COURT FILE NO.: CV-14-504636

DATE: 20221108

ONTARIO SUPERIOR COURT OF JUSTICE

RE: Mount Royal Painting Inc. c.o.b. Epoxy Solutions, Plaintiff

-and-

Unifor Canada Inc. and Lomax Management Inc., Defendant

BEFORE: Robert Centa J.

COUNSEL: Angela Assuras, for the plaintiff

Catherine Willson, for the defendant

HEARD: October 25, 2022

ENDORSEMENT

[1] The plaintiff, Mount Royal Painting Inc. c.o.b. as Epoxy Solutions, moves to oppose confirmation of the report of Associate Justice Wiebe dated April 6, 2020. The report declared that Epoxy Solutions was entitled to a lien under the Construction Act, R.S.O. 1990, c. C.30, upon the interest of the defendant Unifor Canada Inc. in the premises located at 445 King Street East, Toronto, in the amount of $72,084.83. Associate Justice Wiebe also ordered Unifor Canada Inc. to pay prejudgment interest pursuant to the Courts of Justice Act, R.S.O. 1990, c. C.43, and to pay costs of the reference totalling $140,000.

[2] By any measure, this was an extraordinary reference under the Construction Act given the amounts in dispute. Associate Justice Wiebe was required to exercise significant case management functions and to conduct a 16-day trial. Both sides incurred legal fees that significantly exceeded the amounts in dispute.

[3] I find that Associate Justice Wiebe did not make an error of law or a palpable and overriding error in determining the facts of the case. I dismiss Epoxy Solutions’ motion for the reasons that follow.

Facts and process

[4] The background facts in this case are well set out in the reasons for decision of Associate Justice Wiebe: Mount Royal Painting Inc. v. Lomax Management Inc., 2019 ONSC 7071, 5 C.L.R. (5th) 156. I will not repeat them except as necessary to address the issues raised by Epoxy Solutions on this motion.

[5] Epoxy Solutions made its claim in relation to flooring work it did on a four-story commercial property located at 445 King Street East, Toronto. The property was owned by Unifor Canada Inc., a subsidiary of an Italian manufacturer of high-end office interiors named Unifor SpA. Unifor Canada Inc. leased the premises to Italinteriors Inc., which sold the furniture.

[6] Associate Justice Wiebe convened 15 trial management conferences, which took place on January 5, 2015, August 10, 2015, September 24, 2015, October 9, 2015, January 11, 2016, March 1, 2016, May 3, 2016, August 9, 2016, December 2, 2016, April 3, 2017, August 1, 2017, September 20, 2017, May 1, 2018, August 1, 2018, and March 27, 2019.

[7] The trial of this proceeding took place over 16 days over two years. The trial hearing took place on October 3, 4 and 5, 2017 and April 2, 3, 4, 9, 10, 11, 12, 16, 17, 18, 25, 26 and May 10, 2019. During the trial, the parties called live evidence from seven witnesses for Epoxy Solutions (Roger Hildebrand, Ben Garrett, Frank Cimmino, Richard Gabatto, Trent McIsaac, Valerie Sherbondy and Murray Heywood) and nine witnesses for the defendants (John Gillanders, Robert Hodgins, Barry Smith Jr., Richard Jeffrey, Jerry Dyczkowskyj, Anna Trevisan, Carlo Trevisan, Rick Derbecker and Brian O'Farrell). In paragraphs 35 to 55 of the reasons for decision, Associate Justice Wiebe carefully explained his credibility findings in respect of each of the key witnesses.

[8] Associate Justice Wiebe found that:

a. Epoxy Solutions’ contract was with Unifor Canada Inc., not with Lomax Management Inc.[^1]

b. Unifor Canada Inc. fundamentally breached the contract with Epoxy Solutions sometime between January 17, 2014, and early February 2014. Epoxy Solutions accepted this repudiation between March 11 and March 19, 2014. Unifor Canada Inc.’s damages claim was, therefore, dismissed.

c. Epoxy Solutions did not fundamentally breach its contract with Unifor Canada Inc. Associate Justice Wiebe awarded damages to Epoxy Solutions and granted it a lien in the amount of $124,946.93, subject to a set-off, which is described below.

d. Epoxy Solutions’ damages must be adjusted to reflect the fact that it installed an epoxy floor that was not specified. As Epoxy Solutions would have been required to replace the incorrect epoxy with the correct product, it was not entitled to its full expectation measure of damages as if it had not unilaterally introduced a fundamental change in work scope. The cost of remediation might well have exceeded the total of Epoxy Solutions’ damages. Associate Justice Wiebe, therefore, adopted an approach that set-off the difference between the cost between the contract price for the correct product and the incorrect product that Epoxy Solutions installed. The difference in cost was $52,862.10, which was set off against Epoxy Solutions’ damages award producing a net award of $72,084.83.

e. Partial indemnity costs of $140,000 should be awarded to Epoxy Solutions for the lien proceedings.

f. Associate Justice Wiebe declined to award Epoxy Solutions interest at the rate of 24% per year and instead ordered prejudgement interest of 1.3% starting on December 22, 2013, in accordance with the provisions of the Courts of Justice Act.

[9] Epoxy Solutions submits that Associate Justice Wiebe erred in four ways: allowing Unifor Canada Inc. to set off $52,862.10against the amounts it owed; failing to award a 10% service charge on overdue accounts; failing to award prejudgment interest at the rate of 24% per year; and awarding Epoxy Solutions only $140,000 in costs.

Standard of review

[10] Epoxy Solutions moves under rule 54.09 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. Under rule 54.09(5), I may confirm the report in whole or in part or make such other order as is just.

[11] I am to give the decision below considerable deference. This is particularly the case where, as here, the reference involved live evidence. I should confirm the report unless Associate Justice Wiebe made an error in principle, exceeded his jurisdiction, patently misapprehended the evidence, or if I find the award to be unsatisfactory on all of the evidence: Demir v. Kilic, 2018 ONSC 7279, 97 C.L.R. (4th) 191 (Div. Ct.), at para. 24; Scott, Pichelli & Easter Ltd. et al. v. Dupont Developments Ltd. et al., 2019 ONSC 4555, 90 C.L.R. (4th) 191, at paras. 22 to 24, rev’d on other grounds, 2021 ONSC 6579, 157 O.R. (3d) 772 (Div. Ct.); R.P. International Forest Products Ltd. v. DiFlorio, 2010 ONSC 4648; RSG Mechanical Incorporated v. 1398796 Ontario Inc., 2014 ONSC 3936, 38 C.L.R. (4th) 236; Jordan v. McKenzie (1987), 26 C.P.C. (2d) 193 (Ont. H.C.), aff’d 39 C.P.C. (2d) 217 (C.A.).

[12] The standard of review is that of a true appeal: correctness on questions of law; palpable and overriding error on questions of fact: Conrad v. Feldbar Construction Co. (2004), 2004 34354 (ON SC), 70 O.R. (3d) 298 (S.C.); Parma General Contractors Inc. v. Aloe et al., 2015 ONSC 6229, 55 C.L.R. (4th) 316, at paras. 10 to 19, applying Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235. In Parma General Contractors, at para. 19, Brown J. described the role of the judge on this type of motion as follows:

It is not the role of an appellate court to interfere with a conclusion based on an inference drawn from the evidence presented before the trial judge, reassess the weight to be assigned to underlying facts presented at trial, or to interfere with findings of credibility that are based on observation of the witnesses and their evidence. Where evidence exists that supports a conclusion, interference with the conclusion entails interference with the weight assigned by the trial judge to the various pieces of evidence adduced. Where there is no palpable and overriding error with respect to the underlying facts relied on by the trial judge in drawing an inference, it is only where the inference drawing process itself is palpable in error that an appellate court could interfere with the factual conclusion. It is not the role of the appellate court to interfere with factual conclusions with which it may have a difference of opinion regarding the weight to be assigned to the evidence and underlying facts: Housen v. Nikolaisen, supra, at paras. 21-25.

[13] In my view, many of Epoxy Solutions’ submissions invite me to look at passages from transcripts in isolation, rather than in the context of all the evidence and submissions at the reference. Similarly, Epoxy Solutions challenged certain decisions made by Associate Justice Wiebe without sufficient regard to the overlapping matrix of decisions that Associate Justice Wiebe made to resolve the case. I do not think this is the right approach to take.

[14] Associate Justice Wiebe heard an enormous amount of highly technical and detailed evidence. He made a series of interconnected findings based on his review of that evidence. Even where I might have assigned different weight to the evidence and the underlying facts, that is not a sufficient basis to interfere with factual conclusions: Luxterior Design Corp. v. Gelfand, 2020 ONSC 446, 10 C.L.R. (5th) 310 (Div. Ct.). It is not fair to the record, nor would it show appropriate deference to the decision of Associate Justice Wiebe to examine short exchanges with counsel in isolation or to focus on one finding removed from its context.

No error in setting off $52,862.10

[15] Associate Justice Wiebe held that Epoxy Solutions was entitled to a lien and damages judgment against Unifor Canada Inc. in the amount of $124,946.93 less $52,862.10, which Associate Justice Wiebe described as a “set-off to be applied to the Epoxy [Solutions’ damage award] to account for its installation of the wrong epoxy.”

[16] It is important to situate Associate Justice Wiebe’s set-off decision within the totality of the evidence called at the 16-day trial and the many findings of fact that supported his 26-page decision.

[17] Epoxy Solutions pleaded a claim for $130,961.40 and damages of $11,586.32 arising from its installation of an epoxy floor. The defendants’ defence evolved over time and by the time of trial, they asserted (among other claims) that Epoxy Solutions breached the contract by not installing the specified epoxy floor. Unifor Canada Inc. sought damages for breach of contract in the amount of $113,544.53.

Epoxy Solutions unilaterally applied a different epoxy on the floors

[18] Associate Justice Wiebe found as a fact that the project specifications called for pure white, glossy floors and specified that Epoxy Solutions would apply the epoxy known as “Sikafloor 261 (#5).” Epoxy Solutions quoted on that job and, after some negotiations, on June 25, 2012, Epoxy Solutions and Unifor Canada Inc. agreed in a “letter of intent” that Epoxy Solutions would be paid $137,800 to install the Sikafloor 261 (#5) and to complete the associated work. Associate Justice Wiebe found as a fact that the letter of intent was the binding contract between Epoxy Solutions and Unifor Canada Inc.

[19] Epoxy Solutions applied the epoxy to the floors in several coats between about August 2013 and March 2014. Epoxy Solutions issued eight bills for its work, which it represented was in accordance with the letter of intent.

[20] In December, representatives of Unifor Canada Inc. began to have concerns about the unevenness of the floors and the quality of the work. Buffing the floors did not solve the problems. Associate Justice Wiebe found as facts that on February 11, 2014, the project manager wrote to Epoxy Solutions and asked if it had in fact applied Sikafloor 261 (#5) and that Epoxy Solutions never responded to this message. Associate Justice Wiebe concluded, at para. 96, that Epoxy “evaded disclosing this vital change” which was a misrepresentation that Epoxy Solutions had applied Sikafloor 261 (#5).

[21] The parties met on March 19, 2014, to discuss the complaints about the floors but they reached no resolution of the issues. On March 26, 2014, Epoxy Solutions registered its claim for a lien of $130,961.40.

Until the eve of trial, Epoxy Solutions denied applying a different epoxy

[22] At examinations for discovery on March 27, 2015, Roger Hildebrand, Epoxy Solutions’ principal, emphatically denied that the company deviated from the letter of intent and applied any product other than Sikafloor 261 (#5). Mr. Hildebrand repeated this evidence in a subsequent affidavit.

[23] In 2015 and 2016, there were a number of case conferences over the issue of whether or not Epoxy Solutions would be permitted to conduct destructive floor testing to determine the composition of the floor topping. On August 29, 2016, this dispute was finally resolved by a consent order of Associate Justice Wiebe. Unifor Canada Inc. agreed to limit its complaints about the work performed by Epoxy Solutions to the orange peel finish, the unevenness of the floors and the dust and debris in the finish. Unifor Canada Inc. would be deemed to accept that Epoxy Solutions used the products required by the letter of intent and in the proper layers.

[24] Shortly before trial, Unifor Canada Inc. obtained access to the file of one of Epoxy Solutions’ consultants. Material in the file indicate that Epoxy Solutions had not installed Sikafloor 261 (#1) but had instead used Sikafloor 261 (#1) a less expensive product with a shorter lifespan that, unlike Sikafloor 261 (#5), contained no aggregate.

[25] Unsurprisingly, at the commencement of trial on October 3, 2017, Unifor Canada Inc. sought leave to amend the consent order dated August 29, 2016, so that it could assert that Epoxy Solutions applied an inferior product contrary to the letter of intent. Epoxy Solutions opposed this request. Epoxy Solutions’ first witness then testified that, in fact, Epoxy Solutions installed Sikafloor 261 (#1). Associate Justice Wiebe adjourned the trial to allow Unifor Canada Inc. to bring a motion to amend the consent order issued on August 29, 2016. At the return of the motion on April 10, 2018, Epoxy Solutions no longer opposed the amendment, but sought costs thrown away. Associate Justice Wiebe amended the order and permitted Unifor Canada Inc. to raise the product issue at the trial. Associate Justice Wiebe did not award any costs to Epoxy Solutions.

Epoxy Solutions did not fundamentally breach the contract by applying a different epoxy

[26] As noted above, Associate Justice Wiebe concluded that Unifor Canada Inc. fundamentally breached the contract with Epoxy Solutions sometime between January 17, 2014, and early February 2014. Epoxy Solutions accepted this repudiation between March 11 and March 19, 2014.

[27] Associate Justice Wiebe also found that Epoxy Solutions did not fundamentally breach the contract. Associate Justice Wiebe found that the floor had an orange peel surface, was uneven, and contained debris. Associate Justice Wiebe found that these features could have been fixed by removing and replacing the surface coat and grinding down the floor undulations, as suggested by one of the experts, Mr. Vissa, but that Unifor Canada Inc. never gave Epoxy Solutions the opportunity to remediate these deficiencies, whether or not Epoxy Solutions was responsible for them. Therefore, these deficiencies could not amount to a repudiation of the contract: Dirm 2010 Inc. v. Ontario (Minister of Infrastructure), 2017 ONSC 2174, 68 C.L.R. (4th) 54, at para. 310; and C. S. Bachly Builders Ltd. v. Lajlo, 2008 CarswellOnt 6542 (S.C.), at para. 84.

[28] Associate Justice Wiebe was more troubled by Epoxy Solutions using the wrong epoxy. The associate justice found that Epoxy Solutions had a contractual obligation to apply Sikafloor 261 (#5) but instead applied Sikafloor 261 (#1), which had a shorter lifespan. He found as a fact, at para. 93, that this was a “fundamental change in work scope that Epoxy [Solutions] unilaterally introduced.” Associate Justice Wiebe found that Epoxy Solutions should have frankly disclosed this “vital change” to Unifor Canada Inc. but did not do so. Instead, Unifor Canada Inc. did not learn of this change until the eve of trial.

[29] Nevertheless, Associate Justice Wiebe concluded that Epoxy Solutions had not fundamentally breached the contract because Unifor Canada Inc. had already done so. Associate Justice Wiebe noted that the floor could have been remediated with the proper epoxy by grinding away the surface coat and all the layers of epoxy and starting over.

Calculating Epoxy Solutions’ damages in light of its unilateral decision to apply a different epoxy

[30] Because Unifor Canada Inc. had repudiated the contract, Associate Justice Wiebe denied the entirety of its damages claim. Associate Justice Wiebe then turned to Epoxy Solutions’ claim for a lien and damages. Unifor Canada Inc. did not contest the bulk of Epoxy Solutions’ claim. It did, however, submit that “there should be a set-off of the cost saving it alleges Epoxy [Solutions] enjoyed as a result of having wrongfully not installed the specified [Sikafloor] 261 (#5).”

[31] Associate Justice Wiebe noted that Epoxy Solutions’ damages claim was limited to what it reasonably could have recovered if Unifor Canada Inc. had performed its end of the bargain and paid Epoxy Solutions’ accounts. That limit meant that the damage award must reflect the cost that Epoxy Solutions would have incurred to correct any deficiencies. Associate Justice Wiebe had already found as a fact that Epoxy Solutions unilaterally installed an epoxy floor that was not specified and had a different life expectancy than the epoxy it promised to install. Associate Justice Wiebe found that Epoxy Solutions would have had to remove the surface coat and the Sikafloor 261 (#1) and replace it with Sikafloor 261 (#5).

[32] Associate Justice Wiebe considered two options presented by counsel for Unifor Canada Inc.:

a. reduce the damages claim by an amount equal to the cost of repair i.e., the cost to grind off the Sikafloor 261 (#1) and urethane coatings and to then install the Sikafloor 261 (#5);

b. reduce the damages claim by an amount equal to the windfall, the difference in the contract price for installing the Sikafloor 261 (#5) and the cost Epoxy Solutions actually incurred installing the Sikafloor 261 (#1).

[33] Counsel made submissions on the appropriate calculations based on the evidence before Associate Justice Wiebe. No expert evidence was called. Counsel for Unifor Canada Inc. submitted that the portion of the Epoxy Solutions contract attributable to the epoxy floor was $73,340 and that the cost of installing the incorrect epoxy floor was $20,857. The windfall amount was, therefore, the difference between $73,450.00 and $20,857.90 or $52,862.10.

[34] Associate Justice Wiebe accepted this approach for three reasons:

a. Epoxy Solutions submitted there should be no set-off but did not challenge the analysis of counsel for Unifor Canada Inc.;

b. The figure was reasonable given the evidence that it would cost $40,000 to repair the orange peel surface, unevenness, and debris and that the cost of replacing the epoxy would undoubtedly cost more than that; and

c. It was not appropriate to award the much higher amount to replace the floor as there was no credible evidence to calculate that amount.

[35] Associate Justice Wiebe concluded, at para. 130:

In the circumstances, based on the evidence presented, [counsel for Unifor Canada Inc.s’] quantum meruit analysis seems to be a reasonable assessment of the set-off to be applied to the Epoxy [Solutions] to account for its installation of the wrong epoxy. The set-off will be $52,862.10.

No basis to interfere with Associate Justice Wiebe’s conclusions

[36] Epoxy Solutions submits that Associate Justice Wiebe erred in setting off this amount for four reasons:

a. The set-off was not an issue at trial;

b. Epoxy Solutions objected to this approach at trial;

c. The set-off was inconsistent with the law of damages; and

d. There was no evidentiary foundation for the award and Associate Justice Wiebe relied on incorrect assumptions.

[37] I do not accept Epoxy Solutions’ submissions. I find that Associate Justice Wiebe did not make an error in principle, exceed his jurisdiction, or patently misapprehended the evidence in deciding to reduce the damages awarded to Epoxy Solutions by $52,862.10. This decision was integrally connected to the many findings of fact Associate Justice Wiebe made about the dispute between the parties and in his assessment of how to resolve that dispute fairly.

The issue of a set-off was raised at trial

[38] Epoxy Solutions submits that the issue of set-off was not an issue at trial and that there was no claim for set-off in the original statement of defence. In addition, Unifor Canada Inc. did not amend its statement of defence and counterclaim at the resumption of the trial and only in closing submissions did Unifor Canada Inc. raise the issue of a set-off. Therefore, Epoxy Solutions submits, Associate Justice Wiebe erred by considering the request. I would not give effect to these submissions.

[39] First, I do not think Epoxy Solutions can complain that the original statement of defence did not contain a more specific claim for set-off related to the installation of the wrong epoxy. Associate Justice Wiebe found that, in February 2014, Epoxy Solutions effectively misrepresented to Unifor Canada Inc. that it had installed the correct epoxy and provided incorrect evidence on this point up to trial. In these circumstances, it would be unfair to prevent Unifor Canada Inc. from raising this issue because it did not do so at the outset of the case.

[40] Second, Unifor Canada Inc. did raise a claim for a set-off in paragraphs 15 and 19 of the statement of defence (albeit without reference to the issue related to the application of the incorrect epoxy). Epoxy Solutions joined issue on this pleading and submitted at paragraph 11 of its reply and defence to counterclaim that Unifor Canada Inc. was not entitled to a legal or equitable set-off.

[41] Third, if Epoxy Solutions was taken by surprise by the specific submissions made by counsel for Unifor Canada Inc., it could have requested an adjournment or specified what additional evidence it wished to call to address any unfairness. Associate Justice Wiebe offered to schedule additional days of argument to address other issues and there is no reason to believe he would not have done so on the set-off issue. Epoxy Solutions did not request an adjournment or the opportunity to call further evidence.

[42] In my view, the claim for set-off was raised in the pleadings and Associate Justice Wiebe did not err in considering it.

Epoxy Solutions’ objections at trial

[43] Epoxy Solutions submits that Associate Justice Wiebe erred when he stated, among his other reasons for accepting the approach suggested by Unifor Canada Inc. that Epoxy Solutions submitted there should be no set-off but did not challenge the analysis of counsel for Unifor Canada Inc.

[44] I have reviewed the reply submissions of counsel for Epoxy Solutions. She clearly raised concerns about the analysis of counsel for Unifor Canada Inc. She made submissions that certain inputs should not be used, that she disagreed with certain assumptions, and that numbers other than the ones suggested by counsel for Unifor Canada Inc. should be used.

[45] For these reasons, I would not prevent Epoxy Solutions from raising these issues on appeal. I will deal with them below.

The set-off was not inconsistent with the law of damages

[46] Epoxy Solutions submits that Associate Justice Wiebe’s decision to award set-off is inconsistent with the law of damages. The plaintiff submits that a quantum meruit award was inappropriate because a contract existed “covering payment for the particular work in question.” Epoxy Solutions submits that the only approach available was to assess damages on the basis of the diminution in value of the property or the costs to restore. Here, Unifor Canada Inc. led no evidence on diminution in value or cost to replace the floor and it was not appropriate to use a quantum meruit analysis.

[47] Associate Justice Wiebe concluded that he did not have the evidence before him to assess the costs to restore the floor or the diminution in value. I see no error in that conclusion.

[48] In Naylor Group Inc. v. Ellis-Don Construction Ltd., 2001 SCC 58, [2001] 2 S.C.R. 943, at para. 80, the Supreme Court of Canada held that I am not to substitute my own view of the proper award absent an error of principle of law or if the associate judge misapprehended the evidence or acted on no evidence:

It is common ground that the Court of Appeal was not entitled to substitute its own view of a proper award unless it could be shown that the trial judge had made an error of principle of law, or misapprehended the evidence…or it could be shown there was no evidence on which the trial judge could have reached his or her conclusion…or the trial judge failed to consider relevant factors in the assessment of damages, or considered irrelevant factors, or otherwise, in the result, made ‘a palpably incorrect’ or ‘wholly erroneous’ assessment of the damages

[49] If I was hearing this case at first instance, I might have selected a different approach than did Associate Justice Wiebe. I also might have chosen a different description for the approach than quantum meruit. However, I do not think Associate Justice Wiebe made an error of law or principle. In my view, he faced a difficult situation. Epoxy Solutions asked to be paid on invoices for work that he had found it had not performed. Indeed, Associate Justice Wiebe found that Epoxy Solutions had covered up its failure to perform the work for which it now claimed payment in full.

[50] Epoxy Solutions submits that quantum meruit is not applicable where a contract covers payment for the work in question: Peter Kiewit Sons Co. v. Eakins Construction Ltd., 1960 37 (SCC), [1960] S.C.R. 361; Fenwick v. Concierge Auctions, ULC, 2017 ONSC 2514, 86 R.P.R. (5th) 173, rev’d on other grounds, 2017 ONCA 889, 86 R.P.R. (5th) 186. But that misses the point: Epoxy Solutions is seeking payment for work it never performed.

[51] We will never know whether this dispute could have been avoided entirely if Epoxy Solutions did not unilaterally decide to install a different epoxy. In any event, the course of the litigation might well have changed had Epoxy Solutions admitted that it chose to install a different epoxy when this issue was first raised. It is possible that Unifor Canada Inc. would have retained an expert to assist the associate justice to determine the appropriate amount of the set-off. Contrary to the submissions of Epoxy Solutions, the absence of an expert did not prohibit Associate Justice Wiebe from assessing the claim for a set off.

[52] Even where damages are difficult to assess, the court must do the best it can in the circumstances. If Unifor Canada Inc. had proved facts upon which the set-off is estimated, the difficulty of assessment is no ground for refusing damages, even if that involves some guess work. As the Court of Appeal held in Martin v. Goldfarb (1998), 1998 4150 (ON CA), 41 O.R. (3d) 161 (C.A.), at para. 75:

where damages in a particular case are by their inherent nature difficult to assess, the court must do the best it can in the circumstances. That is not to say, however, that a litigant is relieved of his or her duty to prove the facts upon which the damages are estimated. The distinction drawn in the various authorities… is that where the assessment is difficult because of the nature of the damage proved, the difficulty of assessment is no ground for refusing substantial damages even to the point of resorting to guess work. However, where the absence of evidence makes it impossible to assess damages, the litigant is entitled to nominal damages at best.

[53] If Associate Justice Wiebe had evidence before him to make his determination, I would defer to his approach to do fairness between the parties on a long and difficult reference.

There was a sufficient evidentiary foundation for the award and the assumptions made were reasonable

[54] Epoxy Solutions submits that Associate Justice Wiebe used four incorrect “assumptions” in reaching his conclusion on the amount of the set-off:

a. Epoxy Solutions applied 25 mils of Sikafloor epoxy;

b. Epoxy Solutions’ hourly rate for the labour cost was $65.00;

c. No profit component was included in the analysis, only material and labour costs;

d. He relied on timesheets for the application of Sikafloor (#1), which required only one application and less labour.

[55] I would not give effect to these submissions. All of the figures relied on by Associate Justice Wiebe were in the evidence. The manufacturer’s product data sheet indicated that the product was to be applied with a thickness of between 20 and 30 mils and the associate judge accepted that using the midpoint of 25 mils was appropriate given the findings in the KTA report. The associate judge accepted that using Mr. Garret’s hourly rate revealed in the evidence of $65.00 was reasonable in the circumstances. The associate judge acted within his discretion when he did not include a profit component in his calculation, particularly when Epoxy Solutions did not provide evidence or make submissions on its calculation of the profit component of that part of the project. I see no error in Associate Justice Wiebe relying on the actual timesheets submitted by Epoxy Solutions.

[56] As noted, Epoxy Solutions did make submissions to Associate Justice Wiebe on its view of the appropriateness of the set-off and its calculations. It was open to Epoxy Solutions to offer alternative methods of calculation, to point to different evidence in the record, or seek leave to call further evidence on which Associate Justice Wiebe should rely. It was for him to decide whether to accept or reject, in whole or in part, the evidence before him. The types of calculations he made lie at the heart of the role of an associate judge on a lien reference.

[57] It is not my role to interfere with a conclusion based on an inference drawn from the evidence presented before Associate Justice Wiebe or to reassess the weight to be assigned to underlying facts presented at trial. There was evidence before Associate Justice Wiebe that supported his conclusion. If I were to interfere, I would necessarily be interfering with the weight Associate Justice Wiebe assigned to the evidence adduced before him over the course of the reference. It is not my role to interfere with factual conclusions with which I may have a difference of opinion regarding the weight: Parma General Contractors Inc., at para. 19. I do not see a palpable and overriding error in Associate Justice Wiebe’s findings and inferences. I do not find the award to be unsatisfactory on all of the evidence: Demir, at para. 24. I dismiss this ground of appeal

No error in declining to award interest beyond that provided in Courts of Justice Act

[58] Epoxy Solutions requested that Associate Justice Wiebe award 24% interest on that amount of its lien. This would result in an interest award of $104,000 on a $72,084.83 judgment. Associate Justice Wiebe declined to do so and awarded only 1.3% interest pursuant to the Courts of Justice Act. Epoxy Solutions submits that that associate judge erred:

a. because the interest term was incorporated by reference into the contract between Epoxy Solutions and Unifor Canada Inc.;

b. in finding that Epoxy Solutions, through its representative Mr. Hildebrand, admitted that there was no evidence that the parties expressly discussed or agreed to the that interest rate;

c. by not implying the interest rate into the contract; and

d. by failing to award compound interest.

[59] I do not accept these submissions.

[60] Associate Justice Wiebe found that the contract between the parties was the letter of intent and that the contract did not specify a prejudgment interest rate. The question of which documents formed the contract was fully litigated between the parties. In paragraphs 56 to 65 of Associate Justice Wiebe’s reasons for decision, Associate Justice Wiebe considered all of the evidence related to the contracts and the contracting parties. He concluded that the contract between the parties was the letter of intent dated June 25, 2012, which was the only document signed by the two parties. That finding is not challenged on this motion.

[61] The letter of intent did not include a reference to 24% interest rates. Epoxy Solutions submitted that the interest rate appeared in the invoices it rendered and should, therefore, be applied. Associate Justice Wiebe then considered the decision of Campbell J. in Royal Group Inc. v. Core Precision Technologies Ltd., 2011 ONSC 5019, which considered a remarkably similar claim for prejudgment interest. Justice Campbell stated the law as follows, at para. 43:

It seems well-settled that the mere inclusion of such an interest rate provision in an invoice for goods sold will not, in all circumstances, obligate the purchaser to pay interest at that stated rate, unless he or she has agreed to pay interest at that rate. See: Prince Albert Co-Operative Assn. Ltd. v. Rybka (2006), 2006 SKCA 136, [2007] 4 W.W.R. 23 (Sask. C.A.) at para. 16-17. However, where the parties have an established business relationship, the circumstances of that relationship may establish that the parties agreed, at least impliedly, to be bound by the interest rates expressly provided on a series of invoices. See: Salit Steel v. Mondiale Development Ltd. (2009), 78 C.L.R. (3d) 54 (Ont. Master) at para. 77-81; Mackin Mailey Advertising Ltd. v. Budget Brake & Muffler Distributors Ltd., [1987] B.C.J. No. 2268 (B.C.C.A.); Irving Oil v. Whynot (1978), 1978 3741 (NS SC), 33 N.S.R. (2d) 92 (N.S.T.D.). Of course, this will not always be the case. Even where there is an established business relationship between the parties, it may not be appropriate to infer the existence of an agreement between the parties to the application of any particular interest rate. See: Kindersley & District Co-operative Ltd. v. Bowman (1983), 1983 2103 (SK QB), 25 Sask. R. 213 (Sask. Q.B.), at para. 5-6; Marcel Baril Ltee v. 929454 Ontario Limited, [2008] O.J. No. 4506 (Ont. S.C.J.) at para. 21-22. Whether or not a contractual agreement on the issue of interest rates will be implied will, it seems, turn on the individual circumstances of each case and the nature of the particular business relationship between the parties.

[62] Justice Campbell then considered the facts of his case and decided that he was not prepared to conclude that there was any implied agreement between the parties that interest would be paid at the specific rate of interest mentioned in the invoices. Justice Campbell listed a number of considerations that supported his conclusion, including that there was no mention of an interest rate in the contract, no discussion of interest rates between the parties, and that no evidence of a historical practices of accepting that interest rate, a dispute over the total owing.

[63] Associate Justice Wiebe applied the analysis from Royal Group Inc. to the facts of this case and concluded that a higher rate of interest was not appropriate. He explained his reasons as follows:

I have applied this same analysis to this case. There was no explicit mention of interest on outstanding accounts in the letter of intent. There was no evidence that the parties expressly discussed or agreed upon this interest. Mr. Hildebrand admitted this at his discovery. There was also no evidence that Epoxy [Solutions] in fact charged and was paid this interest on overdue Epoxy [Solutions] accounts that were paid. Furthermore, there was no evidence that the defendants by their conduct accepted this interest on overdue accounts. Also, I note that many of the alleged Epoxy [Solutions] outstanding invoices were for dubious items, such as the invoices for the wrong Sika product. Finally, the defendants denied the 24% prejudgment interest in their pleading. Therefore, I am driven to the same conclusion that Justice Campbell reached in Royal Group, namely that there was no agreement on the 24% prejudgment interest rate. I rule, therefore, that there will be prejudgment interest at the rate of 1.3% per annum on the judgment of $72,084.83.

[64] Even if Associate Justice Wiebe erred in considering the discovery evidence of Mr. Hildebrand, that does not change the correctness of his conclusion: there was no evidence before him that the parties ever expressly discussed or agreed upon this interest rate. I see no error in Associate Justice Wiebe declining to imply the 24% interest rate into the contract between the parties: Royal Group Inc.; Nortrax Canada Inc. v. Atlantis Marine Construction Inc., 2010 ONSC 4097, at paras. 23-30; DC Electric Ltd. v. Brauer, [2009] O.J. No. 2022 (S.C.), at paras. 51-53; Hardwoods Specialty Products LP Inc. v. Rite Style Manufacturing Ltd., 2006 BCCA 139, 266 D.L.R. (4th) 485. More generally, courts may imply a term into a contract based on the presumed intentions of the contracting parties if the term is necessary for business efficacy or if it meets the officious bystander test: First National Financial GP Corporation v. Golden Dragon Ho 10 Inc., 2022 ONCA 621, 42 R.P.R. (6th) 1, at para. 71; Energy Fundamentals Group Inc. v. Veresen Inc., 2015 ONCA 514, 336 O.A.C. 230, at paras. 30-40; M.J.B. Enterprises Ltd. v. Defence Construction (1951) Ltd., 1999 677 (SCC), [1999] 1 S.C.R. 619, at para. 29. Neither condition was met in this case. It would be unreasonable to imply such an onerous term into the contract where there is nothing to suggest that Unifor Canada Inc. agreed to such a term.

[65] Associate Justice Wiebe found as a fact that there was no agreement on the 24% interest rate. In light of that finding, the doctrine of incorporation by reference can not be used to evade the lack of agreement. One party can not “unilaterally foist” the obligation to pay interest on another: H2S Solutions Ltd. v. Tourmaline Oil Corp., 2019 ABCA 373, at para. 11. Here, given the finding of Associate Justice Wiebe that there was no evidence to support the submission that Unifor Canada Inc. agreed to pay 24% interest, I dismiss Epoxy Solutions’ submission based on incorporation by reference.

[66] Finally, the associate justice awarded simple as opposed to compound interest. Because he decided to award prejudgment interest under the Courts of Justice Act, he did not err in declining to award compound interest: s. 128(4)(b). While compound interest can be awarded under contracts or in other unusual circumstances, Associate Justice Wiebe did not err in exercising his discretion not to do so in this case: Bank of America Canada v. Mutual Trust Co., 2002 SCC 43, [2002] 2 S.C.R. 601.

No error in failing to apply a 10% service charge on overdue accounts

[67] Epoxy Solutions submits that Associate Justice Wiebe erred by not awarding it a 10% service charge on overdue accounts. It submits that this amount appeared on an invoice and was enumerated in “Schedule C” to its amended statement of claim, which is simply a list of unpaid invoices and amounts outstanding without explanation. I do not accept this submission.

[68] Epoxy Solutions did not include a claim for the 10% service charge in its claim in paragraph 1 of the amended statement of claim. There is no reference to the service charge issue in the statement of claim, the Scott Schedule, or Epoxy Solutions’ 36-page written submissions at the end of trial.

[69] I am prepared to assume that it was sufficient for Epoxy Solutions to include the 10% service charge within the invoice amounts listed in Schedule C to its factum. Nevertheless, I find that the claim for the service charge must fail for the same reason that Associate Justice Wiebe did not allow the claim for elevated interest: there is no reference to the service charge in the letter of intent, which forms the contract between the parties. I would not imply the term or find that it was incorporated by reference into the contract for the same reasons that Associate Justice Wiebe did not award 24% interest.

No error in costs award

[70] Epoxy Solutions submits that Associate Justice Wiebe erred by imposing a distributive costs order. Associate Justice Wiebe’s careful decision on costs and interest spanned eight-pages. In my view, Associate Justice Wiebe did not impose a distributive costs order. Associate Justice Wiebe did not commit an error in principle, and I see no basis to interfere with the exercise of his discretion in fixing costs.

[71] Epoxy Solutions submitted a costs outline seeking $403,618.78 on a substantial indemnity basis and $322,908.48 on a partial indemnity basis. This included over 1,000 hours worked by one counsel at an actual rate of $350 per hour. It is helpful to recall that Epoxy Solutions pleaded a total claim of $143,547.72, which was limited in the Scott Schedule to $124,946.93.

[72] Associate Justice Wiebe correctly identified his jurisdiction to award costs within s. 86 of the Construction Act. Associate Justice Wiebe also correctly identified that the court should be guided in the exercise of its discretion by the provisions of Rule 57: Dean Construction Co. v. M.J. Dixon Construction Ltd., 2011 ONSC 5125, 12 C.L.R. (4th) 61, at para. 17. Having correctly identified his jurisdiction and the appropriate principles of law, I must show significant deference to how Associate Justice Wiebe weighed the factors at play.

[73] First, Associate Justice Wiebe considered the result achieved. Associate Justice Wiebe concluded that, on balance, Epoxy Solutions succeeded in getting a judgment against one of the defendants, obtaining its claimed extras, and in dismissing the defendants’ counterclaim in its entirety. Associate Justice Wiebe concluded that Epoxy Solutions was the successful party in the action and was entitled to an award of costs. Associate Justice Wiebe noted that “the lack of total success will be considered in the final award.”

[74] Second, Associate Justice Wiebe considered, but declined to give effect to the offers to settle made by Epoxy Solutions and Unifor Canada Inc. He found that all of the offers made were unreasonable and that both parties should have been more willing to compromise. Associate Justice Wiebe declined to award substantial indemnity costs on the basis of the offers to settle.

[75] Third, Associate Justice Wiebe considered what costs order would be proportionate to this proceeding. He considered the number of hours and hourly rate claimed by Epoxy Solutions and concluded that they were in excess of what Unifor Canada Inc. would have reasonably expected to be ordered to pay. He also found that the amount claimed was excessive given his finding that the case was not overly complex, and that Epoxy Solutions’ conduct was responsible for most of the complexity. Associate Justice Wiebe then stepped back and considered Epoxy Solutions’ claim for partial indemnity costs ($322,908.48), the value of the claim and counterclaim at issue ($238,491.48), the partial indemnity costs claimed by Unifor Canada Inc. ($218,806.18). Associate Justice Wiebe concluded that Epoxy Solutions’ claim was not proportionate to the litigation and concluded that, before considering Epoxy Solutions’ conduct, a costs award of $200,000 would be appropriate. I see no reversible error in his process or conclusion.

[76] Fourth, Associate Justice Wiebe then considered Epoxy Solutions’ conduct in the litigation. He concluded that the proceeding was delayed for over a year because Epoxy Solutions insisted unnecessarily on obtaining destructive testing of the floor in circumstances where Epoxy Solutions knew that it had not put down the product specified in the contract. Associate Justice Wiebe noted that this issue consumed six trial management conferences and several rulings. He concluded that Epoxy Solutions should be denied any recovery for costs for that issue and decided that Epoxy Solutions’ costs should be reduced by $30,000 to reflect this delay, for a costs order of $170,000 in favour of Epoxy Solutions.

[77] Associate Justice Wiebe went on to consider two other features of Epoxy Solutions’ conduct in the litigation. He noted that Epoxy Solutions was not “open and forthright” about the fact that it had not installed the product required by the contract. Unifor Canada Inc. only discovered that fact close to the beginning of trial when it obtained the file of one of Epoxy Solutions’ consultants. Associate Justice Wiebe also noted that Epoxy Solutions denied the authenticity and admissibility of documents that forced witnesses to be called to prove non-contentious documents that were of marginal importance. Associate Justice Wiebe also considered the conduct of Unifor Canada Inc. during the contract and the litigation in making his costs award.

[78] I see no error in Associate Justice Wiebe’s approach. Rules 57.01(e) and (f) explicitly permit the court to consider the conduct of any party that tended to lengthen unnecessarily the duration of the proceeding or whether any step was improper, unnecessary, or taken through mistake or excessive caution. Associate Justice Wiebe exercised his discretion in a manner that was consistent with the jurisdiction provided to him. Associate Justice Wiebe concluded as follows:

Considering all of these factors, I have decided to award Epoxy [Solutions] $140,000 in partial indemnity costs. …

This award is primarily based on the percentage of Epoxy [Solutions'] success, the reasonable expectation of the defendants concerning costs, proportionality, and the conduct issues discussed above. I believe this is an overall reasonable award of costs in light of the circumstances; see Boucher v. Public Accountants Council (Ontario), 2004 14579 (ON CA), 2004 CarswellOnt 2521 (Ont. C.A.) at paragraph 25.

[79] In my view, Associate Justice Wiebe made a proportional costs order that was fair, reasonable, and in accordance with the reasonable expectation of the losing party.

[80] Epoxy Solutions submits that Associate Justice Wiebe erred by imposing a distributive costs order. A distributive costs order is one where the judge or associate judge identifies the major issues at trial and then awards costs to the party who succeeded on each issue for the time and expense attributable to that issue, rather than by reference to the overall success in the litigation: Murphy v. Alexander (2004), 2004 15493 (ON CA), 183 O.A.C. 325 (C.A.), at para. 72; Fuller v. Aphria Inc., 2020 ONCA 465, at para. 5; Armak Chemicals Ltd. v. Canadian National Railway Co. (1991), 1991 7060 (ON CA), 5 O.R. (3d) 1 (C.A.), at paras. 13, 19-20; Wesbell Networks Inc. v. Bell Canada, 2015 ONCA 33, at para. 21.

[81] In Ontario, distributive costs orders are available only in the rarest of cases: Oz Optics Ltd. v. Timbercon Inc., 2012 ONCA 735, at para. 19; Eastern Power Ltd. v. Ontario Electricity Financial Corp., 2012 ONCA 366, at para. 18.

[82] Associate Justice Wiebe did not make a distributive costs order. The factors he considered in exercising his discretion were all well-grounded among the factors set out in rule 57.01. He made his costs order based on the overall result, not on an issue-by-issue basis. Merely taking into account divided success does not convert an appropriate exercise of discretion into a distributive costs order: Sean Omar Henry v. Dr. Marshall Zaitlen, 2022 ONSC 3050, at para. 26; Ontario Realty Corporation v. P. Gabriele & Sons Limited, 2009 68828 (Ont. S.C.), at paras. 27-35; McLaughlin v. Ariston Realty Corp., [2004] O.J. No. 1456 (S.C.).

[83] I see no basis to interfere with the decision to award Epoxy Solutions’ $140,000 in partial indemnity costs.

Conclusion and costs

[84] For the reasons set out above, I dismiss Epoxy Solutions’ motion to oppose the confirmation of the report of Associate Justice Wiebe.

[85] I urge the parties to settle the issue of the costs of this motion between them. If the parties are not able to resolve costs, Unifor Canada Inc. may deliver its costs submission of no more than three double-spaced pages to be emailed to Theresa.Finelli@ontario.ca on or before November 15, 2022. Epoxy Solutions may deliver a responding submission of no more than three double-spaced pages on or before November 22, 2022. No reply submissions are to be delivered without leave.

[86] I thank both counsel for the excellent and helpful submissions.

Robert Centa J.

Date: November 8, 2022

[^1]: Epoxy Solutions asserted that its contract was with the defendant Lomax Management Inc., the project manager for the construction project. Associate Justice Wiebe found that Epoxy Solutions’ contract was with Unifor Canada Inc., not Lomax Management Inc. and dismissed Epoxy Solutions’ claim against Lomax Management Inc. This decision is not challenged on this motion. In these reasons, I will only refer to Lomax Management Inc. as necessary to describe its project management role.