Court File and Parties

COURT FILE NO.: CV 17-245 DATE: 2021 Apr 2

ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

Jetstream Environmental Solutions, Plaintiff – and – Normerica Realty Corporation and Normerica Inc., Defendants

COUNSEL: D. Touesnard, for the Plaintiff M. Mikhail and V. Hua, for the Defendants

HEARD: October 19, 2020

The Honourable R. J. Harper

Issues

[1] The Plaintiff’s claim is pursuant to the Construction Lien Act.

[2] The Plaintiff claims damages for breach of contract or in the alternative damages for unjust enrichment.

[3] The Plaintiff quantifies their damages in the amount of $68,654.94 plus interest at the rate of 2% per month or the highest non usurious rate of interest whichever is the higher.

Background

[4] The Plaintiff (Jetstream) is a company incorporated under the Business Corporations Act Ontario (BCAO). Jetstream carries on the business of environmental waste management.

[5] The Defendants, Normerica Realty Corporation and Normerica Inc. (Normerica) are companies incorporated under the BCAO. Normerica carries on the business of manufacturing and sale of pet food products and kitty litter.

[6] Normerica’s kitty litter manufacturing plant is located within Brant County in the Province of Ontario.

[7] In 2016, Jetstream was a sole proprietorship that carried on the business of waste management. At that time, the business was being operated by Chad Cunningham. He later took on his brother Jamie and a partner, Stephen Nicholls. Jetstream was later incorporated under the BCAO.

[8] In 2016, Jetstream did environmental waste management for Normerica. They were hired to clean kitty liter that would spill onto the roof of Normerica’s plant in Brantford. A corrosive component in the kitty litter, from time to time, caused leaking in the pipes that ran from one vat to another on the roof of Normerica’s production facility in Brantford.

[9] Chad Cunningham stated that he was contacted in 2016 by Greg Chorpito. Mr. Chorpito was employed by Normerica. Mr. Chorpito became Chad Cunningham’s contact person during the course of 2016. The work that was done by Jetstream for Normerica was done on the basis of time and materials. Invoices for the work completed by Jetstream would be sent by email to the email account of Greg Chorpito when Jetstream first started do the work for Normerica in 2016. However, he was instructed by Mr. Chorpito early on in their working relationship to send their invoices to Cassandra Cuffe who was an administrator in the offices at Normerica at the Brantford office.

[10] At all times that Jetstream did work for Normerica, Jetstream charged Normerica for their time per man and for the cost of materials and equipment that needed to be used to complete a job. Until the work that was done that is the subject matter of these proceedings, all of the invoices sent by Jetstream were paid by Normerica. No one at Normerica ever complained about the work nor the billing process that had been used nor the amounts billed.

The 2017 Jetstream work on Normerica Plant Facility

[11] In February of 2017, Jetstream was contacted by Normerica to assist them in the removal of large piles of kitty litter that were accumulating on the roof of their plant in Brantford. Stephen Nichols, of Jetstream, gave evidence that he went onto the roof and took pictures of the piles of kitty litter. He stated that the piles were approximately 10 feet wide and between 5.5 and 6 feet high.

[12] Mr. Nichols stated that he had never seen anything like it before. The amounts of litter in the past were approximately 2 feet high. Given the significant amount of litter on the roof observed in February they were concerned about the roof structure being vulnerable.

[13] At this time, Greg Chorpito asked Steven Nichols, of Jetstream, to provide them with a quote for the removal of this kitty litter. This quote was provided to Normerica on March 12, 2017.

[14] Mr. Nichols stated that their quote represented what was understood to be the standard in the industry. It was based on hourly work from “port to port” plus materials and equipment costs. Mr. Nichols had a discussion with Mr. Chorpito on March 13, 2017 to go over the quote and the nature of the work that was needed to be done. He stated that they would need to charge for labour per hour per man for a non supervisor at a cost of $50 per hour and a supervisor at a cost of $70 per hour.

[15] Mr. Nichols also reviewed the process that needed to be undertaken. He stated that they would require a conveyor belt to be placed on the roof to move the material closer to the edge and dropped in bins on the ground. They would also need the use of electric wheel barrels to be most efficient and effective to move the materials over the various distances on the roof.

[16] Mr. Nichols stated that there were no concerns that were expressed to him by Mr. Chorpito about the nature of the work process or the charges for labour, material and equipment.

[17] Mr. Chorpito gave the Jetstream quote to his manager and Mr. Nichols stated that no one from Normerica contacted anyone at Jetstream about the quote until an emergency call came into Jetstream from Normerica on April 5, 2017 informing Jetstream that a portion of the roof on the Brantford plant collapsed.

[18] Mr. Nichols told his partners and he stated that they arrived at the Normerica Brantford plant within one hour from being told of the collapse.

[19] Mr Nichols was greeted by Stuart Johnston who was a manger at Normerica. Mr. Nichols told Mr. Johnston that they needed to engage a structural engineer immediately. Mr. Nichols undertook to call certain engineers to ascertain their availability. Mr. Nichols was successful at engaging Cahoon’s Engineering on an emergency basis.

[20] On April 7, 2017 a decision was made to obtain a number of hydraulic jacks in order to take the load of the structural beams that were supporting the roof. Mr. Nichols arranged to get 400-ton jacks that were brought in to secure the roof.

[21] At this time, Mr. Nichols of Jetstream and Mr. Johnston of Normerica went onto the roof with Mr Kimmel, one of the owners of Normerica to inspect the roof and what needed to be done. The kitty litter piles were now a couple of feet higher then when they were inspected in March of 2017 and they were wetter and heavier due to rain that had occurred within approximately a three-week period.

[22] Mr. Nichols stated that Mr. Kimmel asked him what it would take to get this off the roof? Mr. Nichols told him it would take more time, manpower and equipment. Mr. Nichols stated that Mr. Kimmel told him that “it did not matter, do whatever it takes to get the damn stuff off the roof.”

[23] The roof was secured with the hydraulic jacks and once that happened, Jetstream started their work. In the meantime, the production at the plant had to be stopped due to the safety concerns.

The Work and Billing Process

[24] Mr. Nichols stated that he would provide work orders to Cassandra Cuffe as he was directed to do by Mr. Stuart Johnston. She would sign the work orders and Jetstream would also get a copy.

[25] When Jetstream did work for Normerica in 2016, they would charge them an “emergency rate” when they were called to do work outside of their regular schedule. The emergency rate needed to be charged as Jetstream had to drop all other work in order to attend to Normerica’s emergency. Nevertheless, the emergency rate charged in 2016 was higher. Jetstream gave Normerica a break in the rate in order to deal with their emergency.

[26] When Jetstream sent an invoice to Normerica, the invoice would match the work order that had been sent to Cassandra Cuffe and signed by her.

[27] There was never any objection raised by anyone at Normerica to the work order and billing of invoices process that was used throughout the work done to remove the kitty litter from the date of the roof collapse.

[28] During the course of the work being done, Mr. Johnston and Mr. Kimmel would have contact with various workers and owners of Jetstream. They would always state to Jetstream representatives that they were doing a “great job”.

[29] The work by Jetstream was completed in or about April 28, 2017. In total, Jetstream removed approximately 300,000 pounds of kitty litter or approximately 180,000 metric tons. Mr. Nichols stated that they were “in shock’ as to the amount of kitty litter in the roof as compared to the amount that was on in February when they were asked to give their quote at that time.

[30] All of the owners of Jetstream expressed that they were angry at Normerica not paying for the emergency work that was done. They all referenced the fact that they were a small business who dropped everything in order to help Normerica in their time of need. By delaying payment for the work that was done, Normerica was putting the owners of Jetstream in serious financial stress.

[31] As a result, Jetstream registered a lien pursuant to the Construction Lien Act and commenced this lawsuit.

The Tracking of the Work Done by Jetstream

[32] One of the owners of Jetstream, Chad Cunningham testified that he was often the supervisor on the site on a daily basis. On a typical day he would sign into a log in the book and note that he and what other workers were on site that day. He would then make contact with the plant manager, often Mr. Johnston, to advise that he was on site and the work was ongoing. Mr. Cunningham stated that Mr. Johnston had the most frequent contact with him and sometimes he would attend on the roof to observe the work that was being done. Mr. Cunningham stated that Mr. Johnston would often tell him what a great job Jetstream was doing and that he did not know how they could do such work.

[33] Mr. Cunningham also stated that at no time did anyone from Normerica ever complain about the work or the billing process. They never companied about the number of men working nor the material and equipment being used. Importantly, no one from Normerica ever complained about the amount that was charged in any of the invoices that were submitted. Mr. Cunningham stated that if concerns had ever been expressed, they would have tried to work them out or they would have stopped working on the project if the concerns could not be worked out.

[34] Jamie Cunningham stated that he often talked to Mr. Johnston and that he would make a point to ask him if he was satisfied with the work that was being done. He stated that he always expressed Jetstream was doing a good job and that he wanted the job done as quickly as possible. Jamie Cunningham also talked to the owner, Mr. Kimmel and he had nothing but praise for the work that Jetstream was doing.

[35] Jamie Cunningham described the financial position that his small company was put in was “devastating”. He stated that there was no cash flow as Jetstream was completely devoted to Normerica’s emergency. All of the owners of Jetstream had to personally inject their own money into the business in order to just keep the business alive.

The Defence

[36] Simon Than testified on behalf of Normerica. He stated that, at the material times, he was employed by Normerica and was in charge of special capital projects in Brantford.

[37] Mr. Than testified about the general process that Normerica would enter into when soliciting contractors and other service providers for capital projects. This would most often involve soliciting quotes in a competitive bidding process. He stated in his direct testimony that he knew Mr. Kimmel and he knew that Mr. Kimmel would never give a blank check to any contractor.

[38] Mr. Than stated that when Jetstream was in the process of doing the removal work after the roof collapse, he was on the roof almost daily to inspect the work being done. He described the work that was being done by Jetstream as being “slow and disorganized”. He also stated that when they completed the work there was a lot of work to be done in order to clean up the state of the roof that had been left by Jetstream

[39] I find that Mr. Than lacks any credibility. In cross examination Mr. Than was confronted with his testimony at examinations for discovery. His testimony at discoveries was the opposite to his testimony at trial with respect to the number of times that he was on the roof and his ability to comment on the nature of the work being done by Jetstream. At discovery he stated that he was only on the roof during that removal period 2 or 3 times for brief periods of time. When confronted with this significant discrepancy he stated that he probably did not understand the question when asked at discovery. I find that explanation totally implausible. The question was a simple inquiry of how often he was on the roof during that relevant period of time. There was nothing to misunderstand. I find that he inflated the frequency he was on the roof while testifying at trial in order to improperly give the impression to the court that he was in a good position to observe and comment on what he described as poor work by Jetstream. I do not accept his testimony in that regard.

[40] Mr. Than also stated in cross examination that he was not the project manager for the kitty litter removal by Jetstream. He was not aware of whether anyone told Jetstream that they required any different billing or work order process in order to get paid.

[41] Mr. Than conceded that to his knowledge Normerica never engaged the services of anyone who had reviewed the work done by Normerica and could in any way comment of how the work was done and the amount that was charged for the work. He also conceded that he was not an expert in the removal of waste and he was not able to opine on that subject.

[42] Stuart Johnston was a manager with Normerica at the material times. He testified that the entire workforce at the Normerica plant in Brantford reported to him and he reported to Greg Chorpito.

[43] Mr. Johnston was the manager who dealt with Jetstream. He stated that in 2016 they used Jetstream and Jetstream would always be engaged on the basis of the work hours per labourer at a given hourly rate plus material and equipment. They were not engaged by the use of any open bidding process.

[44] Mr. Johnston personally talked to Mr. Kimmel about the quote Jetstream had given in February to remove the kitty litter. Mr. Johnston stated that Mr. Kimmel was very upset about how high the quote was to the point that he told Mr. Johnston that he should get Mr. Johnston and Mr. Chorpito on the roof with a shovel and make them shovel it off the roof.

[45] Mr. Johnston did not peruse the matter until after the roof collapsed on April 6, 2017. At this point Mr. Johnston contacted Mr. Kimmel and the president of Normerica, Mr. Colin Gleason and told them what happened. He waited for their direction. He got people out of harms way and made sure everyone was safe.

[46] By April 8, 2017 Jetstream was contacted. Mr. Nichols from Jetstream attended at the plant and he, Mr. Kimmel and Mr. Johnston were on the roof. According to Mr. Johnston, Mr. Kimmel stated “I don’t care what you have to do to get the equipment and clean this off the roof as soon as possible.”

[47] It was Mr. Johnston who saw Mr. Nichols almost daily working on the roof with approximately 6 to 7 labourers. He also saw the equipment that they were using. According to Mr. Johnston, Mr. Kimmel told him to do his best to get the plant running and to keep it running.

[48] Mr. Johnston confirmed in his testimony that the process of work orders and billing was as described by Jetstream. Work orders were given to Cassandra Cuffe who signed them and forwarded them to head office. Invoices were later submitted in accordance with the work orders. It was Cassandra who confirmed the people who were working on the roof that day and for how long and she is the one who signed off on them.

[49] Mr. Johnston stated that every now and then, Mr. Gleason and Mr. Kimmel would show up at the site to make sure that progress was being made. Mr. Johnston also stated that he heard Mr. Kimmel state that he wanted the work done whatever it took. The plant operations were down and they needed to get things back up and running. Mr. Johnston stated that Normerica could not fill certain orders as a result of the down time and getting the operation up and running was a priority.

[50] Mr. Johnston gave evidence that Normerica was in a vulnerable position as a result of the roof collapse. They were a large international company who supplied nearly seventy five percent (75%) of the worlds’ kitty litter. They could not afford to have their operations halted for any lengthy period of time.

[51] I find that Mr. Johnston was a credible witness who was more of a witness for the plaintiff than for the defendants. Counsel for the plaintiff had no cross examination for Mr. Johnston.

The Law Analysis

[52] I find that this is a simple matter of the law of contract. Although the plaintiff also plead in the alternative that the equitable remedy of unjust enrichment also would apply, I do not need to address that issue.

[53] I find that there was a clear and unambiguous contract that was formed between Jetstream and Normerica. There were promises made and expectations given as a result of those promises. With the knowledge of how Jetstream conducted its business and how they charged for their work, Normerica told Jetstream to perform certain tasks on an emergency basis. Jetstream performed the task and despite Jetstream completing the billing and work ordering process as they were directed to, they were not paid by Normerica in full.

[54] I am also guided in my analysis by the Ontario Court of Appeal in UBS Securities Canada Inc. v. Sands Brothers Canada, Ltd., 2007 ONCA 405, at para 2:

[2] We agree with the appellant’s submission that the trial judge erred by not applying the objective test for contract formation. The objective principle of contract formation is sufficiently summarized in Waddams, The Law Of Contracts (5 th ed.), at page 103:

The principal function of the law of contracts is to protect reasonable expectations engendered by promises. It follows that the law is not so much concerned to carry out the will of the promisor as to protect the expectation of the promisee. This is not, however, to say that the will of the promisor is irrelevant. Every definition of contract, whether based on agreement or on promise, includes a consensual element. But the test of whether a promise is made, or of whether assent is manifested to a bargain, does not and should not depend on an inquiry into the actual state of mind of the promisor, but on how the promisor’s conduct would strike a reasonable person in the position of the promisee.

[55] The two companies had a working relationship in 2016 and each knew the parameters of how work was done by Jetstream, how they charged to that work and the quality of that work.

[56] In April of 2017, Normerica had a serious emergency with the roof collapse of their Brantford plant. Normerica’s international standing as the world’s leading supplier of kitty litter was in jeopardy. Production of the kitty litter was halted as a result of the roof collapse. Normerica could not fulfill its order and they desperately needed to address this issue.

[57] Mr. Johnston, the manager of the Brantford facility, at the time, brought in Jetstream in order to deal with this emergency and Jetstream dropped everything else to accommodate Normerica and assist them in their time of need.

[58] Mr. Kimmel, an owner of Normerica was present on or about April 8, when a member of Jetstream and Mr. Johnston attended at the Brantford site in order to assess what needed to be done to get Normerica up and running again.

[59] After assessing the damage, Mr. Kimmel told Jetstream “do whatever it takes” to remove the cause of the roof collapse and get the plant up and running.

[60] Mr. Johnston, as the manager in charge, knew that Jetstream’s work was billed at a hourly rate per man, that there was an emergency rate to be applied that was discounted and certain material and equipment needed to be used in order to achieve what Mr. Kimmel directed and that was to remove the cause of the collapse as soon as possible in order to become operative again.

[61] Jetstream was directed by the manager of Normerica to submit work order and provide invoices in a certain manner to a specified person. That person was Cassandra Cuffe. It was represented to Jetstream that was the authorised person who would sign the work orders and pass them on to head office. Jetstream was never told be anyone at Normerica that:

a. The work they were doing was in any way faulty; b. The process they were using for billing and work orders was not proper; c. That they brought in equipment that was superfluous to the job at hand.

[62] The only thing that Jetstream was told by management and an owner of Normerica was that they were doing great work and they were encouraged to do whatever it took to complete that task.

[63] I find that the contract entered into by Jetstream and Normerica was performed in accordance with the direction of management of Normerica. The invoicing was provided in accordance with the directions of management of Normerica. However, after the emergency impacted the operations of Normerica in a significant way was alleviated by the completion of the contract by Jetstream, Normerica did not pay Jetstream and embarked on an after the fact disingenuous process of non payment while at the same time searching for retrospective complaints about the nature of the work and the manner in which it was build.

[64] Normerica is a large multinational corporation. All companies owe a duty to perform contracts honestly and in a bona fide manner. I find that Normerica did not do so and that they are liable for breach of contract.

[65] I find that the items that were charged in the invoices submitted are all appropriate and within the terms of the contract.

[66] I find that Normerica is the owner of the lands and premises that the lien was placed by Jetstream. I declare that the lien was properly placed on such lands.

[67] The defendant shall pay the following:

The sum of $68,654.94 representing the outstanding amount on the invoices; Interest on the overdue accounts at the contract rate of 2% per month or the highest non usurious rate.

Costs

[68] The parties are strongly urged to settle the issue of the costs. If the parties are able to settle the question of costs or if a party does not intend to deliver submissions or reply submissions, counsel are requested to advise the court accordingly

[69] If the parties are unable to do so, counsel may provide written submissions no later than April 30, 2021. The written submissions shall not exceed four (4) double-spaced pages exclusive of Bills of Costs or Costs Outlines, offers to settle and authorities.

R. J. Harper, SCJ Released: April 2, 2021