COURT FILE NO.: CV-16-1031-00
DATE: 20210511
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Infinity Construction Inc.
Plaintiff
– and –
Skyline Executive Acquisitions
Defendant
Stephen Barbier and Ben Tustain, Counsel for the Plaintiff
Sam Rogers, Counsel for the Defendant
HEARD: October 13-16, 19-23, 2020 and November 2-6, 12, 13, 16-19, 2020
REASONS FOR JUDGMENT
VALLEE J.
Introduction
[1] In 2011, the defendant, Skyline Executive Acquisitions Inc. (Skyline) was the owner of property commonly known as Horseshoe Valley Ski Resort. It decided to construct on the property a four storey, 67 unit condominium building with underground parking, which would be called Copeland House. It pre-sold units in 2013 with July 1, 2015 as the occupancy date. Skyline hired the plaintiff, Infinity Construction Inc. (Infinity), the principal of which was Paul Barber, P.Eng., to be the construction manager (CM). Infinity did not have much experience in building condominiums. It had been involved in building a condominium in British Columbia; however, its main focus had been building custom, single family homes.
[2] In Infinity’s contract, the start date for the work was September 2, 2014. The contract stated that the projected occupancy for the building was July 1, 2015. In other words, Skyline allowed ten months for construction, which it acknowledged was an aggressive timeline, even in a perfect world. Of course, the world is never perfect.
[3] Delays and additional costs on this project were significant and foreseeable. According to Skyline’s experts, the occupation date had to be extended to December 4, 2015. They stated that none of delay between July 1 and December 4, 2015 was Infinity’s fault. Skyline’s own expert agrees that the project had to be extended by five months. Briefly, the reasons for the delay are that the project started:
Without power to the site (it was energized 15 months later);
Without a finalized design;
Without a registered site plan;
Without permit drawings, not even a foundation permit;
Without issued for construction drawings;
With an easement that crossed the building footprint that had to be negotiated for release; and,
With a delay in pouring concrete. (The delay in obtaining the foundation permit resulted in pouring in cold weather. The concrete required heat, and all other work was similarly delayed.)[^1]
[4] Infinity’s construction management contract stated that trades would contract with Skyline. It also stated, “Should Infinity be required to pay any other project costs, material suppliers and/or subtrades, a 10% markup on invoices will be earned and invoiced to Skyline for reimbursement as part [of] Direct Project Costs.” Infinity alleges that Skyline authorized it to directly hire additional labour and procure materials to accelerate the project after it was delayed. Infinity also paid for certain items to reduce the cost for Skyline.
[5] In a cost to complete spreadsheet prepared by Skyline’s employees, Mr. Lopez and Mr. Matchett, in April 2016, the line item for the amount owing to Infinity was $919,454.61 + $70,000 for rental equipment.
[6] Infinity worked 11 months past the expected occupancy date of July 1, 2015. On May 24, 2016, when 58 of the 67 units were complete,[^2] Skyline terminated Infinity. In its email to Infinity, Skyline stated. “The project is completely off budget which was not documented in your reporting requirements under your project management contract and Skyline has as a result suffered an unexpected and significant financial loss. We confirm that your contract has been terminated…”
Infinity’s Claim
[7] In its statement of claim, Infinity pleads that Skyline breached the contract by failing to pay its account which totals $1,037,367.63. It is comprised of invoices, most of which are dated November 30, 2015 to May 31, 2016. The invoices are for construction management fees, monthly site management labour and expenses that Infinity states it incurred at Skyline’s direction. Infinity did not plead wrongful termination.
[8] In its statement of defence, Skyline states that, “Prior to March 28, 2016, all charges from Infinity to Skyline were approved by Skyline in accordance with the procedures set up between the parties. Unapproved charges were not billed to Skyline.” Skyline states that on March 28, 2016, Infinity issued a statement of accounts to Skyline that included numerous line items that had never been approved by Skyline. It totals $584,041.07 including HST. Skyline alleges that Infinity failed to perform certain items of the scope of work and that the project was not completed by December 4, 2015, the time extension date. Skyline counterclaims for damages resulting from the breach. In particular:
a) Skyline states Infinity should not be entitled to retain any of the construction management fees that were paid, being $380,000, because it did not perform the contract. Skyline also states that Infinity is not entitled to retain a portion of the direct site costs paid because some of Infinity’s employees, such as the senior construction manager, Mr. Barber, were not on site every day. Fifty percent of his direct project cost monthly payment should be refunded to Skyline. Skyline alleges that Infinity did not provide many of the services required by the contract. It is therefore liable for breach of contract for $542,800 plus HST. should return to Skyline $542,800.
b) Skyline claims $218,770 for delay damages. It states that after taking into account the delay issues, the project ought to have been finished by December 4, 2015. Skyline incurred financial carrying costs for an additional six months for items such as its letter of credit, interest and standby costs on its construction loan, cost of its Tarion bond and insurance.
c) In addition, Skyline claims $542,418 for deficiencies. It alleges that Infinity failed to perform the contract which includes supervising the trades. It claims the cost to fix deficiencies identified after Infinity was terminated.
Issues
[9] The issues are as follows:
What are the terms of the contract?
Did the parties, by their conduct, vary the terms of the contract such that they cannot rely on the term that requires written authorization to vary?
Is Skyline’s construction budget relevant?
Should Infinity have completed the project by December 4, 2015? Was it responsible for the delay afterwards?
What, if anything, does Infinity owe Skyline for the delay?
What were the circumstances of Infinity’s termination?
Did Infinity fail to perform some of its obligations under the contract? If so, what was the impact on Skyline?
Did deficiencies exist when Infinity was terminated? Is Infinity responsible to pay for the cost of correcting them?
What specific amounts comprise Infinity’s claim?
What, if anything, does Skyline owe Infinity for the balance of its work?
The People Involved
[10] As with any construction project, a number of people were involved. The following list sets out some of them and their roles:
a. Infinity
i. Paul Barber: president and owner of Infinity, construction manager
ii. Mark Galligan: project manager
iii. Todd Gates: project manager who took over when Mr. Galligan became ill
iv. Harry Bates: site superintendent
b. Skyline
i. Gil Blurich: Skyline’s Chairman of the Board
ii. Michael Snead: Chief Administrative Officer
iii. Blake Lyon: Chief Administrative Officer after Michael Snead’s termination in January 2016
iv. Paul Mondell: senior vice-president of development, hired after project underway
v. Marcelo Lopez: project controller
vi. Joy Roy: in house accountant
vii. Dan Piggott P.Eng: vice-president of development, terminated March 23, 2016, duties assumed by Paul Mondell
viii. Bryan Matchett: project manager
ix. Kevin Toth: Horseshoe Valley Resort manager
c. Consultants
i. Hicks Partners: Architects
ii. Cole Engineering: civil design
iii. Glynn Group: monitor for Skyline’s bank
- What are the Terms of the Contract?
[11] The parties signed a standard CCDC 5A construction management contract. They agree that it was signed in March 2015 and that it sets out their rights and obligations in respect of the construction of the project from the preconstruction phase onwards including all work performed after August 29, 2014.[^3] Some of the important terms are set out below.
[12] As noted above, the project was to construct “a four storey residential building comprising 67 condominium units and a single storey underground parking structure as per architectural drawings dated August 2014” with a “projected occupancy for the building [of] July 1, 2015.” [^4]
[13] Mr. Barber stated that with respect to the trades’ work, Infinity’s job was to obtain quotes from them, request purchase orders[^5] from Skyline for specific work, obtain invoices from trades, review them for accuracy, approve them and send them to Skyline for payment. For the most part, Mr. Piggott carried out his own review of the invoices and then provided them to the accounting department for payment.
Contractual Scope of Service
[14] The scope of Infinity’s work is set out in Schedule B to the contract. It includes 57 items.[^6] Mr. Barber stated that he and Skyline developed the scope list initially as a first draft. Not many changes were made to it. There was not a lot of focus on it. He stated that he was primarily concerned about the percentage fee for construction management and rates to be charged for direct labour. Infinity was permitted to charge a mark-up on any work performed by trades who contracted directly with Infinity.
Other Relevant Contract Terms
[15] Article A-2, 2.1 of the contract states that, “the Contract supercedes all prior negotiations, representations or agreements, either written, or oral, relating in any manner to the Services.”
[16] Article A-2, 2.2 states that “This Contract may be amended as provided in the Contract Documents.” General Condition (GC) 5.2.1 states, “Any agreement between the Owner and the Construction Manager on a change to the Services shall be recorded in writing.”
[17] GC 1.3.2 states, “No action or failure to act by the Owner or the Construction Manager shall constitute a waiver of any right or duty afforded either of them under this Contract, nor shall any such action or failure to act constitute an approval of or acquiescence in any breach thereunder, except as may be specifically agreed in writing.”
[18] Article A-3 states that “The projected Occupancy for the building is July 1, 2015.”
[19] Article A-5 sets out the compensation for services. It refers to Schedule C.
[20] Schedule C states that Infinity is to be paid a pre-consulting fee of $25,000 which included preparation of a detailed preliminary construction budget based on the design work completed at the time.
[21] In addition, the construction management fee is to be calculated as a percentage. It was 3.25% of construction and project related costs with a guaranteed minimum value of $350,000. Progress applications were to be submitted at the end of each month for a total of ten equal payments of $30,000 that were due upon receipt. The balance of fees are due upon completion.[^7]
[22] Infinity is also entitled to charge direct project costs which were comprised of the following monthly amounts:
a. $12,000 for the senior construction manager (Mr. Barber),
b. $10,400 for the site superintendent,
c. $6,000 for the project manager,
d. $5,200 for the safety supervisor,
e. $3,120 for site labourer.
f. $1,000 a month was also permitted for project accounting/bookkeeper;
[23] Infinity is also entitled to charge for reimbursable expenses. These included:
a. $2,300 for vehicle allowance,
b. $600 for two cell phones,
c. $0.50 per km for head office staff and
d. Insurance if required by Skyline.
[24] For work completed by Infinity’s own forces, Infinity is permitted to charge per hour:
a. $60.30 for site foreman,
b. $56.15 for lead carpenter,
c. $49.95 for intermediate carpenter,
d. $39.50 for apprentice carpenter and
e. $35.35 for labourer.
[25] Site office expenses including rental of office equipment (computer, printer, fax, furniture and phone) are to be invoiced at cost.
[26] Schedule C also states, “Should Infinity be required to pay any other project costs, material suppliers and/or subrades a 10% mark up on invoices will be earned and invoiced to Skyline for reimbursement as part [sic] Direct Project Costs.”
[27] General condition 3.1.1.5 states that the owner shall enter into contracts or written agreements with trade contractors to perform the work. “Such agreements shall be consistent with the requirements of CCDC 17 – STIPULATED PRICE CONTRACT BETWEEN OWNER AND TRADE CONTRACTOR FOR CONSTRUCTION MANAGEMENT PROJECTS.”
[28] General condition 4.2.1 states that Skyline shall pay no later than 20 calendar days following date of receipt of application for payment.
[29] General condition 5.1.5 states that if the contract time is exceeded or extended through no fault of the construction manager, the construction manager’s compensation shall be adjusted accordingly to cover the construction manager’s additional costs.
Relevant Omissions
[30] The contract did not contain a pay when paid clause; therefore, the timing of Skyline’s receipt of a draw from the bank did not impact on its obligation to pay Infinity. The contract did not require that Infinity obtain a purchase order to bill direct project costs.
- Did the parties, by their conduct, vary the terms of the contract such that they cannot rely on the term that requires written authorization to vary?
[31] Skyline submits that the answer to the question is no, for several reasons.
a) Pursuant to General Condition 5.2.1, any amendments had to be made in writing. This term should outweigh any conduct by the parties that could suggest otherwise.
b) Even if an oral agreement was made, Infinity has not pleaded any of the material facts to support it. This has prejudiced Skyline;
c) Even if it had pleaded an oral agreement, all of the agreements upon which Infinity relies involved directions from Mr. Piggott. Mr. Piggott had no authority to amend the contract; and,
d) Even if there was an oral agreement, there was no consideration for it;
e) Infinity acknowledges that there were no written mutually signed documents to amend the contract to reflect the changes to which the parties agreed. Mr. Barber testified that he understood from a conversation with Mr. Piggott that the contract had to match the draft given to Skyline’s bank in the borrowing approval stage. Infinity states that it took direction from Mr. Piggott. He was not a site superintendent nor a project manager. He was a professional engineer and held an executive position at Skyline - Vice-President of Development. He was Skyline’s senior representative on the project and was there regularly.
[32] Infinity submits that both parties agreed to do some things differently from what the contract states. This is evidenced primarily by their conduct. The following are examples:
a) GC 3.1.1.5 states that the owner shall enter into contracts or written agreements with the trades consistent with the requirements of CCDC 17, being Stipulated Price Contract Between Owner and Trade Contractor for Construction Management Projects. Schedule B Scope of Services, item 17, states that Infinity was to, “On a pro-forma basis prepare CCDC contracts with schedules for trades subject to Skyline approval and review.” Nevertheless, Skyline decided to issue purchase orders (POs) for the trade work rather than enter into CCDC contracts with them.[^8] The contract was not amended in writing to reflect this.
b) Scope of Services, item 2, states that Infinity is to, “Liase with Skyline corporate accounting team to establish financial reporting requirements, bi-weekly/monthy report delivery dates and reporting formats” with the implication that Infinity would provide the reports. Scope item 43 states, “Review and recommend progress payments in conjunction with Bank’s Quantity Surveyor or Architect based on arrangements made between owner and bank…”. Skyline had an accounting department that used a computer program to do project accounting whereas Infinity did not. Mr. Barber stated that the parties decided that Skyline would do the accounting. Infinity did not provide cost tracking and accounting type reports to Skyline. Mr. Matchett[^9] stated that Skyline was responsible for cost tracking and accounting. The contract was not amended in writing to reflect this. Mr. Piggott’s email dated February 3, 2015 to Mr. Matchett and Mr. Barber, which was cc’d to Mr. Roy, shows that Skyline was performing this function. It responds to Mr. Matchett’s request for an update on the release of the January draw. It discusses the invoice from the steel supplier:
Also, I spoke with Marcelo [Lopez] and he is fine with the invoice format that ACL presented in their last invoice showing the total cost to date, less 10% holdback, HST on the 90% amount and then total amount owing. The total amount requested will be entered into our accounting system and Joy [Roy] will have to track the holdback amounts that accumulate with each progress payment for each trade.
c) Infinity states that it did not review and recommend progress payments in conjunction with the bank’s quantity surveyor. Infinity reviewed the trades’ invoices and sent them to Skyline for payment. Infinity was not privy to Skyline’s bank’s requirements. The bank’s monitor functioned independently. Mr. Mondell stated that Mr. Piggott recommended progress payments. The contract was not amended in writing to reflect this.
d) Mr. Matchett recalled that the contract occupancy was extended from July 1, 2015. The sales teams were putting on events for buyers and having them sign off on extended closing dates. The reason for this was delayed construction. Skyline did not have site plan approval nor coordinated drawings at the outset. There was no written amendment to the contract to extend the completion date; nevertheless, Infinity worked up to nearly the end of May 2016. Mr. Matchett stated that everyone was working weekends. There was a massive push to finish suites in order to meet closing dates. It was a case of all-hands-on-deck, move forward, bring in labour, work late and work weekends. Mr. Matchett stated that Skyline included Infinity’s January 2016 and February 2016 invoices for monthly site management labour in a draw request to its lender.
e) Skyline took over the sequencing of the work from Infinity late in 2015. It determined the order in which the units would be completed because it had closing dates to meet.
f) GC 4.2 states that Skyline shall pay the CM no later than 20 calendar days following the date of receipt of an application for payment. Skyline did not pay within 20 days.
Caselaw relied upon by Infinity
[33] Infinity submits that a requirement that a modification to a contract be made in writing is not enforceable. It relies on Colautte Construction Ltd. v. Ottawa (City) 1984 1969 (ON CA), 46 O.R. (2d) 236, 5 O.A.C. 74. This case was about construction of a sanitary sewer and additional costs incurred by the contractor to do the contract work. The contract provided that the sewer was to be installed along the center of the road, which according to the plans, was 10 feet from an existing sewer and 9 feet from a watermain. The City did the layout work, setting out stakes. The contractor was required to adhere strictly to the contract terms and the grades set out by the City. The contractor’s staff measured from the line, made marks on the road to show where the sewer was to be located and began to drill and blast along that line. The first blasting damaged the watermain. The distance between the line of the proposed sewer and the watermain turned out to be only 3’ rather than 9’. Nevertheless, the City’s project officer instructed the contractor to proceed. The watermain was further damaged. The contractor incurred extra costs in relocating the line and was assured that they would be paid. There was no written agreement to this effect.
[34] The City refused to pay for the additional costs incurred in relocating the line, relying on the absence of a written agreement to modify the contract.
[35] In para 29 and 30, the Court of Appeal stated,
There is no doubt that this contract, drawn as it was to protect taxpayers, attempted to limit the liability of the City to such an extent that one would expect that not even the ordered rotation of the seasons could be reasonably anticipated by the contractor. The problem with contracts such as these is that they are so rigid and so restricting that the parties tend to amend them by their actions during the course of the contract. That was the situation in this case. There were several significant changes and additions to the work ordered by the City during the contract. None of these were in writing. All but the items in dispute in this case were paid for by the City.
In these circumstances, the parties, by their conduct, have varied the terms of the contract which require extra costs to be authorized in writing. As a result, the City cannot rely on its strict provisions to escape liability to pay for the additional costs authorized by it and incurred as a result of its errors.
[36] Infinity also relies on Shelanu Inc. v. Print Three Franchising Corp. (2003), 2003 52151 (ON CA), 64 O.R. (3d) 533, 172 OAC 78. This case is about cancellation of a franchise agreement. The plaintiff had several franchises operating at various locations. The recession in the 1990s affected its businesses. Mr. Banks, the principal of the franchisor, allowed the plaintiff to close one franchise outlet. Later on, the plaintiff wanted to close another outlet and turn it into a production facility for a different outlet. Mr. Banks suggested that it combine all of the plaintiff’s operations into one franchise location. The plaintiff declined this suggestion. Mr. Banks did allow the plaintiff to close the requested location.
[37] The plaintiff continued to struggle financially. The principals thought better of Mr. Bank’s earlier suggestion and approached him about combining all of its operations into one location. According to the principals, at a meeting, he agreed and asked that they confirm this agreement to the defendant’s legal counsel. Shortly afterwards, one of the principals sent a confirming letter to counsel. The plaintiff began reporting as one franchise. Other issues arose between the parties, including the defendant’s withholding royalty cheques from the plaintiff and whether the plaintiff had to report as two franchises or one. Subsequently, Mr. Banks advised the plaintiff that its request to terminate one franchise agreement and consolidate the two centers was denied.
[38] In the action, the defendant alleged that the agreement confirmed in writing to the defendant’s solicitor was unenforceable because it was not a signed agreement in writing as required by the contract and there was no consideration.
[39] The court determined that the parties reached an agreement that the plaintiff would be permitted to combine its operations into one franchise location, as evidenced by the letter to counsel. The court stated,
On the first point, the evidence shows that the defendant did not require any formal written documentation when the plaintiff closed either the 200 Bloor Street West location or the 239 Bloor Street East location. It is apparent to me that neither of the parties had been insisting on their strict legal rights at, or before this time. Therefore, it is not open to the defendant to now insist on compliance with those strict legal rights.
[40] The defendent argued that there was no consideration for varying the contract. The court stated that the defendant was acting in its own best interests to ensure the success of the franchisee. It released the territory related to the 239 Bloor Street East location, which the defendant could sell to another business. Accordingly, there was some consideration for the agreement.
Caselaw relied upon by Skyline
[41] Skyline states that when a party alleges that an oral agreement existed, it must plead all relevant facts. It relies on Cohen v. Cambridge Mercantile Corp. 2007 21596 (ONSC). This matter was first before the court in 2006 on a motion to strike the claim on the basis that it disclosed no reasonable cause of action. The plaintiff pleaded that during the course of his employment he “entered into a further oral contract that the defendant would pay him 10% on commission on all business generated by a certain client known as Abria, which 10% commission commenced in May, 2002”. (The defendant may have paid the plaintiff the 10% commission for five months.)
[42] He claimed that in October 2003, the defendant arbitrarily reduced the commission to 5% over his objections. In his statement of claim, he stated, “The plaintiff is entitled to commissions as a result of a breach of an oral contract to pay ten percent commission for Abria. After the commission was reduced, the plaintiff objected and continually complained to the principals, in house legal counsel and the vice-president.”
[43] In para. 1, the court stated that, “…the plaintiff should provide particulars of this basis in which his entitlement issues whether in contract, trust, on [sic] otherwise. In the absence of particulars, the claim will be struck.”
[44] After the plaintiff amended his claim, the defendant brought a further motion to strike which was before the court in 2007. In para 13, the court stated that the plaintiff had still not pleaded sufficient particulars which would include the date upon which the oral contract was formed, the place where it was formed and the identity of the representative of [the Party] with whom the oral contract was made. In para 14, the court also stated, “I am reluctant to impose the drastic sanction of striking the claim when it discloses a substantively adequate complaint but lacks in some particulars.” The court gave the plaintiff one last chance to correct his pleading of the contractual claim.
[45] Skyline states that because Infinity did not plead that an oral agreement existed, Skyline has been prejudiced. It was left to guess at what was agreed and when, based on Mr. Barber’s evidence at trial.
[46] Skyline also relies on Lam v. The University of Western Ontario Board of Governors et al., 2015 ONSC 1642. This case concerned an alleged breach of fiduciary duty. The plaintiff was a student and claimed that he was improperly pressured into switching from a Ph.D. program to a Master’s program when his Ph.D. supervisor passed away. He then lost his funding because it was not available for Masters’ candidates. On a motion to strike, the defendant argued that the plaintiff made only a bald assertion of a fiduciary relationship. He did not plead any facts constituting a special relationship between the student and the university. In para 19, the court stated that, “[i]n the case of implied or oral agreements sufficient particulars are required to understand what conversation is being relied upon.” The court gave the plaintiff an opportunity to amend the claim but commented that it had concerns about whether a relationship between a student and a university could be a fiduciary one.
[47] Skyline also relies on KPMG Inc. v. Canadian Imperial Bank of Commerce, 1998 CarswellOnt 4422 (Ont CA). This case concerned whether a bank could look to a guarantee provided by a company as security for $150,000 advanced to another company pursuant to a loan transaction that was separate and distinct from the initial two loan transactions for which the guarantee had been required and provided. (see para. 2) The motions judge concluded that it could not. The court looked beyond the agreement and considered a letter from the bank setting out terms to show that the guarantee was only intended to secure the initial two loans and that the bank “by virtue of the terms letter, innocently misrepresented the nature of the guarantee being sought from [the first company].” The motions judge described the wording of the agreement as broad and general. The Court of Appeal disagreed. It found that the terms of the letter should not have been considered to determine the true intention of the parties to the guarantee agreement. It stated that the agreement, “…was very specific and it clearly spelled out the intention of the parties”.
[48] The cardinal interpretive rule of contracts, including guarantee contracts, is that the court should give effect to the intention of the parties as expressed in their written agreement. Where that intention is plainly expressed in the language of the agreement, the court should not stray beyond the four corners of the agreement. (see para. 5)
[49] Skyline further relies on Jessco Structural Steel Ltd. v. Gottardo Construction Ltd. 2016 ONSC 2189. The contract between the parties, Gottardo who was the general contractor and Jessco who was a subcontractor, required that no extra work would be considered for payment unless it had been negotiated before the work commenced. The contract expressly stated that tickets signed by the site superintendent are not an agreement that the items are additional to the contract nor do they constitute acceptance of labour rates or material costs.
[50] Gottardo’s site superintendent requested that Jessco carry out extra work outside of the contract. It was required because of poor soil conditions. Jessco did the work and presented POs to the site superintendent who signed them. This work was not negotiated in advance with Gottardo. Gottardo refused to pay for the extra work. It brought a motion for summary judgment to dismiss the plaintiff’s claim.
[51] The motions judge considered a line of authorities, in addition to Coluatti that indicates that parties to an agreement may vary the terms of a contract by their conduct, such that they cannot rely on the terms of the contract that require written authorization before any additional work is undertaken. These include: Triple R. Contracting Ltd. v. 384848 Alberta Ltd., 2001 ABQB 52, 282 A.R. 1 (Alta Q. B.), Michele’s Landscaping Inc. v. Nicon Developments Alberta Ltd., 2005 ABPC 243 (Alta. Prov. Ct.) and Naegeli v. March Homes Ltd., 1999 ABPC 131 1999 CarswellAlta 1257 (Alta. Prov. Ct.). The motions judge concluded that unlike in Colautti, Gottardo never paid for any of the extras done on the project. Therefore, its conduct did not change the terms of the contract nor did it acquiesce in Jessco’s alteration of the contract.
[52] On Jessco’s appeal, the Divisional Court considered Technicore Underground Inc. v. Toronto (City), 2012 ONCA 597 (Ont. C.A.). Technicore concerns notice provisions for filing claims under a contract. It stated that “the Contractor shall submit detailed claims as soon as reasonably possible and in any event no later than 30 days after completion of the work affected by the situation.” A party submitted a claim in 2007 with specific amounts noted and stated that some costs had not yet been identified. It stated that it reserved the right to claim payment for those costs. In 2010, that party sent another claim in which it repeated its 2007 claim and added new claims. The court concluded that the party was limited to its 2007 claim. There was no unequivocal and conscious decision to abandon the right to rely on the 30 day claim period.
[53] In Jessco, the Divisional Court upheld the motion judge’s decision. It stated that the decision is consistent with the law of waiver and quoted para 63 of Technicore: There must be “an unequivocal and conscious decision to abandon the right to rely on [the contract]”
Analysis
[54] Jessco is about payment for extras. Extras are work outside of the contract. The items for which Infinity seeks payment are not work outside of the contract. They are equipment rentals, materials and additional labour required to accelerate the contract work to meet the closing dates. Cases about extras do not assist me.
[55] Cohen concerns a motion to strike. KPMG concerns whether a separate “terms letter” ought to be indicative of the parties’ intentions. Colautte and Shelanu are more on point because the court considered agreements made between parties during the course of existing contracts.
[56] Skyline states that Infinity should be held to the terms of the contract; however, by its own conduct Skyline varied the terms of the agreement. It used POs rather than contracts that were consistent with the requirements of CCDC-17. The importance of this is set out below. Skyline looked after cost tracking and budgeting. Its executives approved the requests for draws. The independent bank monitor reviewed them and recommended them for payment. Infinity was not included in this process. Skyline acknowledges that the projected occupancy date in the contract had to be extended past July 1, 2015. Skyline did not pay invoices within 20 days. Infinity received its first payment for construction management five months after it had started working.
[57] Mr. Piggott asked Infinity to obtain additional labour to meet the completion dates for occupancy of units. On November 19, 2014, Mr. Piggott sent an email to Kevin Toth and Brian Matchett stating, “Because of delays, we’ve asked the contractor to work longer hours and double up on crews.” Clearly, Mr. Matchett and Mr. Piggott knew that the additional labour was on site working. Mr. Matchett stated that “everybody knew”. Mr. Mondell stated that he had no doubt that the labour and materials claimed by Infinity were provided. Mr. Matchett stated that everyone was working weekends. There was a massive push to finish suites in order to meet closing dates. It was a case of “all hands on deck”.
[58] Mr. Piggott was not just a project manager nor a site superintendent. He was a professional engineer and a Skyline executive - Vice-President of Development. Infinity was entitled to assume that Mr. Piggott had authority to provide direction. It was justified in taking direction from him regarding renting equipment for Skyline’s benefit, purchasing materials and finding and engaging additional labour for the project near the end to accelerate completion. It was justified in assuming that Mr. Piggott would, at a minimum, support payment of the invoices.
[59] I do not accept Skyline’s argument that the failure to plead an oral agreement prejudiced Skyline’s ability to respond to the claim. Even if this matter turned on whether there was an oral agreement, Mr. Barber was the first witness. He testified that Skyline did not require Infinity to do certain things such as liasing with Skyline’s corporate accounting team to establish financial reporting requirements, bi-weekly/monthly report delivery dates and reporting formats Skyline did require Infinity to hire additional labour to finish units to meet urgent closing deadlines. Skyline could not have been prejudiced in its ability to respond to the claim. Much of the conduct that varied the agreement was Skyline’s and occurred before the contract was signed in March, 2015, seven months after the contract start date.
[60] Regarding the lack of consideration argument, Infinity provided no consideration to Skyline for being relieved of certain work such as accounting, reporting and preparation of contracts for trades consistent with the terms of CCDC-17 contracts. Nevertheless, Infinity carried a large receivable because Skyline was slow to pay.[^10] In addition, Infinity rented, on its own account, certain construction equipment to help the project run smoothly. This saved Skyline money because Skyline was not insured to rent it. In the end, Skyline did not pay Infinity the last rental amount of $79,674.52.
[61] Skyline’s own conduct shows that it did not abide by some of the terms in the contract. Infinity did not have to plead that there was an oral agreement, nor the details of it. The parties by their conduct varied the terms of the agreement such that they cannot rely on the term that requires written authorization to vary.
3. Was Skyline’s construction budget relevant?
[62] Mr. Barber believed that some preliminary drawings had been done for the project upon which a contractor had done some earlier pricing. This resulted in a 2011 budget of $11,600,000. Mr. Barber testified that his initial involvement, at Mr. Piggott’s request, was to validate this budget. Mr. Barber stated that the cost of materials had increased significantly between 2011 and 2014. He prepared a budget of $13,055,000, with no contingency, that was also preliminary because the design was incomplete. In a meeting with Mr. Piggott, Mr. Barber understood that Skyline’s initial financing approval was based on the old budget. He believed that Mr. Piggott was concerned about how to present the new budget to the bank. Mr. Barber understood that the old budget would be used. In his testimony, he stated that he was concerned that Skyline had misled the bank and that the project was underfunded. He believed that this caused a number of problems including delays in payments to the trades and Skyline’s refusal to pay the balance owing to Infinity.
[63] Infinity called Jim Ryan as a witness, who was qualified as an expert in construction budgets and construction cost estimating. Mr. Ryan stated that at the outset of a project, estimates should always carry contingencies. The percentage amount will vary depending on the completeness of the design, with a higher amount when the design is preliminary and a lower amount when tender drawings have been prepared. The change orders on the project totaled $2,300,000. Mr. Ryan stated that budgeting for the cost of these change orders would have been impossible.
Analysis
[64] Mr. Barber’s testimony about Skyline’s use of the construction budget was pure speculation. He acknowledged that he was not privy to Skyline’s lending arrangements. Skyline provided evidence that the budget it sent to the bank was not $11,600,000. It was $11,920,000 with a contingency of $585,701, totaling $12,505,701. In comparison to Infinity’s budget of $13,055,000, the difference is less than five percent.[^11]
[65] While Skyline’s obligation to pay Infinity for its work was facilitated by its financing arrangements, it was not contingent on it. Skyline had a contractual obligation to pay Infinity regardless of financing.
4. Should Infinity have completed the project by December 4, 2015? Was it responsible for delay afterwards?
[66] In order to have an understanding of how the project proceeded, one must consider why it was delayed and what caused some of the extra costs.
[67] The occupancy date and budget were unachievable for a number of reasons.
a) The site plan was not registered until October 30, 2014, almost two months after the contract start date. A preliminary foundation permit could not be issued until after it was registered. Surprisingly, Mr. Snead, Skyline’s CEO, sent an email dated August 26, 2014 to Mr. Barber stating, “Please let me know if we have started construction on Copeland and if not what is the hold up?” Apparently, he was not being advised of the delay. He obviously did not know that the first step, being registration of a site plan, had not yet occurred. He did not know that a foundation permit had not been obtained and could not be obtained until after the site plan was registered.
b) On September 22, 2014, Mr. Barber sent an email to Mr. Piggott stating that he had received a call from a member of the sales team, John Giffen. He stated that he would be hosting an owners’ event at the site and “wanted to make sure we’d have guys at the site pouring concrete”. Mr. Giffen was not aware that the site plan was still not registered.
c) On September 23, 2014, Mr. Barber sent an email to Mr. Snead setting out topics for discussion at a meeting. He noted that,
[The original budget estimate] was very preliminary in nature and was created without the benefit of any design drawings…no formal quotes were obtained as no drawings were available…The biggest risk ahead is weather and specifically cold temperatures and snow. Both of these factors will cause increased costs through winter heat for concrete delivered after October 31, heating costs for the building as soon as we start to experience temperatures below 0…Half loads in the spring will restrict site access and inhibit our ability to complete site work required for our proposed July 1st occupancy date…continued material price increases…The two most important challenges are schedule and budget. The schedule is exceptionally aggressive. We cannot have any delays otherwise a July 1, 2015 completion may not be achievable.
d) On October 8, 2014, the steel supplier asked about when it would be provided with certain details so that it could start fabrication. On October 13, 2014, Mr. Barber sent an email to Mr. Matchett stating, “We need answers tomorrow morning…This has caused us to lose 2 weeks of production minimum already. We may not see steel until late November or December.”
e) On December 12, 2014, Mr. Barber sent an email to Mr. Piggott stating that he understood that Mr. Piggott was disappointed in Infinity’s progress with the pricing for the project. It states, “The whole pricing exercise has been hampered by incomplete or non-existent drawings and specifications. We have a detailed budget largely mapped out and it has been substantiated/verified with the exception of a couple key areas where information is lacking.” It also referred to the fact that Infinity had been working for several months and had not been paid.
f) The design was not finalized when construction was supposed to begin. Mr. Matchett stated that there was some delay in Skyline’s paying its consultants. This could have slowed the progress of the design and the drawings. According to Mr. Barber, Infinity had difficulty obtaining trade quotes.[^12] Some trades would work only on a time and materials basis because there was insufficient design to provide a price.
g) Skyline’s pre-construction soil testing was comprised of boreholes down the center of the building location. After the foundation permit was issued and work began, the excavator found soil unsuitable for the foundations at the north west corner of the building. This occurred 10 days after the foundation construction was to begin. The soil had to be excavated and replaced with engineered fill. This caused delay and unexpected cost.
h) Because the foundation permit was not obtained until two months after the contract construction start date, by the time the footings and foundation were being poured, the weather was cold. Accordingly, the concrete had to be heated. This created extra cost.
i) Framing was planned for the fall of 2014; however, Skyline did not obtain the full building permit until February 2015, approximately half-way through the time period of Infinity’s contract. Construction on the building superstructure could not begin until then. This caused significant delay. Framing did not begin until April, 2015.
j) Mr. Barber testified that Gil Blutrich, Chairman of the Board, visited the site on March 17, 2015 and was upset by the lack of progress in the work, even though Skyline obtained the full building permit in only the previous month. On the same day, Mr. Barber sent an email to Mr. Piggott, stating, “Well I hope Gil was not too offended by my defensive posture but he was totally off base and I refuse to have someone blast me and condemn the efforts of the men in the field for things totally outside our control. We are trying our best.” Framing had not yet started. Mr. Blutrich was expecting to obtain occupancy by the contract date, in 3.5 months. In the same email, Mr. Barber asked Mr. Piggott if he was keeping Mr. Snead informed of the schedule. He stated, “Surely he knows we have been held up due to permitting delay’s [sic] and winter weather. It was abundantly clear that Gil had not [been] updated as he thought we were still shooting for July 1st closings.” In response, Mr. Piggott stated, “Yes Michael and I have been discussing all along and he was fully aware…”
k) There was no power to the construction site, even though the building was being constructed adjacent to the ski resort’s parking lot. Skyline required conservation authority approval for the route to install the power supply. Obtaining the approval took months. Power was finally provided on November 12, 2015, one year and three months after the contract start date and four months after the contract occupancy date. For 15 months of the project, diesel generators had to be used for construction power including heating the concrete. They had to be rented and required fuel. Infinity’s workers had to stay at the resort to re-fuel them during the night. The fuel and accommodations were extra costs.
l) There was an easement in the area that intersected the building envelope. The release of that easement required negotiations which took months. Accordingly, the construction of the civil works was delayed.
m) Some of the drawings contained errors. For example, the drawings showed an existing gas line on the wrong side of the road. According to Mr. Barber, new drawings were not provided until 10 months later.
n) According to Mr. Matchett, Skyline managed the design team and dealt with them exclusively. Although Infinity was not precluded from contacting the consultants to obtain information, when a trade required more information, Skyline’s preferred process was that Infinity would provide the request to him and he would forward it to the consultants. The answer would come back by the reverse route. The process was time consuming.
o) Issued for construction drawings (IFCs) were not provided until April 1, 2015, eight months after the construction start date and only three months before the projected contract occupancy date of July 1, 2015. Subsequently, design errors came to light. Changes were made to address them. Skyline itself made some changes. The IFCs were re-issued in August 2015, one month after the projected occupancy date.
p) Changes continued to be made after the second set of IFCs were issued because more errors were discovered. The framing contractor believed that inadequate space had been left for appropriate fire rated drywall. The framing contractor took this into account in how he framed the ceiling even though others disagreed with him. On September 16, 2015, the architect issued a site instruction stating that at the roof assembly, “provide 2 layers of 5/8” Type X fire rated gypsum board at 4th floor ceiling…1 hour fire rating is required.” Mr. Barber stated that if the framer had not left the space and had framed in accordance with the drawings, the roof would have had to be removed and re-framed to make space for the two layers of fire-rated drywall. The delay would have been significantly worse.
q) The footprint of the Stormtech system had to be re-oriented which required additional work in late October, 2015. In November, Mr. Barber sent the related invoices to Mr. Piggott and Mr. Matchett stating, “Here is the latest from Hall [the trade who did the work] regarding all the miscues on the Stormtech chamber, Horseshoe Valley Rd manhole and connecting pipes. The lack of accurate as built information and soils information is proving to be very costly – pipes in the wrong spot, poor/disturbed soils, wrong inverts, etc.”
r) Because of the delay, some purchasers had agreed to postpone their occupancy dates. The units had to be finished. In November 2015, Skyline created a construction schedule and directed Infinity to work on certain units first so that Skyline could meet the closing dates. These units were located throughout the building. According to Mr. Barber, proceeding in this fashion was not efficient. Having owners and sales staff in a building under construction created extra challenges. Hoarding had to be erected to separate them from the trades, among other things.
[68] In January 2016, Mr. Snead, CEO, was terminated. Blake Lyon replaced him. At this point, according to Mr. Mondell, there was a change in corporate culture.
[69] In January 2016, Alfa Stairs and Railings stopped work because it was not being paid. On January 7, 2016, Mr. Gates sent an email stating that a representative of Alfa told him that, “Once payment is made, he will send crews to continue.”
[70] Mr. Barber stated that Vipond, the sprinkler installer, cut back staff because it was not being paid. In an email dated January 11, 2016 from Vipond to Mr. Barber Vipond stated that its October and November invoices were past due.
[71] ACL Steel, the steel supplier, had not been paid for six months. In an email dated January 20, 2016 from ACL to Mr. Matchett, the steel supplier asked for an explanation as to why it had not been paid. It also asked whether substantial performance had been achieved. Mr. Barber stated that ACL was considering registering a lien. It stated, “We have looked on the Daily Commercial News website but could not find any reference to this project.”
[72] Mr. Barber stated that the electrician, Hot Wire, had not been paid and was threatening to walk off the job. Mr. Barber agreed to direct a payment owed to Infinity to Hot Wire to keep the electrician working. Mr. Matchett confirmed this.
[73] In February 2016, there were problems with the balcony railings. They were failing. The attachments were inadequate. Infinity was trying to have the trade fix them.
[74] Mr. Piggott was terminated in late March 2016. Mr. Mondell stepped into his role. At this point, the two senior people who had the most institutional knowledge of the project, Mr. Snead and Mr. Piggott, were gone. Mr. Mondell did not know about the additional labour that Mr. Piggott had authorized.
[75] There were payment issues. Mr. Matchett stated that he had to be careful in selecting trades because Skyline had cash flow issues. Trades might not be paid for four months. Mr. Matchett stated that during the project, payment issues were snowballing. A couple of trades walked off the job. It was hard to keep trades engaged and on schedule when there were problems with payment. Sometimes Skyline would not pay the full amount of a draw. Deductions off payments caused the payment issues to worsen. This became more problematic as the project progressed. Trades were not motivated to work. They would have to work at other jobs to keep up their cash flow. Mr. Matchett stated that part of the problem was not having a coordinated set of drawings. As a result, obtaining quotes from trades was very difficult.
[76] The Chief Building Official sent an email dated April 8, 2016 to Infinity, Mr. Matchett, Mr. Mondell and Mr. van Groll, the principal architect, stating that she would be on site on April 13, 2016 “…to ensure that the terrace guards are being replaced with permanent guards as indicated on the Occupancy approval.” In an email dated April 8, 2016, Mr. Barber warned Mr. Mondell and Mr. Matchett, “Our inability to get Alpha Stairs & Railings paid for prior work and a PO issued for the terrace railings may bite us next week.” Mr. Mondell arranged for immediate payment.
[77] Interim occupancy was granted on a unit-by-unit basis between March and May 2016. On May 24, 2016, when 86.5 percent of the units had been completed, Skyline terminated Infinity. Only nine units remained to be finished. They were not yet sold. The condominium was registered on January 25, 2017. All units closed in early March 2017.[^13]
[78] Mr. Matchett, who was on the site daily, stated that he could not name any delay attributable to Infinity. Mr. Barber was the driver of the schedule and was always motivated to keep things moving forward.
Skyline’s Expert on Delay
[79] Skyline called Jordan Christoff as a witness. He was qualified as an expert in planning, scheduling, critical path scheduling and project delays. His mandate was to assess the delay and determine when the project should have been completed.
[80] Mr. Christoff reviewed three construction schedules prepared by Infinity. The first one was prepared in August 2014 and is entitled “Infinity Baseline Schedule”. It shows an occupancy date of July 1, 2015 and was included in the contract. The second is dated March 11, 2015 and is entitled “Infinity Schedule Update”. It shows an occupancy date of November 1, 2015. The third is dated July 19, 2015, has the same title and shows occupancy dates between December 1 and 15, 2015.
[81] Three examples of the work shown on the third schedule are drywall commencing on August 17, 2015 and being completed by October 26, 2015, interior finish painting starting on August 3, 2015 and being completed by November 23, 2015 and general conditions (contract administration work) being completed by December 21, 2015. Mr. Christoff stated that this schedule should be taken seriously because it was created when Infinity knew all the delays.
[82] Although scope item 30 states, “Establish a critical path schedule for construction activities with schedule updated monthly,” Infinity did not prepare a critical path schedule (CPS). Mr. Barber stated that there was not enough information available to do so. Mr. Barber stated that Infinity prepared a Gantt chart, in accordance with scope item 16, which is a schedule in bar graph format for projected scheduling of all major project elements up to completion as a methodology to identify any schedule slippage.
[83] Mr. Christoff stated that in order to create a CPS for a project, one would need to spend time at the beginning to do some planning. All of the documents would have to be assembled before the work could be scheduled. They would include all building drawings, site plan drawings, the scope of the work, the procurement strategy, permits and approvals and shop drawing submissions. One would need to understand what each of the various participants was providing and have a complete understanding of the design.
[84] Mr. Christoff prepared an after-the-fact critical path schedule for the entire project using computer software called Primavera 6. He stated that because Infinity did not provide a CPS, in order to assess potential delays, he used information from Infinity’s August 2014 schedule to create a baseline and used the same milestones and timeframes to create a model. In other words, he used the dates from Infinity’s schedule showing the number of working days to do something. He acknowledged that the various delays up to July, 2015 were not Infinity’s fault.
[85] Mr. Christoff considered the 11 delay events advanced by Infinity:[^14]
site plan approval/foundation permit;
underground as-builts;
IFC drawings;
permanent power;
soil conditions;
framing delay;
fourth floor fire rating;
heat pumps;
fireplaces;
timber for wood framing; and
KABA locks.
[86] Mr. Christoff stated that the late issuance of IFCs was a major schedule delay and “the single most identified impact to the critical path of the project”. After considering the amount of time that should be allocated to those delays, which he concluded to be 156 days, and adding it to the contract completion date of July 1, 2015, Mr. Christoff concluded that the project ought to have been completed by December 4, 2015.
Analysis
[87] The accuracy of an analysis depends on the accuracy of underlying information used and the assumptions made. When asked how accurate Infinity’s 2014 schedule could have been, Mr. Christoff stated that he “liked to think that there would have been pre-consultation services and meetings with the design team”. There is no evidence that this occurred. Skyline dealt exclusively with the design team. The pre-consultation services consisted of Infinity’s verifying the budget. As noted above, Mr. Christoff stated that in order to prepare a CPS, all of the documents would have to be assembled. They would include all building drawings, site plan drawings, the scope of the work, the procurement strategy, permits and approvals and shop drawing submissions. One would need to understand what each of the various participants was providing and have a complete understanding of the design. Obviously, none of this was available to Infinity in August, 2014. It could not have prepared a CPS.
[88] Infinity’s August 2014 schedule could not have been accurate because at that time, the design was not finalized. The architectural and structural permit drawings were not completed until 2015. Furthermore, the site plan was not registered until October 30, 2014. The foundation permit was not issued until October 31, 2014. Infinity’s schedule was at best a rough guess. It shows that shell framing, window installation and brick veneer were to be done by January 12, 2015. The building could not be enclosed by then. The full building permit was not issued until February, 2015. Construction had to be done in the winter. The July 2015 schedule shows that shell framing would not start until April 20, 2015.
[89] Mr. Christoff concluded that the drywall would be done between July 28, 2015 to November 3, 2015. The drywall work was actually not finished until 2016.
[90] Mr. Christoff stated that Infinity’s July 2015 schedule should be relied on but also agreed that in July, Infinity could not have been aware of all of the design changes reflected in the August 2015 IFCs.
[91] As noted above, in November 2015, Skyline prepared a unit-by-unit construction schedule so that the units that had earlier closing dates would be completed first. I accept Mr. Barber’s evidence that carrying out the work in this disorganized fashion resulted in many inefficiencies.
[92] Mr. Christoff understood that Skyline and Infinity agreed to follow this schedule. He did not have a copy of it. He stated that based on Skyline’s unit-by-unit occupancy list, the actual occupancy dates started on March 1, 2016. In March, 36 units had occupancy. In April, seven units had occupancy. In May six units had occupancy. In June and afterwards, 10 units had occupancy. Mr. Christoff did not take Skyline’s November 2015 schedule into account in determining when the project should have been completed.
[93] Mr. Christoff’s report did not identify any specific delay caused by Infinity. His CPS does not take into account what actually happened on the project. Based on the related invoices, the drywall work took place at a different time from the dates that Mr. Christoff calculated. When asked about this, he stated that the actual progress of subtrade work was never intended to be introduced in his CPS. He stated that the actual work, deficiencies and productivity have nothing to do with his CPS. I find that his CPS is a mathematical exercise based on an August 2014 schedule which could not possibly have been accurate, given the fact all of the elements that Mr. Christoff identified as important to have in order to create a CPS were not available.
[94] Actual work, productivity and deficiencies are inextricably intertwined with the progress of a construction project. Mr. Christoff’s model is based on the theory that everything will go exactly as planned. It rarely does. I do not accept his conclusion that the project should have achieved occupancy by December 4, 2015.
[95] As noted above, the parties agree that Infinity was not responsible for delay up to December 4, 2015. There is no evidence of any delay after December 4, 2015 that is attributable to Infinity. Mr. Matchett stated that he could not name any delay that was attributable to Infinity during any time period. His evidence regarding whether Infinity was responsibility for delays and costs overrun is valuable because he watched the project unfold and had first-hand knowledge of the causes of delays and costs.
[96] I find that Infinity was not responsible for any delay on this project.
5. What, if anything, does Infinity owe Skyline for delay?
[97] As noted above, Skyline claims $218,770 for delay damages. Skyline states that it incurred financial carrying costs for an additional six months for items such as its letter of credit, interest and standby costs on its construction loan, cost of its Tarion bond and insurance.
[98] Infinity was not responsible for any delay; therefore, it is not liable to pay Skyline anything for its costs of the delay.
6. What were the circumstances of Infinity’s termination?
[99] Mr. Matchett stated that he knew Infinity’s termination was coming. He was not involved in the decision. Mr. Mondell had told him. Mr. Piggott had already been terminated.
[100] Mr. Mondell stated that there had been a direct pipeline from Mr. Piggott to Mr. Snead to the owners of the company regarding all decision making. He stated that if Mr. Piggott or Skyline had concerns about Infinity’s performance, notifying Infinity would have been fair and appropriate.
[101] Mr. Barber stated that Skyline knew that money was owed to trades. This is the reason why Mr. Piggott was terminated. He was the bottleneck for getting invoices paid. Sometimes invoices sat on his desk for 90 days.
[102] Infinity worked 11 months past the expected completion date. On May 24, 2016, when all of the sold units had been completed, Skyline terminated Infinity. In its email to Infinity Skyline stated. “The project is completely off budget which was not documented in your reporting requirements under your project management contract and Skyline has as a result suffered an unexpected and significant financial loss. We confirm that your contract has been terminated…” Nothing was said about any performance issues.
[103] Mr. Matchett testified he understood that Infinity’s termination was not related to the quality of the work or its performance on site. He was not involved in any discussions internally about Infinity’s performance. The budget and the schedule were always the issues. Mr. Barber was the driver of the schedule and was always motivated to keep things moving forward.
[104] Mr. Matchett stated that none of the costs over budget were Infinity’s fault. The design was being done on the fly. The change orders for the project totaled $2,300,000. If a full design had been available from the start, the cost would have been less.
[105] Infinity states that it should have had some notice of Skyline’s issues prior to its termination. Mr. Mondell agreed that notice would have been fair and appropriate. Skyline states that it had no contractual obligation to give Infinity any notice.
[106] Infinity did not plead wrongful termination. The notice issue is a red herring.
7. Did Infinity fail to perform some of its obligations under the contract? If so, what was the impact on Skyline?
Experts’ evidence
[107] As noted above, Infinity’s scope of work is set out in Schedule B to the contract. Skyline alleges that Infinity failed to perform a number of the items.
[108] Infinity’s expert was Gerald Boyle, who was qualified as an expert in construction management and the related standard of care, construction project performance, scheduling controls, construction management and delay analysis. He is not a professional engineer; however, he is a Gold Seal Certified Project Manager. Skyline’s expert was Tariq Kawar, P.Eng, who was qualified as an expert in standard of care of construction managers, construction projects scheduling and budgeting and assessment of delay of construction projects. Both experts had extensive experience in project management.
[109] Prior to Mr. Kawar’s testimony, Infinity raised an objection on the issue of whether Mr. Kawar had the proper experience to be qualified as an expert witness in this area. Infinity noted that Mr. Kawar had not acted as a construction manager since 1992. At that time, he was working in the middle east in a military context. He has not been a construction manager for the past 28 years and never worked as one in Canada. Mr. Kawar has worked in project management for most of his career. He stated that he managed construction managers. He has experience with budget costing and scheduling for projects. Infinity withdrew its formal objection. Both counsel agreed that the issue could go to the weight that the court might give Mr. Kawar’s evidence. Infinity submits that little weight should be given to Mr. Kawar’s conclusions.[^15]
[110] Mr. Boyle and Mr. Kawar reached different conclusions regarding Infinity’s performance of the scope of contract items. Mr. Kawar concluded that Infinity performed 14, did not perform 13, and partly or deficiently performed 29. Mr. Boyle disagreed. He stated that Infinity performed many of the scope items. It was prevented from performing some of them because Skyline curtailed Infinity’s ability to contact the consultants. Article A-3 3.1 of the contract states, “Skyline will manage the architect and all subconsultants.”
[111] Mr. Matchett stated that Skyline did manage the design team. It dealt with them exclusively. When Mr. Barber had a question for a consultant, or a design issue, the formal process was that he would come to him or Mr. Piggott. They would go to the consultants to obtain the answer. This was to avoid multiple communications to the trades and Infinity; however, on November 13, 2014, two weeks after the partial permit for the foundation work was issued, Mr. Piggott sent an email to the consultants, which was copied to Mr. Barber, Mr. Galligan and Mr. Matchett. It stated,
…Also, in order to streamline the approval process and requests for information from the trades, I wanted to make it clear that Paul Barber and Mark Galligan are employed by Infinity Construction Inc. who are acting as construction managers for Skyline Executive Acquisitions Inc. They are not acting as a general contractor. Therefore, if any requests for information, shop drawings review etc. come from Paul, Mark and of course Bryan, they are to be processed as if they are coming from Skyline. Because we have started so late, it is critical that reviews be treated with urgency so we do not lose more time. Please ensure your responses are copied to each of Paul, Mark and Bryan so they are all in the loop. [emphasis added]
[112] Mr. Matchett agreed that Infinity never complained that doing the job was impossible because it was not supposed to contact the consultants directly. It never stated that it could not comply with the scope of work, that it was unhappy or unable to comply with the protocol.
[113] Regarding some scope items, Mr. Kawar stated that he did not see any evidence that they had been performed. Mr. Boyle stated that there was no evidence that they had not been performed. Both Mr. Boyle and Mr. Kawar’s opinions were based on the documents provided to them. Because Infinity is defending a counterclaim, if it had evidence that it had performed certain scope items for which Mr. Kawar could not find evidence, Infinity ought to have provided it. Mr. Kawar stated that he would have changed his opinion on a scope issue if Infinity had provided evidence of performance. In instances where it did not, I will assume that the documentation does not exist. Mr. Kawar’s report is dated September 5, 2019. There was ample time for Infinity to provide this evidence prior to the commencement of this trial on October 13, 2020.
[114] Infinity submits that little weight should be given to Mr. Kawar’s evidence because he lacks expertise in the precise matters covered by his opinion. He was not a construction manager.[^16]
[115] Many of the scope items are not well defined. Mr. Kawar’s evidence focused on the standard of care applicable to construction managers. With respect to performance of various items, he considered the scope language in the contract and then stated that specific things were expected to be done. The following are examples:
a. Regarding scope item #17, “On a pro-forma basis prepare CCDC contracts with schedules for trades subject to Skyline approval and review” he stated that without a proper contract between parties, there are no proper procedures. This would be unacceptable. This scope item imposed an obligation on Infinity, as a subject matter expert, to explain the consequences of not having contracts with trades and then to document it.
b. Regarding scope item #31 “Monitor contractor’s performance and enforce requirements”, Mr. Kawar stated that this imposed an obligation on Infinity’s site superintendent to carry out site inspections and produce a daily report to identify any deficiencies. Deficiencies were to be reported to the CM and the consultant. They should have been asked whether the work was acceptable.
c. Regarding scope item #32, “Perform daily field inspection [sic] and engage 3rd part [sic] testing firms as required to ensure quality specifications are achieved”, Mr. Kawar stated that there should be a plan at the beginning of the project regarding soils testing, a date for compaction and a concrete testing date. The trades doing this work cannot be called at the last minute. The result is a pass or fail. If the testing fails, the work has to be done over.
d. Regarding scope item #40, “Manage submittals and monitor designer’s review activities”, Mr. Kawar stated that this relates to design issues. Shop drawings are submittals. This scope item imposed an obligation on Infinity to communicate back and forth with the designers (consultants) regarding approval of shop drawings and to monitor the designers for responses.
[116] I have difficulty with Mr. Kawar’s evidence. If Skyline expected Infinity to carry out scope items in a specific way, clear language should have been used in the contract. Instead, vague language was used for the scope items. I do not agree that obligations to perform the scope items in a specific way should be imposed on Infinity after the fact. Furthermore, Mr. Kawar’s evidence does not take into account the fact that many stages of the construction were delayed through no fault of Infinity. For example, having a plan at the beginning of the project regarding soils testing, a date for compaction and a concrete testing date would have been impossible because the start date in the contract was September 2, 2014 but the site plan was not registered until October 30, 2014. Infinity could not have anticipated that delay and prepared a useful plan.
[117] Mr. Boyle concluded that Infinity did perform many of the scope items. If it did not perform them to the standard set out by Mr. Kawar, there was no related loss to Skyline. Some of Mr. Boyle’s evidence was based on his understanding that Infinity was prevented from contacting the consultants. He determined that Infinity could not perform certain scope items because of this. He learned of Mr. Piggott’s email dated November 13, 2014, set out above, during the trial. This undermines his opinion on a number of items. Furthermore, some of his evidence bordered on advocacy.
[118] In contrast to Mr. Kawar and Mr. Boyle’s evidence, I prefer Mr. Matchett’s evidence. He was a reliable and credible witness. He had experience working as a project manager for Skyline. In this capacity, he was at the site every day and had an office there. He oversaw day to day construction. The experts did not. While his employment was terminated by Skyline[^17] and he was called as a witness by Infinity, his testimony was even-handed. He supported some aspects of Infinity’s position but also candidly stated some of the difficulties that Infinity’s inattention to paperwork and processes caused him. In cross-examination, he did not hesitate to agree that Infinity failed to do certain things that it should have done. I find his evidence to be more helpful than the experts’ theoretical evidence. Mr. Matchett testified as to what should have happened on the project, what actually happened and whether something should or should not have been done. He was in the best position to know the actual causes of delay and their impact.
[119] Mr. Matchett stated that he was not part of any conversations with Mr. Piggott or Skyline on the subject of whether Infinity had performed its scope of work. He stated that Infinity did not cause the delays nor the increased costs of the project.
[120] The following are some of the scope items in issue, the parties’ positions, the evidence and my findings as to whether Infinity performed the item or not.
Scope item 2
[121] Scope item 2 states, “Liase with Skyline corporate accounting team to establish financial reporting requirements, bi-weekly/monthly report delivery dates, and reporting formats.”
[122] Mr. Boyle stated that Infinity was not required to do this because Skyline assumed the responsibility for accounting and reporting for the project and used its in-house software for this. Essential elements of financial reporting were not made available to Infinity so it could not provide financial reporting. Specifically, Infinity was not privy to the amounts each trade had been paid relative to the related draw.
[123] Mr. Matchett recalled that Mr. Roy would send out updated reports showing the various amounts paid when they were requested. Infinity received them and was permitted to request others from Mr. Roy.
[124] Mr. Kawar stated that accounting is different from cost management. Accounting is concerned with only issuing purchase orders and tracking how much was paid. Cost management concerns controlling and reporting.
[125] Mr. Matchett stated that Mr. Piggott, Mr. Roy and Mr. Lopez at the corporate office were responsible for tracking the costs. Mr. Matchett stated that he and Mr. Piggott used a budget spreadsheet to track the progress of the project. It was a working document and was adjusted as the project progressed through construction. After Mr. Piggott was terminated on March 23, 2016, the whole team had access to it.
[126] This scope item is not about cost management. It is about the type and frequency of Infinity’s reports to Skyline. I do not accept Infinity’s submission that it could not perform this scope because it did not have access to Skyline’s accounting information. I accept Mr. Matchett’s evidence that Infinity could have requested it. There was no evidence that it was ever declined upon request. Nevertheless, the budget spreadsheet used by Mr. Matchett and Mr. Piggott shows that Skyline was using it to track costs. It was aware of the status of the project and the costs incurred. Mr. Matchett was issuing purchase orders. Mr. Piggott reported to Skyline’s CEO, Mr. Snead, up to February 2016, when he was terminated. At this point, the project was nearing completion. After that, Mr. Piggott reported to the new CEO, Mr. Lyons. I find that Infinity did not establish financial reporting requirements. Nevertheless, the budget spreadsheets kept Skyline well informed of the financial status of the project.
Scope item 3
[127] Scope item 3 states, “Establish a purchase order system for sub-trade contracts and owner supplied items and materials…” Mr. Kawar states that this means that Infinity was to establish its own PO system.
[128] Mr. Barber stated that Skyline wanted to use its own PO system. It created and managed the purchase orders. Mr. Barber approved all estimates. Subsequently, they would be approved by Mr. Matchett and Mr. Piggott. Mr. Barber agreed that there was no written policy or procedure for purchase orders. Rather it was all verbally agreed. Infinity kept a running tally of POs in the site trailer. He communicated with Mr. Piggott by email.
[129] There were times when Infinity arranged for additional labour but did not provide a budget estimate to Skyline for a PO. Mr. Barber stated that Infinity had a building to complete and could not “sit around for a month waiting for paper”. Mr. Barber agreed that in December 2014, Mr. Piggott was frustrated because Infinity had sent 29 invoices to Skyline for which there were no POs. Mr. Matchett stated that sometimes there were problems with having POs issued in advance of work being completed. Sometimes trades were doing work on site but there was no PO for it. At times, he had to remind Infinity to follow the process more diligently because invoices were being issued before POs. Following the process was important, otherwise payment would be delayed. Mr. Matchett stated that the requirement for having estimates and a budget in advance so a PO could be issued was always clear. It was Skyline’s policy.
[130] If Infinity was too busy to prepare the paperwork to request purchase orders, it ought to have hired extra staff to look after this. Infinity was entitled to charge “$1,000 a month for project accounting/bookkeeper”.
[131] I find that a purchase order system was established although not formally in writing. There is evidence that Mr. Matchett was involved in preparing purchase orders based on Infinity’s recommendations. For example, Mr. Matchett sent an email to Mr. Barber on December 14, 2014 stating that he needed labour costs for placing asphalt so that he could prepare a PO. On the same date, Mr. Roy sent an email to Mr. Barber attaching a PO for the electrical trade, and asked him to sign it and return it by email. On June 9, 2015, Mr. Matchett sent an email directly to KD Clair, the framing trade, with a copy to Infinity, attaching the PO for its work.
[132] I find that this scope item was performed. A formal written PO system would have been better. The lack of documentation was to Infinity’s detriment regarding its being able to prove certain allegations in this matter.
Scope item 4
[133] Scope item 4 states, “Establish an ‘inventory on site’ reporting system for monthly reports.” Mr. Kawar stated that he did not see any documents to show that this was done. Infinity’s position was that inventory was tracked daily on site. Records were maintained in the site office.
[134] If records were kept, Infinity ought to have provided them or explained where they were located when it was terminated. Because it did not, I infer that the records were not kept.
[135] I find that this scope of work was not performed.
Scope item 7
[136] Scope item 7 states, “Establish preliminary plan with inspectors for scheduling of routine project site inspections.”
[137] Mr. Kawar stated that this is part of quality management. The construction manager must do routine inspections of the work. Architects and consultants would inspect at the end. They are not there on a day to day basis. In the contract, the inspections were downloaded to Infinity. A site superintendant would do this. It should have been done daily for quality control. Although inspections were scheduled and conducted, he did not see a preliminary plan for scheduling inspectors in the documents that he reviewed.
[138] Although it would be preferred, I note that there is no requirement for this plan to be in writing. Infinity staff scheduled inspections when appropriate. For example, an email exchange between Mr. Gates and the municipality’s Chief Building Official shows that Infinity requested an inspection. The CBO agreed to attend. The fact that routine inspections were arranged and conducted is evident because all consultant and municipal signoffs for occupancy were obtained.
[139] I find that Infinity performed this scope item.
Scope item 8
[140] Scope item 8 states, “Review status of existing site “As Built Utilities” and required future connections to existing utilities, and confirm required services and utilities for project on a pre-construction and post-construction basis.” Mr. Kawar stated that Infinity should have cross-referenced this information to the civil drawings. If it did not match, the civil engineer should have been advised. There is no evidence that this was done.
[141] Mr. Boyle states that Infinity reviewed Cole Engineering’s drawings as they became available and coordinated the existing conditions with Horseshoe Valley Resort Staff. Infinity also reviewed the geotechnical information prepared by Terraprobe.
[142] The civil works that could be done[^18] appear to have been done during Infinity’s engagement. I find that Infinity performed this scope item.
Scope item 9
[143] Scope item 9 states, “Provide a [sic] bid package management.” Mr. Kawar stated that this requires Infinity to assemble the particulars of the work to be done, obtain three tenders and review the proposals. This is part of procurement management. Mr. Boyle stated that Infinity had a binder containing pre-tender quotes that had to be updated. Mr. Kawar stated that having a binder does not fulfill the requirements. It is only the start of the process.
[144] Regarding obtaining prices for the work, Infinity states that it obtained bids based on the latest drawings at any given time. Mr. Matchett stated that Infinity provided three quotes unless the trade was specialized. He and Mr. Piggott would take quotes to head office.
[145] I find that Infinity performed this scope item.
Scope item 17
[146] Scope item 17 states, “On a pro-forma basis prepare CCDC contracts with schedules for trades subject to Skyline approval and review.” Mr. Kawar stated that a contract is the basis for the relationship between the parties. Without it, there are no proper procedures. Mr. Kawar stated that he did not see evidence of this in the documents that he reviewed.
[147] Infinity states that there was no need to prepare CCDC trade contracts because Skyline decided to use purchase orders. Infinity did prepare one for the electrical trade. It was attached to an email dated April 28, 2015 from Mr. Galligan, copied to Mr. Barber and Mr. Matchett. Skyline decided against using it.
[148] Skyline submits that it was an unsophisticated developer. It relied on Infinity to provide advice and guidance on these types of issues. Infinity should have pointed out the contractual advantages of a trade contract in comparison to a PO. I do not accept this argument for several reasons. General Condition 3.1.1.5 states that, “the owner shall enter into contracts or written agreements with trade contractors to perform the work. Such agreements shall be consistent with the requirements of CCDC 17 – STIPULATED PRICE CONTRACT BETWEEN OWNER AND TRADE CONTRACTOR FOR CONSTRUCTION MANAGEMENT PROJECTS.” The fact that Skyline chose to use POs shows that it did not adhere to the contract requirement. Further, Mr. Piggott, Skyline’s executive who was intimately familiar with the project, was a professional engineer. Skyline had a highly qualified representative to oversee the project. In addition, Mr. Matchett stated that he believed Skyline preferred to use POs because it was familiar with that system.
[149] I find that Skyline’s decision to use POs instead of CCDC trade contracts absolved Infinity from performing this scope item.
Scope item 18
[150] Scope item 18 states, “Establish and manage cost control measures for budgeting purposes.”
[151] Mr. Kawar stated that each activity has a duration and resources. There should have been an estimate of cost equal to Skyline’s budget as well as a recording of what the task cost. If it exceeded the budget, Infinity should have reported back on the cost variance. Infinity should have come up with a mitigation plan or advised Skyline that the budget had to be increased. This should have been updated on a regular basis for Skyline. Mr. Kawar stated that the only party who could do it was the construction manager, the party who was managing the work on a daily basis.
[152] Mr. Boyle stated that Infinity did provide forecasting information to Skyline when requested. Mr. Boyle stated that Skyline assumed this responsibility. It maintained the budget including COs and did its own reporting to financial institutions.
[153] According to Mr. Matchett, he and Mr. Piggott used a budget spreadsheet to track the progress of the project. It was a working document and was adjusted as the project progressed through construction. After Mr. Piggott was terminated on March 23, 2016, the whole team had access to it.
[154] Mr. Matchett stated that the design for this project was being done “on the fly”. This made budgeting and providing estimates of costs difficult. Skyline’s budget spreadsheet showed the costs paid for certain aspects of the work and the amount of the purchase order. I find that Infinity did undertake cost control measures to Skyline’s advantage. For example, it rented certain equipment because it had the required insurance coverage, whereas Skyline did not. The cost to rent the equipment would have been greater if Skyline had been required to obtain the insurance.
[155] Skyline’s upper management, Mr. Snead and Mr. Piggott knew the cost of the project and its status. They had the budget spreadsheet. Mr. Piggott authorized the additional labour.
[156] I find that Infinity performed this scope item.
Scope item 20
[157] Scope item 20 states, “Coordinate work of all utility companies.” Mr. Kawar stated that this relates to connection of utilities. Mr. Kawar states that the co-ordination was deficiently performed, specifically with getting hydro to the site. Mr. Boyle states that Skyline was co-ordinating this work.
[158] This is confirmed by a string of emails from November 11, 2014 to December 4, 2014 that shows Mr. Piggott’s communications with Hydro One and that he asked Mr. Matchett to be on site to meet with “a Hydro field guy” to verify site conditions for the Hydro service.
[159] I find that Skyline performed this scope item.
Scope item 28
[160] Scope item 28 states, “Establish Contract administration policies and procedures to monitor tender/construction drawing distribution, shop drawings processing, Requests For Informations (RFI’s) [sic] Contemplated Change Orders (CO’s) [sic], Change Orders (CO’s) [sic], monthly draw request support to the bank, etc;”. Mr. Kawar states that although Infinity’s position is that policies and procedures were prepared with Skyline, he did not see evidence in the documents provided to him that policies and procedures were in place.
[161] Mr. Barber said that Skyline assumed performance of this scope item because it dealt with the consultants. Mr. Piggott and Mr. Matchett communicated with them. An email dated January 16, 2015 from Mr. Matchett to the consultants attaching a shop log for the trades’ submitted shop drawings with Skyline’s logo on it appears to confirm that Skyline was monitoring the shop drawings.
[162] Mr. Barber did not confirm that Infinity did any of this. It sometimes communicated with the consultants. Its ability to do so was confirmed in Mr. Piggott’s email dated November 13, 2014. Skyline’s wanting to deal with the consultants did not absolve Infinity from establishing the contract administration policies and procedures to monitor the items listed above. Infinity could have established a system for monitoring tender/construction drawing distribution, shop drawings processing, RFIs, CCOs and COs.
[163] I find that Infinity did not perform this scope item.
Scope item 30
[164] Scope item 30 states, “Establish a critical path schedule for construction activities with schedule updated monthly.” Mr. Kawar states that while Infinity provided Gantt (bar) charts, they were not in a critical path schedule format or recognized project management software. Infinity acknowledged that no critical path schedule was prepared. It did not provide any monthly updates. Mr. Kawar states that the schedule was not monitored regularly, fully or properly.
[165] Mr. Barber agreed that Infinity did not provide a complete project schedule in writing to Skyline after July, 2015. He stated that whether Infinity was required to do this was “up for debate”. Mr. Piggott had said it was not necessary. Skyline only needed it for the bank. The deadlines were pushed out six months because of the various delays.
[166] Mr. Barber stated that he could not have prepared a meaningful critical path schedule. Doing one would have been difficult without a design. For example, because of the various issues and the late issuance of the IFC drawings, one of the major trades, the framer, K.D. Clair, was delayed in doing its work. It could not do shop drawings without the IFC drawings. Mr. Barber stated that K.D. Clair sent some of its forces out west to work on a different project. This impacted the critical path timeline for the project. Mr. Barber did not advise Skyline in writing of this critical path problem. He did not notify Skyline that achieving a December 1, 2015 occupancy date would be impossible. He stated that Mr. Piggott and Mr. Matchett were on the site all the time. They were well aware of the status of the project.
[167] As noted in issue three, Mr. Christoff stated that in order to prepare a critical path schedule, all of the documents would have to be assembled. They would include all building drawings, site plan drawings, the scope of the work, the procurement strategy, permits and approvals and shop drawing submissions. One would need to understand what each of the various participants was providing and have a complete understanding of the design. Obviously, none of this was available to Infinity in August, 2014. It could not have prepared a CPS.
Scope item 31
[168] Scope item 31 states, “Monitor contractor’s performance and enforce all requirements of applicable codes, specifications and contract drawings.” Mr. Kawar stated that the trades’ schedules and performance was not monitored closely. This was part of quality control. Daily reports should have been prepared by the site superintendent identifying any deficiencies. They should have been reported. The relevant consultant should have been advised immediately. Waiting one or two months to do this is not acceptable.
[169] Mr. Boyle stated that Skyline’s consultants were responsible for enforcing code requirements and specifications. I do not accept this. As construction manager, Mr. Barber and/or his employees were on site every day. Infinity’s job was to ensure, on a daily basis, that construction was being carried out in accordance with applicable codes, specifications and the approved permit drawings. The consultants were not on site daily. Their reviews were periodic and were done to ensure that construction was carried out in general conformity with the approved permit drawings and the Building Code.
[170] Infinity states that the trades’ performance was monitored to ensure that the work was done in accordance with the Building Code requirements and in conformity with the approved design.
[171] There were problems with the siding and the railings, which Infinity was attempting to have the trades fix before it was terminated. As will be seen below, there were some deficiencies after Infinity was terminated. This does not mean that Infinity failed to supervise appropriately. As is noted below, Mr. Mondell stated that even with perfect supervision, there will always be deficiencies on a construction project. I find that Infinity did monitor the trades’ performance and enforced compliance as required.
Scope item 33
[172] Scope item 33 states, “Monitor construction schedules throughout the course of construction, reporting any deficiencies on a bi-weekly basis.” Infinity acknowledges that schedule deficiencies, which Mr. Kawar describes as “slippages” were not reported on a bi-weekly basis. Mr. Barber stated that Mr. Piggott and Mr. Matchett were at the site daily. He regularly discussed the status of construction and delays with them.
[173] I find that although they did not receive formal reports, Skyline’s representatives were well aware of schedule slippages and the reasons for them. Infinity performed this scope item.
Scope items 35 and 37
[174] These items are related. They state, “Maintain a daily inspector’s log including daily photographs and prepare a weekly summary. Maintain well-organized photographic/video records on a daily basis.” Infinity states that its safety inspector kept a daily log. In addition, according to a letter from the independent safety inspection company that Infinity hired, it provided a comprehensive report to Infinity’s site supervisor after every weekly inspection. Mr. Kawar stated that he did not see a daily log in the documents that he reviewed. Infinity stated that photos were taken and provided to Skyline. Five photos were attached to an email dated April 2, 2015 from Brandon (last name not included) to Mr. Barber, the subject of which was “Daily Photos – April 2, 2015. This email suggests that daily photos were being taken; however, it is the only email concerning photos to which Mr. Barber testified. If others were taken, one would think that a series of emails could have been provided.
[175] I find that Infinity did not perform this scope item.
Scope item 38
[176] Scope item 38 states, “Hire a site “Safety Officer” ensuring [sic] owner’s safety plan and WSIB regulations are fully enforced. Conduct weekly safety meetings. Ensure contractor properly provides for the safety of site workers.” Mr. Kawar stated that he did not see any minutes of meetings in the documents that he reviewed.
[177] Infinity had its own safety inspector. It also hired Cobalt Safety Consulting Inc. to provide, among other things, third party independent workplace inspections that were conducted on a weekly basis. Exhibit 22 to Mr. Boyle’s August 24, 2020 report is a letter from Cobalt outlining the nature of its retainer. Cobalt states that, “At the end of each inspection, a comprehensive report was left with the supervisor on-site…Infinity Construction had a person on-site that was responsible for safety at the time of inspections and would participate in each workplace inspection conducted by Cobalt Safety consulting staff members.”
[178] I find that Infinity performed this scope item.
Scope item 39
[179] Scope item 39 states, “Manage change orders and obtain approval as required for all changes”.
[180] Mr. Kawar stated that a construction manager would receive a CO request. Its responsibility would be to document it, obtain an estimate/procurement, review the estimate, ensure it responds to the change and the timeline, and obtain signed approval. A construction manager should maintain a log that lists all the COs. The related documents should be in the log. Mr. Barber acknowledged that this was Infinity’s responsibility but stated that the construction work had to be done. His main focus was completing the building, not on paperwork.
[181] Mr. Matchett stated that he issued the COs and kept track of them. The documentary evidence supports this. I find that while Infinity should have maintained logs to show management of change orders, Infinity did manage them. They were tracked internally by Skyline.
[182] I find that Infinity performed this scope item.
Scope item 40
[183] Scope item 40 states, “Manage submittals and monitor architects/designer’s [sic] review activities.” Mr. Kawar stated that this included shop drawings. It was not performed.
[184] Infinity states that its review activities with the consultants were minimal and ceased following Skyline’s directive for Infinity not to communicate with the consultants.
[185] “Monitor designer’s review activities” is somewhat vague. In the context of a shop drawing submittal, it could mean that Infinity was responsible for submitting shop drawings to the consultants and for tracking the response. This is not caught by Skyline’s preference to have Infinity make requests through Mr. Matchett or Mr. Piggott. Infinity could have kept a log of when shop drawings were submitted and when the responses were provided. It could have made follow up requests for outstanding responses through Mr. Matchett or Mr. Piggott or to the consultants directly. The absence of a log does not mean that the managing and monitoring was not done. Submittals were made, responses were received and the building was constructed. I find that this scope of work was performed.
Scope item 42
[186] This is similar to scope item 40. Scope item 42 states, “Manage contractor’s [sic] Request for Information (RFI).” Mr. Kawar stated that Infinity should have kept a log of RFIs. He did not see any evidence of a record of communications in the documents that he reviewed.
[187] Infinity states that RFIs were submitted. The consultants provided answers. A document dated May 19, 2015 entitled Request for Information No. 19 is an example of an RFI that Infinity prepared regarding questions relating to the security and fire alarm systems. Infinity states that it performed as much of the RFI process as required by Skyline.
[188] While keeping a log would be preferable, the scope item does not require that a log be kept. There is considerable evidence of Infinity’s providing RFIs to Mr. Matchett and his obtaining answers from the consultant which were passed back to Infinity and then to the trades. I find that Infinity performed this scope of work.
Scope item 43
[189] Scope item 43 states, “Review and recommend progress payments in conjunction with Bank’s Quantity Surveyor or Architect based on arrangements made between owner and bank. These reports can be weekly or bi-weekly based on owner’s and bank’s requirements to advance draws, cut off day would be established by Skyline’s accounting staff.” Mr. Kawar states that this item was not performed because he did not see any documentation of it.
[190] Infinity states that it was not involved in Skyline’s arrangements with its bank. He approved the trades’ invoices and sent them to Mr. Matchett. Mr. Matchett confirmed this. He described the process for paying trades on the project. Skyline needed a number in the budget for work in order to issue a purchase order. Upon receipt, a purchase order would be issued. As the work was done, Infinity would put together a package of invoices, statutory declarations and workplace safety and insurance board certificates. Mr. Barber stated that he would review it first for completeness and to ensure that it reflected the progress on site. If it was satisfactory, he would send it to Mr. Matchett. Mr. Piggott and Mr. Snead would give final approval depending on dollar value. Mr. Matchett stated that he would expect payment to be made.
[191] There is considerable documentation showing that Infinity approved items and submitted them to Skyline for payment. Infinity did not have contact with the bank’s quantity surveyor or architect regarding recommending progress payments. Infinity did not know of the arrangements made between Skyline and the bank. Skyline was clear about this in its submissions on issue two: was Skyline’s construction budget relevant. Mr. Piggott and Mr. Snead were the final approvers of invoices. They dealt with the bank monitor. I find that Infinity reviewed and recommended progress payments to Skyline. It performed this scope item.
Scope item 55
[192] Scope item 55 states, “Post construction – Complete all project documentation including but not limited to change order summary, final detail estimate summary, project acceptance documentation, and claims management/resolution.” Mr. Kawar states that this item was not performed.
[193] Obviously, Infinity could not have done this work because it was terminated before the project was finished. It could not perform scope items 56 and 57 for the same reason.
Summary
[194] In summary, Infinity performed 52 of the 57 scope items, which is 91% percent of them.
What was the impact on Skyline of Infinity’s failure to perform scope items?
[195] As noted above, Skyline states that Infinity is not entitled to retain any of the construction management fees that were paid, $380,000, because it did not perform the contract. Skyline also states that it lost millions of dollars on the project. There is no reason why Infinity should make a profit when it failed to provide the services that it contracted to provide. The question is: did Infinity’s failure to perform the five scope items cause Skyline any damages?
[196] As is set out below, Skyline states that because of Infinity’s poor record keeping, it could not determine which trades performed certain work so it decided to hire other trades to rectify deficiencies. I do not accept this argument. Skyline issued POs for the trades’ work. It paid them. It had records of who performed the work.
[197] I find that Infinity’s failure to perform scope item 2 did not impact on Skyline’s knowledge of the status and cost of the project. It had no effect on the progress of the project. Infinity’s failure to perform scope item 4, did not impact on the management of materials on site. Its failure to perform scope item 28 did not impact on the progress of the project or the costs. There is no evidence that its failure to perform scope items 35 and 37 impacted the project.
[198] Infinity failed to perform 9% of the scope items. I disagree with Skyline that this provides a basis to require that all of CM fees paid to Infinity, $380,000, be refunded to Skyline. Skyline has not proven that it suffered a quantifiable loss because Infinity failed to perform 9% of the scope items.[^19] Skyline may have lost money on the project. There could be many reasons for this. There is some evidence that Skyline pre-sold units for low prices relative to their value several years later when the cost of construction had risen and the transactions closed. There could be other reasons. There is no evidence for this court to conclude that any financial losses suffered by Skyline on the project ought to be visited on Infinity.
8. Did deficiencies exist when Infinity was terminated? Is Infinity responsible to pay for the cost of correcting them?
[199] Skyline states that a number of deficiencies were discovered after Infinity was terminated. The cause of them is Infinity’s poor construction management and supervision of the trades. Therefore, Infinity is responsible for the cost to rectify them.
[200] Deficiencies are listed in two types of documents, one being the Scott Schedule and the other being the Burnside Performance Audit Reports dated January 18, 2018 and January 18, 2019.
The Scott Schedule
[201] The Scott Schedule[^20] contains 27 items of work that Skyline claims were deficient and Infinity’s response to each one. It is 58 pages long. I will not address each item. Infinity’s responses are comprised of the following:
it was Skyline’s original work. It was approved by Skyline because the design was incomplete;
it was a consultant design error;
it was approved work and still within a typical trade warranty;
the unit owner caused the damage two years after the trade warranty expired because the item operated for two years;
it was a unit owner maintenance issue
it is a condominium corporation maintenance issue;
it is an extra that Skyline approved; or
the work regarding equipment repair on an invoice was not justified.
[202] Mr. Matchett stated that when Infinity was terminated, all the units that had been sold were occupied. Approximately nine units had to be finished. The elevator had to be completed. There were 15 items that had been identified by the CBO that had to be addressed. For example, the balcony railings did not meet the Code requirements. Occupancy had not been granted for the building. The siding trade had done a bad job. A second siding trade had taken over. A swing arm was required for the parkade. There were odds and ends to finish. Mr. Matchett stated that he reviewed the Scott Schedule. He agreed with Infinity’s responses regarding the items.
[203] Specifically, with respect to the siding, Mr. Barber agreed that the siding was poorly done. An appropriate deduction was made. Infinity negotiated a price for a new contractor to fix the work. It wanted a deposit which Skyline would not pay. The issue was not resolved prior to Infinity’s termination.
[204] Mr. Mondell stated that deficiencies should be charged back to trades. He stated that if a deficiency was a workmanship issue, the trade ought to have repaired it. He stated that as a CM, Infinity was responsible for supervision and quality control. He agreed that every project has deficiencies. Their existence does not mean that the supervision was deficient. He also noted that Infinity was not allowed to complete its work. Mr. Matchett stated that if Skyline had not lost access to the trades, he could have required that they fix the deficiencies. Deficiencies were their responsibility.
[205] Mr. Mondel stated that without proper CCDC contracts in place, it was hard to press trades to come back and fix things. It was hard to figure out who was responsible for what. It was easier for Skyline to have the work done by others.
Analysis
[206] I accept Mr. Matchett’s evidence regarding the Scott Schedule deficiencies. He was Skyline’s project manager and was on the project every day from the start. He is the witness with the most knowledge of the project and the trades who worked for Skyline. His evidence regarding what needed to be finished and who bore responsibility for it is much more accurate and persuasive than the evidence of other Skyline employees who were not as intimately involved with the project or who started their employment with Skyline after Infinity was terminated.
[207] I agree with Mr. Mondell that deficiencies should be charged back to trades. I accept his evidence that the existence of deficiencies does not mean that the supervision was deficient.
[208] As noted above, I do not accept the assertion that figuring out which trade was responsible for specific work was difficult for Skyline. It issued POs for the work. It paid the trades who did the work. It knew who they were and the work they performed.
[209] Mr. Matchett stated that after Infinity was terminated, Skyline had trouble pressing trades to come back and fix things. Mr. Matchett stated that Skyine’s termination of Infinity and/or Skyline’s non-payment of trades had severed Skyline’s relationships with some of them. They would not continue to work on the project.
[210] Skyline had the deficiency work done by others and now seeks to charge it back to Infinity. Skyline decided to use POs with its trades, rather than agreements consistent with the requirements of CCDC17 as required by GC 3.1.5. Its POs do not contain any warranty provisions. In contrast, GC 12.3 of CCDC 17 states the following regarding warranties:
12.3.1 Except for extended warranties as described in paragraph 12.3.7, the warranty period under the Contract is one year from the later of the date of Substantial Performance of the Work and the Project In-Use Date.
12.3.2 The Trade Contractor shall be responsible for the proper performance of the Work to the extent that the design and Contract Documents permit such performance.
12.3.3 The Trade Contractor shall submit to the Construction Manager for the Owner's acceptance all written warranties and related documents required by the Contract Documents.
12.3.4 The Owner, through the Construction Manager, shall promptly give the Trade Contractor Notice in Writing of observed defects and deficiencies that occur during the one year warranty period.
12.3.5 Subject to paragraph 12.3.2, the Trade Contractor shall correct promptly, at the Trade Contractor's expense, defects or deficiencies in the Work which appear prior to and during the one year warranty period.
12.3.6 The Trade Contractor shall correct or pay for damage resulting from corrections made under the requirements of paragraph 12.3.5.
[211] Had Skyline used agreements consistent with the requirements of CCDC 17 contracts with the trades, as required by its contract with Infinity, rather than deciding to use its own POs, it would have been able to rely on written contractual warranties to force the trades to rectify deficiencies. If they refused, actions could have been brought against them. These warranties would have been in force up to the later of one year from substantial performance or the project-in-use date.
[212] As stated above, CMs themselves are not responsible for rectifying deficiencies – the trades are. The evidence shows that Infinity was working to have the siding deficiencies addressed when it was terminated. It had no opportunity to force the trades to rectify any deficiencies identified after its termination. The Scott Schedule was prepared in the course of the litigation. I find that Infinity is not liable for the cost to rectify any of the items on the Scott Schedule.
The Ontario New Home Warranties and Protection Plan
[213] Briefly, pursuant to the Ontario New Home Warranties Plan Act, R.S.O. 1990 c. O.31, certain warranties are provided to purchasers of new homes. An entity called Tarion administers the program. Specific items are warranted for one year, two years and seven years. The condominium units were new homes.
[214] In this case, reports were prepared for Tarion and the condo corporation after one and two years from the date of registration of the condo corporation, which occurred January 25, 2017. Two others were also prepared.
Performance Audit Reports and Final Report
The One Year Report
[215] R.J. Burnside & Associates Limited provided a One Year Performance Audit Report for Tarion and the condominium corporation dated January 18, 2018, 20 months after Infinity was terminated. It focused on deficiencies inside the condo units.
The Final Tarion Report
[216] Peto MacCallum Ltd. completed a Builder Bulletin 19R Final Report dated April 5, 2018 for Tarion and the condominium corporation. A Field Review Declaration is in section 8 of the report. The list of the items inspected is set out on a three page chart that has the following headings: below grade/foundations, exterior closure, roofing, fire safety systems, interior finishes/common elements, conveying systems (elevators), mechanical, site work. The title of the columns are: deficiency o/s, if o/s report references, cost to correct, initial if clear. Each item in the Field Review Declaration is initialed as “clear”. In the declaration section (iv), the declarant states, “to the best of my knowledge the condominium project has been constructed in a workmanlike manner, in general conformity with the construction documents, the relevant sections of the governing Ontario Building Code and good construction practice. In section (v), the declarant states, “… I shall conduct a follow up review to confirm that any/all outstanding issues identified in the final submission have been completed and signed off and accepted by the FRC and Prime Consultant or if applicable the Condominium Corporation Board of Directors.” This is followed by a deficiency summary table which refers to two architectural punch lists and a leaking window. The text “no outstanding issues noted” is next to the punch lists and the window.
The Two Year Report
[217] Burnside provided a Two Year Performance Audit Report dated January 18, 2019, 32 months after Infinity’s termination. If focuses on other deficiencies inside the building.
The Balcony Report
[218] Burnside also provided a Balcony Evaluation Report dated June 21, 2019, 37 months after Infinity’s termination.
Deficiencies Noted in Tarion Reports
[219] Skyline claims against Infinity the cost to rectify the deficiencies noted in the Burnside reports.
[220] Paul Meredith, Skyline’s construction and warranty manager testified regarding the performance audit items. He began his employment with Skyline after the two performance audit reports were completed but before the balcony audit report had been done. He explained that the audits were part of the Tarion process. Deficiencies identified by the independent engineer, Burnside, would be put before Skyline who is obligated to fix them to the satisfaction of the condo board and its management.
[221] Mr. Meredith stated that in a typical construction project, when the construction was completed, an owner would expect to receive a close out package. It would include details of the construction team, operations and maintenance manuals, as built drawings, a list of who holds the warranties, testing results, photos of the project, a construction diary and a formal change order registry showing who approved them. Mr. Meredith stated that he had the IFCs and manuals for the boiler and elevator. He stated that having little documentation makes completing the deficiency work more difficult. He saw changes but no rationale for them.[^21]
[222] Mr. Meredith stated that the Skyline team put together a spread sheet[^22] regarding the items in the audit reports and the work required to complete them. These deficiencies were noted many months after Infinity’s termination. Mr. Meredith stated that construction deficiencies are usually the responsibility of the trades. The question is whether Infinity itself should be liable for the cost to fix the deficiencies identified by Burnside in its reports. These reports are dated after the expiry of a one year trade warranty.
[223] The following are the items claimed by Skyline against Infinity found in the Burnside reports, Mr. Meredith’s explanation of them and Infinity’s response on each one. I will use the numbering set out on Skyline’s document.
a) #1 Supply and install a new automatic door and push button. Mr. Meredith stated that the project required an accessible parking garage. The ramp that would be used by a disabled person was not built as specified by the Code. The level area was not long enough. Tearing up the concrete and re-grading it would have been very expensive. The municipality accepted a trade off – an accessible compliant door. A new automatic push button door was installed. The cost of the door was $5,946. Infinity’s response is that the “door worked fine”. This suggests that Infinity may not have been aware that the ramp was the problem rather than the door.
b) #2 Supply and install roof hopper drain. Mr. Meredith stated that the drain was installed too high. There was standing water on the roof. Infinity’s response is “mechanical room built as per design”. Infinity questions how one defines excessive water. Mr. Meredith stated that this item is “in progress”, meaning that it has not yet been fixed. The expected cost is $2,465. Again, Infinity’s response suggests that it did not understand the problem because this does not relate to the mechanical room. Skyline’s photo of the roof does not assist. It does not show the drain nor standing water.
c) #4 Supply five new fire doors. Mr. Meredith stated that the doors in the attic space were not functioning. They required automatic closers to contain fire. They did not work. The doors were built on site and made of plywood, which is a combustible material, rather than a fire rated material such as gypsum. Infinity states that the closers worked fine. This does not address the materials used to construct the doors. Mr. Meredith stated that the new doors have been installed. This cost is $2,500.
d) #6 A garbage truck ramp was to go from the parking lot up to the dock where the bins are located. Mr. Meredith explained that a parking curb was constructed at the bottom of the ramp across it where it connects to the parking lot. The garbage trucks cannot back up over the curb to the ramp to access the bins. They have to be carried down the ramp. This condition is depicted in a photo. Skyline states Infinity is responsible for this deficiency because the curb should not be there. Infinity states that the ramp was built for an articulated lift to take the bins to the truck. It was never purchased. Skyline deleted it. Mr. Meredith stated that the work to remove the curb has not been started. The cost is $3,855. Mr. Meredith also stated that the garbage ramp would have been inspected by the municipality prior to granting occupancy.
e) #8 Skyline submits that Mr. Meredith testified that the wrong product and installation method was used to install the primary rain screen. Mr. Meredith did not provide testimony on this item.
f) #20 The drip edge on window sill does not adequately protect the brick. Skyline states that a mechanical drip edge may be required. It is waiting for direction from the condominium board. The cost would be $3,000.
g) #23 The clean out to the waste pipe is to be to be fully exposed. Mr. Meredith stated that the pipe is partially enclosed in the wall finish. There are discontinuities in insulation and vapour barrier. The pipe was installed too close to the wall. The location of the pipe would be shown on a drawing but the drawing might not say “build four inches away from the wall”. This should have been seen on a walk through. Infinity states that this is a building maintenance problem. Mr. Meredith stated that the work for this item has not been done. The cost will be $1,150.
h) #26 Remove concrete to repair dip in sanitary pipe. Mr. Meredith stated that there was a sanitary back-up into the garage area. The sewage pipe going out to the road to the main sanitary line has a back slope. There are no photos because it is under concrete. Mr. Meredith stated that there were two blockages. A jet system was used to clean them out. Then a camera was used to monitor the pipe. There were many trades working in this area (for example, installing granular materials, the pipe and the concrete) so determining which trade is at fault is impossible. This item was identified in 2018; however, the work for it has not been done because Skyline is not sure whether it is necessary. If it is done, the cost will be $7,125. Infinity’s response is that original contractor should be contacted to repair it.
i) #29 Sheet metal repairs are required. Bunside noted that this was a problem in several of the units. Mr. Meredith stated that water should shed away from the building; however, the sheet metal along the edge is back-sloped. Water is standing on it and falling back toward the building. Photo 10 in Burnside’s Balcony Evaluation Report dated June 21, 2019 shows the area although the problem is difficult to see. Mr. Meredith stated that the work for this item has not been done. It will cost $16,800. Infinity’s response is that Skyline should contact its siding contractor to remedy this.
j) #31 The siding had to be repainted. Burnside noted that this relates to unit 407. Mr. Meredith stated that nail hole touch ups were done but the paint did not match the siding. He could not say when the work was done. Infinity’s response is that the person who did the touch ups should be contacted to re-do the work. The cost was $5,662.
k) #33 Scaffolding for sheet metal and deck repairs is needed because the balcony railings must be removed for the work to be done. The railings cannot be removed by using a boom because they would have to be put in the boom and taken to the ground. The sections are four feet long. Infinity’s response is that CAP Waterproofing should be contacted because they replaced all the decks in November and December, 2018. Skyline states that CAP did not replace all of them. Mr. Meredith stated that the work for this item is not done yet. The cost will be $55,302. Mr. Meredith conceded that the unit owners were not asked if the balcony railings could be removed through their units. He stated that some thought was given to asking for permission from the unit owners; however, the corporation decided against it.
l) #34 This item is similar to #29. Water is standing on balconies. Mr. Meredith stated that the duradeck and handrails must be removed. The base of the deck must be repaired to allow water to shed off. Mr. Meredith stated that a mock-up was done in an unoccupied unit. A zoom boom was used to take the railing off and put it inside the unit. Infinity’s response is the same as for #33. Mr. Meredith stated that the item is in progress. The cost will be $26,110.
m) #35 A Tarion contingency of $10,000 must be maintained in case the deck substructure is found to have perished because of standing water on the balconies. Mr. Meredith stated that one has been found. If 10 or 12 more are found, the contingency would be used. Mr. Meredith stated that the balcony work should be done by January 2021. At that point, Skyline will know whether any other deck substructures have perished. If no problems are found, Skyline will return the money to Infinity.
n) B12 The exhaust fan in the garbage chute was not working. Mr. Meredith stated that it was not connected. The work has been done at a cost of $1,578. It was not needed for individual suite occupancy. Infinity states that this was either a manufacturer’s warranty item or a condo maintenance issue.
o) Pipe insulation (no item number assigned) The Aqua rise piping was not properly insulated. Mr. Meredith stated that this is a grey area, meaning that this may not be entirely accurate. The Burnside report states that that the hot water pipes are non-compliant for the energy efficiency requirement of SB-10 ASHRAE standard. Depending on their size, they must be insulated in ½” to 1” insulation. This will cost $1,000 per unit because the drywall has to be cut in the units in order to insulate the pipes. Mr. Meredith stated that the mechanical drawings show that this piping was to be insulated but not all of it had to be done. Mr. Meredith stated that the total cost will be $68,000. The work has not yet been started. Infinity’s response is that this is a design issue that should be taken up with the engineer of record.
Analysis
[224] Infinity’s responses to these items is similar to its responses to the Scott Schedule items. Infinity denies that it is responsible to pay for the cost of correction of any of these deficiencies. The first Burnside report identifying deficiencies is dated January 18, 2018, one year and nine months after Infinity was terminated and one year and four months after final occupancy was granted. The second Burnside report is dated January 18, 2019, two years and nine months after Infinity was terminated and two years and four months after final occupancy was granted.
[225] In addition to Infinity’s project manager, the municipality’s inspectors were also responsible for ensuring that construction was carried out in accordance with the Code and the permit drawings. The evidence shows that the Chief Building Official inspected the project around the time that Skyline was requesting occupancy for the specific completed units. She noted some deficiencies.
[226] Mr. Matchett stated that he also reviewed these audit report deficiencies, the cost to fix them and Infinity’s responses. He stated that if Skyline had not “lost access” to the trades, he could have requested that they return to fix items. Fixing deficiencies was the responsibility of Skyline and its trades, not the CM.
[227] Mr. Matchett stated that because Skyline’s relationship with the trades had been severed, they would not continue work on the project. After Infinity was terminated, he had to hire other trades to finish their work. Some of the line items related to work done by different trades retained by Skyline to resolve an issue after Infinity was terminated. Mr. Matchett also noted that Skyline was pursuing the Tarion deficiencies years after Infinity had been terminated.
[228] Again, I accept the evidence of Mr. Matchett and Mr. Mondell that fixing deficiencies was the responsibility of the trades. The trades contracted with Skyline, not Infinity. If trades’ work was deficient, Skyline should have required them to fix it. There is no evidence that it did. If they refused to fix deficiencies, Skyline could have made claims against them. Infinity did not have contracts with the trades. The existence of deficiencies does not mean that Infinity’s supervision was deficient. It is not responsible to pay Skyline for trades’ deficiencies. Specifically:
a) #1 The trade who built the ramp is ultimately responsible for the deficiency, not Infinity. There is no evidence that Skyline contacted the trade to demand that the work be done or took steps against it if it refused to rectify the deficiency.
b) #2 The trade who installed the drain is responsible for the deficiency, not Infinity. There is no evidence that Skyline contacted the trade to demand that the work be done or took steps against it if it refused to rectify the deficiency. Furthermore, this item was identified in 2018 with a relatively small cost to remedy of $2,465 but was not fixed by the time of trial in 2020.
c) #4 The building inspector should also have identified the issue on the related inspection. The trade who constructed and installed the doors is responsible for the deficiency, not Infinity. There is no evidence that Skyline contacted the trade to demand that the doors be replaced or that Skyline contacted the trade to demand that the work be done or took steps against it if it refused to rectify the deficiency.
d) #6 The evidence on this issue is contradictory. Photo 13 in Burnside’s performance audit report dated January 18, 2018 depicts the area. There are painted diagonal lines in the parking area up to the sidewalk to denote no parking. These lines take up the length of a parking stall and are wider than a regular stall. Past the lines is the curb in issue, which is adjacent to a sidewalk. Next to the sidewalk is the ramp which proceeds to a loading dock where the garbage bins are located. The Burnside report states that the ramp was on the drawings but was not installed. In contradiction, Mr. Meredith stated that the ramp was constructed as per the design. He said the solution would be to extend the ramp down into the parking area. Cole Engineering was the civil engineering firm for the project. I note that its drawing SG-02, revision 11 issued October 11, 2015 shows the ramp. It was designed to be constructed out into the parking area where the painted lines are located. A depressed curb is indicated at the end of that ramp. Perhaps a change was made because the existing ramp ends in front of the sidewalk. It does not continue into the parking area. Since the ramp is not as long as the design shows, Skyline likely did not pay for the cost of installing the longer ramp. One wonders how the deficiency, the proposed solution for which is removing the curb, will assist garbage trucks to back up the ramp when there would still be an elevation difference between the pavement and the sidewalk. One also wonders how an articulated lift would have taken the bins from the loading dock down the existing ramp to a garbage truck that was parked in the parking lot. If there was a change in the design, Infinity ought to have presented clear evidence of it. Nevertheless, Mr. Meredith’s evidence that the curb must be removed is at odds with the Burnside report and the design. Infinity is not responsible for this item.
e) #20 There is no evidence that the mechanical drip edge is actually required. Infinity is not responsible for this cost.
f) #23 This item was identified in 2018. It was not fixed by the time of trial in 2020. Furthermore, the location of the pipe relative to the wall was not shown on a drawing so it cannot be described as a deficiency. Infinity is not responsible for this cost.
g) #26 Mr. Meredith agreed the sanitary pipe would have been inspected by a ball test during construction. A ball is added to see whether it comes out the other end. This happens during construction and would have been inspected by the municipality when it was uncovered. When concrete was added, it might have disturbed the pipe. Something happened to the pipe after it was installed. Mr. Meredith stated that no repair has been done because it may not be required. Infinity is not responsible for the cost of work that may not be required. If it is required, there is no evidence that Skyline contacted the trades to demand that the work be done or that Skyline contacted the trade to demand that the work be done or took steps against it if it refused to rectify the deficiency.
h) #29 The trade who did the sheet metal work that requires repairs is responsible to remedy this deficiency, not Infinity. There is no evidence that Skyline contacted the trade to demand that the work be done or took steps against it if it refused to rectify the deficiency.
i) #31 The trade who did the nail hole touch ups and did not use the correct colour of paint is responsible to remedy this deficiency, not Infinity. There is no evidence that Skyline contacted the trade to demand that the work be done or took steps against it if it refused to rectify the deficiency.
j) #33 According to Mr. Meredith’s evidence, Skyline did not inquire about another way to remove the balcony railings that did not require expensive scaffolding. The trades whose deficient work requires the railings to be removed is responsible for the appropriate anticipated cost, not Infinity.
k) #34 This item is apparently in progress without the alleged required scaffolding. The mock-up shows that a boom could be used to take off the railings rather than expensive scaffolding. The trade that built the base of the decks is responsible for this item, not Infinity.
l) #35 The trade responsible for the standing water is responsible for the cost to replace any of the decks that have perished, not Infinity.
m) B12 The cost to have the exhaust fan connected is the responsibility of the trade who installed it, not Infinity.
n) Pipe insulation (no item number assigned) If the mechanical drawings show that certain pipes were to be insulated but the trade who installed them did not do it, the trade is responsible for the deficiency, not Infinity.
[229] As noted above, the balconies were the subject of a separate Burnside report dated June 21, 2019. Mr. Matchett recalled that the railings were a problem. Inappropriate fasteners were used. In places, some of them were missing. They failed the testing for this reason. Infinity was trying to have the trade correct this before it was terminated. Mr. Matchett recalled that some of the railings on the terrace level had to be corrected after Infinity was terminated.
[230] Based on the evidence of its efforts to have the balcony railings fixed, I find that Infinity was taking appropriate steps to address the deficiency. But for its termination, it likely would have continued its efforts to have the trade correct the problem. The trade is responsible for the deficiency, not Infinity.
9. What specific amounts comprise Infinity’s claim?
[231] Mr. Barber testified that Skyline paid Infinity the first $25,000 for pre-consultation services, $50,000 for the first construction management payment and the 10 payments of $30,000. It was also paid one additional amount of $30,000.[^23] Skyline also paid a number of Infinity’s invoices totaling $1,398,357.80. It did not pay Infinity’s invoices totaling $1,037,367.63, most of which were submitted after Infinity’s termination. Infinity claims payment of $1,037,367.63.
[232] Infinity also claims construction management fees for the period after it was terminated up to the completion of the project when final occupancy was granted. Infinity states that Skyline wrongfully terminated its contract. It lost the opportunity to earn these fees which it calculates on the additional costs to complete set out in the Scott Schedule and the Tarion audits.
[233] Infinity states that based on GC 6.1.2 to 6.1.4, it was “clearly entitled” to written notice of any purported breach. I note that GC 6.1.2 states,
If the Construction Manager neglects to properly perform the Service or otherwise fails to comply with the requirements of this Contract to a substantial degree, the Owner may, without prejudice to any other right or remedy the Owner may have, give the Construction Manager Notice in Writing that the Construction Manager is in default of the Construction Manager’s contractual obligations…[emphasis added]
[234] The term “may” in GC 6.1.2 does not mean that Infinity was “clearly entitled”. Furthermore, as noted above, Infinity did not plead wrongful termination. In para. 9 of its statement of claim, it states, “Infinity pleads that Skyline’s failure to pay Infinity’s accounts and other fees and amounts owing under the Contract constituted a breach of the Contract…” Accordingly, I cannot consider a claim based on failure to give notice or on wrongful termination.
[235] Mr. Matchett testified regarding the process for paying Infinity. He stated that he received Infinity’s invoices. He would do a first level review of the invoices and validate that there was nothing improper in them. Then he would send them to the corporate office for approval by Mr. Piggott, Mr. Lopez and Mr. Roy. Mr. Matchett stated that sometimes Infinity’s invoices included third party invoices for labour. Decisions about labour were being made on the fly. Mr. Piggott was providing direction to Infinity regarding bringing in additional labour so he had to approve these invoices. Mr. Matchett stated that he was on site every day. The labour hours were submitted to him. He did not have signing authority. He validated that the work had been done. These invoices had to go to Mr. Piggott and others at the corporate office for final signing.
[236] Mr. Barber stated that by the end of December 2015, Skyline owed Infinity $618,297.96. By the end of March, 2016, Skyline owed Infinity $969,035.85
[237] Mr. Matchett stated that he reviewed Infinity’s March 28, 2016 invoices which totalled approximately $500,000 and validated them. This was significantly higher than the typical monthly amounts that Skyline had received from Infinity. Mr. Piggott had authorized Infinity to bring in additional labour to accelerate the project and meet the closing dates. The invoices were approved for payment by management and were included in the last draw request. Although the bank paid the draw to Skyline, it did not forward the payment to Infinity.[^24]
[238] On April 19, 2016, Mr. Matchett asked Mr. Barber to update the spreadsheet. He stated that he and Mr. Lopez were “going to bat to get the budget injection” so that he could have the outstanding invoices processed. He stated that everyone was aware that the work was proceeding with additional labour. Skyline had given Infinity authority to proceed on site. Mr. Matchett wanted a correct forecast so that the cost to complete could be discussed. Mr. Mondell stated that this was required for a meeting with Skyline’s CFO. He testified that Skyline was operating in a vacuum with Mr. Piggott gone. The new CEO had added a layer of scrutiny. Mr. Barber stated that he and Mr. Matchett prepared a spreadsheet setting out the cost to complete the project.
[239] Mr. Barber provided a total of $1,013,413 for outstanding accounts payable. Mr. Matchett testified that he and Mr. Lopez updated the spreadsheet to show the budget and the cost to complete the project.
[240] In response to an email from Mr. Barber on April 27, 2016 requesting that Mr. Lopez send him the “draft budget adjustments for one final review”, Mr. Lopez responded on the same date and attached the spreadsheet. The heading “total cost to complete” meant the budget required to complete the project. The line item for Infinity was $919,454.61 plus $70,000 for rental equipment. The spread sheet showed that the value of invoices not approved was $923,329.
[241] Mr. Matchett stated that there was only $3,000 remaining in Infinity’s PO. A budget injection of $919,000 was required for the invoices submitted because there was no PO, Change Order or approved budget for them. Mr. Matchett testified that the spreadsheet depicts what Skyline believed was the cost to complete the project. Regarding Infinity, it states:
a. PO Amount Remaining: $93,958.59
b. Draw 10 Approved: $90,083.60
c. PO Remainder After Draw 10: $3,874.99
d. Value of Invoices Not Approved: $923,329.60
e. Budget Injection Required for Invoices Submitted: $919.454.61
f. Total Cost to Complete: $919,454.61 + $70,000 for rental equipment
[242] Mr. Barber stated that the number shown in the budget was close to what Infinity was owed. He took comfort from this budget and Mr. Mondell’s verbal promise that Infinity would be paid for the work. Mr. Mondell agreed with Mr. Barber’s characterization of the meeting. Mr. Barber was correct to understand that he would be paid.
[243] The budget also showed amounts owing to trades. Mr. Barber stated that the trades had obligations to complete warranty work for one year; however, they would not be honoured if the trades were not paid.
Costs Incurred by Infinity for Skyline’s Benefit
[244] Mr. Barber stated that Infinity incurred certain expenses on Skyline’s behalf at Skyline’s request. As noted above, on November 19, 2014, Mr. Piggott sent an email to Mr. Toth and Mr. Matchett stating, “Because of delays, we’ve asked the contractor[^25] to work longer hours and double up on crews.” Overnight accommodation had to be provided for Infinity’s workers who had to get up in the middle of the night to add more fuel to the generators. They had to run continuously to heat the concrete. Skyline requested that Infinity obtain more labourers. Infinity hired them from a company called Labour Ready. Mr. Barber testified that it required payment within seven days. Skyline could not accommodate this so Infinity paid Labour Ready.
[245] Another example is zoom boom rentals. A zoom boom was required on site to unload materials and lift them to various floors. It was also used to lift furniture into the suites through the balconies because there was no functioning elevator. Mr. Barber explained that each trade could have provided a zoom boom for its work; however, having multiple zoom booms on the site would increase costs and could cause problems. A zoom boom rental requires an insurance rider to cover third party liability for equipment. Skyline did not have this rider. Obtaining one would be costly. Accordingly, the parties agreed that Infinity would rent a zoom boom for the project because it did have the rider. Mr. Piggott specifically approved the rental. Stevenson Rental provided it and billed Infinity’s account. This saved Skyline money and made the work on the project more efficient. Skyline also authorized Infinity to purchase some project materials such as aluminum and fasteners.
[246] Infinity claims:
a) Infinity’s construction management fees for September, October and November, 2015. Infinity did not request CM fees for December 2015 to May, 2016. The amount of $183,793.75 for its work included in the draw, for which Skyline received payment;
b) Various labour charges and office expenses for November, 2015 to May, 2016;
c) Amounts for materials and rentals that Infinity claims it ordered and paid for on Skyline’s behalf, including Stevenson’s Rentals, in the amount of $79,674.37; and
d) Infinity’s May 2016 invoices sent after its termination for items described as, “monthly site labour, Infinity labour, JM Construction, Labour Ready fees paid by Infinity, Xplornet/internet, Stevenson rental and miscellaneous Handley lumber” totaling $68,331.79.
[247] Infinity claims $1,037,367.63 plus holdback plus four percent interest as per the contract.
10. What if anything does Skyline owe Infinity for its work?
[248] In total, Skyline paid Infinity $1,398,357.79. It paid the last CM fees from September 2014 to August 2015 which in total constituted the guaranteed minimum value of $350,000 plus an additional payment. It stopped paying Infinity’s site management labour and costs in December, 2015.
[249] On March 18, 2016, Mr. Barber sent an email to Mr. Piggott asking for a financial update. He stated, “Please provide an immediate and honest update as to where the monies are from the last bank draw. I am growing tired of being yelled at by trades and suppliers because of outstanding monies. I am also near end of my rope with my own account. This is ridiculous. I should not be carrying this project on my back. I will be bringing my accounting right up to date over the next week and will be expecting combination of payments and hard PO’s [sic] issued next week to confirm payments.”
[250] GC 5.1.5 states that if the contract time is exceeded or extended through no fault of the CM, the “[CM’s] compensation shall be adjusted accordingly to cover the CM’s additional costs”. Infinity submitted invoices dated March 31, 2016 totaling $584,041.07. Three of them were over $80,000, being $86,260.26 for Boma/JM Construction/Labour Ready, $132,206.26 for Infinity labour and $168,003.73 for flooring labour.
[251] Skyline did not pay the following invoices, which I have given a separate number for ease of reference.[^26]
| Item | Invoice Number | Date | Amount | Description |
|---|---|---|---|---|
| 1. | 15-0930-23 | Sept-30-15 | $33,900.00 | CM Fee – Sept |
| 2. | 15-1031-26 | Oct-31-15 | $33,900.00 | CM Fee – Oct |
| 3. | 15-1031-31 | Oct-31-15 | $50,518.63 | All Weather Construction labour |
| 4. | 15-1130-33 | Nov-30-15 | $33,900.00 | CM Fee – November |
| 5. | 15-1130-35 | Nov-30-15 | $48,982.39 | Infinity Labour |
| 6. | 15-1130-37 | Nov-30-15 | $21,744.97 | Boma & Labour Ready |
| 7. | 15-1130-38 | Nov-30-15 | $18,486.52 | All Weather Construction labour |
| 8. | 15-1202-40 | Dec-2-15 | $8,436.86 | Boma Site Labour |
| 9. | 15-1231-41 | Dec-31-15 | $45,041.80 | Mthly Site Mgmt Labour |
| 10. | 16-0131-42 | Jan-31-16 | $45,041.80 | Mthly Site Mgmt Labour |
| 11. | 16-0229-43 | Feb-28-16 | $45,041.80 | Mthly Site Mgmt Labour |
| 12. | 16-0326-44 | Mar-28-16 | $45,041.80 | Mthly Site Mgmt Labour |
| 13. | 16-0328-45 | Mar-28-16 | $2,669.73 | Wireless Internet Site Trailer |
| 14. | 16-0328-46 | Mar-28-16 | $168,993.73 | Flooring Labour |
| 15. | 16-0328-47 | Mar-28-16 | $132,206.58 | Infinity Labour |
| 16. | 16-0328-48 | Mar-28-16 | $86,260.26 | Boma/JM Construction/Labour Ready |
| 17. | 16-0328-49 | Mar-28-16 | $33,078.27 | Hilti fasteners/epoxy |
| 18. | 16-0328-50 | Mar-28-16 | $21,629.18 | Misc metals-HD Supply, Norweld, Steve |
| 19. | 16-0328-51 | Mar-28-16 | $8,109.63 | Site Office Supplies |
| 20. | 16-0328-52 | Mar-28-16 | $79,674.37 | Stephenson Rentals |
| 21. | 16-0328-53 | Mar-28-16 | $6,377.52 | Misc Construction Products |
| 22. | 16-0531-54 | May-31-16 | $31,617.40 | Mthly Site Mgmt Labour |
| 23. | 16-0531-55 | May-31-16 | $15,815.64 | Infinity Labour/JM Construction/Labour |
| 24. | 16-0531-56 | May-31-16 | $19,894.56 | Xplornet Internet/Stephenson Rental |
| 25. | 16-0531-57 | May-31-16 | $1,004.19 | Misc Handley Lumber |
[252] The work in these invoices falls into six categories as follows:
a) Construction management fees for September, October, and November 2015. Infinity continued to provide CM until May 2016. It did not invoice for CM fees after November 2015. Mr. Piggott sent Mr. Barber an email dated September 22, 2015 stating that Skyline’s budget amount for construction management fees had been used up.
b) Infinity’s site management labour for December to April, although Skyline submitted the amounts for December, January and February in its draw request and received the draw from the bank.
c) The balance of the amount for its work included in the draw request totaling $183,763.75, which includes (b) above, for which Skyline received payment from the bank.
d) Various labour charges and office expenses for November 2015 to May 2016;
e) Amounts for materials and rentals that Infinity claims it ordered and paid for on Skyline’s behalf, including Stevenson’s Rentals in the amount of $79,674.37; and
f) Infinity’s May 2016 invoices sent after its termination for items described as, “monthly site labour, Infinity labour, JM Construction, Labour Ready fees paid by Infinity, Xplornet/internet, Stevenson rental and miscellaneous Handley lumber” totaling $68,331.79.
[253] Infinity’s claim for the above totals $1,037,367.63 plus holdback and four percent interest as per the contract.
[254] Mr. Mondell stated that in 2015, when he became involved in the project, it was clear that there were significant issues. It was Skyline’s biggest project at the time. There were serious delays and it was significantly over budget. He agreed that Mr. Piggott had established a certain process for the project before he was involved. He agreed that Mr. Snead would have been aware of it, but there was a reason why he was brought in to replace Mr. Piggott. Greater oversight was needed.
[255] Mr. Mondell stated that some of the documentation regarding trades’ work and additional labour and materials presented by Infinity to Skyline did not contain adequate details. A number of the invoices were dated at the end of March, shortly after Mr. Piggott was terminated. They were substantial invoices totaling approximately $400,000. Mr. Mondell stated that he was surprised by them. He had not been privy to earlier conversations. He did not know what Mr. Piggott had approved. He was not aware of the amount of additional labour that was engaged on the project. He stated that invoices should have been kept up to date.
[256] Mr. Mondell did not dispute that the labour and materials claimed by Infinity were provided to the site. He had no reason to believe that Mr. Barber was trying to deceive Skyline or that he falsified documents. He could not disagree with Mr. Barber’s evidence that Mr. Piggott had directed Infinity to add labour to accelerate the project in order to achieve occupancy and that this work was done on a time and materials basis. He had no information to the contrary. He could not disagree with Mr. Barber’s evidence that Infinity was instructed to retain third party labour as needed to accelerate the project, at a cost savings to Skyline. He was not aware of Mr. Piggott’s directions to Infinity. He stated that a CM’s bringing in more labour for certain tasks was not unusual. Mr. Mondell primarily took issue with the quality of the documentation provided. He stated that processing Infinity’s invoices was difficult; however, Skyline was not completely “on the side of the angels”. There were accounting issues. A number of concerns were raised about the timing of POs.
[257] Regarding the monthly site management labour, Mr. Matchett stated that Infinity’s employees on the site were Mr. Bates, Mr. Galligan, and Mr. Gates, although Mr. Bates stopped working on the job approximately six to eight months into the project. Mr. Galligan became ill in the fall of 2015 and stopped working. After that, Mr. Gates was doing the work of both Mr. Bates and Mr. Galligan. Mr. Barber also did some of Mr. Galligan’s work. Mr. Barber was on the site multiple times per week, especially when the schedule fell behind.
Skyline’s Position
[258] Skyline states that in order for GC 5.1.5, to apply (being adjustment of the CM’s compensation if the contract time is exceeded or extended through no fault of the CM), Infinity must prove that it was not the cause of any delay. Infinity has not done this.
[259] Pursuant to the contract, Infinity was entitled to 3.25% of the construction and project related costs with a guaranteed minimum of $350,000. The payment terms state that Infinity was entitled to a first month draw of $50,000 and then 10 equal payments of $30,000 with the balance of the fees due upon completion.
[260] Regarding the CM fees that it claims for September to November, inclusive, Skyline states that Infinity was informed in September 2015 that the budget amount for its construction management fee was used up because no more was owing until project completion. Infinity was terminated prior to completion. It did not challenge the termination so it cannot recover any further CM fees after August 2015.
[261] Regarding the $71,000 that Infinity claims for CM fees after it was terminated up to the end of the project, Skyline states that Infinity cannot claim anything related to its termination because it did not plead wrongful termination.
[262] Regarding the monthly site management labour, Infinity did not perform any of its reporting or record keeping responsibilities to allow a more fulsome assessment of the delay on the project. Therefore, Infinity cannot recover its additional costs incurred as a result of the delay past December 4, 2015.
[263] Furthermore, Infinity’s charges do not take into account the fact that Mr. Bates, who was the site superintendent, stopped working on the project after six to eight months. Mr. Galligan, a project manager, became ill and stopped working on the project in the fall of 2015. Mr. Gates took over from Mr. Galligan. After that, Infinity’s staff on site was only Mr. Barber and Mr. Gates.
[264] As noted above, in addition to the CM fee, Infinity was entitled to charge $12,000 per month for the senior construction manager, Mr. Barber. Skyline states that 50% of this salary should be refunded to Skyline because Mr. Barber was not on site every day.
[265] Regarding the other amounts, Skyline states that the project should have been completed by December 4, 2015. Therefore, charges beyond that date are not justified. Even if they were, Infinity’s documentation was so poor that it could not be presented to the bank monitor for payment. In some cases, Infinity could not prove that it paid the amounts to the trades.
Analysis
[266] For the reasons set out earlier, I do not accept Skyline’s position that the project should have been completed by December 4, 2015.[^27] Therefore, I do not accept its position that nothing should be payable to Infinity after December 4, 2015. Skyline submitted some of Infinity’s invoices for work done in December 2015 and in 2016 to the bank monitor for payment and received the payment. By doing this, Skyline acknowledged that payment was owing to Infinity for this work done after December 4, 2015.
[267] I do not accept Skyline’s position regarding GC 5.1.5 that Infinity has to prove it did not cause delay. There is no evidence that Infinity was the cause of any delay. In fact, the reverse is true: all of the delay was caused by Skyline. One significant reason for the delay is the fact that it did not have a completed design for the project at the outset. Mr. Matchett stated that he was not aware of any delay caused by Infinity.
Construction management fees already paid
[268] Skyline terminated Infinity when the project was nearing completion. Nine of the 67 units, 13%, remained to be completed. I find that Infinity carried out most of the work required by the contract. It substantially delivered what it promised to do. Skyline is not entitled to be paid back the CM fees.
Construction management fees for September 2015 and onward
[269] Infinity continued to work from September 2015 to May 2016. It invoiced Skyline for CM fees for September to November 2015 inclusive. Skyline’s budget for CM fees may well have been used up in August. It was created before the significant delays occurred. It did not take them into account. The resulting delays were Skyline’s fault, not Infinity’s. Nevertheless, Infinity agreed to be paid 3.25% of construction related costs based on an initial CM fee of $50,000 for September and $30,000 per month for 10 more months. It agreed to be paid the balance of the 3.25% on completion of the project. There was no conduct that varied this term. While Skyline prevented Infinity from completing the project and earning 3.25% of the balance of the total construction costs, Infinity did not assert wrongful termination. Therefore, Infinity’s claim for CM fees of $101,700 from September 2015 and onward is not allowed.
Construction manager’s salary
[270] I do not accept Skyline’s position that 50% of the CM’s monthly salary of $12,000 should be refunded because Mr. Barber was not on site every day. The contract does not require Mr. Barber personally to be on site every day. Mr. Matchett stated that Mr. Barber was on site multiple times a week. Infinity is not required to refund half of Mr. Barber’s salary to Skyline.
All Weather Construction
[271] Part of Infinity’s claim is two invoices, #3 dated October 31, 2015 for $50,518.63 and the other, #7 dated November 30, 2015 for $18,486.86 regarding All Weather Construction Labour, the trade that installed the windows and doors. Mr. Barber stated that although Infinity obtained All Weather to do the work, in order to save some money for Skyline, Infinity agreed to have All Weather bill Skyline directly. This avoided Infinity’s mark up. When he learned that Skyline had not paid All Weather, he included the amount owing in Infinity’s claim.
[272] Skyline states that there are no underlying invoices from All Weather to Infinity. Infinity’s invoices do not say that this work was done by All Weather. The workers, identified only by their first names, are identified as Infinity employees. There are no time sheets, no scope of work, no budget and no estimate for the work or what it was for. Mr. Barber admitted that Infinity had not paid these invoices. Infinity cannot claim payment for items that it has not paid. Skyline is not responsible for paying invoice 3 and 7 in the total amount of $69,005.49.
Monthly Site Management Labour
[273] Infinity claims site staffing costs for the period from December 2015 to May 2016, totaling $211,781. I have already determined that Infinity was not responsible for any of the delay. In accordance with GC 5.1.5. Infinity is entitled to recover its legitimate additional costs.
[274] Infinity charged $45,041.80 for monthly site management labour from December 2015 to March 2016 inclusive in invoices 9 – 12. It charged $31,617.40 in invoice 22 dated May 31, 2016. Skyline alleges that Mr. Bates only worked on the site for six months and Mr. Galligan left “in the fall”, therefore, Infinity overcharged for site management labour. Skyline paid the full amount of the site management labour costs up to November 2015 inclusive. It did not pay Infinity’s invoices for December 2015 to March 2016 in the same amount. Skyline states that no site management labour is payable after November 2015; however, in contradiction, it included the invoices for December, January and February in a draw request presented to the bank monitor and received the draw from the bank.
[275] When Mr. Matchett was cross-examined, he stated that Infinity had three staff members working on the site in December 2015 and going forward: Mr. Barber, Mr. Gates and a site safety supervisor. Mr. Barber was not cross-examined on the alleged overcharge but should have been. In para. 70, the rule in Browne v. Dunn (1893), 1893 65 (FOREP), 6 R. 67 is stated as follows:
…if you intend to impeach a witness you are bound, whilst he is in the box, to give him an opportunity of making any explanation which is open to him; and, as it seems to me, that is not only a rule of professional practice in the conduct of a case, but is essential to fair play and fair dealing with witnesses.
[276] The rule in Browne v. Dunn is a rule of fairness. A breach of it does not automatically lead to rejection of the evidence. Here, accepting and relying on this evidence is fair because it came from Mr. Matchett, a credible and reliable witness in Infinity’s own case, and Infinity’s counsel did not raise a Browne v. Dunn objection or ask for any relief during the trial. The overcharge allegation was not addressed in the plaintiff’s submissions. Infinity could have cross-examined Mr. Matchett, tendered contradictory evidence or recalled Mr. Barber if it wished to do so.
[277] Skyline did not provide an overcharge calculation so this is left to the court. Infinity should have been charging $12,000, $10,400 and $5,200 for the three people respectively, being $27,600 per month. When HST of $3,588 is added, the total monthly charge should have been $31,188. I calculate the overcharges as follows:
December 2015 to March 2016[^28]
$45,041.80 x 4 = $180,167.20 charged by Infinity
$31,188.00 x 4 = $124,752.00 should have been charged by Infinity
Overcharge $55,415.20
May 24 x 1 = $31,617.40 charged by Infinity
Less $24,145.55 should have been charged by Infinity (24/31)
Overcharge $7,471.85
Total Overcharge $62,887.05
[278] I find that Infinity overcharged by $62,887.05. This amount shall be subtracted from Infinity’s claim.
Stevenson Rentals
[279] Skyline states that is not liable for payment of invoice #20, $79,674.37 and invoice #24, $19,894.50 because they represent additional costs incurred by Infinity as a result of the exceedance or extension of the contract time. I do not accept this argument. Infinity was not responsible for any delay. The zoom boom rental was approved and required for the project. Skyline paid for the equipment rental from February to November 2015 inclusive. It was still required for work up to and including March 2016. Mr. Barber testified that when the units were ready, the zoom boom was used to get furniture into them because the elevator was not yet installed. Part of invoice 24 is “Xplornet Internet. This is a legitimate site trailer expense as is invoice #13, $2,669.73 for “Wireless Internet Site Trailer”. Infinity is entitled to be paid for these invoices.
Infinity Labour, Flooring Labour, JM Construction, Labour Ready invoices
[280] Regarding invoices #6, 8, 14 - 16, Skyline states that it is not liable to pay them for several reasons. The supporting documentation is entirely inadequate to allow anyone to assess whether work was done, what it was, or to authorize payment. They could never have been presented to the bank monitor for payment.
[281] Skyline states that although Mr. Mondell told Infinity at the budget meeting that it would be paid, this was predicated on Skyline’s receipt of proper documentation. Most importantly, there is no evidence that Infinity paid the invoices.
[282] Many of the invoices from trades to Infinity are marked paid and state Infinity’s cheque number. Skyline states that there is no evidence that the following were paid:
Chuck’s Floor invoices 45076 – 78 $54,616.50
2336904 Ontario Inc. invoices 2015024, 2016002, 2016004, 2016005 $76,968.84
Lindsay Floorcovering Ltd. invoice 26876 $21,735.55
Infinity Labour invoice 16-0328-47 (#15) $132,206.56
J.M Construction Services invoices 1603, 1604, 1608, 1609 $5,582.50
Labour Ready invoices 83072212, 83382212, 83672212, 83892212,
84122212, 84132212, 84492212, 84842212, 85122212, 85402212,
8564221285902212, 85912212, 86232212 $24,711.13
Total $315,821.08
[283] Skyline was in fact satisfied with the supporting documentation for invoices 6 and 8. They were approved and presented to the bank monitor for payment. Skyline received payment for them. It is responsible for payment of them to Infinity.
[284] Regarding the Chuck’s Floor invoices, #45076 in the amount of $19,410.00, is dated December 10, 2015 and is made out to Infinity for installing wall tile in bathrooms. Mr. Barber initialled the amount. Invoice 45077 in the amount of $20,376.50 dated February 8, 2016, is made out to Skyline at its Toronto address for installing carpet and backsplashes. Invoice 45078 in the amount of $14,830.00 dated March 27, 2016 for installing backsplashes is also made out to Skyline at its Toronto address. They total $54,616.50.
[285] I find that Infinity was not liable for payment of the two invoices made out to Skyline. There is no evidence that Infinity paid them nor the one made out to Infinity. Mr. Barber could not say that they were paid. I find that they were not paid.
[286] The four invoices from 2336904 Ontario Inc. are for laminate flooring installation. There is an earlier invoice to Infinity for $17,824,62. The copy of it is almost illegible. It was marked paid on December 11, 2015 and the Infinity cheque number is noted. The four invoices with which Skyline takes issue are not marked as paid. No Infinity cheque number is noted on them. Mr. Barber could not say that they were paid. They total $76,968.84 I find that they were not paid.
[287] Regarding the Lindsay Floor Covering Ltd. invoice of $21,735.55, Mr. Barber initialled the amount. It was not marked as paid. No Infinity cheque number is noted on it. Mr. Barber could not say that it was paid. I find that it was not paid.
[288] Infinity’s invoice 16-0328-47 for $132,206.56 is for Infinity’s own labour including carpenters, an equipment operator and a labourer. This invoice is different from the others. There is no issue about whether Infinity paid a trade. A time sheet is attached for the period December 1, 2015 to March 19, 2016. Specific weekly hours are shown for six named individuals as well as overtime hours for two of them. The various hourly rates are shown. According to Mr. Barber, Mr. Piggott authorized this work and told Infinity to proceed as quickly as possible. Mr. Matchett confirmed that Mr. Piggott authorized Infinity to bring in additional labour. Certain units had to be finished. There was urgency because Skyline had closing dates to meet. As noted above, Infinity was justified in taking direction from him and expecting that he would, at a minimum, support payment for the work. Mr. Piggott was not called as a witness in this trial. His evidence would have been helpful to the court; however, it shall remain a mystery. He was not in the exclusive control of either party so no adverse inference can be drawn from the fact that he was not called. Mr. Mondell stated that Mr. Piggott had run the project differently from what he would have done. Mr. Snead knew about it. Mr. Mondell did not know what Mr. Piggott approved.
[289] I find that Mr. Piggott authorized this work. The closing dates were fast approaching. There was pressure to complete the units.[^29] Under these circumstances, I find that Infinity is entitled to be paid for this invoice.
[290] Regarding the J.M. Construction Services invoices, I note that invoices 1601, 1602, 1605 and 1606 were marked paid and the Infinity cheque number is indicated on them. Mr. Barber initialled the amounts in invoices 1603, 1064, 1608 and 1609; however, they are not marked as paid. No Infinity cheque number is noted on them. Mr. Barber could not say that they were paid. They total $5,582.50. I find that they were not paid.
[291] Regarding the 14 Labour Ready invoices totalling $24,711.13, the amounts were billed weekly. The first invoice date is November 12, 2015. The last invoice is dated February 28, 2016. The amounts were initialled by Mr. Barber; however, they are not marked as paid. I accept Mr. Barber’s evidence that Labour Ready required payment in seven days. It was hired by Infinity because Skyline could not pay quickly enough. If these invoices had not been paid when they were due, Labour Ready would not have returned to the job to do more work. Given the circumstances, I find that Infinity paid these invoices.
Conclusion
Infinity’s claim $1,037,367.63
Less monthly site management labour overcharge $62,887.05
Less CM fees claimed $101,700.00
Less All Weather invoices $69,005.50
Less invoices not proven paid $158,903.39
$392,495.94 $392,495.94
Total $644,871.69[^30]
[292] Skyline shall pay to Infinity $644,871.69 plus interest in accordance with A-6.2. Counsel shall calculate the interest amount. If they cannot agree on the amount, I may be spoken to.
[293] I have assumed that the invoice amounts include HST. If that is not the case, counsel may submit a calculation.
[294] In addition, if I have made any mathematical errors, I may be spoken to.
Costs
[295] If the parties are unable to agree on costs, they may file written submissions, no more than 5 pages of text (14 pt. font size, regular 1” margins, 1.5 spacing) exclusive of the costs outline required by r. 57.01(6) and any offers to settle. Infinity’s submissions are due within 3 weeks of the release date of this decision and Skyline’s within a further 2 weeks. The costs outline shall identify all lawyers on the file, their respective years of call and rates actually charged to the client. It shall also provide calculations on a partial indemnity rate including the rate applied, and if sought, the same on a substantial indemnity basis. A breakdown of the hours spent on specific aspects of the work shall be provided. (In other words, stating “50 hours for pleadings, affidavits, cross-examinations preparation, hearing etc. is not adequate.) A breakdown of disbursements shall be provided with copies of receipts if applicable. The disbursement amounts shall indicate whether HST is included. If the parties intend to rely on caselaw, copies shall be provided electronically.
[296] All costs submissions shall be provided to my judicial assistant at 75 Mulcaster Street, Barrie, ON, L4M 3P2. If no submissions are received after Skyline’s submissions are due, costs will be deemed to have been settled between the parties.
Justice M.E. Vallee
Released: May 11, 2021
[^1]: This is not an exhaustive list [^2]: The remaining nine were not yet sold. [^3]: Agreed Statement of Facts para. 3 [^4]: Contract Article A-3 [^5]: because Skyline decided against using an agreement consistent with the requirements of CCDC 17 [^6]: see Schedule A attached [^7]: $350,000 is 3.25% of $10,769,230.77 [^8]: Mr. Mondell stated that he did not understand how a PO could be issued without a contract or approved work plan. One should know who will be paid and the amounts. [^9]: Mr. Matchett is an architectural technologist. He obtained his college certification in 2005. He worked in contract administration prior to joining Skyline in 2011. [^10]: Infinity alleges that by the end of March 2016, Skyline owed it $384,994.78. [^11]: The actual cost of construction was approximately $14,000,000. [^12]: I will refer to all of the parties who carried out work on the project as trades. They were not subcontractors, even though they were sometimes described that way. Skyline issued purchase orders for their work except for the additional forces that Infinity obtained. Their obligation to do the work was to Skyline [^13]: Agreed statement of facts para. 11 [^14]: Set out in Infinity’s report prepared by Revay and Associates Limited. [^15]: Mr. Kawar stated that he worked on his report with Mr. Christoff. He identified the delays. Mr. Christoff considered them and developed the CPS. [^16]: Infinity relies on McLean (Litigation Guardian of) v. Seisel, (2004) 2004 9418 (ON CA), 182 OAC 122, 128 ACWS (3)d 822 (CA) which concerned a doctor with a particular specialty testifying as to the standard of care required of another doctor with a different specialty. [^17]: Skyline terminated Mr. Matchett’s employment in the summer of 2016. At that point, there were six or seven deficiencies remaining for final occupancy. He stated that the reason given was not enough work. In fact, it was opposite. Both Mr. Piggott and Infinity had been terminated. Mr. Matchett stated that more work was being put on him. He requested a pay increase which he said was promised. It did not happen. In fact, his compensation was the issue. He stated that he was doing some of Mr. Piggott’s work in addition to his own. [^18]: See above regarding errors on the drawings. [^19]: This issue is more fully addressed below. [^20]: Exhibit 8a [^21]: He might have contacted the consultants for explanations [^22]: Exhibit 9 [^23]: Which could notionally be applied to August 2015. [^24]: Infinity submitted that this constituted a breach of trust. Skyline’s position was that because it had paid the funds into court, there was no breach of trust. Furthermore, Infinity did not plead breach of trust. This is correct. I will not consider this issue. [^25]: Infinity was not a contractor. It was a construction manager; however, at times others referred to it as the contractor. [^26]: Items 6 – 11 in italics were approved by Skyline and presented to the bank monitor for payment. Skyline received payment for these items in a draw. [^27]: In addition, the contract envisioned that Infinity might be required to work beyond July 1, 2015. Article A-1 1.3 states, “The Construction Manager’s obligation to provide services shall end no later than one year after the project in use date.” Even without an extension to it, the contract envisioned that Infinity might work up to July 1, 2016. [^28]: Infinity does not include a charge for April in its claim. [^29]: Infinity billed the cost of the work to Skyline as a direct project cost which, pursuant to Schedule C, it was entitled to do. [^30]: Because these amounts were not paid to Infinity, no holdback would have been deducted.