1671233 Ontario Limited v. Wellenreiter

CITATION: 2021 ONSC 8298

COURT FILE NO.: 11063/13

DATE: 2021-12-16

SUPERIOR COURT OF JUSTICE – ONTARIO

RE: 1671233 Ontario Limited, plaintiff

AND: Anthony Wellenreiter and Agnes Wellenreiter, defendants

BEFORE: Mr Justice Ramsay

COUNSEL: Luigi DeLisio for the plaintiff; Paul Ingrassia for the defendants

HEARD: December 16, 2021 at Welland by teleconference

ENDORSEMENT

[1] The plaintiff is suing for breach of contract. It claims payment of a management fee for supervising a construction project at the defendants’ home.

[2] The parties have served affidavits of documents. The defendants move for an order requiring the plaintiff to serve a further affidavit of documents containing:

(d)(i) all time sheets, receipts, logbooks, and schedules for all trades contracted for by 167 and Mammoliti to perform work at the construction project located 61830 Regional Road 27, Welland (the “Property”);

(ii) all timesheets or calendars for all other construction properties Mammoliti was engaged in or working at during the relevant times as pleaded in this action;

(iii) all invoices pertaining to the construction project at the Property, including but not limited to all invoices, quotes, receipts, cancelled cheques, and/or other proof of payment between Mammoliti, his suppliers and trades as detailed in the interim invoices delivered to and paid for by the defendants, Anthony (“Anthony”) and Agnes (“Agnes”)Wellenreiter; and,

(iv) all underlying backup documentation including but not limited to all emails, texts, communications, correspondence, and notes between Mammoliti and his subcontractors, suppliers, tradespeople, and/or other individuals who worked on, or provided supplies, material and services to the construction project at the Property.

[3] The parties agree that if I find that relevant documents may have been omitted from the affidavit of documents, it would be appropriate to make an order under Rule 30.06 (b) for service of a further and better affidavit of documents. The plaintiff, however, submits that the requested further documents are not relevant to the proceedings and that to order their production would in any event be disproportionate.

[4] Rule 30.02 requires disclosure of “every document relevant to any matter in issue” that is in the possession, control or power of any party to the action”. The defendants’ evidence satisfies me that documents described in the notice of motion are in possession of the plaintiff. The plaintiff does not deny it. The plaintiff does not claim privilege over any of the documents in question. The issue, then, is whether the requested documents are relevant. The second issue is whether the order sought would be proportionate to the importance and complexity of the issues and to the amount involved in the proceeding.: Rule 1.04(1.1).

The issues in the action

[5] The parties agree that the defendants commissioned the plaintiffs to do renovation work on their residence that included foundation work, insulation, drywall, floors and exterior wood siding. The defendants submitted a bill to the plaintiffs for $384,218.93. The plaintiffs paid the bill.

[6] They also agree that the defendants commissioned work from other contractors. The defendants have produced a list of invoices totalling $1,375,151.54. These invoices were also paid.

[7] The plaintiff pleads that the defendants agreed to pay them a fee for managing the project, that the fee would be 12% of the “project cost”, and that the cost is the sum of the two amounts just mentioned, which is $1,759,370.47. The fee owing, then, is $211,124, of which only $28,025 has been paid.

[8] The plaintiffs plead in the alternative that in the absence of a contract, they did management work that was worth $211,124 on the basis of quantum meruit or unjust enrichment.

[9] The defendants plead that they agreed to pay a management fee, but it was only for managing the construction performed by the plaintiffs and its contractors, and it was to be $50,000 plus HST. They plead that 40% of the work on the project was overseen by the plaintiff, while 60% was managed by Mr Wellenreiter, the co-defendant. In the alternative, therefore the defendants plead that if the management fee is 12%, it is 12% of the cost of the work that was managed by the plaintiff, i.e. $384,218.93. That would be $46,106.

[10] The defendants also plead that in addition to the payment for the work done they paid $28,025 to the plaintiff in full satisfaction of the claim for the management fee, based on $50,000 plus HST, less money owed by the plaintiff to the defendants to replace a door, and giving themselves credit for a $20,000 balance in their favour. They plead that the plaintiff accepted the payment in full satisfaction of the claim. The plaintiff pleads that the $28,025 was a partial payment.

[11] The defendants also counterclaim for defective workmanship and inadequate management of the project, including inadequate record keeping and an accounting.

The positions of the parties

[12] The position of the plaintiff is that the cost of the project is the approximately $1.7 million paid to the contractors. The defendants’ own invoices establish that. The issue is whether the parties agreed that the defendants would pay 12% of that cost to manage the project. Therefore the additional materials sought by the defendants are not relevant and need not be disclosed. Furthermore, disclosure of them would not be proportionate to their importance.

[13] The defendants argue that the documents in clauses (i), (iii) and (iv) are relevant in the following ways:

a. To establish the cost of the project, upon which the management fee is said by the plaintiff to be based;

b. To show the extent to which the plaintiff managed the project and whether its management was adequate;

c. To show whether the plaintiff’s management work was worth the $211,124 it claims as quantum meruit;

d. To show whether the defendants were unjustly enriched by the amount of the claimed fee;

e. To account for money paid on the invoices.

[14] The defendants argue that the documents in clause (ii) are relevant to establish whether the plaintiffs managed the project inadequately because its principal spent unreasonably little time on the project, preferring to spend his time on other clients.

[15] With respect to proportionality, the defendants argue that early disclosure will save resources by obviating the need for undertakings, discovery motions and re-attendance at discovery.

Decision

[16] It strikes me as unlikely that in the absence of a written contract the plaintiff will be able to prove that Mr Wellenreiter agreed to pay 12% of the cost of the part of the project that he managed himself. The $50,000 alleged by the defendant, on the other hand, is in the neighbourhood of 12% of the part of the project that the plaintiff completed. The plaintiff has made this claim, however, and must disclose documents that are relevant to its proof or disproof.

[17] The parties are not alleged to have agreed on a management fee consisting of 12% of the invoices paid by the defendants. The plaintiff claims 12% of the “project cost.” Unless the plaintiff is found to have been entitled to a blank cheque, the “project cost” will have to have some relationship to the actual value of work and materials contracted for. The items in clauses (i), (iii) and (iv) of the motion are relevant to that issue. I agree with the defendants that they are relevant to the other issues listed in paragraph 13, supra. The items in clause (ii) are relevant to the adequacy of the plaintiff’s supervision of the project and whether it is possible or likely that it supervised the 60% of the project on which it did not perform the work. Ordering disclosure of these items is not disproportionate to their importance or the complexity of, and the amount involved in, the proceedings. If the plaintiff is unable to produce documents, that will be relevant to the defendants’ claim that it did not keep adequate records.

[18] An order will go in terms of paragraph (d) of the defendants’ notice of motion dated October 26, 2021.

[19] If necessary, the parties may make written submissions to costs and to the deadline for service of the new affidavit of documents. If I have not heard from the defendant by January 7, 2022 and the plaintiff by January 14, I shall consider those questions to have been settled.

J.A. Ramsay J.

Date: 2021-12-16