COURT FILE NO.: 1477/16
DATE: 2019 10 09
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
1632093 Ontario Inc. carrying on business as Turn-Key Projects
Plaintiff
– and –
York Condominium Corporation No. 74
Defendant
Rahul Gandotra, for the Plaintiff
Taheratul Haque, for the Defendant
HEARD: October 2 - 4, 2019
REASONS FOR JUDGMENT
CONLAN J.
I. Introduction
[1] Through the hard work of counsel on both sides, much of the background of this dispute, including many of the material facts and the timeline of key events, is not in issue.
[2] This Court can do no better in setting the stage than to reproduce herein, in its entirety, the Agreed Statement of Facts and Timeline of Events, which document was marked Exhibit 2 at trial.
Agreed Statement of Facts and Timeline of Events
The Parties
The Plaintiff, 1632093 Ontario Inc. carrying on business as Turn-Key Projects (“Turn-Key”) is a corporation in the business of providing general contractor services.
Alex Royt is the principal director and controlling mind of Turn-Key.
The Defendant, York Condominium Corporation No. 74 (“YCC 74”) is a non-profit Condominium Corporation established under the Condominium Act, R.S.O. 1970, c. 77, a predecessor to the Condominium Act, 1998, S.O. 1998, c.19.
YCC 74 is the condominium corporation for the condominium property municipally located at 115 and 135 Antibes Drive, Toronto (the “Premises”).
The Contract & Payment History
On August 15, 2015, YCC 74 and the Turn-Key entered into a contract (“the Contract”) for the “complete refurbishment of all suite level corridors” at the Premises. A copy of the Contract is found at Tab 1 of the Joint Document Brief (“JDB”).
Turn-Key’s was to “carry-out the corridor refurbishment work under the Contract as per the specific Scope of Work” as delineated under Article 1.2 of the Contract (“Work”).
Under the Contract, YCC 74 was to pay Turn-Key a total amount of $562,100.00 plus HST ($635,173.00 in total), upon completion of the Work.
Turn-Key commenced the Work in September, 2015.
Turn-Key issued a total of six invoices during the performance of the Work. Copies of the invoices are found at Tabs 2 to 6 and 9 of the JDB.
Under Article 2.3 of Schedule “B” of the Contract, payments were to be made within five (5) days of the delivery of the invoice(s).
YCC 74 paid in full four of the invoices rendered by Turn-Key; Invoice 1524, 1602, 1604 and 1605, for a total of $530,572.30 (including HST).
On February 21, 2016, Turn-Key issued Invoice 1608 in the amount of $50,019.88 inclusive of HST. A copy of Invoice 1608 is found at Tab 6 of the JDB.
YCC 74 partially paid Invoice 1608, in the amount $11,356.99. A copy of the cheque for partial payment of invoice 1608 is found at Tab 7 of the JDB.
On April 11, 2016, Turn-Key issued Invoice 1606 in the amount of $57,959.53 inclusive of HST. YCC 74 refused to pay Invoice 1606. A copy of Invoice 1606 is found at Tab 9 of the JDB.
In total, YCC 74 has paid Turn-Key $541,929.29 (including HST) for the Work under the Contract to date.
Taking into account the partial payment towards Invoice 1608, Turn-Key claims a balance of $96,622.42 (including HST) remains owing for Invoices 1608 and 1606 under the Contract. The Contract’s billing summary is found at Tab 8 of the JDB.
Timeline of the Work under the Contract
Alex Royt attended a YCC 74 Board Meeting on January 14, 2016. The board presented questions to Alex Royt about the Contract and the Work which were answered by Alex Royt. A copy of the Board Meeting Minutes is found at Tab 12 of the JDB.
On January 29, and February 23, 2016, Alex Royt sent emails to the Board of Directors of YCC 74 to address matters related to the Work under the Contract. A copy of the email correspondence is found at Tab 14 of the JDB.
Timeline of Belanger Engagement & Expert Opinions
In April, 2016, YCC 74 retained Paul Belanger (“Mr. Belanger”) of Belanger Engineering.
On April 29, 2016, Belanger Engineering rendered the Report of the Condition Survey of the Corridor to YCC 74 (“Condition Survey”), found at Tab 23 of the JDB, with an addendum on June 28, 2016, found at Tab 25 of the JDB. A copy of the photographs taken by Belanger Engineering while completing the Condition Survey and addendum are found at Tab 33 of the JDB.
In June, 2016 Alex Royt retained Mr. John Labre (“Mr. Labre”) to provide an opinion on the alleged carpet deficiencies found in the Condition Survey.
On June 10, 2016, Mr. Royt, Mr. Labre, his colleague Mr. Senter, Mr. Belanger, another engineer from Belanger Engineer, and the then property manager of YCC 74 conducted a walkthrough of the corridors of YCC 74.
On June 21, 2016, Mr. Labre provided his opinion to Turn-Key on the alleged carpet deficiencies noted by the Condition Survey. A copy of said opinion is found at Tab 24 of the JDB.
On July 21, 2016, Mr. Jeff Goodman, retained by Turn-Key, wrote a letter and provided his opinion on the paint used by Turn-Key during its performance of the Contract. A copy of the said opinion is found at Tab 26 of the JDB.
Mr. Goodman had previously attended the Premises with Alex Royt in or about January, 2016 to observe the paint in the Premises.
In October, 2017, Belanger Engineering sent out an Invitation to Bid, to remedy the alleged deficiencies in Turn-Key’s Work.
On October 25, 2017, Belanger Engineering prepared specifications for the Invitation to Bid. A copy of the Invitation to Bid and Specifications is found at Tab 35 of the JDB.
[3] In these Reasons, for consistency, I will use the same terminology as contained in Exhibit 2 to describe, for example, the parties, the agreement, and so on.
[4] Over a little more than two days in Milton in October 2019, this dispute was heard by way of a summary trial under Rule 76.12 of the Rules of Civil Procedure.
[5] The Plaintiff, Turn-Key, has agreed to limit its claim to the sum of $96,622.42, plus interest and costs.
[6] Turn-Key characterizes the key issues to be decided as a determination of what deficiencies there were in the work that it performed and how those deficiencies affect the quantum of damages that it is entitled to.
[7] The Defendant, YCC 74, frames the issues as follows: (i) was there a breach of the Contract by either side, (ii) is YCC 74 entitled to a set-off, (iii) did Turn-Key fail to mitigate its damages, and (iv) what is the quantum of Turn-Key’s damages?
[8] At trial, by way of both affidavits filed and oral testimony, this Court received evidence on behalf of Turn-Key from (i) Alex Royt, (ii) Jeff Goodman, and (iii) John Labre, and for YCC 74 this Court received evidence from (i) Adam Serota (at the time, a member of YCC 74’s Board of Directors) and (ii) Paul Belanger.
[9] Mr. Goodman, Mr. Labre and Mr. Belanger all testified as expert witnesses.
II. Analysis
Brass Numbers on the Condominium Buildings’ Suite Doors
[10] To understand this issue, one should have reference to the email from Alex Royt to YCC 74’s property manager sent on February 23, 2016, clause number 3, under the heading “Suite Number Signs”. That can be found at page 38 of the Joint Document Book filed at trial. The paragraph is reproduced below.
- Suite Number Signs
The suite number signs were removed to enable painting of the doors and in anticipation of the condo buying new number plates. The original numbers were placed into two bins and put into the storage room in building 115, lower level exit. The number at some point in December disappeared, likely stolen. As this is not my fault and at best a shared fault with me and the condo, in trying to calm the residents, I said I would replace them at my costs, the condo however will have to wait until I get the right products. I’ve now sourced two options to replace them and currently waiting for samples. I hope to receive these soon but these are coming from oversees. I will not buy them locally as the cost is extremely high and local suppliers don’t have the quantities we need anyway.
[11] Turn-Key relies on section 1.4 of the Contract, set out below (found at page 2 of the Joint Document Book).
1.4 YCC 74 shall permit, provide, enable and assist Turn-Key with the following;
-service elevator as reasonably requested for the purpose of removal of debris and delivery of materials,
convenient location as reasonably requested for placement of temporary garbage container,
storage are as reasonably requested for misc. construction materials,
arrange access to suites for purpose of opening the suite entrance door for door preparation and painting,
provide all notices of construction activities to condo unit residents,
provide keys or fobs for construction crew access to areas or work,
provide and permit on site parking for construction crews vehicles,
provide any security as it deems necessary.
[12] According to Turn-Key, as YCC 74 was responsible for “security”, and as YCC 74 was responsible for providing “storage” for “misc. construction materials”, YCC 74 is responsible for the missing brass suite numbers, and thus, there should be no set-off on account of that item.
[13] YCC 74 disagrees with that position and claims a set-off in the amount of $5905.86, as per the invoice rendered by and paid to a third party to supply and install new numbers on the suite doors.
[14] I agree with YCC 74. The set-off as claimed shall be allowed.
[15] First, the said email from Alex Royt is unhelpful to Turn-Key’s position. It was sent after the numbers had already gone missing. Further, it says nothing about what YCC 74 agreed to.
[16] Second, the said provisions of the Contract are equally unhelpful to Turn-Key’s position. In my view, on a plain reading and using some common sense, “security” must be taken to mean general building security, while “misc. construction materials” cannot reasonably be taken as referring to brass suite numbers that were already in place before the construction even began.
[17] I accept the evidence of Mr. Belanger that Turn-Key being held responsible for the safekeeping of the numbers is entirely consistent with general practice in the industry and with his personal, very extensive, experience as a professional civil engineer and payment certifier.
[18] I do not quarrel with the method of analysis submitted by counsel for Turn-Key: (i) first ask whether there was a deficiency, and (ii) then, if so, ask whether the deficiency was caused by Turn-Key, and (iii) then, if so, assess and quantify the damages with reference to the framework outlined in the decision of Lalonde J. in Safe Step Building Treatments Inc. v. 1382680 Ontario Inc., 2004 CarswellOnt 4060 (S.C.J.), in particular paragraphs 58 through 82 of that decision.
[19] I simply disagree with Turn-Key on the application of that methodology in our case, on this issue of the brass suite numbers. I answer the first two questions in the affirmative.
[20] On the third question, I disagree with Turn-Key that $2040.00 charged by a third party to YCC 74 for the installation of the new suite numbers should be deducted from the set-off amount because Turn-Key was not provided with an opportunity to install the new numbers itself.
[21] Although I agree with the general proposition that the failure of a complaining party to allow the other side to return to the job site and rectify the deficiency is an important factor to consider in assessing that complaining party’s set-off claim, as stated by Master Albert at paragraph 23 of the decision in Grainger v. Flaska, 2013 ONSC 4863 (S.C.J.), context is everything.
[22] In our case, unlike the one referred to immediately above, not only was there a bitter lawsuit underway as of May 2016, but there was also no offer or willingness by the contractor, Turn-Key, to remedy the deficiency unless at least half of the cost was borne by YCC 74 (as per Alex Royt’s February 23, 2016 email).
[23] The suggestion of shared responsibility for the missing suite numbers was (and still is), with respect, unreasonable.
[24] Finally, I reject the submission by counsel for Turn-Key that this Court cannot properly assess the damages sustained by YCC 74 because we do not know how the new suite numbers compare to the missing ones.
[25] We know enough, in my view. We have the description of one of the missing numbers, given by Mr. Belanger. We have the description of the missing numbers generally, given by Mr. Serota. And we have the description of the new numbers as contained in the invoices supplied by the third party who installed them. The new suite numbers appear to be similar to the old ones.
Carpet Seams and Gaps Between the Carpet and the Baseboards
[26] To understand this issue, one should have reference to the report of Mr. Belanger’s firm dated May 9, 2016 (found at tab 23 of the Joint Document Book). At pages 61 and 62 of the Joint Document Book, Mr. Belanger, retained by YCC 74 to assess the situation at the job site, reported observing “visible seams in the carpet”, and “loose fibres indicative of ravelling of the carpet at carpet seams”, and “excessive gaps at carpet perimeter and below baseboards”, among other things.
[27] To fix the seams, YCC 74 paid to a third party the sum of $1900.00. In addition, to place quarter-round trim around the entire perimeter of all carpeting installed, YCC 74 paid $28,500.00.
[28] YCC 74 claims a set-off for those two amounts combined.
[29] Turn-Key submits that, at most, consistent with the expert opinion of Mr. Labre, $2000.00 ought to be set-off. Mr. Labre, unlike Mr. Belanger, was of the opinion that the quarter-round trim was unnecessary as there was a much quicker and cheaper way of addressing the problem of the gaps between the carpet and the baseboards.
[30] I agree with the alternative position advanced by Turn-Key. The set-off shall be allowed in the reduced amount of $2000.00, all-inclusive.
[31] First, I should explain why I reject Turn-Key’s primary position which is that nothing should be set-off for this item because Turn-Key was not given the chance to fix the defects, and/or because the gaps referred to above were not a deficiency at all.
[32] On the latter point, the gaps were most certainly a deficiency. Whether they were the result, in part, of existing site conditions (like an uneven concrete underfloor) is not determinative of the issue of assigning responsibility. I agree with counsel for the Defendant and with Mr. Belanger that common sense suggests that Turn-Key ought to have measured more carefully and realized in advance of the carpet being installed that, because of the change in its thickness and because the baseboards were not being altered, there was a serious risk of these gaps occurring.
[33] On the former point, in these specific circumstances which included (i) the fact that the lawsuit by Turn-Key had already been commenced by the time that the Belanger report was delivered in May 2016, and (ii) the drastic difference of opinion between the two sides as to how the carpeting defects should be addressed, and (iii) the parallel issue of internal strife among members of YCC 74’s Board of Directors given that Alex Royt’s father was the President of the Board and a resident of one of the buildings at the time that the Contract was awarded and when the project was ongoing, which strife only fueled heightened distrust between Turn-Key and YCC 74, I find that it would have been unreasonable to have expected YCC 74 to invite Turn-Key back to the job site in order to remedy the carpet deficiencies.
[34] I should now explain why I reject the position advanced by YCC 74. I find that there is no reason to conclude that quarter-round trim was required around the entire perimeter of the carpet that had been installed. I agree with Mr. Labre in that regard.
[35] Counsel for Turn-Key is correct that the Defendant bears the onus of proving, on balance, its damages when it comes to its set-off claims.
[36] There is simply insufficient evidence before this Court on (i) where these gaps between the carpet and the baseboards were located throughout the two buildings, and (ii) how much of the total carpet area was affected by these gaps, and (iii) why the Defendant failed or refused to at least try the significantly cheaper and quicker solution recommended by Mr. Labre (that solution being to raise the underpadding of the carpet where necessary in order to stretch it and, in doing so, close the gaps).
[37] In other words, on the $28,500.00 devoted to the quarter-round trim, YCC 74 has failed to adequately prove its damages, and that includes a failure to mitigate.
Painting of the Suite Doors
[38] Despite a fair amount of time having been devoted to this issue at trial, with respect, I do not find it difficult to decide.
[39] Turn-Key admits that (i) a very specific paint product was expressly contracted for by the parties, and (ii) Turn-Key unilaterally changed the paint brand from Benjamin Moore to Selectone, and (iii) that change in an express contractual term was not agreed to by YCC 74, even informally, in advance of the substituted paint being applied at the job site.
[40] This, surely, is bad business practice. It is also a breach of contract on the part of Turn-Key.
[41] I agree with counsel for the Defendant that it is largely irrelevant whether the Selectone paint was a better quality product than the Benjamin Moore paint, as testified to by Mr. Royt and by Mr. Goodman.
[42] I accept the evidence of Mr. Belanger that the paint job was done badly (my word). As of May 2016, the paint was not curing well. It was not drying properly. It was “tacky”. There were scratches. There was paint residue where it ought not to have been. The paint did not appear to be uniform or consistent. All of these observations are contained in the Belanger report found at tab 23 of the Joint Document Book.
[43] I find as a fact that the said defects were caused by a combination of the change in paint and the improper application of that paint.
[44] On the latter, what else could reasonably be concluded given that a third party was ultimately able to redo the job without any issues at all?
[45] On the former, Mr. Goodman himself testified that the Selectone product that was used was not ideal for application on a surface like these suite doors. I accept that evidence. There were better products that could and should have been used, Selectone and otherwise.
[46] Yes, Mr. Goodman also testified that the Selectone product(s) that was/were used is/are superior to the Benjamin Moore paint that was originally contracted for. Given the unavailability at trial of any of the lab test results, and the unavailability at trial of any Selectone records of any kind, and the absence of any comparative testing of the two products on the actual suite doors themselves, in that environment, however, I place reduced weight on that portion of Mr. Goodman’s evidence.
[47] On this issue of the paint, all of the other arguments by Turn-Key I also reject. There is no evidence that the defects observed by Mr. Belanger and outlined in his May 2016 report were caused by regular wear and tear. In these specific circumstances, as explained above, there is no reason to disallow the set-off on the ground that Turn-Key was not invited back to the job site to fix the paint defects. And, finally, there is no reason to limit the amount of the set-off to $3500.00 rather than the $17,400.00 actually charged to and paid for by YCC 74 to the third party that remedied the situation.
[48] On the latter point, the $3500.00 was an initial rough estimate from Mr. Belanger, a non-painter. It turned out to be materially wrong. So be it. That does not mean that the $17,400.00 is excessive or otherwise not recoverable in law.
[49] The set-off shall be allowed in the full amount claimed by YCC 74, $17,400.00.
Damaged Fixtures, Damaged Ceiling Tiles, and Wallpaper Issues
[50] Very little time was spent at trial on these alleged deficiencies, both during the evidence and in the opening and closing submissions by counsel.
[51] The Belanger report of May 2016 confirms that each one of these items was relatively minor, both in the degree to which it existed at all and in the sense of what it would cost to address it.
[52] Turn-Key submits that none of these items has been proven to have been caused by the Plaintiff. I agree.
[53] Frankly, counsel for the Defendant did not press otherwise. The most that was submitted is that there is some circumstantial evidence to suggest that the few damaged or missing light fixtures, the few damaged ceiling tiles and the minor wall covering defects could have been caused by Turn-Key’s crew.
[54] If the Defendant was going to “nit-pick” about things like these, it should have come to the table with clean hands and paid the roughly $18,000.00 that it has always conceded is owing to Turn-Key (about $96,000.00 claimed minus a maximum of approximately $78,000.00 to be set-off).
[55] These set-off amounts are all dismissed.
Miscellaneous, including Belanger Engineering’s Fees
[56] Likewise, very little time was spent at trial on these items, both during the evidence and in the opening and closing submissions by counsel.
[57] I will allow as a proper set-off the five invoices rendered to YCC 74 by Belanger Engineering between September 2017 and September 2018. That total amount, $9887.46, shall be allowed to be set-off.
[58] Quite responsibly, counsel for the Plaintiff did not take issue with the Belanger fees being set-off in the event that this Court found his services to have been necessary and helpful (which I do), and his invoices to be reasonable (which I do), and his opinions on at least some of the deficiencies to be persuasive (which I do).
[59] Other than what is expressly outlined above, nothing further will be permitted to be included in the amount to be set-off.
III. Conclusion
[60] For all of the above reasons, the Plaintiff’s Claim is allowed in part. Judgment is granted in favour of Turn-Key in the principal amount of $61,429.10, plus prejudgment interest, plus post-judgment interest.
[61] The $61,429.10 is arrived at as follows: $96,622.42 minus $5905.86 (brass suite numbers), minus $2000.00 (carpet), minus $17,400.00 (paint), minus $9887.46 (Belanger’s fees).
[62] On prejudgment interest, Turn-Key requests 24% per annum commencing five days after the invoice in question was rendered.
[63] I decline to order that. The Contract says that, but the invoices do not. As Turn-Key created all of the said documents, it is stuck with the least generous term, that is, 24% interest per annum starting on the 46th calendar day after the date of the invoice in question (invoices being due within 45 days).
[64] As there are two invoices that have not been paid, at least not in full, invoice 1608 dated February 21, 2016 and invoice 1606 dated April 11, 2016, it is easier to simply have the prejudgment interest term of 24% per annum apply to the entire $61,429.10 and commence on the date that the Statement of Claim was issued, May 11, 2016.
[65] That is the Order of the Court, subject to the receipt of further submissions by counsel, if so desired. Those submissions, if any, shall be limited to one page in length on each side and must be served and filed along with the costs submissions.
[66] On costs, if not resolved between the parties, this Court will accept written submissions. Each submission shall be limited to three pages in length, excluding attachments. Turn-Key shall file within sixty (60) calendar days of the date of these Reasons. YCC 74 shall file within thirty (30) calendar days of its receipt of Turn-Key’s submissions. Without leave of this Court, no reply submissions are permitted.
[67] Finally, I understand that this was both counsel’s very first trial in the Superior Court of Justice. They should be commended. They both did a fine job in all respects. I am grateful for their assistance.
Conlan J.
Released: October 9, 2019
COURT FILE NO.: 1477/16
DATE: 2019 10 09
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
1632093 Ontario Inc. carrying on business as Turn-Key Projects
Plaintiff
– and –
York Condominium Corporation No. 74
Defendant
REASONS FOR JUDGMENT
Conlan J.
Released: October 9, 2019