COURT FILE NO.: CV-19-614253
DATE: January 19, 2022
ONTARIO
SUPERIOR COURT OF JUSTICE
IN THE MATTER OF the Construction Act, R.S.O. 1990, c.C.30
BETWEEN:
RAHAEL PEREIRA
Plaintiff
Jamie M. Sanderson for the plaintiff,
Tel.: 905-731-9251,
Email: jsanderson@maclawyers.ca,
Il DREAMS HOMES LTD. and
ASHRAF AMELHELALI
Joshua D. Hemmings for Il Dreams Homes Ltd.,
Tel.: 416-221-9343,
Email: jhemmings@lmklawyers.ca,
Alvin W. Leung for Ashraf Amelhelali,
Defendants
Tel: 905-881-6601
Email: aleung@eruditelaw.ca,
HEARD: September 16 and October 1, 2021.
Associate Justice C. Wiebe
REASONS FOR JUDGMENT
I. INTRODUCTION
[1] This reference concerns this one action wherein the plaintiff, Rafael Pereira, claims a lien in the amount of $18,655 and breach of contract damages in the amount of $7,200 concerning carpentry work he did for the defendants on a residential home located at 81 Munro Boulevard in Toronto (“the Property”). The defendant, Ashraf Amelhelali, is the registered owner of the Property. The position of the other defendant, Il Dreams Homes Ltd. (“Il Dreams”), is unclear, namely whether it is a proper defendant and, if so, whether it was a pure project manager or a general contractor. The defendants deny the claim and raise a counterclaim of $3,000. They also crossclaim against each other for contribution and indemnity.
II. BACKGROUND
[2] I begin with a summary of the facts of this case that are undisputed.
[3] On November 18, 2016 Ms. Amelhelali entered into a contract with either Il Dreams or a related company, 2506411 Ontario Limited operating as Il Dreams (“250”). Both companies are owned and operated by Shahin Jafari. The contract document is under Il Dreams letterhead and describes Il Dreams as the contracting party and as the “general contractor.” The signature, however, is written by Mr. Jafari as being for 250. Il Dreams alleges that 250 was hired to be a pure project manager acting as no more than an agent for Ms. Amelhelali. Ms. Amelhelali denies this. The project was the construction of a new house on what was a vacant lot.
[4] Mr. Pereira did small trim carpentry work for Mr. Jafari on Mr. Jafari’s home and on another residential lot. There is a text showing that in June, 2018 Mr. Pereira was invited by Mr. Jafari to attend at two houses he was working on, the Property and one located at 73 Lord Seaton Road, Toronto (“the Seaton Property”).
[5] In early August, 2018 Mr. Jafari retained Mr. Pereira to clad the exterior of the bay window in the kitchen of the Property. Mr. Pereira did this work and was paid.
[6] On August 31, 2018, at Mr. Jafari’s invitation, Mr. Pereira attended at the Property and prepared an estimate of the trim carpentry work. The estimate totaled $41,250.
[7] Mr. Pereira and Mr. Jafari then discussed a contract. Mr. Pereira advised that he wanted $40,000 to do the work. After a negotiation, it was orally agreed that Mr. Pereira would do the work identified in the Pereira estimate for a total of $28,000. Mr. Pereira alleges that he agreed to the reduction in price on condition that Mr. Jafari retained Mr. Pereira to do the trim carpentry work on the Seaton Property. Mr. Jafari denies this alleging he got other quotes for less than $28,000.
[8] The two agreed that the work would be paid in cash and as sections of the work were done. There was no contract document. It was agreed that Il Dreams would supply the materials.
[9] On September 1, 2018 Mr. Pereira started working. He had two workers assisting him. On several occasions he complained to Mr. Jafari about not being paid properly and about not getting enough materials to do the work.
[10] Ms. Amelhelali paid Mr. Pereira in cash as directed by Ms. Jafari. In the end she paid Mr. Pereira a total of $15,000.
[11] On October 30, 2018, at Mr. Jafari’s invitation, Mr. Pereira went to the Seaton Property and prepared an estimate for the trim carpentry work on that site.
[12] On November 14, 2018 there was a serious disagreement about Mr. Pereira’s payment assertions. Mr. Pereira called Ms. Amelhelali who attended at the site with Messrs. Pereira and Jafari. Mr. Pereira and Ms. Amelhelali allege that Mr. Jafari terminated the contract. Mr. Jafari alleges that Mr. Pereira abandoned the contract and that Ms. Amelhelali terminated the contract. Mr. Pereira alleges he was 70% done; the defendants allege that he was 40% done. Mr. Pereira left the site the next day picking up his tools and went to work at another site at 105 Colbeck Street, Toronto.
[13] Mr. Jafari hired Artman Carpentry to complete the trim carpentry. The contract document is dated November 20, 2018 and is stated to be between Artman and Ms. Amelhelali, but with Mr. Jafari signing for Ms. Amelhelali as “supervisor.” The contract was for a fixed price of $15,000 plus HST.
[14] Ms. Amelhelali paid Artman $12,000 in cash. In January 10, 2019 Artman signed a document confirming receipt of $18,000 of which $3,000 was for two extras to redo library woodwork and to redo arches and kitchen window jams.
[15] On December 20, 2018 Mr. Pereira registered a claim for lien in the amount of $21,200. This amount included a claim for eight extras totaling $8,200, which he has now reduced to five extras totaling $5,655. On February 11, 2019 Mr. Pereira purported to perfect his lien by commencing this action and registering a certificate of action. In this pleading he added a claim for breach of contract damages of $7,200. On March 29, 2019, using the same lawyer, the defendants delivered a joint statement of defence and counterclaim.
[16] On January 5, 2021 Mr. Pereira obtained a judgment of reference from Justice Speigel referring this action to a Toronto master for trial. I issued an order for trial on January 14, 2021. The reference came before me for a first trial management on March 15, 2021. I was advised that the parties had completed pleadings, affidavits of documents, production and a Scott Schedule. Given the modest amount in issue, I ordered a summary trial to take place on July 22, 2021.
[17] On May 4, 2021 I convened another trial management conference. I was told that the defendants had retained separate counsel as their interests were not aligned. I made orders for amended pleadings and rescheduled the trial to September 16, 2021.
[18] The trial proceeded on September 16, 2021. Mr. Pereira was the only witness for the plaintiff; Mr. Jafari the only witness for Il Dreams; and Ms. Amelhelali the only witness for her. Because of a late filing of a factum by Mr. Leung, I granted the request of the other counsel for a separate closing argument day and a schedule for written closing submissions. I scheduled the closing arguments for October 1, 2021. That is when closing argument occurred.
[19] On September 16, 2021 Mr. Hemmings tried to file a late supplementary affidavit of Mr. Jafari. Mr. Sanderson opposed the filing. I denied the filing as the issues contained in the affidavit could have been anticipated when Mr. Jafari prepared his primary affidavit. This was not proper sur-reply.
III. ISSUES
[20] Based on the evidence and submissions, I find that the following are the issues to be determined:
a) What was the contract for the overall project?
b) Was there a contract between Mr. Pereira and Il Dreams?
c) What was the contract price in the Pereira contract?
d) Is Mr. Pereira entitled to the claimed extras?
e) Was there a contract repudiation, and, if so, by whom?
f) Has Mr. Pereira preserved and perfected his lien claim?
g) What are the damages?
IV. WITNESSES
[21] Before I analyze the issues, I will comment on the credibility of the witnesses.
[22] All of the witnesses are parties to this action and therefore have a bias. I weighed the credibility of the witnesses using other factors.
[23] I found Mr. Pereira a credible witness. He was forthright in his evidence. He admitted weaknesses in his evidence such as the lack of any written confirmation of the condition he alleged attached to the contract price, and the lack of backup for his claims for extras such as time sheets. He nevertheless came across as a careful man as he took pictures and videos when he left the site, all of which he used at trial. He worked at corroborating as much of his evidence as possible, such as the sudden purchase by Il Dreams of lumber after he left the site to corroborate his point about not being supplied sufficiently while he was working. There were parts of his evidence that also just made common sense, such as the need to install tile before the trim and the elevator before the elevator door.
[24] Ms. Amelhelali was also credible. She conceded points that were against her interest. For instance, she consistently stated that her contract was with Il Dreams and that it, through Mr. Jafari, controlled the project. Yet she conceded that there were instances, such as with the purchase of the MDF sheets, where she and her husband brought in trades and exercised control. She also conceded that she found Mr. Pereira’s work to be good. There was a discrepancy between what she said in her affidavit she paid to Artman ($18,000) and what she said she paid during cross-examination ($12,000); but she overcame this issue by pointing to her payment schedule to prove the lesser figure and by accepting the lesser figure which was against her interest. Also, her insistence that Mr. Jafari controlled the project, including payment, made general sense as he was her friend and she entrusted him to do the construction.
[25] Mr. Jafari, on the other hand, was much less credible. He came across as a person capable of deception to achieve his purpose. Shockingly, he stated in cross-examination that he never intended to give Mr. Pereira the work on the Seaton Property despite asking Mr. Pereira for a quotation on that work in late October, 2018. He said he asked for the quotation only to “encourage” Mr. Pereira to finish his work on the Property. He said that he “led Mr. Pereira on” about the Seaton work as he never intended to give him that work. In short, he conceded deceiving Mr. Pereira.
[26] There was also the Jafari evidence about the competing quote from HS Designs Carpentry dated August 25, 2018. At discovery, Mr. Jafari stated that the competing quotes were all verbal. Then suddenly at trial he produced a written quotation from HS dated August 25, 2018 showing the price of $27,017.50 plus HST. In cross-examination Mr. Jafai conceded he asked HS to prepare the document in August, 2021 in advance of the trial. The only reasonable inference to be drawn from this is that the document was created for the trial and is not a genuine document. In short, further deception.
[27] Mr. Jafari’s evidence was also full of contradictions. At discovery, Mr. Jafari stated that he asked Mr. Pereira for a price on the Seaton work; but at trial he called this a deception. At discovery, Mr. Jafari said he did not know whether the Pereira contract was with Il Dreams; but at trial he insisted it was with 250. Generally, his evidence also did not make sense. His insistence that he acted only as “agent” for the owner and that Ms. Amelhelali terminated the Pereira contract was uncorroborated. It also did not accord with the evidence of Mr. Jafari’s construction experience and Ms. Amelhelali’s reliance upon Mr. Jafari as a family friend to do the construction.
[28] Therefore, I have given the evidence of Mr. Pereira and Ms. Amelhelali greater weight whenever it contradicted the evidence of Mr. Jafari. Where the evidence of Mr. Pereira and Ms. Amelhelali conflicted, I determined credibility based on the evidence concerning the issue.
V. ANALYSIS
a) What was the contract for the overall project?
[29] Ms. Amelhelali argues that her contract was with Il Dreams and that under this contract IL Dreams was responsible for the construction of the project and subcontracted with trades to get the work done, including a subcontract with Mr. Pereira. Il Dreams alleges that the contracting party was 250 and that it was a pure project manager, namely no more than an agent for Ms. Amelhelali helping her run the project.
[30] The pleadings confirm Ms. Amelhelali’s position on the issue of the contracting parties. In paragraph 6(a) of the Il Dreams Amended Statement of Defence, Crossclaim and Counterclaim, Il Dreams states that “on or about November 18, 2016, the Defendant Il Dreams Homes Ltd. entered into an agreement with the Defendant homeowner, Ashraf Amelhelali, to manage the construction of a home at 81 Munroe Boulevard.” This pleading is an admission of a material fact by Il Dreams that was never amended. An admission of a material fact binds a party. I note that the admission also accords with Ms. Amelhelali’s pleading and her evidence. That is what I find.
[31] As to whether Il Dreams was a pure project manager, I have reviewed the signed agreement between Ms. Amelhelali and Il Dreams (“the Contract”). It is undisputed that the document was created by Il Dreams. It has Il Dreams letterhead. Concerning the issue of project control and responsibility, the document is ambiguous. On the one hand, it says that the owner takes on the responsibility of performing the work and supplying the material. It says that the owner will exercise “significant control” over the construction including the selecting and terminating of trades. It says that the owner will pay a fee to Il Dreams and all project costs. On the other hand, it describes Il Dreams as the “general contractor” hired to construct the home. It does not describe Il Dreams as the owner’s agent. In the fifth paragraph it says again that Il Dreams “agrees to construct the new house.” It specifies that Il Dreams will get all permits and inspections, will correct deficiencies in the work as identified by the owner, and must carry liability insurance. The referenced WSIB and HST numbers belong to Il Dreams.
[32] Because of this ambiguity I employ the usual principles of contract interpretation. First, there is the principle of contra preferentem, the doctrine whereby an ambiguity in a contract document is interpreted against the interests of the creator of the document. While this doctrine is of limited utility in contracts between parties of equal bargaining power, it is useful where there is an inequality of bargaining power. I find such inequality to be the case here, as the evidence shows that Mr. Jafari was Ms. Amelhelali’s friend, whom she entrusted with doing the construction.
[33] Second, I examined the evidence of surrounding circumstances and party behavior. The evidence indicates that the parties conducted themselves as if Il Dreams was a “contractor,” namely the one responsible for the construction project. Ms. Amelhelali was not involved in negotiating the Pereira subcontract. Also, while she paid Mr. Pereira for his work, she did so at the direction of Mr. Jafari. Furthermore, there is no email or text corroborating Mr. Jafari’s assertion that Ms. Amelhelali terminated that Pereira subcontract, while there are texts showing that it was Mr. Jafari who did the terminating. At discovery, Mr. Jafari admitted managing the project, procuring the subtrades, instructing them and advising Ms. Amelhelali when and how to pay them. These are characteristics of a contractor; see Centrum Renovations & Repair Inc. v. Ditta, 2006 CarswellOnt 7390 at paragraph 6. Also, it was Ms. Amelhelali’s evidence that Il Dreams was the contractor and not a manager, and I prefer her evidence to Mr. Jafari’s for the reasons already stated.
[34] I, therefore, find that the contract for the project was a cost-plus general contract with no guaranteed maximum price, and that Il Dreams was responsible for the construction, not Ms. Amelhelali. He was a contractor.
b) Was there a contract between Mr. Pereira and Il Dreams?
[35] Mr. Pereira alleges that he had an oral contract and that it was with Il Dreams. Il Dreams alleges it was either with Ms. Amelhelali or with 250, but not with Il Dreams. It also alleges there was no contract.
[36] The pleadings undermine the position of Il Dreams entirely. In paragraphs 7, 7a, 8 and 9 of its Amended Statement of Defence, Crossclaim and Counterclaim, Il Dreams pleads that it contracted with Mr. Pereira, calling the subcontract a “carpentry services agreement.” In its Counterclaim, Il Dreams asserts a claim for damages it says it incurred on account of an alleged repudiation of the subcontract by Mr. Pereira. In paragraph 21(g) of the same Counterclaim, Il Dreams pleads that it “was forced” to retain the services of a third party contractor to finish Mr. Pereira’s work and deficiencies.
[37] These are admissions of material facts that bind Il Dreams. They were never amended. They also accord with Mr. Pereira’s evidence.
[38] I, therefore, find that the Pereira had an oral subcontract and that it was with Il Dreams.
c) What was the contract price in the Pereira contract?
[39] A significant issue in the case is the contract price of the Pereira subcontract. Mr. Pereira asserts that the subcontract price was $40,000. Il Dreams and Ms. Amelhelali assert that the price was $28,000. Ms. Amelhelali relies on the evidence of Il Dreams on this issue.
[40] The following facts are not in dispute. At the request of Il Dreams, on August 31, 2018 Mr. Pereira did a takeoff of the carpentry work Il Dreams requested of him on the Property on a box lid, as he did not have his takeoff sheets available. This estimate produced a total of $41,250. Mr. Pereira told Mr. Jafari that he, Mr. Pereira, would do the work for $40,000 plus extras. Mr. Jafari wanted a substantial reduction to $27,000 stating that he had obtained competing quotations at that level. There was eventually an oral agreement that the price would be $28,000.
[41] Mr. Pereira asserts that he agreed to this reduced price only because Mr. Jafari promised him the carpentry work on the Seaton Property. Il Dream denies this condition and asserts that the contract price was $28,000 without condition. The onus rests on Mr. Pereira to prove this condition.
[42] The evidence, while circumstantial, supports Mr. Pereira. In his affidavit, Mr. Jafari denied raising the Seaton work with Mr. Pereira until late October, 2018. Yet, there was a text exchange between Mr. Pereira and Mr. Jafari on June 11, 2018, well before the Pereira work began, wherein Mr. Pereira raised the subject of his quotation for his work on the Property, and wherein Mr. Jafari invited Mr. Pereira to attend both the Property and the Seaton Property. This shows a linkage between Mr. Pereira’s work on both properties at the outset. At discovery, Mr. Jafari admitted asking Mr. Pereira to price both projects on June 11, 2018, which contradicted his trial evidence.
[43] I also do not accept Mr. Jafari’s evidence about the contract negotiation. I have already commented that I find the HS written quotation of August 31, 2018 Mr. Jafari now says he obtained not be a genuine document. As a result, I find that Mr. Jafari did not have the competing quotations he said he did. Therefore, Mr. Jafari’s only leverage to get Mr. Pereira to substantially reduce his price was the promised condition Mr. Pereira alleges.
[44] I also find it telling that Mr. Jafari in late October, 2018 asked Mr. Pereira to price the carpentry work on the Seaton Property. By this time there was tension between Mr. Jafari and Mr. Pereira. At the end of September, 2018 Mr. Pereira complained in texts about payment and lack of material. Yet, Mr. Jafari asked Mr. Pereira to price the Seaton work. Mr. Jafari’s explanation in cross-examination I have already touched on. In short, he said he purposely misled Mr. Pereira into believing he had the Seaton work to “encourage” Mr. Pereira to finish his work on the Property. He said he never intended to give Mr. Pereira the Seaton work.
[45] I do not believe him. There was no evidence of the state of readiness of the Seaton Property for the carpentry work at the end of October, 2018. Therefore, I have no way of determining the extent to which Mr. Pereira’s takeoff work on the Seaton Property would have spurred him to finish his work on the Property. As a result, the only credible explanation of Mr. Jafari’s conduct is that he knew he had a contract condition to fulfill, namely the contract condition alleged by Mr. Pereira.
[46] The defendants argued that I should take into consideration the total absence of any written corroboration of Mr. Pereira’s alleged condition. I have considered that absence. In the end, I do not find it sufficient to change my finding. Messrs. Pereira and Jafari conducted their affairs largely orally and through text messages. There was in fact no text or other documentary confirmation of the final agreement between them concerning the Pereira subcontract. It, therefore, does not surprise me that there is no text corroboration of the contract condition.
[47] Mr. Sanderson referred me to the authority of Esso Petroleum Co. Ltd. v. Mardon, [1976] 2 All E.R. 5 as adopted by our Court of Appeal in Sodd Corp. v. Tessis, 1977 CarswellOnt 103 at paragraph 8 for the proposition that a pre-contractual negligent misrepresentation that induces a party to enter into a contract that is then not rescinded becomes a collateral warranty that underpins the contract. In Esso there was an action by a landlord on a lease concerning a service station, and the tenant counterclaimed alleging that the landlord had misrepresented the potential revenue stream from the station prior to the lease inducing him to enter the lease. The court found that the misrepresentation formed a collateral warranty to the lease. As stated in Heintzman and Goldsmith on Building Contracts, 5th Edition (Toronto: Carswell, 2014) at page. 8-17, “a collateral warranty is a separate contract by which the person making the representation promises that the statement is true, and the entering into the main contract is the consideration for the contract represented by the collateral warranty.”
[48] In the case before me, I find that Mr. Jafari made such a misrepresentation just prior to the Pereira subcontract about his intention to give the carpentry work on the Seaton Property to Mr. Pereira in return for the price reduction on the Pereira subcontract. Mr. Jafari may have made this misrepresentation negligently as at he did not know of Mr. Pereira’s ability to do the Seaton work or his own final intention to give Mr. Pereira the work. But that is enough, as the negligent misrepresentation induced Mr. Pereira to enter into the subcontract at the reduced price.
[49] As a result, I find that the Pereira subcontract price was $28,000 on condition that Mr. Pereira was given the carpentry work on the Seaton Property. If that condition was not met, the collateral warranty specified that the contract price would revert to the unreduced price of $40,000.
d) Is Mr. Pereira entitled to the claimed extras?
[50] Mr. Pereira claims five time-and-materials extras totaling $5,655:
• Estimating carpentry materials in early September, 2018 at a cost of Mr. Pereira’s time of 2.5 hours at $90/hour for a total of $225;
• Picking up and delivering materials to the site in September, 2018 at a cost of Mr. Pereira’s time of 10 hours at $90/hour for a total of $900;
• Repairing framing deficiencies in October, 2018 at a cost of Mr. Pereira’s time of 20 hours at $90/hour for a total of $1,800;
• Changing the bedroom door to swing in the direction opposite to the direction of the door swing originally installed at a cost of $300;
• Three “false work calls” when Mr. Jafari called Mr. Pereira and his crew of two to the site when their work site was occupied by the plaster moulding installers, all at a wasted cost of 3 hours per visit at $90/hour per worker: ($90/hour x 3 worker) x 3 hours/visit x 3 visits = $2,430.
[51] These extras fall into two groups. The first four concern alleged extra work done on instructions outside the scope of the Pereira subcontract. One can charge for such extras if the work falls outside the contract scope and the plaintiff is instructed to do it; see Anowara Construction Ltd. v. Tom Jones Corp., 2006 CarswellOnt 2766 at paragraph 20. The last extra concerns standby charges for wasted time by attending on site on instructions only to have the worksite blocked by other forces; see Dirm Inc. v. Dalton Inc., 2006 CanLII 28557 at paragraph 31. Mr. Pereira has the onus of proving these extras.
[52] Both Messrs. Pereira and Jafari accepted that the items of work contained in the Pereira August 31, 2018 estimate accurately reflect the scope of work in the Pereira subcontract. Mr. Jafari disagreed with the prices. The evidence is also clear that Mr. Pereira was only a labour supplier, that he was to supply trim carpentry work, and that Il Dreams was to supply the materials.
[53] Given this legal framework and evidence, I make the following findings on the extras:
a) Estimating carpentry materials: Obtaining materials was Il Dreams’ responsibility. Mr. Jafari denied instructing Mr. Pereira to assist him in estimating the materials. He maintained that he had Balmoral Lumber do this work. Yet, the Balmoral documents he produced show that Balmoral provided Il Dreams with an estimate only on September 14, 2018 and it was not clear how comprehensive this quote was. No one from Balmoral was called to explain the document. There was an August 13, 2018 estimate from another company, but the utility and comprehensiveness of this quote was not clear as no one from that company was called either. Mr. Jafari’s evidence was therefore hearsay. Mr. Pereira on the other hand produced text messages he sent to Mr. Jafari in early September, 2018 containing estimates of lumber. Given this evidence, and my negative view of Mr. Jafari’s credibility, I accept that this work was done on instruction. As to the quantum, there were no time sheets, but the claimed time was uncontested and was not unreasonable. I accept this extra.
b) Packing up and delivering material: Delivering material to the site was Il Dream’s responsibility. Mr. Pereira states in his first affidavit that, at Mr. Jafari’s request, he assisted Mr. Jafari with this work in September, 2018. Mr. Jafari denies this. This is a credibility issue. That there is no documentary corroboration does not surprise me as the two men did much of their business verbally. Because of my generally more positive view of Mr. Pereira’s credibility, I accept his evidence over that of Mr. Jafari. The amount claimed is also uncorroborated but was not contested and was not unreasonable. I accept this extra.
c) Repairing framing deficiencies: There is no dispute that this work was done on instruction. Mr. Jafari alleges that this work was the correction of Mr. Pereira’s own deficiencies, not the framer’s work. Mr. Pereira’s evidence in his affidavit was specific – the framing of the doors did not leave enough of an opening to accommodate the doors. This problem clearly concerned the work of the framer, not the trim carpenter. As to the claimed quantum, again there were no time sheets, but the amount was not contested and does not seem unreasonable. I accept this extra.
d) Change of bedroom door: Again, there is no dispute that this work was done on instruction. Mr. Jafari alleges again that this work was the correction of Mr. Pereira’s own deficiency work. Mr. Pereira again was specific in his evidence. He said he installed the bedroom door with the swing in one direction as instructed by Mr. Jafari. The owner then wanted that changed to have the door swing in the other direction. I simply do not accept Mr. Jafari’s evidence. It does not seem credible that Mr. Pereira would install a door that swung in a direction that conflicted with plans or instructions. This was a change for which Mr. Pereira is entitled to extra costs. The claimed amount is reasonable. I accept this extra.
e) False work calls: This is a more problematic claim as it does not involve extra work. It involves wasted time and delay. As such, in my view, it was incumbent on Mr. Pereira to give timely notice to Mr. Jafari of the interference so that Mr. Jafari could mitigate the damage. Mr. Pereira gave no evidence that he gave such notice to Mr. Jafari. There was also no timely invoice or text to Mr. Jafari showing immediately the alleged wasted time. In Dirm there were timely invoices rendered for the wasted time. There was no such documentation here. Mr. Jafari also complained that there is no evidence that Mr. Pereira actually paid his crew, which is a valid complaint. I, therefore, find that Mr. Pereira has failed to prove this claim.
[54] I, therefore, find that Mr. Pereira is entitled to the indicated four extras in the total amount of $3,225. I deny the fifth claimed extra for false work calls.
e) Was there a contract repudiation and, if so, by whom?
[55] There is no doubt that Mr. Pereira’s work was ended on November 14, 2018 before his contract scope was complete. Each side blames the other for repudiating the Pereira subcontract. Mr. Pereira argues that Il Dreams failed to pay him properly, failed to supply materials properly, failed to complete prerequisite work properly, and removed him from the site. The defendants allege that Mr. Pereira repudiated the subcontract by demanding payment when it was not due and withdrawing services. Contract repudiation happens when there is a contract breach so fundamental that it goes to the root of the contract; see Heintzman and Goldsmith on Building Contracts, 5th Edition, op. cit., page 2.
[56] The payment issue is critical to this determination. Messrs. Pereira and Jafari agreed that the Pereira subcontract contemplated periodic payment based on the progress of the work and completion of items. It is undisputed that Ms. Amelhelali paid Mr. Pereira periodically on instruction from Mr. Jafari, that these payments totaled $15,000, and that her last payment was on October 20, 2018 in the amount of $4,000. This represents 53% of the $28,000 subcontract price and 48% of the subcontract price with the above noted extras. The defendants argue that that Mr. Pereira was only done with 40% of his contract scope by November 14, 2018, and that this payment was more than enough for what he had done. Mr. Pereira argues that he was done with 70% of his scope, if not more, and that he was being significantly underpaid.
[57] The most compelling evidence on this issue concerned the Artman contract document of November 20, 2018. This is the document that Mr. Jafari produced. Mr. Jafari stated it was for the completion of the carpentry work on the project. The contract price was for $15,000 plus HST. This document therefore represented a contemporaneous assessment by Artman and Mr. Jafari as to what carpentry work remained to be done.
[58] There were seven items of work listed. In his reply affidavit Mr. Pereira acknowledged that the first four items were included in his contact scope and described the reasons he did not complete them. He costed these four items at $3,388.61. HST must be added, which makes the cost estimates for those items total $3,829.13. The three items Mr. Pereira did not admit to being in his subcontract scope were the two exterior door casings, the two wine cellars and the garage window casing. These three items indeed do not appear in Mr. Pereria’s August 31, 2018 estimate.
[59] Taking $3,829.13 off of the subcontract price of $28,000 (without the extras) produces a total of $24,170.87. This figure is 86% of the subcontract price. The Pereira cost estimates may seem low when compared to the final Artman price, but not so much when that price is compared to what Ms. Amelhelali said she paid Artman, $12,000. But even doubling the Pereira estimates of the four items in his contract scope would produce a figure of $7,658.26, which, if taken off of the $28,000 subcontract price (without the extras), produces a total of $20,341.74. This is 73% of the subcontract price (without the extras). This exercise satisfies me that Mr. Pereira completed over 70% of his scope by November 14, 2018 as he claims.
[60] There was other evidence from Mr. Pereira that was not as compelling, but that nonetheless corroborated the above analysis. Mr. Pereira created a chart in his initial affidavit wherein he used his originally estimate of August 31, 2018 as the basis for his assessment of the percentage of his completion item-by-item. This chart produced a total of $34,184.93 for the value of the work completed, which was 82.33% of the estimate total of $41,250. Mr. Pereira produced five videos of his work that he took on November 15, 2018. Unfortunately, the two largest videos did not have audio. He also produced photographs of his work at that time. Without the assistance of an expert, it is difficult to determine the percentage of completion from these videos and photographs. What they do show though is that significant work had been done.
[61] Mr. Jafari produced photographs he took on November 22 and 28, 2018 to corroborate his estimate of 40% completion. Ms. Amelhelali obviously relied on Mr. Jafari when she gave the same estimate. Again, without the guidance of expert evidence, it is difficult to determine the percentage of completion from these photographs. As a result, I rely primarily on the above noted evidence about the Artman contract document. I also reiterate my generally negative view of Mr. Jafari’s credibility in discounting his evidence on this point.
[62] Il Dreams argued that Mr. Pereira was not entitled to payment as he had not completed any sections of his work. Mr. Pereira responded that Il Dreams had not completed prerequisite work and had not supplied him adequately with materials. In his first affidavit Mr. Pereira prepared a chart based on his August 31, 2018 estimate which contained detailed explanations for the lack of completion of sections. The chart showed that only 4 out of the 14 items were completed. As for the 10 items not completed, the consistent explanation was that Il Dreams had not completed prerequisite work such as the tile work, elevator installation and drywall, and that Il Dreams had not supplied necessary materials such as panels and rubber moulds.
[63] Mr. Jafari retorted in his affidavit that Mr. Pereira did not need to have the tile or elevator work finished to complete his work. This makes no sense to me as installations such as the archways, baseboards and wainscotting would rest on the floor, as stairs would abut drywall, and as the elevator doors surely could not be finally done before the elevator was in. These statements by Mr. Jafari were self-serving and not credible. I also reiterate my generally negative view of Mr. Jafari’s credibility. As a result, I find that Mr. Pereira had not completed his work because of the failure by Il Dreams to complete prerequisite work and provide necessary materials.
[64] It does not surprise me then that, despite the lack of completion of sections, Mr. Pereira was paid over half the subcontract price, $15,000. It was not his fault that his work proceeded this way. As a result, I find that the subcontract was amended by conduct to have Mr. Pereira paid periodically by percentage of overall completion.
[65] Accordingly, by November 14, 2018, with his work at least 70% done and having received his last payment over three weeks earlier on October 20, 2018 (as Ms. Amelhelali admitted), Mr. Pereira was owed at least $5,000 to $6,000, namely about 20% of the contract price. His demands for payment were reasonable.
[66] Then the issue is: which party terminated the Pereira subcontract? Mr. Pereira maintained that it was the defendants; the defendants assert that Mr. Pereira abandoned the subcontract. I find that it was Il Dreams who terminated and repudiated the subcontract based on the following evidence.
[67] On November 11, 2018 Mr. Jafari texted Mr. Pereira saying, “I think we can’t work together, come and take your stuff, you never going to be a business man.” He went on to accuse Mr. Pereira of making unreasonable payment demands. This was a clear sign that Il Dreams wanted to bring the subcontract to an end. Then on November 14, 2018 Mr. Jafari texted Mr. Pereira stating that he was taking the further step of bringing two other finishing contractors to the site. Mr. Pereira responded stating he had not left the site but that he needed payment.
[68] Mr. Pereira contacted Ms. Amelhelali who convened a site meeting between Messrs. Pereira and Jafari and Ms. Amelhelali on November 14, 2018. At this meeting, Mr. Pereira said he was not being paid. The defendants admit they then terminated the Pereira subcontract and required that he remove his material. Obviously, the reason for the subcontract termination was Mr. Pereira’s payment demands.
[69] Ms. Amelhelali and Mr. Pereira stated that it was Mr. Jafari who terminated, while Mr. Jafari stated that it was Ms. Amelhelali. I prefer the evidence of Ms. Amelhelali and Mr. Pereira for credibility reasons already stated. Furthermore, as Il Dreams was Mr. Pereira’s contracting party, Il Dreams would naturally be the one terminating. That is what I find. In the meantime, Mr. Pereira did not abandon the subcontract as he remained willing to work if he was paid properly and if he was properly supplied.
[70] I find that Il Dreams wrongfully repudiated the Pereira subcontract. By not paying Mr. Pereira properly Il Dreams made a fundamental breach of the Pereira subcontract; see D & M Steel Ltd. v. 51 Construction Ltd., 2018 ONSC 2171 at paragraphs 49 to 56. By denying Mr. Pereira materials and eventually access to the work site altogether Il Dreams made a further fundamental breach of the Pereira subcontract: see Penvidic Contracting Co. v. International Nickel Co. of Canada, 1975 CanLII 6 (SCC), [1976] 1 S.C.R. 267 (S.C.C.) at page 276, Wiebe v. Braun, 2011 MBQB 157 at paragraph 14, and Jozsa v. Charlwood-Sebazco, 2016 BCSC 78 at paragraph 65. By leaving the site and working on another project, which is what Mr. Pereira did on November 15, 2018, he accepted the Il Dreams wrongful contract repudiation and brought the subcontract to an end.
f) Is Mr. Pereira entitled to a lien?
[71] There was an issue as to whether Mr. Pereira preserved and perfected his lien in time. The last day of supply as stated on the Pereira claim for lien was November 13, 2018. Mr. Pereira was clear in his evidence that he worked to that date. The defendants admit this in their pleadings.
[72] Mr. Pereira registered his claim for lien on December 20, 2018. It was undisputed that the old Construction Act, R.S.O. 1990, c. C.30 (“CA”) applies. This means that Mr. Pereira had 45 days from the date of his last supply to preserve his lien. December 20, 2018 was 37 days from the date of last supply. I therefore find that the Pereira claim for lien was preserved in time.
[73] Under the old CA a subcontractor such as Mr. Pereira had 90 days from his last day of supply to perfect his lien. This action was commenced on February 11, 2019 and a certificate of action was issued and registered on the same day. This was on the 90th day after the last date of supply, November 13, 2018. I, therefore, find that Mr. Pereira perfected his lien.
g) What are the damages?
[74] By wrongfully repudiating the Pereira subcontract, Il Dreams is not entitled to assert its set-off and counterclaim for damages on account of alleged deficiency correction; see D & M Steel, op. cit., paragraph 49. Il Dreams denied Mr Pereira the opportunity every subcontractor has to correct his own deficiencies without price reduction. I, therefore, deny this set-off and counterclaim.
[75] Mr. Pereira, on the other hand, is entitled to claim his damages. What are they?
[76] By terminating the Pereira subcontract, Il Dreams did not honour the collateral warranty condition I have found attached to the subcontract price. As a result, I agree with Mr. Sanderson that the subcontract price reverted to $40,000.
[77] I have found that Mr. Pereira was at least 70% done with his work. He should be paid accordingly. 70% of $40,000 is $28,000. It is undisputed that Mr. Pereira was paid $15,000. This leaves a balance of $13,000. To that should be added the unpaid extras I have found Mr. Pereira entitled to, namely $3,225. This leaves a total of $16,225 that should be paid to Mr. Pereira for the work he completed. This is the amount of Mr. Pereira’s lien.
[78] I find that the liability of the defendants to Mr. Pereira for payment of this $16,225 is joint and several. It was undisputed that the holdback liability of Ms. Amelhelali on the Il Dreams contract well exceeds the entirety of this amount. As a result, she is liable to pay this amount by operation of the old CA section 23(1). Il Dreams is liable to pay the full amount because it was Mr. Pereira’s contracting party and his payor.
[79] As between each other, Il Dreams and Ms. Amelhelali claim contribution and indemnity by way of crossclaim. I have decided that as between each other the defendants must share this liability equally. Ms. Amelhelali was the ultimate beneficiary of Mr. Pereira’s services and should pay as a result. However, she was not involved in creating the collateral warranty Mr. Jafari and Mr. Pereira agreed to. This warranty makes up the bulk of the lien amount.
[80] There is another claim to be resolved. Mr. Pereira stated that he had a huge profit margin on this work, namely 60%. This was an admission that the defendants tried to use against Mr. Pereira arguing that he had more than enough “room” in his estimated price to agree to a reduction to $28,000 without condition. I do not accept that argument given the evidence about the collateral warranty as discussed above.
[81] The 60% profit margin was not contested. Because of the wrongful subcontract repudiation by Il Dreams, Mr. Pereira is entitled to breach of contract damages for loss of anticipated profits. I, therefore, find that Mr. Pereira has a valid claim for loss of profit damages as follows: $12,000 (the unearned portion of the $40,000 subcontract price) x 0.60 = $7,200. This liability rests only with Il Dreams as it was Mr. Pereira’s contractor.
VI. CONCLUSION
[82] In summary, I find that Mr. Pereira has a lien of $16,225 and that Il Dreams and Ms. Amelhelali are jointly and severally liable to Mr. Pereira to pay this amount. As between each other, they must pay this amount in equal shares. In addition, I find that Il Dreams is liable to pay Mr. Pereira $7,200 in breach of contract damages. The total of these two figures is $23,425.
[83] I directed that the parties file costs outlines concerning this reference. These documents are staggering given the modest amounts in issue. Mr. Pereira filed a bill of costs showing a total of $53,009.61 in partial indemnity costs and $77,922.53 in substantial indemnity costs. Il Dreams filed a bill of costs showing a total of $20,971.44 in partial indemnity costs, $27,895.56 in substantial indemnity costs and $34,820.27 in actual costs. Ms. Amelhelali filed a costs outline showing $31,043.93 in partial indemnity costs, 41,391.90 in substantial indemnity costs and $51,739.88 in actual costs.
[84] If the parties cannot agree on a costs award, Mr. Pereira must serve and file written submissions on costs of no more than three pages on or before January 28, 2022. Il Dreams and Ms. Amelhelali must deliver responding written submissions on costs of no more than three pages each on or before February 8, 2022. Anyone wishing to serve reply written submissions on costs can do so, but the reply cannot be more than one page and must be served on or before February 11, 2022.
Released: January 19, 2022 _____________________________
ASSOCIATE JUSTICE C. WIEBE
COURT FILE NO.: CV-19-614253
DATE: January 19, 2022
ONTARIO
SUPERIOR COURT OF JUSTICE
In the matter of the Construction Act, R.S.O. 1990, c. C.30
BETWEEN:
Rafael Pereira
Plaintiff
- and -
Il Dreams Homes Ltd. and Ashraf Amelhelali
Defendants
REASONS FOR JUDGMENT
Associate Justice C. Wiebe
Released: January 19, 2022