COURT FILE NOS.: 18-75300 and 18-75301
DATE: 2022/03/10
ONTARIO
SUPERIOR COURT OF JUSTICE
IN THE MATTER OF the Construction Lien Act, R.S.O. 1990, c. C.30, as amended
BETWEEN:
GREEN VIEW HEATING & COOLING INC.
Plaintiff
– and –
RETAIL AND FRANCHISE CONSTRUCTION GROUP INC. a.k.a. RFC GROUP, TOROVIN INVESTMENTS LTD., 2437408 ONTARIO CORP. and BOSTON PIZZA
Defendants
– and –
GREEN VIEW HEATING & COOLING INC.
Plaintiff
– and –
RETAIL AND FRANCHISE CONSTRUCTION GROUP INC. a.k.a. RFC GROUP, 2418138 ONTARIO INC., LAURENTIAN BANK OF CANADA and CAISSE POPULAIRE RIDEAU-VISION D’OTTAWA INC.
Defendants
Fabio M. Soccol, Counsel for the Plaintiff
Andrew D. Ferguson, Counsel for the Defendants
HEARD: November 22-26, and December 1, 2021
AMENDED REASONS FOR JUDGMENT
The text of the original Reasons for Judgment of January 20, 2022 was amended on March 10, 2022 and a description of the amendment is appended.
MCLEAN J.
[1] The trial covered the two actions noted above. The court notes that, on consent, the only two parties are the Green View Heating & Cooling Inc. (“Green View”) and the Retail and Franchise Construction Group Inc. (“RFC Group”). Green View was a corporation that was operated by Mr. Mensur Hodzic and RFC Group by Mr. Edin Sefic. Both actions relate to a construction agreement between Green View and RFC Group over providing HVAC duct work on two projects, one being a hotel near the airport in Ottawa. This is the Homewood project. The other one is a Boston Pizza restaurant in the Glebe area of Ottawa, known as the Boston Pizza project. The two principals, Mr. Hodzic and Mr. Sefic, were acquaintances. They both were from a similar national background and perhaps their familiarity led to the lack of paperwork and documentation about these two construction projects. It seems that each participant had their own ideas about the nature of the work that was to be done. Indeed, when we consider the evidence, there may never have been an agreement in detail as to the actual nature of that work.
FACTUAL BASIS
[2] As said, there were two construction projects. First, the Homewood project. In that, Green View offered to do duct work according to certain construction drawings. The amount of the payment for this work was $190,292, that is $168,400 plus HST. The Boston Pizza project was to yield the sum of $135,000 plus HST, or $152,550. As stated before, both projects were based on certain construction drawings. These appeared to be “Build to” drawings because they were both incorporated either directly or by implication into the arrangements between the parties. However, what the work actually was is where the problems arose according to the evidence brought forward. There was also an issue as to whether the work was completed by Green View. There is also a question of extras and back charges. Scott Schedules were provided by the parties on both projects. It is the court’s view that the real issue between the parties is actually the nature of the accounts. It has been suggested that the issue is one of credibility but after hearing the parties, there are credibility issues on both sides. I asked both parties to provide further submissions regarding the contract itself, on the issue of whether a contract has been proved in either case. Those submissions were provided on December 1, 2021. Another issue that I canvassed with counsel was if there was no contract proved whether the matter could be dealt with as a question of quantum meruit. When I consider the submissions on those issues and the matter as a whole, it seems that it makes little difference whether the analysis is carried out based on quantum meruit or as a contract. The court notes that the parties seem to have agreed that a contract exists. The difficulty is what the nature of the contract is, in and of itself. It seems really to be one where the court must consider what work was done by one side or the other and what must be paid for.
[3] Both parties have agreed that there is a contract in place. As indicated, the difficulty relates to what the terms of the contract were and whether those terms were fulfilled.
[4] As said, there were two projects. Indeed, there are two separate claims. I repeat, the Homewood project has to do with the HVAC duct work in a hotel and the other concerning duct work in a Boston Pizza restaurant. In both cases, the defendant is RFC group as the general contractor, and Green View (the Plaintiffs) being a subcontractor doing the HVAC work. In February or March 2017, the parties agreed orally that Green View would do the HVAC work on Homewood. On June 3, 2017 Green View provided the quote (Caselines, at p. A274). RFC Group did not reply to this. It is agreed that this particular document contains the price and scope of work. However, as the matter proceeded the terms became more variable, or indeed, foggier. In RFC Group’s internal email, it quotes, “His price of $168,400 is for sheet metal only” (Caselines, at p. A719). A further email on April 21, 2017 (Caselines, at p. A240), lists various other equipment. However, in the background to all of this, was the joint understanding that the installation should be as per the technical construction drawings.
[5] At the trial there was very little discussion about the import of the drawings. Despite this, everything was based on them: the placement of the ducts, the types of ducts and devices, etc., and their installation. It is noted that it is even seemingly the basis for the alleged remediations and extras. The issue about the drawings being the governing document is unquestioned. However, there are many side agreements or understandings. These are unfortunately still, even though a trial was held, without any clarity. For example, the discussion between the parties on the job site and more particularly the understanding that arose as a result of those discussions. Perhaps the testimony is lacking because of the passage of time and the fact that the principals had other projects. Here is an example. Mr. Sefic stated that he made cash payments which turned out to be e-transfers, not cash themselves. We consider the evidence of all the payments that were agreed upon, except for an alleged payment of $10,000 in cash. This will be dealt with later. There is little point in rehearsing basic contract law. Contract, breach, and damages are all necessary. Here, it seems the contract law itself does not fit well with the issues that are being litigated; the very lack of contractual clarity being in the forefront. Things might be less opaque from a legal point of view if the two contracts and work completed were dealt with separately. However, the parties did not treat them as such. Time and workers were shared across the two projects. The lack of payment on the Boston Pizza project led to the stoppage of work on the Homewood project.
FACTS and ANALYSIS
[6] Although the two lawsuits were combined, I will deal with them now separately. First, the Homewood project. The contract price was seemingly agreed upon in the Scott Schedules at $190,292, being $168,400 plus HST. The scope of the work indicates that sheet metal duct work was to be provided as per the drawings. There was a side agreement to provide PTAC units. These are individual room air-conditioning units. This claim was paid and the claim for this price is not being put forth in this litigation. There is an extra claim of $16,235.43 for ducts in the furnace room, the electrical room, and the elevator. This is backed up by charges noted at pp. A374, A375, and A437 in Caselines. It is noted that these charges were flowed through, by RFC Group, to the owner as an extra (Caselines, at p. A351). It is noted that RFC Group was paid over $100,000 for the extras on this contract. Therefore, these extras will be allowed and found proven in the claim.
[7] There is some dispute as to payment from Homewood. There seems to be a dispute regarding the markup on the PTAC units. The court notes that Green View has already been paid for this as they put a markup in the invoice provided for the PTAC units to RFC Group. Therefore, the claim for further markup will be disallowed and the sum of $9,462 will be credited to the payments made by RFC Group.
[8] There is also an issue with the alleged $10,000 payment in cash. (This is in addition to the other agreed amounts paid of $135,000.) It was apparently paid in cash to the principal of Green View, in Niagara, where Green View had another project. It was said that it was delivered to Green View. I find with regard to that payment, from the evidence of the parties called and the workmen for RFC Group, that the court is satisfied on the balance of probabilities that it was paid. Therefore, the total owing, when taking into consideration all the extras and the payments made, will net out at $52,035.
[9] However, there are still issues with respect to the back charges that were billed by DAG Air for $47,348. Clearly, there is a percentage of the work not completed. It would seem on the evidence from the various witnesses, that five or six percent of the work was left outstanding. Regarding these back charges of $47,348, the invoices and evidence of the completion are not clear. There are further difficulties with the invoices in that it is not clear whether some of these items were already claimed as extras from the owner, and whether they were paid by that owner. Clearly, double payment is not appropriate. Therefore, we will only deduct roughly five percent of the claimed back charges or $2,600. Therefore, the net amount would be $52,035 minus $2,600 leaving a total of $49,435 and that will be the amount ordered payable on this particular part of the claim.
[10] Next is the Boston Pizza claim. In October and November 2017, Boston Pizza was discussed between the principals of the two corporations. An offer was made by RFC Group to Green View on October 3, 2017. It seemed to provide for the rough-in and finished duct work as per the drawings (Caselines, p. A466). Green View replied (Caselines, at p. A469). In item 2 of the revised Scott Schedules, each party puts their position forward with regard to the scope of work and how its details were put forward. However, at p. A469 in Caselines, there is a description of the scope of work in some detail and I quote:
Installation of HVAC services including the following:
• duct work as per drawings,
• three rooftop units [RTU 1, 2, 3],
• make up air unit [MUA 1],
• exhaust fans [EF 1, 2, 3, 4, 5],
• two furnaces [AHU 1, 2],
• two AC units [AC 1, 2],
• gas line and finishing grills.
[11] Apparently, Mr. Sefic, on behalf of RFC Group, accepted this proposal. Further, because of that, paid $40,000 as a deposit to Green View in November 2017. There was a problem of how payments were to be made. The understanding by Green View was that progress payment should be made, however, aside from the $40,000 deposit, no progress payments were made. On December 3, 2017, Green View walked off the job. Progress payments had not been made as promised and as testified by Mr. Hodzic. Further, in November, Mr. Hodzic sent a notice of default to RFC Group (Caselines, p. A540, A541). There was also a demand for $111,000 which was later reduced to $84,000 or 80 percent of the completed work (Caselines, p. A542). There was some debate about this, and a meeting was held which did not ameliorate the situation. Four days later, Green View left the job site. Mr. Sefic admitted that 50 to 60 percent of the work was done. There was also a dispute with respect to the hoods over the stoves. An extra was claimed for this in the amount of $27,120. Apparently, the stove hoods were made of heavier gauge metal and the joints in them had to be welded. This was a special order according to the principal for Green View. However, when I consider the drawings themselves, the stove hoods seem to be in the drawings. In the court’s view, they are part of the duct work – that extra will not be allowed. Therefore, with the contract price of $137,295, and the reduction of the $40,000 deposit already paid, as a result, the net amount outstanding is $97,295. There was also the issue of the back charge for the cost to complete. DAG Air was called in to complete the project. The problem with their invoices is that it is difficult to ascertain from them as they lack specificity as to what work was actually done. When I consider their evidence as a whole, I am of the view that the cost to complete was $29,101 and, therefore, that will be deducted from the amount otherwise owing.
[12] There was also an issue with respect to some damage being done to the plumbing by Green View. That is because of the cramped nature of the construction site in the restaurant. Green View had to remove certain plumbing fixtures and plumbing lines that had already been placed to allow them to run their duct work. I consider the evidence as a whole with regard to the repair of the plumbing lines and the damages that Green View allegedly committed and allow that back charge of $22,000. The final claim for this matter is the issue on the Scott Schedules regarding the leak around the exhaust fan. The difficulties with this back charge are that it is not clear on the evidence as to who was responsible for dealing with these exhaust fans. Indeed, it is further problematic as to when the leak occurred as Green View had left the site. The court notes that the bill was received in January. Therefore, that particular claim is not allowed. The net result is as follows. The contract amount claimed was $137,295 for which a deposit of $40,000 had already been paid. Therefore, the remaining net amount value of the contract was $97,295. From that will be deducted the cost to complete of $29,101 as well as the repair to the plumbing of $22,000. Therefore, the net amount owing to Green View will be $46,194.
[13] In summary, damages will be awarded to Greenview in the amount of $49,435 (for Homewood) and $46,194 (for Boston Pizza).
[14] With respect to the claims for liens themselves, these are both admitted. Therefore, there will be a judgment to issue in those respective amounts including an order that those amounts and any applicable costs will be paid out of the funds that are paid into court after any appeal period has elapsed.
[15] Both parties will have two weeks from the date of the release of this decision to make written submissions of one page each as to costs.
Mr. Justice H. McLean
Released: March 10, 2022
ADDENDUM
[1] This is an addendum to a judgment issued in January 2022. An error contained in the calculations in the judgment was brought to my attention by joint letter from counsel. After consideration of the matter again, it is the court's view that there were certain mistakes in the calculation set forth in that judgment.
[2] In the discussion regarding Boston Pizza, there was clearly an error in the contract price set forth in the judgment. It should have read $152,550 in paragraph 11. The court further omitted the two agreed upon chargebacks namely $2,254.35 and $1,423.24 (items 17 and 23 of the Scott Schedules). The net result of these changes is that the judgment to Green View Heating & Cooling Inc., on this part portion of the claim is changed to $57,771.41. There is no change to the Homewood claim. The judgment is amended accordingly.
[3] The other matter that the court must decide is the matter of costs. This was a very short trial and therefore costs should be proportional. The parties have provided bills of cost on a global basis combining both claims. The plaintiff suggests $67,918.82 and the defendant $48,423.89. Both are on a partial indemnity basis. There are no Rule 49 offers for consideration. I have considered the time involved and the other considerations in Rule 57.01(1). The plaintiff shall have costs in the amount of $57,000.00 which, if costs are to be apportioned 60%, then $34,200 for Homewood and $22,800 for Boston Pizza, all payable from the amounts paid into court in the first instance.
COURT FILE NOS.: 18-75300 and 18-75301
DATE: 2022/03/10
ONTARIO
SUPERIOR COURT OF JUSTICE
IN THE MATTER OF the Construction Lien Act, R.S.O. 1990, c. C.30, as amended
BETWEEN:
GREEN VIEW HEATING & COOLING INC.
Plaintiff
– and –
RETAIL AND FRANCHISE CONSTRUCTION GROUP INC. a.k.a. RFC GROUP, TOROVIN INVESTMENTS LTD., 2437408 ONTARIO CORP. and BOSTON PIZZA
Defendants
– and –
GREEN VIEW HEATING & COOLING INC.
Plaintiff
– and –
RETAIL AND FRANCHISE CONSTRUCTION GROUP INC. a.k.a. RFC GROUP, 2418138 ONTARIO INC., LAURENTIAN BANK OF CANADA and CAISSE POPULAIRE RIDEAU-VISION D’OTTAWA INC.
Defendants
AMENDED REASONS FOR JUDGMENT
MCLEAN J.
Released: March 10, 2022