the release of these reasons; b. The defendant shall deliver its submissions within twenty (20) days following service of the submissions of the plaintiff; c. The plaintiff shall deliver its reply submissions, if any, within five (5) days following service of the defendant’s submissions; d. If any party fails to deliver their submissions in accordance with this schedule, they shall be deemed to have waived their rights with respect to the issue.

Original signed by Justice J. Paul R. Howard

J. Paul R. Howard Justice

Released: December 4, 2018

Footnotes

[^1]: Canadian Construction Documents Committee, 2008. [^2]: Partial Closing Argument of the Defendant, dated April 20, 2018, at para. 40. [^3]: That said, I recognize it was consistent with that part of the Otis terms of payment which said, “installation will not commence until the material is paid for.” [^4]: Exhibit no. 13, Answers to Discovery Questions of Basil John William Arvanitis, Q. 19. By order of King J. dated August 1, 2017, Mr. Arvanitis was ordered to submit to written questioning by the plaintiff pursuant to rule 31.10 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. [^5]: Trial Record, Tab 6, Amended Statement of Defence and Counterclaim dated April 7, 2014, para. 10. [^6]: Exhibit No. 11, Transcript of the examination for discovery of Kim Vangeloff held on October 31, 2014, p. 2, QQ. 36-37. [^7]: Partial Closing Argument of the Defendant, dated April 20, 2018, at para. 9. [^8]: Building Code, O. Reg. 332/12. [^9]: See Cutts v. Alterra Property Group Ltd., 2013 BCSC 1951 (B.C.S.C.), at para. 45, citing S.M. Waddams, The Law of Contracts, 5th ed. (Toronto: Canada Law Book Inc., 2005), at p. 103. [^10]: Partial Closing Argument of the Defendant, dated April 20, 2018, at para. 16. [^11]: See ibid., at paras. 17, 18, and 24. [^12]: Ibid., at para. 18. [^13]: I note also the email from Mr. Merritt to Mr. Wright dated September 19, 2013, as referenced in para. [71] above, where Mr. Merritt said, “I would expect that Otis too, will be expecting payment prior to installation and turnover of the elevator.” If there were any truth in the Owner’s claim that it had no idea that the invoice had not been paid and that, pending payment, Front could not schedule the installation, one would surely expect Mr. Wright to reply to Mr. Merritt, fairly immediately, with something to the effect of, “what?? The Otis invoice has not been paid??!!” But no such response was forthcoming from Mr. Wright. On the contrary, Mr. Wright was not surprised by that “news” at all because he knew that the invoice had not been paid. [^14]: Courts of Justice Act, R.S.O. 1990, c. C.43.