COURT FILE NO.: CV-14-504636

DATE: December 5, 2019

ONTARIO

SUPERIOR COURT OF JUSTICE

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

BETWEEN:

MOUNT ROYAL PAINTING INC. c.o.b. EPOXY SOLUTIONS Plaintiff

• and -

LOMAX MANAGEMENT INC. and UNIFOR CANADA INC. Defendants

Angela Assuras, for the plaintiff, Tel.: 416-601-0131, Fax: 416-601-1462.

Paul Hancock for the Defendants Tel.: 416-597-7881, Fax: 416-597-2270.

HEARD: October 3, 4 and 5, 2017, and April 2, 3, 4, 9, 10, 11, 12, 16, 17, 18, 25, 26, and May 10, 2019.

Master C. Wiebe

REASONS FOR JUDGMENT

I. INTRODUCTION

[1] This reference began with two judgments of reference, namely one issued by Justice Goldstein in the lien action commenced by Gottardo Masonry & Contracting Ltd. (“Gottardo”), CV-13-476847, and the other issued by Justice Matlow in the lien action commenced by Mount Royal Painting Inc. c.o.b. Epoxy Solutions (“Epoxy”), CV-14-504636. Both concerned the same improvement. I became seized of the Gottardo reference. Master Albert, as she then was, became seized of the Epoxy reference and transferred that reference to me. By the time of the trial hearing, the reference had been reduced to the Epoxy claim. I have decided as a result to issue my reasons for judgment under the Epoxy title of proceeding, and I herewith do so.

[2] In the Epoxy action Epoxy pleaded a claim for lien of $130,961.40 and damages of $11,586.32, for a total pleaded claim of $143,547.72. However, in its Scott Schedule, Epoxy limited its claims to $124,946.93. I will proceed according.

[3] Epoxy makes this claim in relation to flooring work it says it did under a contract it says it had with Lomax Management Inc. (“LMI”) on a four story commercial property located at 445 King Street East, Toronto (“the Property”) owned by Unifor Canada Inc. (“UCI”), a subsidiary of an Italian manufacturer of high-end office interiors named Unifor SpA (“US”). The Property was leased entirely to Italinteriors Inc. which used the Property to display and sell the US furniture. The defendants allege that LMI was just a project manager, that the Epoxy contract was with UCI, that Epoxy breached the contract by not installing the floors in the Property properly, that Epoxy breached the contract by not installing the specified epoxy floor, that UCI properly terminated the contract and mitigated its damages, and that UCI suffered damages which it pleaded was in the amount of $150,000 but which at the time of the trial hearing was reduced to a total of $113,544.53.

[4] This is an extraordinary reference, as the parties have insisted on interlocutory proceedings and a trial hearing that were more fitting for a case five times the size of these claims.

II. BACKGROUND

[5] I begin with a summary of the facts of this case that are undisputed.

[6] US is based near Milan, Italy. The US official that directed the project was one Loris Locatelli. The Property has a basement and three floors at and above grade. US purchased the Property with a view to building these four floors to display and sell its interiors in Canada. The total floor size is 12,000 square feet. US incorporated UCI to own the Property and lease it to distributor, Italinteriors Inc.

[7] UCI proceeded with the project in June, 2011. It retained Sweeney Sterling Finalyson & Co. (“Sweeney”) as its Canadian architect to prepare the design and specifications for the project, and to inspect the construction. UCI also used an Italian architect, Alessandro Colombo of Studio Cerri, to assist in this regard. There is an unsigned construction management contract document dated September 9, 2010 stated to be between US and LMI whereby LMI was to act as construction manager on the project. LMI dealt with and coordinated the construction.

[8] One of the latter scopes on the project was installation of the flooring. The specifications called for glossy epoxy floors that were pure white in colour. The specified epoxy was “Sikafloor 261 (#5).” LMI solicited quotes for this work. On June 4, 2012 Epoxy gave LMI a quotation for the installation of the concrete topping and epoxy flooring in the amount of $127,550 plus HST. Shortly thereafter, upon request, Epoxy also provided a quotation for an extra concerning the installation of raceways in the floors. Raceways are long trays inserted into the concrete topping to carry electrical conduit to areas of the display floors. After a negotiation, the parties came to an agreement. On June 25, 2012 LMI issued a “letter of intent” to Epoxy stating that LMI, “on behalf of Unifor Canada Inc.,” intended to award the contract for the epoxy flooring, concrete topping and raceway installation to Epoxy for a total price of $137,800 plus HST.

[9] In June, 2012 LMI also advised Epoxy that Sweeney had issued a Site Instruction to the flooring contractor to apply a top coat of a polyurethane called Sika 316 for UV protection. Epoxy submitted an extra quote for this application which was accepted.

[10] In early July, 2012 LMI sent Epoxy a form of contract that showed that US, not UCI, was contracting with Epoxy. This document was never signed. Work proceeded nevertheless. LMI eventually issued a purchase order for the Epoxy contract on September 18, 2013. This document described LMI as acting for “UNIFOR SPA.”

[11] Epoxy subcontracted the concrete topping work to a German company named Daro. This work was done between July 27, 2012 and August 20, 2012. The raceways in the basement were formed using wooden forms. On instruction, Daro did not use that method for the top three floors, as the new idea was to cut the raceways into the finished concrete topping on those floors.

[12] A year later, Epoxy returned to install the epoxy. On September 18, 2013, due to cracking issues with the Daro topping, LMI gave Epoxy a purchase order for an extra of $30,000 plus HST to supply and install a primer, Sika 156, over the topping. At the same time, Sweeney authorized a change of the top coat from the polyurethane, Sika 316, to polythane, Sika Duochem 942, in order to provide more durable UV protection. On September 19, 2013 LMI gave Epoxy a purchase order for an extra of $18,000 plus HST to supply and install the Sika 942.

[13] The Sika 156 was applied in September and October, 2013. In the fall of 2013 the raceway trenches were cut on floors 1, 2 and 3. Epoxy worked with the electrical trade, Jenner, to grout and install the raceways. Epoxy prepared a sample area of epoxy flooring in a bathroom on the second floor that was approved by Sweeney.

[14] Epoxy installed the Sika 261 and 942 in December, 2013. Two coats of Sika 261 were installed on each floor. The sequence was as follows: first coat of Sika 261 on floors 2 and 3 on December 10, 2013; second coat of Sika 261 on floors 2 and 3 on December 12, 2013; Sika 942 sprayed on floors 2 and 3 on December 13, 2013; first coat of Sika 261 on floor 1 on December 17, 2013; further Sika 261 on floor 1 and on the basement floor on December 19, 2013; another layer of Sika 261 on floor 1 and the basement floor on December 20, 2013; sprayed Sika 942 on floor 1 and on the basement floor on December 23, 2013. The concrete on the stairs in the building had to be repaired and the epoxy was then applied. Epoxy did this work in January and early February, 2014. It came back on March 11, 2014 to apply epoxy to the stair landing.

[15] Epoxy billed LMI on a regular basis. It rendered eight contract invoices. Three of these ended up not being paid. They plus bills for extras form the basis of the Epoxy lien claim.

[16] In December, 2013 Sweeny and LMI noted some unevenness with the floors. On December 13, 2013 John Gillanders of Sweeny reported to Messrs. Locatelli and Colombo by email on December 13, 2013 that “the quality of the floor finish is good.” On January 13, 2014, Mr. Gillanders emailed LMI and Mr. Locatelli that the epoxy floor is “generally complete” with the exception of “some spot touch-ups.”

[17] Mr. Locatelli took a different view. Having reviewed pictures, he emailed Mr. Gillanders on January 15, 2014 saying that the floors were “absolutely unacceptable.” On January 17, 2014 he ordered a stop to the floor work, an order that was not relayed to Epoxy. He required that Epoxy charges be removed from certified LMI draws. He hired Franco Vissa of Vissa SrL (“Vissa”), an Italian flooring contractor he was familiar with, to examine the floors. Vissa was located near Venice, Italy. Mr. Vissa came to the site on February 18, 2014 and wrote a report to Mr. Locatelli advising that the floors had an orange peel surface, dust inclusions and unevenness. He blamed the flooring contractor and recommended that the polyurethane top be removed and replaced with a mat (not glossy) finish produced by an Italian company called Mapei. Mr. Vissa worked almost exclusively with Mapei products. Mr. Locatelli hired Mr. Vissa to do as he recommended. With an Italian crew, Mr. Vissa returned and from March 26, 2014 to April 6, 2014 ground the floors and applied the Mapei products. None of this was brought to Epoxy’s attention.

[18] LMI and Sweeny allowed Epoxy to finish working on the stairs, which it did in early February, 2014. In January and February, 2014 LMI verbally advised Epoxy of concerns about orange peel surface, dust and unevenness. At Epoxy’s suggestion, LMI hired a janitor to buff, which did not deal with the issues. On February 11, 2014 LMI emailed Epoxy asking whether it had in fact applied the specified Sika 261(#5) product. Epoxy gave no answer to that email. LMI did not follow up on its email request.

[19] No deficiency list was ever served on Epoxy. On March 11, 2014 LMI verbally advised Epoxy to stop working.

[20] Sweeny hired Rick Derbecker of CCI Group to examine the floors, which he did on March 18, 2014. He wrote a report on March 31, 2014 identifying problems of uncompleted work, orange peel surface, wavy finish around the raceways and imbedded dust. This was not brought to Epoxy’s attention.

[21] On March 19, 2014 there is a meeting between Epoxy, a Sika representative, LMI and Sweeny to discuss the complaints with the floors. Epoxy offered remediation. There is no resolution. On March 26, 2014 Epoxy registered a claim for lien of $130,961.40.

[22] Epoxy perfected its lien, and pleadings were exchanged. On August 27, 2014 there was a consent order issued by Master Hawkins, as he then was, authorizing the Epoxy expert, Murray Heywood, and the Sika representative, Richard Gabbato, to attend at the premises on August 28, 2014 to make observations and conduct non-destructive tests. This happened.

[23] On August 22, 2014 Justice Goldstein issued a judgment of reference referring the Gottardo lien action to the master. Master Sandler issued the order for trial in that action on November 12, 2014, and that action came before me for the first trial management conference on January 5, 2015. Epoxy appeared before me. I made a scheduling order.

[24] On November 18, 2014 Justice Matlow issued a separate judgment of reference referring the Epoxy action to the master. Master Albert issued the order for trial in that action on December 16, 2014. That action came before her for the first trial management conference on February 2, 2015. She immediately transferred that reference to me given my existing order.

[25] Epoxy also commenced a breach of trust action as against LMI, UCI, Richard Jeffrey, Gianfranco Marinelli and Anna Trevisan in 2015. Pleadings were exchanged, and Justice Whitaker issued a judgment of reference on April 29, 2015 referring that action to me.

[26] At the trial management conference on August 10, 2015 I made orders which included one granting Epoxy another site visit by its expert and requiring a settlement meeting between the parties. At the request of Mr. Hancock, I convened a trial management conference on September 24, 2015, as the parties could not agree on the locations for the Epoxy core drilling the Epoxy expert wanted to do to determine the composition of the final floor topping. Essentially, the issue was whether core drills would be done in the showroom areas. I ordered that they take place in those locations, and that the cost of repairing them be deferred to trial. Because the parties could not agree on the locations for the core drills in the showroom areas, a telephone trial management conference took place with Master Albert on October 9, 2015. I was not available at that time and I authorized her to conduct the call. She ordered locations of certain core drills.

[27] At the trial management conference on January 11, 2016 the defendants advised that they wanted to have me amend my September 24, 2015 order to eliminate the showroom core drills on account of the alleged exorbitant cost of repair. I scheduled a motion in this regard and made other orders. The motion was twice adjourned at the request of Epoxy. Eventually, at my suggestion, the parties reached an agreement on the motion whereby the contested core drills in the showroom areas would not be done in exchange for the defendants’ deficiency complaints being limited to the orange peel finish, the unevenness of the floors and the debris, and defendants’ deemed acceptance that Epoxy applied the specified products in the proper layers. I made this order at the trial management conference on August 9, 2016 along with other scheduling orders. One of these other orders was the scheduling at the defendants’ request of a motion by them for an order dismissing the trust action on the grounds that there was no evidence of a breach of trust.

[28] At the trial management conference of April 3, 2017, I scheduled the trial hearing in the Epoxy lien action to take place over 11 days in October and November, 2017 starting on October 3, 2017. I ordered also that the Epoxy trust action be deferred to be scheduled after the conclusion of the Epoxy lien action.

[29] The defendants’ motion for summary judgment dismissing the Epoxy trust action was argued before me on April 10, 2017. By that time the motion had been reduced to a question that turned on the issue of the identity of the contracting parties. I issued my decision on April 21, 2017 dismissing the motion.

[30] At the commencement of trial hearing on October 3, 2017, the defendants gave notice that they intended to raise as an additional issue, despite my consent order of August 9, 2016, namely that Epoxy had not applied the specified epoxy product. Epoxy called as it first witness, Roger Hildebrand, the principal of the company. He gave evidence that Epoxy had in fact applied Sika 261 without aggregate primarily to avoid spillage into the raceways. Sika 261(#5) is Sika 261(#1) with aggregate. This made the issue of whether Epoxy had applied the specified product real. Ms. Assuras argued on October 5, 2017 that I should prohibit the defendants from raising this new issue in light of August 9, 2016 consent order. I was not prepared to do so. Instead I adjourned the trial hearing to allow for a motion by the defendants for an order amending my August 9, 2016 consent order adding this new issue. I also ordered a settlement meeting between the parties due to what I surmised were the disproportionate costs that were being incurred in comparison to the amounts being claimed.

[31] The defendants’ motion was argued before me on April 10, 2018. At this time, Epoxy no longer opposed the joinder of the product issue, but wanted costs thrown away and other costs. I amended my August 9, 2016 order accordingly and did not award the requested costs.

[32] At the trial management conference on May 1, 2018, I set another schedule for the resumption of the trial hearing. This schedule was for a hearing over 11 days in April and May, 2019 starting on April 2, 2019.

[33] The trial hearing resumed on April 2, 2019. Epoxy called an additional seven witnesses. The defendants called twelve witnesses. In total the trial had 19 witnesses. On April 9, 2019 I excluded the evidence of an Epoxy witness, one William Loveys, on the grounds that he was an opinion expert witness who had not complied with Rule 53 and had not been properly qualified as an expert witness by Ms. Assuras. On the grounds that the defendants were prejudiced by this oversight, I excluded his evidence. In the course of this matter, the defendants confirmed that they were no longer seeking as damages the cost of repairing the core drills.

III. ISSUES

[34] Based on the evidence and submissions, I believe that the following issues are the ones to be determined:

a) Who were the parties to the contract?

b) Did either of the parties to the contract fundamentally breach it?

c) What are the damages to be recovered?

IV. WITNESSES

[35] Before I analyze the issues, I will comment on the credibility of the witnesses.

[36] Epoxy initially called eight witnesses. This was reduced to seven when I excluded the evidence of William Loveys for the reasons stated above. I generally found that the Epoxy witnesses had credibility, with some exceptions.

[37] Epoxy’s primary witness was Roger Hildebrand, the principal of Epoxy. He gave his evidence on October 3 and 4, 2017 before the trial hearing was adjourned. I approached his evidence knowing he has a stake in the outcome of this case. Yet, Mr. Hildebrand gave his trial evidence in a forthright manner. My major concern with his evidence stemmed from his pretrial conduct concerning the product issue. Mr. Hildebrand did not act in a forthright manner towards the defendants on this issue. He did not respond to the February 11, 2014 email inquiry from LMI about whether Epoxy had applied the Sika 261(#5) product, which I found in my Costs Decision of April 11, 2018 was tantamount to a misstatement that Epoxy had applied Sika 261(#5). At his discovery of March 27, 2015 Mr. Hildebrand emphatically denied deviating from the specified epoxy products, which was not true. In the defendants’ motion in 2016 to set aside my September 25, 2015 order Mr. Hildebrand swore an affidavit wherein he again affirmed that Epoxy had applied the specified product. Finally, at his cross-examination on this affidavit he conceded that Epoxy applied the specified product “until they installed the raceways.” As I indicated in my Costs Decision of April 11, 2018, Mr. Hildbrand’s trial evidence indicated that he was aware that the Sika 261(#1) that Epoxy applied and the specified Sika 261(#5) were different products. At trial, Mr. Hildbrand was indeed straight forward in his evidence about the issues, including the type of Sika product that was applied. But this history showed me that Mr. Hildebrand could and did massage the truth to suit Epoxy’s interest.

[38] Epoxy’s other witnesses were more credible. A major witness was Ben Garrett, Epoxy site coordinator. He remains an Epoxy employee, and therefore has a natural bias towards the plaintiff. Nevertheless, he was a frank, careful and credible witness. He gave evidence about the application of the coatings, which included such things as the higher than acceptable temperatures, the prevalence of dust, the footprints in the epoxy, and the preparation of the mock-up in the second floor bathroom. He was frank in admitting that Epoxy did not add sand to the Sika 261 and that Epoxy had no experience with installing raceways. He admitted that Epoxy helped to install the raceways “as best we could.” These were admissions against Epoxy’s interest and added credibility. He frankly admitted that Epoxy was not prepared to talk about deficiencies until its work was done.

[39] Epoxy called two witnesses who were Sika representatives, Frank Cimmino (an experienced service representative) and Richard Gabatto (a sales representative). I found both to be credible, despite their understandable bias in favour of their customer, Epoxy. Mr Cimmino attended the site on March 6, 2014 and wrote a letter dated June 4, 2014. He stated that he saw no surface flaws and that the Sika products were installed properly. The unevenness in the floor he attributed to the underlying concrete. He admitted, however, and against Epoxy’s interest, that the Sika 261(#1) had a thinner application and a significantly shorter life expectancy than did the Sika 261(#5). He also admitted that the usual method of application of the Sika 942 was back-rolling and not the spraying Epoxy used. Mr. Gabatto attended at the site twice, once at the March 19, 2014 meeting and once with Mr. Heywood in August, 2014. He stated that there was a solution for the debris and unevenness as suggested by Epoxy, namely abrasion. His evidence though was of more marginal significance.

[40] Epoxy called an employee of Jenner Electric, one Trent McIsaac, to give evidence on the raceway installation. Mr. McIsaac stated that he installed the troughs into the trenches, that he shimmed the trough bottoms to get the proper height for the raceways, and that Epoxy came thereafter to grout around the trenches. I found Mr. McIsaac to be a credible witness. He had no apparent stake in the outcome of the case. This gave weight to his evidence such as his statement that floors appeared “glossy” and “very good.”

[41] Epoxy also called two expert witnesses. One was Valerie Sherbondy, an epoxy and urethane technical analyst with her company, KTA-Tator Inc., in Pittsburgh, Pennsylvania, U.S.A. Her evidence was skyped from that location. She was qualified to give opinion evidence on the composition and performance of floor coatings. As discussed above, Epoxy obtained core drills (core samples down to the concrete topping) from the final floors, and it was Ms. Sherbondy who analyzed these core samples as to what coatings were there and at what depth. She rendered eight reports. Her credibility was not challenged with good reason. She was careful, measured and persuasive in her evidence.

[42] The other expert was Murray Heywood. Mr. Heywood is an experienced epoxy and urethane coatings applicator, and was qualified to give opinion evidence on the application of the epoxy and urethane and on the technical specifications for the floors. He attended at the site on August 28, 2014 to examine the floors. He recommended getting the core drill samples, and obtained the ordered samples. He wrote a report dated May 1, 2017 observing that the final floors had a flat urethane finish that was a different product than the specified epoxy. He interpreted the KTA results as confirming that the flat finish was placed over all of the previously applied epoxy under the Sika 942 and was thin in depth. He wrote another report on May 1, 2017 responding to the reports of Rick Derbecker and Franco Vissa. Mr. Heywood rejected Mr. Vissa’s assertion that the orange peel finish was due to the Epoxy spray application of the Sika 942 and that a roller application would have achieved a “perfectly smooth finish.” He attributed the unevenness Mr. Derbecker observed to the underlying concrete floor and concrete topping. Mr. Heywood wrote a third report on March 19, 2019 responding to the defendants’ expert, Brian O’Farrell. In this report, Mr. Heywood challenged Mr. O’Farrell’s assertion that the Sika 261(#5) would have been much more expensive for Epoxy to apply than the Sika 261(#1). He challenged the O’Farrell assertion that an epoxy floor with “little to no imperfections” was possible. On the witness stand, he adopted these findings. He also asserted that in his experience orange peel finish is inherent in epoxy coatings. In general, I found Mr. Heywood to be a credible expert. His opinion about the expense of the Sika 261(#5), the unevenness of the floor and the elusiveness of “perfection” made practical sense. He was careful to ground his findings on the applied products as indicated in the scientific KTA results. His credibility was not affected by his cross-examination.

[43] The defendants called twelve witnesses. They were less credible. Most notable was the one witness who was not called. This was Loris Locatelli. There is no doubt that Mr. Locatelli was the one in charge of the project for US and UCI. LMI and Sweeny both reported to him. Furthermore, the evidence indicates that Mr. Locatelli had a keen interest in the flooring contract. He attended the site in the summer of 2013 and wrote emails to LMI and Sweeny on July 20 and 22, 2013 specifying how the floor coatings were to be applied. Importantly, the evidence indicates he was the one who caused the course of the floor work to abruptly change in January, 2014 when he ordered a stop to Epoxy’s work and hired Mr. Vissa to put down a mat finish. Mr. Locatelli’s absence was never explained. The fact that he resides in Italy was obviously not an explanation for his absence, as the defendants had no trouble bringing Mr. Vissa over from Italy to give evidence. I will draw an adverse inference against the defendants on account of the absence of Mr. Locatelli, namely that Mr. Locatelli’s evidence would have been detrimental to the defendants’ case. Mr. Locatelli’s conduct and absence coloured the entire case for the defendants.

[44] The defendants called John Gillanders, the Sweeny architect in charge of the architectural responsibilities on the project. He reviewed the flooring specifications. Most importantly, he reviewed the floor coating installation. While he gave his evidence carefully, Mr. Gillanders’ in the end came across as one prepared to make compromises to suit his client. He tried to explain away his comment in his email to Mr. Locatelli on December 13, 2013 that the “floor finish [before top coat] is good” by trying to base the comment on assurances from Epoxy that it would remove unevenness and bubbles. The email does not point to such assurances at all. Mr. Gillanders tried to explain away his comment in his January 13, 2014 email to Mr. Locatelli that the floor was “generally complete” by describing it as a comment about the “extent of completion, not deficiencies.” The email itself described the remaining work as “spot touch-ups,” which obviously referred to deficiency work. These were the comments that Mr. Locatelli took great exception to in his email to Mr. Gillanders of January 16, 2014, calling them “absolutely unacceptable.” Mr. Gillanders responded on January 16, 2014 by saying that “we too are very disappointed with the performance,” when this is exactly not what was relayed in his earlier emails. His view of the floor work thereafter suddenly became more critical. His report to Mr. Locatelli of January 16, 2014 referred to orange peel surface and embedded dust. Mr. Gillanders also did not act forthrightly with Epoxy. He chose not to follow Mr. Locatelli’s clear instruction on January 17, 2014 to have Epoxy “stop” all work as he allowed Epoxy to finish the stair repair and epoxy work. He followed Mr. Locatelli’s instructions to remove Epoxy charges from certified LMI draws and did so without informing Epoxy. He followed Mr. Locatelli’s instruction to meet with Epoxy on March 19, 2014, not to discuss deficiencies forthrightly as Epoxy anticipated, but to “reduce their contract price and leave the floor as is.” He did not produce the floor sample that Mr. Locatelli and Mr. Colombo insisted they provided to Sweeny. I found Mr. Gillanders as generally lacking credibility.

[45] The defendants also called Robert Hodgins, the senior associate architect at Sweeny who assisted Mr. Gillanders with the administration of the project. He is now retired. He attended the site only about six times. His evidence and credibility suffered from some of the issues I noted with Mr. Gillanders’ evidence. Mr. Hodgins prepared the reports that went to Mr. Locatelli. He insisted that he observed orange peel surface and dust inclusions as early as mid-December, 2013 when his reports at that time do not refer to these issues. Nevertheless, his later evidence was consistent with his later reports, such as the reports in January, 2014 about unevenness and dust in the floors. He was straight forward about his February 14 and March 6, 2014 reports which outlined deficiencies in detail, which reports called for a “refinishing” of only two floors (namely a new top coat) and a “repair” of parts of the other two floors. He admitted that the dust in these last two floors, floors 2 and 3, was “acceptable.” He was also frank in admitting that LMI was “not the best construction manager” Sweeny had worked with, and that Sweeny allowed Epoxy to finish working while being skeptical about the usefulness of Epoxy’s promised buffing. Mr. Hodgins was more credible than Mr. Gillanders, but also had issues.

[46] The defendants also called Barry Warren Smith Jr., whom everyone referred to as B.J. Smith. Mr. Smith is an architect who remains employed by Sweeny. At the time he was an intern working under Mr. Gillanders. Mr. Smith discussed the preparation of the specifications for the floor, and the administration of the flooring work. He was the one who investigated in early February, 2014 the issue of whether Epoxy had applied the specified Sika 261(#5). I found him to be a careful witness and at times credible. For instance, he freely admitted not following Mr. Locatelli’s July, 2012 instructions concerning the installation of the epoxy. He concurred with Mr. Hodgins’ deficiency assessment of the floors. But his evidence showed the same deceptive and opaque conduct that appeared in Mr. Gillanders’ evidence. Mr. Smith frankly admitted taking pictures of Epoxy doing epoxy work after Mr. Locatelli’s stop order and not “using” them. He said he also interpreted the Locatelli stop order as applying to epoxy work and not stair repair to justify Sweeny’s decision allowing Epoxy to continue working. The Locatelli stop order was sweeping in scope. He tried to diminish Mr. Gillanders’ December 13, 2013 opinion (namely that the floor finish is “good”) as being “his opinion,” but he did not challenge it at the time. He said that certification was a “serious business” but appeared to have had no difficulty following Mr. Locatelli’s orders removing Epoxy charges from certified LMI draws without informing Epoxy. He admitted knowing as of March 6, 2014 that Epoxy would not be given an opportunity to correct its deficiencies, and admitted not telling Epoxy about this. Finally, he admitted that the raceway cap sample that Mr. Locatelli provided for the floor remained boxed and undisclosed in Mr. Smith’s office. In the end, I found Mr. Smith lacking in credibility.

[47] The defendants called LMI witnesses. There was Richard Jeffrey, the principal of LMI. I am mindful that his company is a defendant, and that he has a stake in the outcome as a result. Nevertheless, he reviewed the history of the overall project and the flooring contract from tender to completion clearly and carefully with much corroboration. He gave frank admissions that enhanced his credibility, such as the admission that Epoxy did the extra work of the added length of the raceways without charging for same. But in the end he too showed the same opaque behavior that bedeviled the Sweeny witnesses. He insisted that he also viewed Mr. Locatelli’s stop order as referring only to the epoxy and not the stair repair. Mr. Locatelli demanded a stop to “all activities regarding the epoxy floors” including the “stairs.” Mr. Jeffries insisted that he told Epoxy to stop epoxy work and focus on the stair repair, but gave no corroboration. He insisted that there was a genuine discussion about deficiency correction at the March 19, 2014 meeting when he admitted knowing that the owner just wanted a settlement and a return of the raceway caps. He could not remember whether Mr. Locatelli’s sample was given to Epoxy in June, 2012 when it was received. He admitted not telling Mr. Hildebrand about the Epoxy charges that the owner had removed from the certified draws. He tried justifying not giving Epoxy deficiency lists by stating that the Epoxy work was not done. This did not accord with his insistence that he told Epoxy to stop contract work in compliance with the Locatelli stop order but to continue with deficiency correction. I found Mr. Jeffrey lacking in credibility.

[48] The defendants called Jerry Dyczkowskyj, the LMI site supervisor. He no longer works for LMI. Mr. Dyczkowskyj focused on his daily site reports and reviewed the issues concerning the application of the floor coatings, such as the circulation of dust, the temperature and deficiencies. He was the most credible of the defendant witnesses as he anchored his evidence in his site records. He was understandably vague when asked to rely only on his memory. Interestingly, he stated that in early February, 2014 he found that the epoxy floor looked “OK.”

[49] The defendants called two individuals who were Italinterior officials. There was Anna Trevisan, the CFO of Interinteriors and a director of UCI. She gave evidence on the delay in the move in by Italinteriors, the moving costs, the floor completion costs, and the state of the floors. There was her husband, Carlo Trevisan, the president of Italinteriors. He gave evidence on the state of the floor and the photographs he took of it in December and January. Interestingly, he said that the eventual mat finished floor was not as good as the glossy finish for exhibiting furniture. Both witnesses confirmed that they had no active role in the project. I found their evidence to be of limited significance given their marginal roles in the project. As to credibility, they understandably both came across as partisan in favour of their source of business, US and Mr. Locatelli.

[50] The defendants called two expert witnesses. There was Rick Derbecker of CCI Group. He rendered two reports. The first was dated March 31, 2014 concerning a site visit he made on March 18, 2014. This report and his evidence concerning same was admitted as the evidence of a participating expert, as the report was used to address deficiency issues with Epoxy in the March 19, 2014 meeting. Mr. Derbecker rendered another report dated August 11, 2017 in response to the Heywood and KTA reports. Concerning this report, he was qualified to give evidence on quality and specification compliance and remediation. Mr. Derbecker stated that he observed orange peel surface, debris and unevenness. In the end, however, I found his evidence of more limited significance, as he admitted never having applied epoxy, not being familiar with the specified epoxy products, not being a floor inspector and not being a coating specialist. Contrary to his report, he was not clear in his testimony as to whether the orange peel surface was a function of application or was inherent in the specified product. Concerning unevenness, after I admitted an unredacted version of a March 19, 2014 email from Mr. Gillanders that referred to Mr. Derbecker, Mr. Derbecker conceded that his broad conclusions about floor unevenness in his report were properly confined to the areas around the raceways. This left me with the impression that Mr. Derbecker was more of a “hired gun” for his client than a helpful expert.

[51] The defendants also called as an opinion expert one Brian O’Farrell. In my May 1, 2018 directions, I granted leave for further expert reports concerning the new floor product issue. The defendants hired one Brian O’Farrell, who authored a report dated November 3, 2018. He included comment not only on the Sika 261 issue but on the other floor coatings that were used. This was outside the scope of my leave order. In addition, he referred to the evidence of Mr. Hildebrand which contravened my witness exclusion order at the outset of the trial hearing. Ms. Assuras wanted me to exclude Mr. O’Farrell all together. Instead I required that the objectionable parts of the report be redacted, which was done.

[52] Mr. O’Farrell, an experienced coating inspector and applicator, was qualified to give an opinion on the epoxy that was used. He commented on the differences between Sika 261(#1) and Sika 261(#5), both as their composition and application and as to cost. I found that Mr. O’Farrell’s credibility was affected by his cross-examination. He conceded that the application of the urethane top coat lengthened the epoxy’s life expectancy; he conceded that the Sika 261(#5) product data sheet did not refer to retail stores or to showrooms; he conceded that the Sika 261 (#5) product data sheet did not say that it produced “little to no imperfections,” which phrase Mr. O’Farrell used; he conceded that no epoxy floor can be “almost flawless”; his evidence was based on documents, yet he did not bring his file or list the documents he reviewed in preparing his report, thereby making it difficult to assess his opinion; he embarked on costing analysis that was not in his report and that was difficult to follow. I found his evidence of limited use.

[53] The defendants also called Franco Vissa, whose company, Vissa, is a worldwide installer of floor coatings. The company uses an Italian product, Mapei, for almost all its applications. Mr. Vissa worked for US on two previous projects. He was hired by Mr. Locatelli to examine Epoxy’s work, which he did on February 18, 2014. He commented on the orange peel surface, dust inclusions and unevenness. He recommended a complete replacement of the polyurethane finish and much of the epoxy. He said he was hired by Mr. Locatelli to do just that. He struck me as a self-important individual who had no regard for the contract requirements of the work. He admitted to looking only briefly at the specifications. He admitted to knowing that the contract called for a glossy Sika coating and nevertheless recommending a mat Mapei coating instead just because that would hide imperfections better and be easier to maintain. He never talked with LMI or Sweeny. He obviously had no interest in using the specified Sika product, as he wanted to apply his preferred product, Mapei. He admitted to not grinding away all the Sika produce, and then dismissed the issue of whether applying a Mapei product onto a Sika product voided the warranties on both. He was obviously biased in favour of his established client, US and Mr. Locatelli, especially given that his company had been retained to “correct” the floors. I found that Mr. Vissa had limited credibility.

[54] Finally, the defendants called two minor witnesses, Tony Virzi and Francis Luongo, to prove documents concerning the completion project and the Italinteriors’ move. Their credibility was not seriously challenged as their evidence was of limited scope.

[55] Due to this analysis, I found generally that the credibility of Epoxy’s witnesses exceeded that of the defendants’ witnesses. The only exceptions are Mr. Hildebrand and Mr. Dyczkowskyj. With these exceptions, I preferred the evidence of the Epoxy witnesses over that of the defendants’ witnesses when their evidence conflicted. When it came to Mr. Hildebrand and Mr. Dyczkowskyj, I dealt with their evidence based on the issues and the corroborating documentation.

V. ANALYSIS

a) Who were the parties to the contract?

[56] Epoxy asserts that its contract was with LMI. The defendants assert that Epoxy contracted with UCI. Based on the evidence, I find that Epoxy contracted with UCI.

[57] The analysis of this issue must start with the contract document. The evidence indicates that there was a contract document that was signed by both parties. It was the Letter of Intent dated June 25, 2012. This letter is signed by Mr. Jeffrey. It states that LMI intended to award a contract for the concrete topping, epoxy flooring and the extra work of the raceway installation for a total price of $137,800 plus HST. The essential elements of a binding contract are there, namely the agreed upon price and the scope of the work to be done. While a schedule is not expressly mentioned, there is a statement that the letter was Epoxy’s authorization to proceed with the work and order materials “as necessary.” The inference is that a more specific schedule would be fleshed out in time. This is understandable as the flooring work was one of the very last items of work in the overall project, and there was evidence from Mr. Jeffrey that the overall project schedule was seriously impacted by the failures of two significant trades.

[58] Importantly, the Letter of Intent states that, “if you concur with the content of this letter, please complete the section below and return two (2) copies to the undersigned.” Mr. Hildebrand admitted signing this letter on July 17, 2012, returning it and starting work. The trial documents contain the Letter of Intent signed by both parties. I have no difficulty finding that this was the contract document between the parties.

[59] The question is whether it was LMI or UCI that was contracting with Epoxy. The Letter of Intent repeats twice that LMI was “acting as agent for and on behalf of Unifor Canada Inc.” I, therefore, have no difficulty in finding that Epoxy contracted with UCI. Mr. Hildbrand admitted reading the Letter of Intent before he signed it. He stated that he ignored the contents of the letter. I do not accept this evidence. Had he really objected to contracting with UCI, he would not have signed the letter. In any event, a seasoned businessman such as Mr. Hildebrand who signs a clearly worded contract document without duress while ignoring its contents must live with it.

[60] There are indeed several other documents that confuse this issue. There is an unsigned construction management contract between LMI and US. Mr. Jeffrey stated that this was a mistake, and that this contract should have read UCI instead of US. Another set of documents was the Epoxy quotations, both for the contract work and extras, all of which are made out to LMI, not UCI or US. In my view, neither of these sets of document detracts from the effect of the Letter of Intent, which was the contract document that was signed by both parties.

[61] Another document that confused the issue was the long form of contract dated July 11, 2012 that LMI sent to Epoxy for review and signature. The Letter of Intent referred to a “Contract” that would be issued in the future. The July 11, 2012 long form of contract was that “Contract.” The document specifies US as the party who was contracting with Epoxy. Mr. Jeffrey again stated that the reference to US was another mistake on the part of LMI, as, according to Mr. Jeffrey, it should have read UCI. In my view, this document is immaterial to this issue. It was never signed. Mr. Hildbrand also gave convincing evidence that he deliberately did not sign the document because it referred to US, which he found to be unacceptable as US was a foreign entity.

[62] Another set of documents that confused this issue was the set of LMI purchase orders. LMI issued a purchase order for the base contract on September 18, 2013. It was on LMI letterhead and was signed by Mr. Jeffrey. It referred to the Letter of Intent. At the bottom were four lettered paragraphs. In the paragraph lettered “A,” LMI is described as the agent for US, not UCI. In the paragraph lettered “B,” Epoxy is instructed to submit its invoices to “Unifor SPA c/o Lomax Management Inc.” Mr. Jeffrey described these are further mistakes, as they should have referred to UCI instead of US. In my view, the purchase order for the base contract does not supersede the Letter of Intent concerning the parties to the contract. Similar forms of purchase orders with the same mistakes were issued for the extras that Epoxy did. These are purchase orders for extras, and also do not supersede the Letter of Intent in relation to the parties to the contract.

[63] Finally, there was the funding arrangement. UCI funded the project, including the flooring contract, by paying LMI on its certified draws. LMI then paid trades. The cheques that went to Epoxy were all marked as coming from “Lomax Management Inc. – Unifor.” In my view, these cheques were consistent with the contracting parties as described in the Letter of Intent, namely that Epoxy’s contracted with UCI.

[64] As a result, I find that Epoxy contracted with UCI. This means that the Epoxy case for breach of contract as against LMI must fail.

[65] Mr. Hancock stated in his written submissions that, if I found that Epoxy’s contract was with LMI, I would have to determine whether Epoxy’s lien has expired. Having determined that Epoxy’s contract was with UCI, I do not have to make this determination, and I do not do so.

b) Did either party to the contract fundamentally breach it?

[66] The question of whether either side fundamentally breached the contract is central to this case. In Dirm 2010 Inc. v. Ontario (Minister of Infrastructure), 2017 ONSC 2174 (Ont. Master) at paragraph 307 Master Albert referred to the succinct summary of this doctrine in the decision of the Supreme Court of Canada in Guarantee Co. of North America v. Gordon Capital Corp., [1999] 3 S.C.R. 423 (S.C.C.) at paragraph 40:

[R]epudiation occurs by words or conduct evincing an intention not to be bound by the contract . . . [S]uch an intention may be evinced by a refusal to perform, even though the party refusing mistakenly thinks that he is exercising a contractual right . . . The effect of a repudiation depends on the election made by the non-repudiating party. If that party treats the contract as still being in full force and effect, the contract remains in being for the future on both sides. Each (party) has a right to sue for damages for past or future breaches . . . if, however, the non-repudiating party accepts the repudiation, the contract is terminated, and the parties are discharged from future obligation.

[67] How does the court determine whether there has been a repudiation? In Dirm Master Albert referred to the decisions of the Court of Appeal in 968703 Ontario Ltd. v. Vernon (2002), 58 O.R. (3d) 215 (CA) at paragraph 16 and Spirent Communications of Ottawa Limited v. Quake Technologies (Canada) Inc. (2008), 58 O.R. (ed) 721 (CA) at paragraph 36. These two decisions outline five factors to be considered in determining whether conduct has deprived the innocent party of substantially the whole benefit of the contract, which is the core ingredient of contractual fundamental breach: (1) the ratio of the party’s obligations not performed to that party’s obligations as a whole; (2) the seriousness of the breach to the innocent party; (3) the likelihood of repetition of the such breach; (4) the seriousness of the consequences of the breach; and (5) the relationship of the part of the obligation performed to the whole obligation.

b.1) Did UCI repudiate the contract?

[68] Applying this law to the facts of this case, I have determined that it was UCI that fundamentally breached the contract, not Epoxy.

[69] I ground this finding first and fundamentally on the adverse inference I draw from the absence of Mr. Locatelli from the trial hearing. There is no doubt that Mr. Locatelli was the person who directed the project on behalf of UCI. Sweeny and LMI reported to him, as did the Italian architect Mr. Colombo. Mr. Locatelli’s absence causes me to draw the following adverse inference, namely that he on behalf of UCI decided unilaterally to end the Epoxy contract shortly after January 17, 2014 without any further payment to Epoxy, without allowing Epoxy to repair its deficiencies, and with the intention of installing a different floor.

[70] The evidence contains many documents that corroborate this adverse inference. First, there was the mysterious absence of the 2012 floor sample on which Mr. Locatelli appears to have relied in proceeding with the epoxy floor. This floor sample apparently found its way into the possession of B.J. Smith, but it was never produced. This absence creates another basis for an adverse inference to be drawn against UCI. In a March 20, 2014 email from Mr. Locatelli he described the Epoxy floor as being completely different from the sample he had approved in 2012. He described the Epoxy floor as not being smooth, uniform and grit-free. Without the production of Mr. Locatelli’s sample, I am left to infer, and I do infer, that the sample was also probably detrimental to the UCI case, namely that it not consistent with the floor coverings that had been specified in the contract.

[71] Second, there was clear evidence that Mr. Locatelli wanted the epoxy work to stop in its entirety. On January 16, 2014 Mr. Locatelli sent an email expressing outrage over photographs of the floors. He described Mr. Gillanders’ descriptions of the floor on December 13, 2013 (ie. as being “good”) and on January 13, 2014 (ie. as “some spot touch-ups required”) as being “absolutely unacceptable.” He said he was “dismayed and very sorry for that.” He said he would make a decision about the epoxy floor in the “next days.” On January 17, 2014 Mr. Locatelli sent an email issuing the following order: “. . . stop all the activities regarding the epoxy floors, e[s]pecially on the third and the ground floor and stairs and the . . . curtain wall profile. It should be evident to everyone that the way this activity has been done is not acceptable, so I do not see the reason to go on. I confirm you that Unifor will take a final decision about this in the next days.” He described the floor as a “disaster.” This was a clear and complete stop work order concerning the floors with a view to allowing UCI to consider its course of action.

[72] Third, this stop order was not relayed to Epoxy. Epoxy was not told to stop work for 1 ½ months, namely until March 11, 2014. Mr. Jeffrey stated that he informed Epoxy of the Locatelli stop order shortly after January 17, 2014, but there is no corroboration for this statement and Epoxy continued to work. I do not accept this assertion by Mr. Jeffrey as credible. Messrs. Gillanders, Smith and Jeffrey tried to explain their failure to stop Epoxy by insisting that the Locatelli stop order did not apply to deficiency correction work. As a result, they said, they allowed that work, which was the bulk of what remained to be done, to continue. This was a self-serving explanation. The Locatelli stop work order was sweeping in scope. I view this conduct of the owner’s Canadian team instead as showing their core disagreement with Mr. Locatelli as to the severity of the Epoxy deficiencies, namely that Epoxy’s work did not justify abandoning the contract. I find that the UCI Canadian team thought that the Epoxy contract would probably continue to be performed.

[73] Fourth, at some point shortly thereafter Mr. Locatelli hired the Italian flooring contractor Mr. Vissa to attend the site and examine the work. Mr. Vissa had worked for Mr. Locatelli on previous occasions and used almost exclusively Mapei floor coverings, not the specified Sika product. Mr. Vissa came to the site to observe the floors on February 18, 2014. What I find clear from Mr. Vissa’s evidence was that the thrust of his work was not to facilitate Epoxy in correcting deficiencies with the epoxy floors. Mr. Vissa admitted not reviewing the contract documents, including the specifications. He admitted not taking core samples of the Epoxy floor to determine what was there. He admitted not interviewing Sweeny or LMI. He said he relied only on the photographs Mr. Locatelli had sent him and his site view. While Mr. Vissa did produce a technical letter containing his criticisms of the epoxy floor, this letter was obviously not produced for the benefit of Epoxy. It was not dated, but it appears to have been produced in mid-March, 2014 at the time of the final “settlement meeting” between UCI representatives and Epoxy on March 19, 2014. By that time, Mr. Vissa had already instructed Mr. Vissa to proceed with his replacement work. This letter was in my view produced solely for the purpose of anticipated litigation.

[74] Most importantly, Mr. Vissa’s “repair work” bore no resemblance to the glossy, epoxy floor that had been specified in the Epoxy contract. Mr. Vissa’s floor was a mat finish using a Mapei product, not a glossy Sika product as specified. Mr. Heywood described the product Vissa put down as a “flat urethane,” not a glossy epoxy. Mr. Vissa stated that he recommended the Mapei mat covering because a glossy finish “was too hard to keep polished,” and because the mat finish “hides imperfections” well. Mr. Heywood agreed with this assessment of the Mapei product. I find that Mr. Vissa’s statement was tantamount to an admission that the floors had unavoidable imperfections that had to be hidden with a mat finish, namely a different floor than the glossy epoxy that had been specified. I note Mr. Vissa made no reference to the Epoxy contract. Mr. Vissa said that Mr. Locatelli accepted his recommendation without difficulty. The Vissa evidence indicates to me that Mr. Locatelli decided as early as when he hired Mr. Vissa, early February, 2014 at the latest, that UCI would be installing a replacement floor that had not been specified.

[75] Fifth, there was evidence that as of early February, 2014 Mr. Locatelli also took steps to stop any form of payment to Epoxy even for work that was done and certified for payment. On February 10, 2014 Mr. Locatelli emailed Mr. Gillanders instructing him to instruct LMI remove the Epoxy charge of $11,250 from the certified LMI October, 2013 draw. Sweeny complied with this instruction by moving the deleted amount to the November draw. Then on March 3, 2014 Mr. Locatelli expressed his “opinion” to Mr. Gillanders by email that this same charge should be removed from the certified LMI November, 2013 draw, which it was. The charge was moved to the December, 2013 draw, but was removed from that one as well at the behest of Mr. Locatelli. None of this was communicated to Epoxy until the “settlement meeting.” No further payment was made to Epoxy.

[76] Sixth, UCI made no formal and serious effort to have Epoxy address UCI’s concerns about deficiencies in the Epoxy work. There was considerable evidence that the owner’s representatives complained to Epoxy about debris in the polyurethane topping, the orange peel surface of the floors, and the unevenness of the floors. Messrs. Jeffrey, Dyczkowskyj and Gillanders all stated that they raised these concerns verbally with Epoxy repeatedly. They stated that they were told by Epoxy that it would buff the floors and that by doing so these problems would be addressed. But at no time did the owner’s representatives send a formal deficiency list and written demand for correction to Epoxy. When asked about this, Messrs. Jeffrey, Smith and Gillanders, asserted that such formal deficiency lists were produced only at the end of a contractors’ work, which they said had not happened in the case of Epoxy. As stated above, they insisted that they believed that, despite the Locatelli stop order, Epoxy’s deficiency correction obligation continued. This assertion does not accord with their behavior. If the deficiency correction obligation continued despite the stop order, the owner’s representatives should have formally put Epoxy on written notice to correct deficiencies. Yet, they sent no formal deficiency lists to Epoxy.

[77] Furthermore, as confirmed by Mr. Smith by email dated February 14, 2014, Sweeny in fact began its formal deficiency review of the entire project at that time. The Sweeny deficiency report dated February 14, 2014 includes several references to the floors. Interestingly, it calls for the “refinishing” of the basement and ground floors, and the “repair” of the second and third floors. In other words, it did not call for a refinishing of all the floors. This report and the subsequent Sweeny deficiency report dated March 6, 2014, which also included the same comments about the floors, were delivered to LMI but were never forwarded to Epoxy. The Sweeny witnesses blamed LMI’s poor construction management for this failure. When asked about this, Mr. Jeffrey blamed Sweeny saying that these were not formal deficiency “lists.”

[78] The only reasonable explanation for all this confusing behavior concerning deficiencies was that the owner’s Canadian representatives were uncertain as to the state of the Epoxy contract following Mr. Locatelli’s stop work order. They did not view the stop order as bringing the Epoxy contract to an end. However, they did not know what Mr. Locatelli wanted to do with the floors, and that uncertainty included an uncertainty as to whether Mr. Locatelli really wanted Epoxy to repair the floors. Mr. Locatelli did not communicate with his Canadian team for at least 1 ½ months after his stop work order. Both Messrs. Gillanders and Jeffrey stated that they heard rumors at the end of February and the beginning of March that Mr. Locatelli “was going with a known commodity,” namely an Italian contractor he had worked with before.

[79] Finally, Mr. Locatelli informed his Canadian team in March, 214 that he wanted nothing to do with Epoxy, including its deficiency correction work. On March 3, 2014 Mr. Smith sent an email to Mr. Locatelli concerning Epoxy’s outstanding invoices. He stated that, “we need to know how we are to proceed.” In response on the same day, Mr. Locatelli finally emailed back confirming that, having had “our opinion” confirmed by “our specialist,” UCI could not accept the Epoxy work. On March 10, 2014 Mr. Locatelli sent an email stating that UCI had decided to “stop cooperation with [Epoxy].” About deficiency correction work, Mr. Locatelli added the following: “. . . we don’t trust in the “Epoxy Solution” Contractor capability to repair the disaster he has already done: we don’t want to lose another month to assist to another disaster.” These emails led Mr. Dyczkowskyj on March 6, 2014 and Mr. Jeffrey on March 11, 2014 finally to advise Epoxy that all work was “on hold.” These emails also led to the convening of the “settlement meeting” with Epoxy on March 19, 2014. The owner’s purpose for this meeting obviously was not to deal with deficiencies but to conclude a settlement with Epoxy that did not involve further payment. That was made clear by Mr. Gillanders and Mr. Jeffrey. I find from these facts that the owner had concluded as early as January 17, 2014 that it did not want Epoxy to do any more work, even deficiency correction work.

[80] The critical obligations of UCI in the Epoxy contract were the obligations to facilitate Epoxy in the proper performance of its work, including deficiency work, and to pay Epoxy for the work it did. Based on the facts as I found them, UCI breached these fundamental obligations. It decided unilaterally to stop Epoxy’s work, including deficiency correction work, as of or shortly after January 17, 2014, and it decided also to stop paying Epoxy. These obligations were obviously critical to Epoxy. The evidence, as stated above, also indicates that UCI’s decision was permanent and immutable as Mr. Locatelli decided on the advice of Mr. Vissa to have Mr. Vissa install a form of flooring that was not specified. This is a clear fundamental breach of contract on the part of UCI.

[81] The next question is: did Epoxy “accept” the UCI contract repudiation? An innocent party can only exercise its option to accept the contract repudiation “with reasonable dispatch after the true state of affairs become known to the [innocent party];” see W. J. Crowe Ltd. v. Pigott Construction Ltd., 1961 CarswellOnt 92 (Ont. C. A.) at paragraph 45. Epoxy was not informed of the Locatelli stop order for 1 ½ months, namely until March 11, 2014. As Mr. Jeffrey reported, when he was informed that Epoxy’s work was put “on hold,” Mr. Hildebrand initially ignored the order, and insisted on continuing with Epoxy’s work. This was not allowed, and the work ceased.

[82] At the March 19, 2014 “settlement meeting” there was a discussion about deficiencies again, but the discussion was a superficial rehashing of old positions. Mr. Jeffrey frankly admitted this when he stated that the owner’s real purpose for this meeting was to get Epoxy to settle its invoices for no payment, which he said was “difficult” as the owner’s Canadian team did not know what the fix was or what it would cost. Mr. Hildebrand said that he offered to buff the floors and reapply the polyurethane top coat but refused to compromise on Epoxy’s accounts.

[83] Because of the unpaid invoices, Epoxy took steps to preserve its lien. Mr. Hildebrand advised the owner’s representatives of this step at the March 19, 2014 meeting. The Epoxy claim for lien was registered on March 26, 2014. In addition, and critically in my view, Mr. Hildbrand stated that Epoxy also decided at this time not to return the raceway caps. Epoxy had brought the raceway caps back to its facility to install the epoxy in the caps there. When Epoxy learned of the owner’s stop work order and non-payment of accounts, Mr. Hildebrand stated that he decided that these raceway caps would not be returned.

[84] This act of holding on to the raceway caps plus the preservation by Epoxy of its lien amounted, in my view, to an “acceptance” by Epoxy of UCI’s repudiation of the contract.

b.2) Did Epoxy repudiate the contract?

[85] The next question is: did Epoxy fundamentally breach the contract? In my view, it did not.

[86] Much time was spent in the trial on the issue of whether the orange peel surface of the epoxy floors, the unevenness of epoxy floors and the debris in the epoxy floors were deficiencies for which Epoxy was responsible. The existence of these conditions was self-evident from the numerous photographs that were introduced in the trial hearing. The only issue in this regard that was seriously contested by Epoxy was the alleged unevenness of the floor. Mr. Derbecker gave evidence that he measured the surface undulations of the floors and found them to exceed the tolerances specified by the contract. On cross-examination he confined this evidence to the areas around the raceways. While Mr. Heywood criticized the unreasonable tolerances specified by the contract, he did not seriously undermine this evidence of Mr. Derbecker. Therefore, I find that these three conditions existed and that the unevenness was limited to the areas around the raceways.

[87] For deficiencies to form the basis of contract repudiation, they must be both serious enough to undermine the very foundation of the contract and the contractor must be found to be unwilling to correct the deficiencies; see Dirm 2010 Inc. v. Ontario (Minister of Infrastructure), 2017 ONSC 2174 (Ont. Master) at paragraph 310, and C. S. Bachly Builders Ltd. v. Lajlo, 2008 CarswellOnt 6542 (SCJ) at paragraph 84.

[88] As to whether the above noted three conditions were serious enough to undermine the very foundation of the contract, there is no doubt that Mr. Locatelli and the Trevisans thought so. However, the Sweeny trained representatives that were charged with inspecting the work under the Epoxy contract did not share that view. Mr. Gillanders reported to Mr. Locatelli on December 13, 2013 that the “floor finish [before top coat] is good.” Most importantly, after all the coats were on the floors, Mr. Gillanders reported to Mr. Locatelli on January 13, 2014 that Epoxy’s work was “generally complete” with the remaining work being only “spot touch-ups.” As stated earlier, Mr. Gillanders’ attempts at trial to temper or modify the contents of these reports were not credible. Furthermore, LMI’s site representative, Mr. Dyczkowskyj reported in early February, 2014 that he found Epoxy’s work to be “OK.” As stated above, I found Mr. Dyczkowskyj to be credible witness. Therefore, due to these observations of UCI’s Canadian team, I find at minimum that the three noted deficiencies did not undermine the foundation of the Epoxy contract and did not justify contract termination.

[89] As to whether Epoxy was responsible for these three deficiencies and would have repaired them, these were issues that were rendered moot by the owner’s own contract repudiation. These three conditions were, in my view, reparable. The evidence indicates that the orange peel surface was a by-product of the Sika Duochem 942 top coat either due to improper application (according to Mr. Vissa) or to the inherent condition of the product (according to Mr. Heywood). The evidence indicates that the debris in the floor was in or just below the top coat (according to Messrs. Vissa and Derbecker) and that the undulations in the floor around the raceways could be ground down (according to Mr. Vissa). As a result, I find that all three conditions, whether they were the responsibility of Epoxy or not, were capable of being repaired, as Mr. Vissa suggested in his technical report, by removing and replacing the top coat and grinding down the floor undulations.

[90] This repair proposition, however, was never put to Epoxy as the owner was not interested in having Epoxy repair its own deficiencies after January 17, 2014. Therefore, I find that Epoxy could not and did not repudiate the contract on account of these three conditions, regardless of whether Epoxy was responsible for them. It was never given an opportunity to repair.

[91] The same cannot be so easily said of the fourth issue that came to the fore at the beginning of the trial, namely the issue whether Epoxy installed the improper Sika epoxy. The evidence indicates that the contract specifications clearly required that Sika 261(#5) form the core epoxy for the floors. The specifications for the Sika 261(#5) indicate that this product is a combination of the Sika 261(#1) resin plus an amount of aggregate. This produces a self-leveling epoxy that is used for institutional buildings such as airplane hangars.

[92] Mr. O’Farrell gave convincing evidence that the Sika 261(#5) is a different product from the Sika 261(#1) which is essentially the pure resin without the aggregate. He also stated that the Sika 261 #5 has a much longer life expectancy than does the Sika 261(#1). Mr. Hildebrand asserted that the two were essentially the same products with the same life expectancies; but I find this to be a self-serving statement of an interest party and therefore lacking in incredibility. The two were indeed different products with different data sheets.

[93] Messrs. Hildebrand and Garrett frankly admitted in chief that Epoxy did not apply the specified Sika 261(#5) and that they instead applied the Sika 261(#1). They did so because they were having difficulty getting the epoxy flush with the raceways. Mr. Garrett frankly admitted that Epoxy had had no previous experience with raceways. Messrs. Hildebrand and Garrett said that by thinning out the Sika 261(#5) they could work with the raceways. In closing argument, Ms. Assuras blamed the raceway heights, a LMI responsibility, for this problem; but Mr. Garrett admitted that in the end he had no difficulty with the raceway heights. I do not accept this argument. This change from Sika 261(#5) to Sika 261(#1) was a fundamental change in work scope that Epoxy unilaterally introduced.

[94] That the owner remained ignorant of this change is clear from the evidence. Mr. Hildbrand admitted to not responding to the email from Mr. Dyczkowskyj to Epoxy dated February 11, 2014 asking for confirmation that Sika 261 #5 had been used. This meant that the owner was uninformed of this vital change and remained uninformed until the eve of the trial hearing. Ms. Assuras argued that LMI should have known about the absence of the aggregate because aggregate was not at any time situated on the site. I do not accept this argument. The evidence is clear that Sweeny and LMI were not experts in epoxy application. Messrs. Gillanders and Jeffrey admitted this ignorance. The owner hired Epoxy because it was the expert in this area. It should have been frank in its disclosure of the epoxy change. It was not.

[95] This issue has all the trappings of a repudiation of the contract by Epoxy. The Sika 261 #5 was specified and was the core epoxy that was to be used for the floor. Epoxy replaced the specified epoxy with a different product that had significantly less durability, all without authority. Such a deficiency would usually “go to the root of the contract” as it concerns the very thing (ie. Sika 261 #5 epoxy flooring) that Epoxy contracted to install; see C.S. Bachley Builders Ltd. v. Lajlo, 2008 CarswellOnt 6542 ( SCJ) at paragraph 82. As such it would usually amount to a fundamental breach of contract justifying contract termination.

[96] Furthermore, Epoxy evaded disclosing this vital change of epoxy to the owner’s representative. I have previously found in this reference that Epoxy’s failure to respond to the Dyczkowskyj February 11, 2014 email asking about whether Sika 261 #5 had been used was effectively an affirmation answer, and therefore a misrepresentation. While I recall that there is authority for the proposition that parties to contracts are bound by the issues they rely upon in terminating a contract, there is always room for a variation of this principle in cases such as this which involve conduct of actual or tantamount to willful misrepresentation.

[97] Nevertheless, after careful reflection, I am not prepared to find that Epoxy in fact repudiated the contract on account of this issue. Again, the reason is the owner’s own contract repudiation. I have found that by the end of January and into February, 2014, Mr. Locatelli had for reasons that were not justified effectively abandoned the contract. He had embarked on the installation of a different floor than the one that was specified, namely a mat finish floor that he believed on the advice of Mr. Vissa covered imperfections better than did the glossy floor. This was a different scope of work altogether. As a result, it became immaterial that Epoxy had in the meantime failed to deliver the glossy epoxy floor specified by the contract and failed to inform the owner accordingly.

[98] The owner’s duties as the “innocent party” at the time of being informed of a fundamental breach are relevant to this analysis. At that point, the law requires that the owner be in a position to either affirm the contract going forward (namely by having Epoxy remediate the floor) or bring it to an end and seek another contractor to remediate the floor; see Guarantee Co. of North America, op. cit., paragraph 40. I find that UCI was not in that position when it properly should have been in that position, namely within a reasonable time after the Dyczkowskyj February 11, 2014 email asking Epoxy about whether Sika #261 #5 had been used. This is an email Epoxy should have answered correctly and in a timely way. By this point, however, I have found that UCI had abandoned the contract making the issue immaterial.

[99] The option of having the floor remediated with the proper epoxy would have been a real one. That the improper epoxy could have been replaced with the proper epoxy, either through Epoxy or another contractor, seems clear from the evidence. The repair would have been more extensive, namely the replacement of not only the top coat but also the epoxy coats. Mr. Vissa stated that he did just that by grinding away much of the epoxy and applying lawyers of Mapei product. The evidence of the KTA reports and Ms. Sherbondy suggests otherwise, as much of the original Sika 261 #1 showed up in the core drill samples. Yet, I accept that these core samples were taken in areas that were not in the centers of the display floors where Mr. Vissa did most of his heavy grinding work. However, UCI was not in a position to exercise this option. It had abandoned the contract, as it had no interest in installing the specified epoxy floor any more.

b.3) Conclusion about repudiation

[100] I am satisfied, therefore, based on the evidence, that the owner was simply not prepared to have Epoxy do any further work after January 17, 2014, and that this included not doing any deficiency correction work. Instead, I find that the owner proceeded in an entirely different path with the installation of a different floor, all unbeknownst to Epoxy. This meant that when the Epoxy egregious deficiency of having installed the wrong Sika epoxy should have come to light in mid-February, 2014, UCI had effectively abandoned the contract rendering that deficiency issue immaterial.

[101] Indeed, I suspect, although I do not so find, that the reason LMI and Sweeny never followed up on Epoxy’s non-response to Mr. Dyczkowskyj’s February 11, 2014 email concerning the Sika 261 #5 was because of the prevailing uncertainty in their minds as to the status of the Epoxy contract and whether Epoxy would in fact be correcting its own deficiencies.

[102] Therefore, I find that UCI wrongfully repudiated the Epoxy contract between January 17, 2014 and early February, 2014, and that this repudiation was accepted by Epoxy between March 11 and 19, 2014. I am also not prepared to find that Epoxy repudiated the contract and I make this determination based on the owner’s own contract repudiation.

c) What are the damages to be recovered?

c.1) UCI’s claims for damages

[103] UCI claims damages from Epoxy as follows:

1. Vissa inspection of epoxy floor: $3,149.06 (CDN);
2. CCI Group inspection: $1,741.61 (CDN);
3. Rental of tools from IND Inc.: $6,747.80 (CDN);
4. Vissa cost to replace floor: $72,131.96 (CDN);
5. Cost to move furniture: $1,979.65 (CDN);
6. Replacement of raceways: $9,054.45 (CDN);
7. Lost rent (1 ½ months): $18,750.00 (CDN);

TOTAL: $113,544.53 (CDN).

[104] It is well established law that an owner who wrongfully repudiates a contract is disentitled from claiming damages for breach of contract from the innocent party; see my decision in Brock Doors & Windows Inc. v. Rosemary Klotz, 2017 ONSC 5117 at paragraph 48, and see C.S. Bachley Builders Ltd. v. Lajlo, 2008 CarswellOnt 6542 ( SCJ) at paragraph 87. Therefore, I am driven to the conclusion that I must deny the entirety of the UCI damage claim, and I do so.

c.2) Epoxy’s damage claims

[105] Epoxy makes damage claims of its own and a claim for lien calculated as follows. All figures are tax included:

1. Base contract amount: $155,714.00 (CDN);
2. Air freight for additional additives (extra): $3,220.50 (CDN);
3. Additional primer (extra): $33,900.00 (CDN);
4. Supplying 30 amp power for 7 days (extra): $2,768.50 (CDN);
5. Application of UV Sika 942 (extra): $20,340.00 (CDN);
6. Repair of the stairs (extra): $8,008.88 (CDN);
7. Payments made: [$99,004.95 (CDN)];

TOTAL: $124,946.93 (CDN).

[106] UCI does not contest these claims other than numbers 4 and 6. It also asserts that there should be a set-off of the cost saving it alleges Epoxy enjoyed as a result of having wrongfully not installed the specified Sika 261 #5 epoxy, a saving UCI alleges to be in the amount of $52,861.68 (HST inclusive). It also alleges that there should be a further reduction of $9,054.45 on account of the Epoxy decision to retain the raceways. It also alleges that there should be a further reduction of $6,215 (HST inclusive) on account of the cost of the Epoxy uncompleted work.

c.2.1) Raceway reduction

[107] I am not prepared to reduce the Epoxy claim by the $9,054.45 (CDN) UCI incurred to replace the raceways by Epoxy. This was a cost UCI incurred as a result of its own wrongful repudiation of the contract, and I have found that the Epoxy retention of the raceways was its acceptance of the owner’s repudiation.

[108] I also note that the extensions of the raceways to the east wall were not a part of the original Epoxy scope, that these extensions were instituted on October 17, 2013, and that Epoxy did not charge an extra for these extensions. Epoxy certainly could have claimed an extra for this supply. Therefore, there is some additional fairness in having UCI pay for the raceways due to this issue.

[109] This back-charge claim is denied.

c.2.2) 600 volt 30 amp power extra

[110] Epoxy claims that it provided 7 days of 600 volt 30 amp power for other project work from its own truck, and claims an extra of $2,768.50 (CDN) in this regard. Mr. Garrett stated in the evidence that this was necessary because the base building provided only 208 volts of power to the site, and more was needed for certain operations, particularly those of the electrician.

[111] In the evidence there is an LMI purchase order to Epoxy (UNI-046) dated September 18, 2013 authorizing the supply and installation of Sika 156 primer on the concrete topping. This purchase order contains the following additional wording: “Concrete dust and debris disposal by other, 600 Volt 30 Amp power supply $350.00/day.” Work on this purchase order was billed by Epoxy in two bills. The last one was dated November 22, 2013 has the following additional entry: “7 Days 600 Volt 30 Amp power” with the related extra charge of $2,450 plus HST. LMI accepted this bill and UCI made no complaint until this litigation.

[112] UCI now challenges the credibility of this claim asserting that Jenner had sufficient power on site to provide the necessary extra power at a lesser fee. Mr. McIsaac did state that this was the case in September, 2013. But he provided no corroboration for his statement. Furthermore, this does not undermine the veracity of the Epoxy position that it received authorization to provide the extra power, provided it and billed for it. That Mr. Garrett could not remember the exact days on which this power was supplied is immaterial in the end.

[113] I grant this extra charge.

c.2.3) Stair repair extra

[114] Epoxy claims an extra for having to repair the stairs. There is no issue that this is an extra that Epoxy is entitled to and that the proper basis for this extra charge was time and material. The issue is whether Epoxy overbilled for the work. UCI wants a $2,923.88 reduction in this extra claiming that Epoxy inappropriately billed for travel time in its charge.

[115] There is an issue as to whether the Epoxy billing actually included travel time. Mr. Garrett, the Epoxy site representative, stated that it was not. Mr. Hildebrand, on the other hand, implied that it was and that this inclusion was properly a part of the time and material billing. I prefer the evidence of Mr. Hildebrand here as to the inclusion of the travel time in the billing. He is the principal of Epoxy and was involved in the billing process, not Mr. Garrett. I also note that there is indeed a discrepancy in start and stop times between the Epoxy time sheets that formed the basis for its billing and the start and stop times in Mr. Dyczkowskyj’s daily site records.

[116] I also accept Mr. Hildebrand’s assertion that the travel time was a proper inclusion in the time and material billing. I was given no basis for the UCI position that it was not a proper inclusion. Travel by Epoxy’s workers to and from the site to do extra work is an expense that was not reasonably contemplated by Epoxy. This is particularly the case here since the bulk of Epoxy’s contract work was done by January, 2014 when the stair repair was done. There was no reason for Epoxy to attend the site other than to do this extra work.

[117] I deny the UCI assertion and grant the Epoxy extra for stair repair in full.

c.2.4) Costs of uncompleted work

[118] Mr. Hancock stated in closing argument that Mr. Hildebrand admitted in cross-examination that Epoxy’s scope was not done, and that the cost to complete the scope was $5,500 plus HST = $6,215. Mr. Hancock argued that this should be deducted from any Epoxy damage judgment as this was a cost that Epoxy was spared.

[119] I am not prepared to do so. My trial notes indicate that Mr. Hildebrand in fact admitted that the remaining work was in a few small corners around the elevators and that the cost of this work was no more than $3,000. Furthermore, Epoxy would be entitled to lost profits on uncompleted work as a part of its damage claim, and it was not made clear in the evidence whether Mr. Hildebrand’s statement referred to the unearned portion of the contract price as opposed to cost. Finally, any benefit of the doubt on this issue should favour Epoxy as it was the owner who wrongfully repudiated the contract and denied Epoxy an opportunity to finish.

[120] I deny this reduction.

c.2.5) Set-off for improper epoxy

[121] Epoxy’s claim in damages must be limited to what it reasonably could have recovered had the contract been performed and not been repudiated by the owner. This analysis must, therefore, take into account the cost Epoxy would have incurred to correct deficiencies.

[122] Much time was spent on the three issues of deficiencies, namely the orange peel surface, the floor unevenness and the debris in the floor. In the end, I found these issues to be of marginal significance at best. This was due to the rise of the much bigger issue, namely the issue of Epoxy’s installation of the unspecified epoxy coating.

[123] As stated above, there is no doubt in my mind that Epoxy installed an epoxy floor that was not specified. It installed Sika 261(#1) epoxy rather than the Sika 261 #5 epoxy. Messrs. Hildebrand and Garrett admitted as much, and Mr. O’Farrell convinced me that the Sika 261#1 epoxy and Sika 261(#5) epoxy are indeed different products. These are different products with different life expectancies. As a result, I find that Epoxy would have had to replace the epoxy it put down with a Sika 261#5 in order to comply with its contract obligations. By doing so, it would have had to replace the top coat and the epoxy, thereby also removing the orange peel surface, the unevenness and the debris.

[124] Rather than reducing the Epoxy claim by the cost of replacing the Sika 261(#1) with a Sika 261(#5), Mr. Hancock proposed using what he called a quantum meruit analysis instead. He argued that this produced a lesser reduction and was fairer to both parties as it produced a total recovery for Epoxy that reflected what it actually supplied as opposed to what it should have supplied. In short, it produced a figure that represented the “windfall” to Epoxy in its contract price. The alternative, namely the estimate of the cost of grinding off the epoxy and urethane coatings and installing the Sika 261(#5) would have produced, according to Mr. Hancock, a much higher figure, perhaps one large enough to eclipse the entire Epoxy claim. He stated that the replacement option would have cost much more than what Mr. Vissa charged as Mr. Vissa after all did not grind off the entirety of the epoxy coatings. Mr. Hancock advised that his clients were prepared to accept his quantum meruit analysis as an assessment of the proper set-off for this item.

[125] The “windfall” in the Epoxy contract price, according to Mr. Hancock, would be the difference in the cost Epoxy incurred for installing the Sika 261(#1) and the contract price for the Sika 261(#5) epoxy installation. There was no expert evidence on this point. This is how Mr. Hancock pieced together the evidence to make his argument. He pointed out rightfully that, while Mr. Garrett had indicated that Epoxy had put down between 28 and 32 mils (a unit of measure) of epoxy, the actual figure was much less than that as indicated in the KTA reports. Mr. Hancock used the figure of 25 mils as a result. He then rightfully pointed out that Mr. Gabbato had estimated the material cost of installing 32 mils of Sika 261(#1) over the 12,000 square foot area of the four subject floors at $11,340. Mr. Hancock then did this calculation of material costs for the Sika 261#1: 25/32 x $11,340 = $8,859.38. Mr. Hancock then went on to assess the labour cost of installing the Sika 261#1. He did so by totaling the actual labour hours Epoxy spent installing epoxy as identified in the Epoxy site records. This total was 144 hours. He then used the higher labour rate for Mr. Garrett, namely $65/hour, to estimate the total labour costs of installing the Sika 261(#1): $65 x $144 = $9,360.

[126] Mr. Hancock then totaled the estimated cost to Epoxy of installing the Sika 261(#1) as follows: ($8,859.38 + $9,360) x 1.13 (HST) = $20,587.90. The portion of the Epoxy contract price for the epoxy floor was $65,000 x 1.13 = $73,450. Therefore, so the argument went, the “windfall” in the Epoxy contract price is as follows: $73,450 - $20,587.90 = $52,862.10. He proposed that I reduce Epoxy entitlement by this amount.

[127] I am prepared to accept this position. First, Epoxy challenged this back-charge not on the basis that Mr. Hancock’s analysis was flawed, but on the basis that there should be no set-off at all due to, what Ms. Assuras argued, as the defendants’ shared responsibility for the wrong epoxy. I have already dismissed the Epoxy argument about shared responsibility.

[128] Second, this figure seems reasonable given the submitted evidence of the floor repair concerning the three deficiencies - orange peel surface, unevenness and debris. At a point when it was not aware of the wrong epoxy issue Sweeny estimated what it would cost to repair the floors. In a March 6, 2014 email to Mr. Locatelli, Mr. Smith advised that Sweeny believed the floor remedial cost would be “as much as $40,450,” which corresponded with the unpaid portion of the base contract price. This no doubt was a repair estimate concerning the deficiencies as Sweeny understood them to be at that time, which were primarily the three problems – orange peel surface, unevenness and debris. The replacement of epoxy would undoubtedly cost more.

[129] Third, as to whether I should use a much higher replacement cost figure for this set-off, I note that there was no credible evidence from UCI, expert or otherwise, as to what it would cost to replace the epoxy floor. This is a set-off that UCI is claiming. It, therefore, has the onus of proving this point. There was reference to the Vissa costs. I am not prepared to use these costs as a benchmark for the replacement cost. The Vissa work involved an unspecified product.

[130] In the circumstances, based on the evidence presented, Mr. Hancock’s quantum meruit analysis seems to be a reasonable assessment of the set-off to be applied to the Epoxy to account for its installation of the wrong epoxy. The set-off will be $52,862.10.

c.3) Damages calculation

[131] Therefore, I find that Epoxy is to be granted a lien and damage judgment as against UCI in the amount of $124,946.93 - $52,862.10 = $72,084.83. The counterclaim of the defendants is dismissed.

VI. CONCLUSION

[132] In conclusion, I rule that UCI, not LMI, must pay Epoxy $72,084.83 on account of its claim for lien and breach of contract claims. I dismiss the action as against LMI. I also dismiss the counterclaim of the defendants.

[133] As to costs and interest, I required that the parties deliver cost outlines for the reference including the trial hearing. They did so. The Epoxy costs outline shows $494,544.07 in full indemnity costs, $403,618.78 in substantial indemnity costs and $322,908.48 in partial indemnity costs. The defendants’ costs outline shows $390,219.83 in actual costs, $304,512.99 in substantial indemnity costs and $218,806.18 in partial indemnity costs.

[134] If the parties cannot otherwise agree on costs and interest, Epoxy must deliver written submissions of no more than five (5) pages on or December 20, 2019. The defendants must deliver written submissions of no more than five (5) pages on or before January 10, 2020. Any reply written submissions cannot be longer than two (2) pages and must be delivered on or before January 17, 2020.

[135] These written submissions must in addition to any issues the parties may wish to raise, deal with the following issues:

• the costs for the reference that should be awarded, and the basis for doing so;

• the rationale for the time and effort that was spent in this reference on the issue of the core samples;

• the settlement discussions between the parties; and

• the prejudgment and post-judgment interests that should be applied.

[136] If the parties are unable to agree on the form of my final report, an attendance may be required to settle the report.

Released: December 5, 2019 __________________________

MASTER C. WIEBE

COURT FILE NO.: CV-14-504636

DATE: December 5, 2019

ONTARIO SUPERIOR COURT OF JUSTICE

In the matter of the Construction Act, R.S.O. 1990, c. C.30

BETWEEN:

Mount Royal Painting Inc. c.o.b. Epoxy Solutions Plaintiff

• and -

Lomax Management Inc. and Unifor Canada Inc. Defendants

REASONS FOR JUDGMENT

Master C. Wiebe

Released: December 5, 2019