Court File and Parties

Court File No.: CV-18-604608 Date: 2022-03-17 Superior Court of Justice - Ontario

Re: Valleywoods Rentals Inc., Plaintiff And: Yukon Construction Inc., Defendant

Before: Pollak

Counsel: Aleksandar Jovanovic, for the Plaintiff Jonathan Frustaglio, for the Defendant

Heard: September 22, 23, 24 and 27, 2021

Endorsement

[1] The Plaintiff, Valleywoods Rentals Inc. (“Valleywoods”), is an Ontario Corporation that owns and develops a townhouse project located at 35-43 Valley Woods Road, Toronto, Ontario (the “Project”). It brings this action against Yukon Construction Inc. (“Yukon”), an Ontario Corporation that carries on business as a concrete forming contractor, claiming that Yukon failed to construct exterior entrance stairs (the “Stairs”) at the “Project” in accordance with Ontario Building Code Act, 1992, S.O. 1992, c. 23 (the “Code”)and industry standards with respect to stair riser uniformity (the “Alleged Deficiencies”).

[2] The defence is that there are no deficiencies in contravention of the Code with respect to the work (the “Work”) performed by the Defendant. The work was performed in accordance with the terms of the contract between the parties (the “CCDC Contract”) dated October 27, 2014 and in accordance with the Code.

[3] In this Action, the Plaintiff claims costs of remediating the exterior concrete stairs constructed by Yukon.

[4] Urban Capital Property Group (“Urban Capital”), a real estate developer in Toronto, is a related entity to Valleywoods. Mr. Segal, a Director of construction at Urban Capital, directs both companies which are related. Urban Capital and Valleywoods operate out of the same building in Toronto.

[5] Mr. Segal testified as the representative of Valleywoods.

[6] The parties have agreed to the following facts:

• The Plaintiff, Valleywoods Rentals Inc. ("Valleywoods"), was the owner and developer of a townhouse development project located at 35-43 Valley Woods Road, Toronto, Ontario (the "Project").
• The Defendant, Yukon Construction Inc. ("Yukon"), is incorporated pursuant to the laws of the Province of Ontario and carries on business as a concrete forming contractor in the City of Toronto.
• Valleywoods and Yukon entered into a written agreement dated October 27, 2014 (the
• "Contract") for Yukon to provide concrete forming services at the Project.
• Valleywood retained Matteo Gilfillan & Associates Inc. ("MGA"), a fire and life safety consultant, to review the as-built stair riser dimensions for the exterior stairs at Blocks 100, 500, 600, 700, and 800 (the "Exterior Stairs"), with respect to the uniformity of the stair risers.
• The Parties agree that the following documents are authentic:

Tab	Date	Description	Page No.
1.	October 27, 2014	CCDC 17-Stipulated Price Contract between Owner and Trade Contractor for Construction Management Projects 2010 (Valleywoods Rental Towns) between Valleywoods Rentals Inc. ("Valleywoods") and Yukon Construction Inc. ("Yukon")
2.	August 15, 2016	Warranty provided by Yukon
3.	November 28, December 4, and December 15, 2017	E-mails from Adam Segal and Michael Tamblyn to Christian Perruzza re: notice of default
4.	December 18, 2017	E-mail from Christian Perruzza to Michael Tamblyn re: inspecting site
5.	December 18, 2017	E-mail from Adam Segal to Christian Perruzza re: scheduling visit
6.	February 23, 2018	E-mail from Adam Segal to Christian Perruzza
7.	February 23 and April 2, 2018	E-mails from Adam Segal to Loreto Perruzza re: remedial work
8.	March 1, 2018	E-mail from Michael Tamblyn to Christian Perruzza re: failure to attend on site and perform remedial work
9.	May 8, 2018	E-mail from Adam Segal to Loreto Perruzza re: documents in connection with remedial work
10.	June 5, 2018	E-mail from Adam Segal to Loreto Perruzza re: June 11 start
11.	June 8, 2018	E-mail from Adam Segal to Loreto Perruzza re: schedule for remedial work
12.	June 11, 2018	E-mail from Adam Segal to Loreto Perruzza re: failure of Yukon to attend on-site
13.	June 20, 2018	E-mail from Michael Tamblyn to Christian Perruzza re: Valleywoods will retain a third party to perform the work, failing mobilization, and performance of work, by Yukon

[7] The relevant terms of the CCDC are:

a. Yukon was the “Trade Contractor”, Valleywoods was the “Owner”, Highstar Building Inc. (“Highstar”) was the “Construction Manager” (1.1), and Rafael and Bigauskas Architects (“RBA”) was the “Consultant”(1.1); b. Yukon would “do and fulfill everything indicated by the Contract Documents (Article A-1.2)”. The Contract Documents included the following documents (Article A-3.1): i. Agreement between [Valleywoods] and [Yukon]; ii. Definitions iii. The General Conditions of the Contract; and iv. To complete all work as per: Appendices “A” – Schedule of Document, “B” – Notice to Contractor, “C” – Scope of Work, “D” – Trade Quotation, “E” Supplementary Conditions and “F” – Construction Schedule; c. The Contract Price …is $2,375,000.00 (Article A-4.1); d. Product means material, machinery, equipment, and fixtures incorporated into the Work, but does not include Construction Equipment (Definitions); e. The Work means the total construction and related services required by the Contract Documents (Definitions); f. The intent of the Contract Documents is to include the labour, Products, and services necessary for the performance of the Work by the Trade Contractor in accordance with these documents (GC 1.1.1); g. No action or failure to act by the Owner, Construction Manager, Consultant, Payment Certifier, or Trade Contractor shall constitute a waiver of any right or duty afforded any of them under the Contract, nor shall any such action or failure to act constitute an approval of or acquiesce in any breach thereunder, except as may be specifically agreed in writing (GC 1.3.2); h. The Construction Manager and the Consultant will have authority to act on behalf of the Owner only to the extent provided in the Contract Documents, unless otherwise modified by written agreement as provided in paragraph 2.1.2 (GC 2.1.1); i. The Construction Manager and the Consultant will not: i. be responsible for the Trade Contractor’s failure to carry out the Work in accordance with the Contract Documents (GC 2.2.4.1); and ii. have control over, charge of or be responsible for, the acts or omissions of the Trade Contractor …or any other persons performing portions of the Work (GC 2.2.4.2); j. No payment by the Owner under the Contract nor partial or entire use or occupancy of the Work by the Owner shall constitute an acceptance of any portion of the Work or Products which are not in accordance with the requirements of the Contract Documents (GC 5.9.1); k. The Trade Contractor agrees to complete the Work in accordance with all applicable federal, provincial and municipal laws, regulations and codes and all regulations thereunder, amendments thereto or substitutions therefore, including, but not limited to the following: i. The Ontario Building Code; (GC 10.2.8, created by SC 9.1); l. …the Owner waives and releases the Trade Contractor arising from the Owner’s involvement in the Work including, without limitation, those arising from negligence or breach of contract in respect to which the cause of action is based upon acts or omissions which occurred prior to or on the date of Substantial Performance of the Work …except as follows: claims arising pursuant to GC 12.3 – WARRANTY (GC 12.2.3.5); m. …the warranty period under the Contract is two years or such longer period as specified in the contract documents or as required by the Tarion Corporation and the Ontario New Home Warranties Plan Act R.S.O. 1990 c.o. 31 (“ONHWPA”) from the date upon which the condominium is registered, all in accordance with the requirements of the Tarion Corporation and ONHWPA; (GC 12.3.1, as amended by SC 11.1); n. 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 (GC 12.3.2); o. 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 warranty period (GC 12.3.5, as amended by SC 11.3); p. The Trade Contractor shall correct or pay for damage resulting from corrections under the requirements of paragraph 12.3.5 (GC 12.3.6); q. Upon written notice from the Owner or Construction Manager to the Trade Contractor of any defect or deficiency the Trade Contractor will either make the necessary repairs, or in the event of failure to do so within five (5) working days after receiving written notification from the Owner, the Owner may make such repairs at the Trade Contractor’s expense, which the Trade Contractor agrees to pay upon demand (GC 12.3.8, created by SC 11.5); r. The contract will be based on all documentation including but not limited to the following: i. Work will proceed to the satisfaction of the owners, consultants, independent inspection and testing companies, City inspectors and the O.N.H.W.P. inspections. (Appendix B – Notice to Contractor, p. 3, point 1); ii. This trade contractor agrees that it will perform all work required to complete the work including all installation of concrete and rebar complete with concrete finishing in accordance with the spirit and intent of this agreement including all plans and specifications and to conventional and good trade practices, at no extra charge, even if not specifically reflected on the plans and specifications (Appendix C – Scope of Work, p. 1, point 3); and iii. This trade contractor shall conform to the above requirements as well as the requirements of the Ontario Building Code, National Building Code, the City of Toronto…as well as the requirements of all other authorities having jurisdiction (Appendix C – Scope of Work, p. 1, point 4).

[8] Pursuant to the CCDC, Yukon issued a letter of warranty dated August 15, 2016, confirming that the date of “Substantial Performance of the Work” for the purposes of GC 12.2 of the Contract was July 22, 2016.

[9] Valleywoods’ claim is that the CCDC required Yukon to construct the Exterior Stairs in accordance with the Code and that when it discovered during the warranty period that Yukon had failed to do so, it provided written notice to Yukon to remedy the deficiency and bring the Exterior Stairs in compliance with the Code. As Yukon failed to remedy the deficiency within 5 working days (as provided for in the CCDC), Valleywoods was entitled to make the repairs at Yukon’s expense.

[10] Mr. Loretto Perruzza (“Mr. Perruzza”) is the General Manager of Yukon.

[11] HighStar Building Inc. was the Construction Manager for the Project.

[12] Adjeleian Allen Rubeli Ltd. was the Structural Consulting Engineer (the “Structural Consulting Engineer”) on the Project and was responsible for inspecting and approving all work on the Project.

[13] Rafael + Bigauskas Architects was the Architect of Record on the Project and was responsible for inspecting and approving all of the Work.

[14] Valleywoods released payments to Yukon throughout its performance of work and after substantial performance, paid Yukon in full because the Construction Manager, the Structural Consulting Engineer, the Architect of Record, and/or the City of Toronto reviewed, inspected, certified and approved all of Yukon’s Work in accordance with the terms of the CCDC.

[15] During the performance of its work on the Project, Yukon was not advised of any deficiencies, or asked to remedy any alleged deficiencies of its work.

[16] Yukon’s work was completed, inspected and approved for all progress draws and payments by the Construction Manager and/or Structural Consulting Engineer on the Project.

[17] In May of 2016, occupancy was granted by the City of Toronto with respect to the Project. The evidence is that the buildings and units were occupied.

[18] In July 2016, Yukon issued its final invoice for holdback and around November 2, 2016, Valleywoods released the holdback payment to Yukon.

[19] On November 23, 2017, the Architect of Record reaffirmed that the Work was completed in compliance with the Code.

[20] On November 28, 2017, Mr. Segal sent a notice of default by email on behalf of both Valleywoods and Urban Capital to Christian Perruzza (“Mr. C. Perruzza”) of Yukon with respect to alleged deficiencies with the uniformity of stair risers of exterior stairs at the Project. The Notice of Default was delivered before any inspection by Mr. Gilfillan (a consultant hired by the Plaintiff).

[21] On December 4, 2017, Mr. Segal sent a follow-up email to Mr. C. Perruzza. After November 28, 2017 and before December 5, 2017, the Plaintiff retained counsel, Michael Tamblyn in contemplation of the litigation of this action.

[22] Mr. Segal, on behalf of Valleywoods and Urban Capital instructed Matteo Gilfillan & Associates (“MGA”), who had a pre-existing business relationship with Urban Capital and performed consulting work for Urban Capital under a general retainer, to prepare and produce an expert report in respect of the alleged deficiency on the stairs. In accordance with Mr. Segal’s instructions, MGA prepared a report, dated December 5, 2017, addressed to “Mr. Adam Segal, Director of Construction, Urban Capital Property Group” in respect of the Alleged Deficiencies (the “MGA Report”).

[23] Further to the November 28, 2017 Notice and the December 4, 2017 Notice (collectively, the “Notices of Default”), on or about December 15, 2017, Mr. Tamblyn forwarded a copy of the “MGA Report” to Mr. Perruzza advising that Yukon will be held responsible for the full cost of the work to remediate the Project Stairs (the “Remedial Work”).

[24] Yukon’s evidence is that it went to the Project in the summer of 2018 and was of the opinion that its work complied with the CCDC terms, specifications and drawings. The evidence of Mr. Perruzza was that the Construction Manager, HighStar Building Inc., advised Yukon that no remedial work was required as its work was already completed, inspected and approved and occupancy had been granted.

[25] On September 6, 2018, Valleywoods commenced this action against Yukon alleging that Yukon failed to construct the Project Stairs in accordance with the CCDC and specifically with the Ontario Building Code and industry standards with respect to stair riser uniformity.

[26] On July 15, 2021, Yukon delivered a one-page quote dated July 9, 2021 (the “Alocon Quote”) by Anthony Alonzi (“Mr. Alonzi”), President of Alocon Concrete Floor Finishing (“Alocon”), which sets out an estimate of the cost of remediating the Project Stairs to Yukon. Yukon did not retain Mr. Alonzi nor paid Mr. Alonzi or his company for the Quote.

[27] Matteo Gilfillan (“Mr. Gilfillan”), is the President and founder of Matteo Gilfillan & Associates (“MGA”), a provider of building and fire code consulting services in Vaughan, Ontario. MGA is currently retained by Urban Capital to provide ongoing consulting services and has previously provided Urban Capital with non-litigation consulting services totalling an estimated value of hundreds of thousands of dollars in ongoing consulting fees.

[28] Mr. Gilfillan submitted his MGA Report and testified that he attended at the Project and measured the Exterior Stairs. It is submitted that his measurement of the Exterior Stairs is set out in an organized fashion in Appendix B to the MGA Report, with a legend as the first page. In Appendix B of the MGA Report, Gilfillan prepared charts for every riser measured, which identify:

a. the location of the stairs; b. whether he measured from the bottom of the landing up or from the top of the landing down; c. the riser measured; d. the riser dimension (i.e., the length of the riser), in both millimetres and inches; e. the tolerance between adjacent treads, in millimeters; and f. the tolerance between the tallest and shortest risers, in millimetres.

[29] Non-compliant tolerances are clearly identified by red highlighting, whereas non-compliant riser heights are clearly identified in yellow highlighting. Below is an excerpt from Appendix B as an example of the chart:

[30] It is submitted that Mr. Gilfillan’s evidence establishes that the Exterior Stairs did not comply with the OBC.

[31] Valleywoods submits that Mr. Gilfillan is qualified to opine as to whether the Exterior Stairs met the requirements of the Code, for these reasons:

a. in his affidavit sworn September 2, 2021 Mr. Gilfillan advised that he is a “licensed engineering technologist, and [is] licensed by the Professional Engineers of Ontario to provide fire and life safety studies and reporting related to building, as well as fire codes and standards”; b. during cross-examination, he confirmed that he has an engineering stamp, is qualified to give evidence regarding life and safety, and that the Professional Engineers of Ontario deemed his years of experience sufficient to provide him with a stamp; and c. also during cross-examination, he confirmed that he had experience performing uniformity measurements on site, and on re-examination explained that he as performed such measurements many times.

[32] Yukon submits that he is not qualified and is not impartial as:

a. Mr. Segal is the instructing and directing mind of both Valleywoods and Urban Capital, which Mr. Segal confirmed are related companies both on examination and at trial; b. Mr. Segal instructed both MGA and FM (another expert discussed below) on behalf of Valleywoods for the purpose of and in contemplation of litigation; c. Urban Capital commissioned both the MGA Report and the FM Report on behalf of Valleywoods; d. Both FM and MGA are on general retainer with Urban Capital for non-litigation services that pre-exist, exist during the litigation and trial, and are set to continue to exist following the litigation of this action: FM is retained by Urban Capital to provide it with consulting services with respect to six of Urban Capital’s active development projects, all of which are being directed by Mr. Segal, and has also previously provided Urban Capital with consulting services for projects totalling an estimated value of $1 billion; MGA is retained by Urban Capital to provide it with consulting services and has previously provided Urban Capital with non-litigation services totalling an estimated value of hundreds of thousands of dollars, all of which are being directed by Mr. Segal. FM and MGA have a general retainer with Urban Capital and therefore do not have the independence necessary to provide fair, objective, and non-partisan opinion evidence; e. Both the MGA Report and the FM Report were prepared for the purposes of the litigation of this matter; f. Mr. Gilfillan does not have the relevant expertise, training or experience with respect to assessing and opining on stair riser uniformity issues at the time that their respect reports were prepared. He has never been previously qualified as an expert in the field; g. Valleywoods did not qualify the FM Report and the MGA Report by satisfying the Mohan criteria on an admissibility voir dire, and therefore has not satisfied its evidentiary and legal burden of establishing that the opinions contained in the reports are fair, objective and non-partisan; and h. Yukon submits that the MGA Report is unreliable.

[33] On or about August 11, 2021, Valleywoods served Yukon with another “expert” report, authored by Mr. Coates of Finnegan Marshall, dated August 5, 2021 (the “FM Report”). Yukon alleges that such is a clear breach of the trial management plan and the procedural obligations in respect of the time frame contemplated under Rule 53.03 of the Rules of Civil Procedure (the “Rules”).

[34] Yukon objects to the evidence of Valleywoods’ proposed experts witnesses emphasizing Mr. Segal’s existing and ongoing business relationships with both MGA and FM through Urban Capital, a related company of the Plaintiff. It alleges that Mr. Segal instructed both Mr. Gilfillan and Mr. Coates with respect to preparing and producing their respective expert reports on behalf of the Plaintiff in contemplation of and during the litigation of this action.

[35] The parties raise the following issues in this 5 day simplified rules trial:

a. Whether there were deficiencies with respect to the Project Stairs as a result of the concrete forming services provided by Yukon? b. If there were deficiencies, was Yukon required to correct the Alleged Deficiencies pursuant to the CCDC? c. Whether the Architect of Record acted as consultant/agent on behalf of Valleywoods? d. Whether the opinions, acts and/or instructions of the Architect of Record bind Valleywoods as its agent? e. Whether the Construction Manager acted as agent on behalf of Valleywoods? f. Whether the opinions, acts and/or instructions of the Construction Manager bind Valleywoods as its agent? g. Whether Yukon breached the CCDC? h. If Yukon breached the CCDC, what is the appropriate quantum of damages owing to Valleywoods? i. Whether Valleywoods reasonably mitigated its damages? j. Whether Valleywood’s claim is statute-barred by the limitation periods prescribed by section 36 of the Act and/or Limitations Act, 2002, S.O. 2002, c. 24, Sched. B, as amended.

[36] Valleywoods’ evidence is that a City Inspector advised Mr. Segal that there was a deficiency with the Exterior Stairs constructed by Yukon. As a result, Valleywoods retained a consultant to inspect the Exterior Stairs for compliance with the OBC, and to determine whether the City Inspector’s conclusion was accurate. The consultant concluded that the Exterior Stairs did not comply with the OBC. Valleywoods then provided written notice to Yukon of its default. Yukon initially agreed to perform the remedial work but did not do the remedial work. Valleywoods gave further written notice of default to Yukon, but Yukon did not perform the work. Valleywoods then retained third-party contractors to perform the work. Valleywoods claims damages for Yukon’s breach of contract.

[37] Valleywoods submits that the evidence has established on a balance of probabilities that Yukon was required to construct the Exterior Stairs in accordance with the Code and did not. Therefore, Valleywoods incurred costs of $65,147.89, for which Yukon is liable.

[38] In addition to its defence noted above, Yukon relies on the lack of evidence to show any deficiencies specifying: (1) the nature of the contravention; (2) location of the contravention; and (3) nature of the compliance required or Orders from the City of Toronto.

[39] Specifically, Yukon relies on the evidence that:

• The Code does not permit occupancy of a building until all fire and life safety components under the Code have been: (1) completed; (2) inspected; and (3) passed by the City of Toronto.
• On May 30, 2016, the City of Toronto Inspectors granted occupancy in respect of the project, by which date all of Yukon’s work was completed, inspected, and passed.
• As occupancy was granted on May 30, 2016, it is clear that Yukon’s Work was properly performed because the City of Toronto inspected the Work and passed it.

[40] Such approval by the City was contingent on the work being constructed in accordance with the Code.

[41] Pursuant to the CCDC Contract, the Construction Manager and the Consultant determine whether or not the work is in compliance with the contract. On November 23, 2017, the Architect of Record reaffirmed that the Work was compliant with the Code and CCDC Contract.

[42] The evidence of the Construction Manager (Highstar), Mr. Rudy Trevisan, was that he advised Mr. Perruzza not to perform the remedial work because the work had been approved. Valleywoods claim is that Yukon is required to perform remedial work pursuant to its warranty obligations. Mr. Perruzza was advised by Highstar not to attend the Project before June 11, 2020, and before Valleywoods issued its final notice of default by e-mail dated June 20, 2020. Valleywoods submits that in accordance with GC 1.3.2. of the Contract, no action by Highstar could waive any rights under the Contract, unless specifically agreed in writing. I agree.

[43] Highstar’s involvement in the Project was winding down after the Project was substantially complete and by September 2017, Highstar had no or minimal involvement with the Project, and was not involved with addressing the deficiencies with Yukon’s work.

[44] I do not accept Yukon’s position that payment of its invoices discharged it from its obligations as the Contract expressly states that:

a. No payment by the Owner under the Contract nor partial or entire use or occupancy of the Work by the Owner shall constitute an acceptance of any portion of the Work or Products which are not in accordance with the requirements of the Contract Documents (GC 5.9.1); and b. Yukon’s warranty obligations only commence after “Substantial Performance of the Work” which is when Yukon alleges it was discharged from any further obligations under the Contract.

[45] The evidence of the deficiency to be corrected by warranty relied on by Valleywoods is Mr. Segal’s evidence of his emails with Ms. Akhter (the City inspector).

[46] Yukon submits that the evidence relied on by Valleywoods of alleged “verbal discussions” with a City of Toronto inspector are improper hearsay evidence, which should not be considered by the court.

[47] On November 13, 2017, Mr. Segal emailed Ms. Akhter to ask when she would be attending the Project to perform her inspections. Ms. Akhter responded that she would be attending on November 13, 2017. On November 14, 2017, Ms. Akhter emailed Mr. Segal that “the inspection manager and myself had a walk around on site and we identified some deficiencies. Next week please re book for inspection.” Mr. Segal emailed back asking her what kind of deficiencies she had identified. She responded “the deficiencies are related to stair, handrails, rain water pipes etc…”.

[48] Valleywoods submits these emails are Business Records pursuant to section 35 of the Evidence Act, that support a finding that Ms. Akhter had determined that there was a deficiency with the Exterior Stairs during her inspection of the Project on November 13, 2017.

[49] Further, Valleywoods submits that the following documentation prepared after November 13, 2017, supports a finding that the stair deficiency referred to in Ms. Akhter’s e-mail was with respect to variations in the stair riser heights contrary to section 9.8.4.1(1) of the OBC:

a. E-mail from Mr. Segal to Ms. Akhter dated November 23, 2017, including Rafael and Bigauskas Architects’ (“RBA”), letter dated November 23, 2017 to “close out the City’s concerns”, referring to the City’s concerns with “Variations in stair riser heights from the walkways leading up to the concrete and application of O.B.C. 9.8.4.1(1)”; and b. E-mail from Mr. Segal to Mr. Perruzza dated November 28, 2017, advising that the Building Inspector has identified a condition on site where the exterior cast in place stair cases have variations in stair riser heights. The variations noted by the Inspector are in excess of what the code allows; O.B.C. reference 9.8.4.1(1).

[50] Valleywoods asks the court to infer that Mr. Segal would not have noted the specific issue with the stairs (variations in stair riser heights) and the OBC reference 9.8.4.1(1), unless he had been advised by the City of those specific concerns.

[51] On cross-examination, Mr. Segal denied that Ms. Akhter had accepted the submissions set out in the Rafael + Bigauskas Architect’s letter dated November 23, 2017, to support the closing of the building permits. He testified that his email to Mr. Lorretto Perruzza dated November 28, 2017, which notified Yukon that it is in default as a result of stair risers identified by the City Inspector, would not have been sent if the City Inspector had agreed to close building permits.

Further, Mr. Segal’s evidence on cross-examination was that he attended with the City Inspectors when they went back out to measure the Exterior Stairs to close out the building permits after the remedial work was complete. The City Inspectors would not have returned to the site to measure the Exterior Stairs if the building permits were closed.

[52] There was no evidence that the permits were closed as a result of and after the City’s receipt of the architects letter dated November 23, 2017.

[53] Yukon objects to all of this as inadmissible hearsay evidence. The Plaintiff did not introduce any evidence from the City.

[54] Our Supreme Court of Canada has directed in R. v Khan, [1990] 2 SCR 531 that:

for hearsay evidence to be admissible, the evidence must be necessary and reliable, and is subject to the trial judge’s general discretion in balancing the probative value and the prejudicial effect of the evidence.

[55] Yukon submits that Valleywoods should have called proper Witnesses. There is no written record to support the alleged hearsay discussions and no evidence that the City Inspector is not available to give evidence. There is no written record such as a Deficiencies List, Notice of Contravention, Order to Comply and/or Stop Work Order from the City Inspector. It is submitted that the alleged hearsay statements of the City Inspector about deficiencies and a refusal to close exterior permits, lack probative value, which does not outweigh the prejudicial effect. Valleywoods, however, submits that Ms. Akhter’s determination that the Exterior Stairs failed to comply with the OBC is just one of the pieces of evidence that demonstrate that the Exterior Stairs were deficient. Valleywoods submits that it had no control over the City Inspectors and submits that the court should not draw an adverse on the failure of Valleywoods to call City witnesses. Rather, it is submitted, Yukon could have called Ms. Akhter as a witness.

[56] Further, Mr. Segal testified that Ms. Akhter did not provide him with a deficiency list and Mr. Gilfillan confirmed that it is not uncommon for the City Inspectors to have informal conversations about Code infractions at the job, instead of issuing a report. This was also confirmed by Mr. Badali of Islington Nurseries.

[57] As there is no evidence that the City Inspector is not available to testify. I am unable to find the statements in the emails are necessary or reliable. Rather, the evidence of the Construction Manager, the agent of the owner of the Project certified that the work had been properly performed in accordance with the CCDC and the Code.

[58] Valleywoods emphasizes Mr. Segal’s evidence that Mr. Loretto Perruzza agreed to complete the remedial work. This is denied by Mr. Perruzza who testified that he did not admit liability for having to perform the remedial work.

[59] Valleywoods submits that where Mr. Perruzza’s evidence conflicts with Mr. Segal’s evidence or the documentary record, Mr. Segal’s evidence and the documentary record should be preferred. As support for this argument, Valleywoods submits:

a. Mr. Loretto Perruzza recanted a significant portion of the evidence in his affidavit. At paragraphs 11, 12, 13, 14, and 17 of his Affidavit, Mr. Loretto Perruzza states, without any documentary support, that the concrete supplied by Valleywoods was “wet”, and the concrete caused “any alleged issues and/or deficiencies in the exterior entrance stairs”. During cross-examination, Mr. Perruzza was defensive regarding his contradictory statement that Yukon’s work was completed in accordance with “all applicable building codes”, while simultaneously maintaining that “any alleged issues and/or deficiencies in the exterior entrance stairs, which is not admitted but expressly denied, is a result of Valleywoods and/or its agent’s failure to supply proper concrete material to the Project.” Initially, after refusing to answer the question regarding whether he believed the Exterior Stairs were deficient because of the concrete, Mr. Perruzza finally answered that the Exterior Stairs were deficient in some respects. However, after it was pointed out to him that he was also of the belief that the Exterior Stairs were not deficient, he immediately recanted his previous answer, and stated that the Exterior Stairs were not deficient, preferring that story. When it was put to him that this meant that the paragraphs in his affidavit concerning Valleywoods’ supply of concrete were completely irrelevant, he confirmed that it did, and that those paragraphs were irrelevant; b. At paragraph 25 of Mr. Perruzza’s Affidavit, Mr. Perruzza alleged that “Yukon states that Valleywoods is attempting to hold Yukon responsible for costs relating to aesthetic improvements made the [sic] property because Valleywoods was in the process of selling the property in 2018 to some unknown buyer.” On cross-examination, Mr. Perruzza admitted that he had no knowledge on which to base this allegation, and that he was just guessing. c. Mr. Perruzza was hostile during cross-examination, refused to answer questions, and ultimately had to be privately spoken to about his conduct by Yukon’s counsel; d. Mr. Perruzza’s Affidavit contains argument akin to a pleading, including legal argument. At paragraph 35 of his Affidavit, Mr. Perruzza “states that Valleywoods’ claim is statute barred pursuant to the Limitations Act”. During cross-examination, Mr. Perruzza maintained that he knew enough about the Limitations Act to advance this allegation, notwithstanding that he has no law degree.

[60] Mr. Segal’s evidence is that Mr. Perruzza had agreed to perform the remedial work, and had accepted Mr. Gilfillan’s conclusion in the MGA Report (discussed below) that the Exterior Stairs did not comply with the Code, as follows:

a. In Mr. Segal’s Affidavit, he states that Mr. C. Perruzza had failed to respond to the first notice of default sent by e-mail from Mr. Segal to Mr. C. Perruzza on November 28, 2017. Counsel for Valleywoods, subsequently provided Mr. C. Perruzza with a copy of the MGA Report and provided written notice to Yukon that it was in default of the Contract, by e-mail dated December 15, 2017. This evidence was not challenged by Yukon. b. By e-mail dated December 18, 2017, Mr. C. Perruzza responded to Mr. Michael Tamblyn and indicated that Yukon wanted to inspect the site, and that he would be following up with Mr. Segal to find a time that worked for both of them; c. During the week of February 19, 2018, Mr. Segal called and spoke with Mr. C. Perruzza, and they discussed when Yukon anticipated attending at the Project to review the Exterior Stairs. Mr. C. Perruzza told Mr. Segal that Yukon would attend at the Project, although he did not commit to a specific date. Me. Segal followed up with Mr. C. Perruzza by e-mail dated February 23, 2018 as follows:

Good Morning Loreto, further to our discussion earlier this week have you had a chance to make it to site?

As mentioned earlier, I do have a trade who has mocked up and repaired one staircase acceptable to the city. I suspect I can cut a deal with him for about $60,000 to do the balance of the stairs.

Did you want to make a cash settlement with me, so I can deal with him direct?

Please confirm direction, as we will likely be in a position to begin correcting these stairs within the next month and don’t want this issue to be lingering any longer.

This evidence was not challenged by Yukon.

d. As Mr. Perruzza did not respond to Mr. Segal’s e-mail of February 23, 2018, by e-mail to Mr. Christian Perruzza and Mr. Perruzza dated March 1, 2018, counsel for Valleywoods provided a third default notice to Yukon: e. Following counsel’s e-mail, Mr. Segal’s affidavit evidence is that he spoke with Mr. Perruzza on the phone, who advised him that Yukon would attend at the Project after Easter 2018 to start the remedial work. This evidence was not challenged and is supported by his e-mail to Mr. Perruzza dated April 2, 2018, which confirmed Mr. Perruzza’s advice that Yukon would start work after Easter (being in or around April 2, 2018); f. Mr. Segal’s affidavit evidence is that he met with Mr. Perruzza at the Project on May 7, 2018 to discuss Yukon performing the remedial work. This evidence was not challenged and is supported by Mr. Segal’s e-mail to Mr. Perruzza dated May 8, 2018, which confirms that they met on site. Mr. Perruzza confirmed during cross-examination that he had a site visit, during which he admitted having a full opportunity to inspect the Exterior Stairs. However, he admitted that he did not use a tape measure to measure the stairs, and instead, simply performed a visual examination; g. Mr. Segal’s affidavit evidence is that he had a telephone conversation with Mr. Perruzza, who advised him that Yukon would attend at the Project to perform the remedial work on June 11, 2018. Mr. Segal’s evidence was not challenged and is supported by Mr. Segal’s text messages and e-mails to Mr. Perruzza confirming the June 11, 2018 start date; h. Mr. Perruzza admitted on cross-examination that he did not show up on June 11, 2018 and did not provide Mr. Segal with any warning that Yukon was not attending; and i. Valleywoods subsequently provided Yukon with a final notice of default by e-mail dated June 20, 2018, providing it with one last opportunity to attend at the Project to complete the remedial work. Mr. Perruzza confirmed that Yukon never completed the remedial work; j. Valleywoods submits that, Mr. Perruzza’s affidavit evidence that he committed to completing the remedial work under a reservation of rights, and that he never admitted liability for the deficiency with the Exterior Stairs should be rejected. Mr. Segal’s Reply Affidavit evidence is that Mr. Lorretto Perruzza never advised Valleywoods that Yukon did not admit liability for the deficiencies with the Exterior Stairs, and that Mr. Segal only learned of Yukon’s position in this regard when he reviewed that Statement of Defence. Mr. Segal further indicated that had Mr. Perruzza actually advised of Yukon’s position that it did not admit liability. Valleywoods would have retained replacement contractors to remedy the deficiencies sooner. k. Valleywoods points out that there is no documentary evidence that Yukon ever raised concerns with the MGA Report, requested that Valleywoods provide a deficiency list or other report from the City, took the position that the Stairs conformed with the OBC, or that Yukon denied liability for having to fix the Stairs.

[61] Valleywoods submits that the evidence shows that Mr. Perruzza was aware of the deficiency with the Exterior Stairs, through his receipt of the MGA Report, and through his own admission that the Exterior Stairs were deficient. Mr. Perruzza attended at the Project site, chose not to take any of his own measurements, and agreed to perform the remedial work on behalf of Yukon, to remedy the deficiencies with the Exterior Stairs.

[62] I agree that Mr. Loretto Perruzza’s evidence was very “legalistic”. I agree that he testified in a heated and passionate manner. It was clear that he believed that Yukon’s work had been properly performed, especially in light of the approval of the work by the Construction Manager Highstar, whose evidence was that the work had been performed in accordance with the CCDC. I do accept that although he may have initially agreed to inspect the work and do the remedial work, he did not admit liability for deficient work.

Mr. Gilfillan’s Expert Evidence

[63] Yukon submits that if the evidence of Mr. Gilfillan is not qualified as that of an expert, it should only be considered as layperson opinion evidence, and should be given little to no weight given the issue of ongoing general retainer and lack of relevant knowledge, experience, and training to the specific issue of stair riser uniformity Code compliance.

[64] Valleywoods argues that there is no evidence that Mr. Gilfillan was biased toward Urban Capital. The evidence is that Gilfillan was retained by Urban Capital two times before. Further, Mr. Gilfillan was not aware that the MGA Report would be relied upon in the context of this action and did not prepare the MGA Report for the purposes of litigation. At page 2 of the MGA Report, Gilfillan indicated that “It was requested that MGA conduct a survey of the as-built stair condition to confirm the veracity of the City’s raised concern regarding the stair riser uniformity of the exterior stairs serving the above-listed townhouse blocks”. Gilfillan confirmed that this was his objective during cross-examination, and that the MGA Report was intended to be a springboard document for Valleywoods’ contractor to review.

[65] Valleywoods submits that Mr. Gilfillan did not exercise any discretion in determining that the Exterior Stairs did not comply with the OBC, such that his conclusions could not be affected by bias. On cross-examination, Mr. Gilfillan explained that the reason the MGA Report was not stamped with an engineering stamp was because it was not an “engineered document”, as the report is considered a literal application of the OBC, as opposed to requiring the interpretation of the OBC. In other words, he measured the Exterior Stairs and then literally applied the provision of the OBC concerning riser uniformity tolerances.

[66] This evidence confirms that no expertise was applied and that the only possible benefit of his evidence is to support a finding that certain measurements were taken by Mr. Gilfillan.

[67] Mr. Gilfillan set out the methodology he applied to measure the Exterior Stairs in section 3.2.2 of the MGA Report as follows:

For this assessment, MGA used a measuring tape to measure the stair riser heights. The risers were measured at single points along the width of the stair tread – the point of measurement was approximately 300 mm from the left-side handrail when facing the stair from the bottom landing – with the intention of documenting a representative stair riser height from a consistent point of measurement. However, it was noted the as-built stairs appear to be uneven along their width and tread depth, so the heights would likely vary depending on the measurement points.

For obviousness, the measurement was conducted at the back of the tread from base of stair tread to top of nosing of the tread above, as opposed to a nosing to nosing dimension.

The intent of assessment was not to conduct a comprehensive cataloguing of the stair dimensions with high accuracy measurement methods, but rather to provide a reasonably accurate height value of the stair risers in question for review purposes.

[68] Yukon criticizes the methodology he used as:

a. did not use a more precise method of measurement, other than measuring tape; b. used measuring tape that measured in imperial units instead of in metric units; c. measured from the back of the tread to the nosing of the stair riser, as opposed to from nosing to nosing (as specified in the 2012 OBC); and d. only measured on one point of the tread as opposed to on various points on the tread.

[69] Valleywoods submits that Mr. Gilfillan refuted Yukon’s criticism of his measurement methodology as follows:

a. regarding his use of a tape measure, in the Reply Gilfillan Affidavit, Gilfillan maintained that a measuring tape “provided a reasonably accurate, representative height value of the stair risers. It was unnecessary for MGA to have used more expensive and time-consuming electronic equipment, as MGA was measuring millimetres, and not smaller units.”. On cross-examination, he maintained that his measurements were sufficiently accurate; b. regarding the use of imperial measuring tape, Gilfillan explained during this cross-examination that using imperial measuring tape was a recognized form of measurement and that the OBC contained conversion tables to convert imperial measurements to metric. Further, in the detailed breakdown of Gilfillan’s measurements attached as Appendix B to his report, Gilfillan set out the imperial measurement in brackets beside the metric measurement, so that the reader can perform their own calculation. Yukon did not challenge any of these conversions in cross-examination or by way of affidavit evidence; c. regarding the measurement from the back of the tread to the nosing instead of nosing to nosing (required by the 2012 OBC), Gilfillan responded as follows: i. in the Gilfillan Reply Affidavit, Gilfillan explained that the 2006 OBC was the “Code of Record” for the Project, meaning the version of the OBC that applied at the time of the building permit application for a particular project. Gilfillan further explained that MGA was provided with a drawing revision scheduling indicating the date of the building permit application as September 12, 2013, and that in accordance with section 4.1.1.1 of the 2012 (an excerpt of which is set out in paragraph 10 of Gilfillan’s Reply Affidavit), the 2006 OBC continued to apply for the project for which the building permit was applied prior to January 1, 2014. The only evidence from Yukon regarding the applicable OBC was Perruzza’s bald assertion that the 2012 OBC applied, and he confirmed on cross-examination that he did not know when the building permit application was submitted for the Project; ii. during cross-examination, Gilfillan maintained that since the Project was governed by the 2006 OBC, his measurements were sufficiently accurate; and iii. during cross-examination, Gilfillan maintained that in any event, if he were to have measured the Exterior Stairs from nosing to nosing, that it would have created a higher variation in stair risers heights; d. regarding his measurement of the riser at one point approximately 300 mm from the left-side handrail when facing the stair from the bottom landing, instead of at various points on the riser (as suggested by Yukon’s counsel during cross-examination): i. during cross-examination, Gilfillan explained that taking measurements at various points of the riser to determine an average stair riser height is not a recognized form of measuring stair risers. Again, Yukon led no evidence as to the appropriate method of measurement; and ii. on re-examination, Gilfillan explained that he measured 300 mm from the left-side handrail because it was more likely that someone would walk down the stairs at this location, holding the handrail.

[70] Assuming that Mr. Gilfillan’s evidence should be introduced, such evidence must be considered in light of Yukon’s evidence.

[71] Valleywoods submits that Mr. Gilfillan refuted each one of the criticism of Yukon on his measurements during his cross-examination, and in his reply affidavit. It is submitted that the court can rely on Gilfillan’s conclusion in the MGA report that the “the majority of the as-built exterior stairs are not in conformance with the uniformity and tolerance requirements of the OBC”. I do not agree that the methodology used or his conclusions on whether the stairs were in compliance with the “applicable Code”, were sufficiently reliable to outweight the evidence upon which Yukon relies. Valleywoods has submitted that Mr. Gilfillan did not apply any discretion or opinion in his measurements or in his report. Rather, it is submitted, that this court should apply the measurements taken by Mr. Gilfillan to the provisions of the Code to find that the stairs were not in compliance with the Code.

[72] Yukon objects to the introduction of Mr. Gilfillan’s evidence on the basis that it is “litigation expert evidence”, submitting that he lacks the necessary qualifications and impartiality, independence, and absence of bias necessary to provide fair, objective and non-partisan opinion evidence, and on the basis of Valleywoods’ failure to comply with Rule 53.03. Valleywoods seeks to introduce him as a participating fact expert.

[73] I do not accept Valleywoods’ argument that the court should apply the measurements established by Mr. Gilfillan to make its own determination on whether the stairs were in compliance, when the court has reliable evidence of approval of the work from the Construction Manager, project architect and City approval for occupancy, which would not have been granted if the work was deficient.

[74] I agree that the CCDC provides that no payment by the Owner under the Contract nor partial or entire use or occupancy of the Work by the Owner shall constitute an acceptance of any portion of the Work or Products which are not in accordance with the requirements of the Contract Documents (GC 5.9.1) Yukon’s warranty obligations commence after “Substantial Performance of the Work”. Although I do not accept Yukon’s submission that it can not be liable because Mr. Perruzza was advised by Rudy Trevisan of Highstar that it was not liable for deficient work and further because Yukon was paid for its work, the evidence of Mr. Rudy Trevisan is relevant. He advised Mr. Lorretto Perruzza not to perform the remedial work and was of the view that the stairs were in compliance.

[75] In considering the evidence, it is of note that Valleywoods did not adduce evidence of the Construction Manager to support its position.

[76] The evidence of the Construction Manager, Mr. Rudy Trevisan, who certified that the Work was completed, inspected, and passed, with occupancy being granted in May 2016 is persuasive on the issue of whether the work was performed in accordance with the CCDC.

[77] Further, the Architect of Record, Rafael + Bigauskas Architects also confirmed that there were no deficiencies with respect to Yukon’s Work on November 23, 2017. Further, Yukon submits that if any deficiencies in respect of Yukon’s Work existed, the Work would not have passed the City Inspection and occupancy would not have been granted/permitted.

[78] The City inspected the completed Work, determined that said Work passed the Inspection, and permitted occupancy in May 2016. All of this evidence must be weighed against Mr. Segal’s hearsay evidence and email evidence as well as Mr. Gilfillan’s evidence (assuming it is admissible), regarding his measurement of the stairs.

[79] Yukon submits that the absence of an Order from the City specifying (1) the nature of the contravention; (2) its location; and (3) the nature of the compliance that is required, this court should conclude that there were no deficiencies in respect of the Work.

[80] Although the opinions of the Construction Manager and Architect of Record do not bind Valleywoods as its agent, they are persuasive. It was their function, pursuant to the CCDC to evaluate Yukon’s work for compliance with the contractual terms.

[81] Pursuant to the CCDC Contract, the Construction Manager and the Architect of Record have the authority to determine compliance or non-compliance under the Code.

[82] I find that when the evidence is considered as a whole, in particular that the Construction Manager and the Project Consultant made decisions that Yukon’s Work was in compliance with the Code and Architect of Record stated in its letter dated November 23, 2017 that Yukon’s Work was in compliance with the Code, that Valleywoods has not met its burden of proof that Yukon’s work was deficient pursuant to the CCDC.

[83] In light of this finding that Valleywoods has not met its burden of proof, it is not necessary for the court to rule on the issue of how the evidence of Mr. Gilfillan is to be characterized or the weight to be given to it or the mitigation issue.

[84] In the event that I am wrong, the evidence is that after Yukon failed to return to the Project to complete the remedial work, Valleywoods retained Historic Restoration Inc. (“Historic”) and Islington to complete the remedial work, as follows:

a. Segal’s affidavit evidence and the affidavit evidence of Historic’s President, Paul Goldsmith (“Goldsmith”), along with the purchase order, is that Valleywoods retained Historic pursuant to a purchase order signed on August 8, 2018 (the “Historic Contract”) to perform a portion of the remedial work. Yukon led no evidence to refute that Historic performed the work; and b. Segal’s evidence and Badali’s evidence is that Islington was retained by Valleywoods to correct the height of the paving stones located at the bottom of the exterior stairs at the Project, so that the height between the paving stones and the first step of the concrete stairs complied with the requirements of the OBC. Yukon led no evidence to refute that Islington performed the work.

[85] Yukon submits the damages should be limited to $12,500 + HST as Valleywoods did not negotiate the price for the alleged Remedial Work; and did not obtain more than one quote with respect to the market value for the Remedial Work.

[86] I accept the Valleywoods’ evidence regarding damages and find that Valleywoods’ reasonably mitigated its damages.

[87] Yukon also submits that Valleywoods’ action is barred pursuant to the one-year limitation period outlined in section 36 of the Act. Yukon states that the stairs are not concealed but rather are openly visible outdoor stairs. Further, Yukon relies on the two-year limitation period outlined in section 4 of the Limitations Act, 2002, S.O. 2002, c. 24, Sched. B.

[88] Valleywoods claim is on the two-year warranty provided by the CCDC. Valleywoods submits that Yukon has led no evidence that Valleywood ought to have commenced its claim on or prior to September 26, 2016, which is two years prior to the date that Valleywoods’ issued its claim.

[89] I find that Valleywood’s claim is not statute-barred by the limitation periods prescribed by the Section 36 of the Act and the Limitations Act, 2002, S.O. 2002, c. 24, Sched. B, as amended.

[90] For all of the above noted reasons, the Plaintiff’s Action is dismissed

Costs

[91] The Plaintiff requested costs in the amount of $54,000 if it had been the successful party in this litigation. It should be noted that this was a simplified trial and the amount claimed is disproportionately high to the costs that are claimed by each party.

[92] As the Defendant has been the successful party in the trial, costs are awarded to the Defendant to be paid by the Plaintiff on a partial indemnity basis in the amount of $54,000.

[93] The Defendant had to defend this Action and I am satisfied that the costs awarded are appropriate in the circumstances, having regard to the factors set out in the Boucher case and in the Rules of Civil Procedure.

Pollak J. Date: March 17, 2022