Court File and Parties
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: ADAM ROWE carrying on business as Clandestine, Plaintiff
AND:
FRED HAGEMAN’S HOLDINGS LIMITED, JD DESIGN & BUILD INC. and KOSTA MENTIS, Defendants
BEFORE: VERMETTE J.
COUNSEL: Steven D. Gadbois, for the Plaintiff Nadia Condotta, for the Defendant JD Design & Build Inc.
HEARD: May 9, 2022
ENDORSEMENT
1The Defendant JD Design & Build Inc. (“JD”) seeks an order opposing the confirmation of the report of Associate Justice Wiebe dated October 5, 2021, and an order directing a new reference and trial before a different associate judge.
2JD has failed to demonstrate that the Associate Judge made any reversible error. Therefore, the motion is dismissed.
A. FACTUAL BACKGROUND
3In this action, the Plaintiff claimed a lien and damages in the amount of $36,761.73 in relation to construction work that he and his crew did for JD on two high-rise residential towers owned by the Defendant Fred Hageman’s Holdings Limited.1 The principal of JD is Joseph Didiano. The Defendant Kosta Mentis was the general contractor for the project.
4JD and Mr. Mentis denied the Plaintiff’s claim. They also pleaded set-off and counterclaimed for damages in the amount of $104,725.60 for deficiency correction costs, lost income and lost equipment. By the time the trial started, the counterclaim figure had been reduced to $58,210 in damages for deficiency correction costs and $2,000 for lost equipment. In the course of the Defendants’ closing submissions, the figure was reduced again to $28,210.
5On December 5, 2018, the Plaintiff obtained a judgment of reference from Copeland J. (as she then was). On December 12, 2019, the Associate Judge granted an order for trial.
6The summary trial took place on April 21, 22 and 23, 2021 by videoconference. The Associate Judge released his Reasons for Judgment on July 30, 2021. He held that the Plaintiff had a lien in the amount of $35,643.03 and a personal judgment for contract damages in the same amount as against JD. He dismissed the counterclaim.
7The Associate Judge’s Reasons for Judgment contain detailed findings of credibility. He found that the Plaintiff and the witnesses he called were credible. Conversely, he found that the credibility of most of the witnesses called by the Defendants was problematic. Ultimately, on balance, he gave more weight to the Plaintiff’s evidence than to the evidence of Messrs. Didiano and Mentis.
8On September 28, 2021, the Associate Judge released his decision on costs and interest. He awarded costs to the Plaintiff in the amount of $44,000.
9The Associate Judge issued his report on October 5, 2021.
B. ERRORS ALLEGED BY JD
10JD alleges that the Associate Judge made three errors. According to JD:
a. The Associate Judge erred in finding that travel time was included in the contract.
b. The Associate Judge erred in finding that the alleged deficiencies arose from a change of the scope of work.
c. The award of costs is disproportionate to the damages sought in the action.
11In its motion record, JD included an affidavit of one of its lawyers summarizing the facts of the case and attaching: (a) the answers on written examination for discovery of Mr. Didiano; (b) the Associate Judge’s Reasons for Judgment and Report; and (c) two scheduling endorsements of judges of this Court. The affidavits that were before the Associate Judge, the Associate Judge’s Costs and Interest Decision and other documents were uploaded onto CaseLines by the parties, but the transcripts of the evidence before the Associate Judge were not before this Court.
12At the hearing, counsel for JD indicated that JD was not challenging the Associate Judge’s credibility findings on this motion and was primarily relying on the Associate Judge’s reasons in support of its arguments that errors were made.
C. DISCUSSION
1. Standard of appellate review
13Rule 54.09 of the Rules of Civil Procedure permits a party to a reference to oppose the confirmation of an associate judge’s report. The review of an associate judge’s decision on a motion to oppose confirmation of a report is in the nature of an appeal, and the standards of appellate review applicable on an appeal also apply on this type of motion. See Scott, Pichelli & Easter Ltd. v. Dupont Developments Ltd., 2019 ONSC 4555 at para. 35 and Zeitoun v. Economical Insurance Group, 2008 20996 at para. 33 (Ont. Div. Ct.); aff’d 2009 ONCA 415 at para. 1.
14As set out in Housen v. Nikolaisen, 2002 SCC 33 (“Housen”), on an appeal, the standard of correctness applies to questions of law and the standard of palpable and overriding error applies to questions of fact and questions of mixed fact and law, unless an error of law can be extricated from the mixed question of fact and law, in which case the standard of correctness applies.
15Questions of law are questions about what the correct legal test is, and questions of mixed fact and law involve applying a legal standard to a set of facts: see Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53 at para. 49 (“Sattva”). Legal errors include the application of an incorrect principle, the failure to consider a required element of a legal test, or the failure to consider a relevant factor: see Sattva at para. 53. Contractual interpretation involves issues of mixed fact and law as it is an exercise in which the principles of contractual interpretation are applied to the words of the written contract, considered in light of the factual matrix: see Sattva at para. 50.
16The standard of palpable and overriding error was described as follows by the Court of Appeal in Farsi v. Da Rocha, 2020 ONCA 92 at para. 35:
A palpable and overriding error is one that is clearly wrong, unreasonable, or not reasonably supported on the evidence: H.L. v. Canada (Attorney General), 2005 SCC 25, [2005] 1 S.C.R. 401, at para. 110. The Supreme Court recently explained in Salomon v. Matte‑Thompson, 2019 SCC 14, 432 D.L.R. (4th) 1, at para. 33, “[w]here the deferential standard of palpable and overriding error applies, an appellate court can intervene only if there is an obvious error in the trial decision that is determinative of the outcome of the case.”
17The fact that an alternative factual finding could be reached based on a different ascription of weight does not mean that a palpable and overriding error has been made: see Nelson (City) v. Mowatt, 2017 SCC 8 at para. 38 and Salomon v. Matte-Thompson, 2019 SCC 14 at para. 33.
18Thus, an appeal from an associate judge’s decision is not a rehearing. On questions of fact and mixed fact and law, deference applies, and the role of the reviewing court is limited. An appellate court cannot substitute its interpretation of the facts or reweigh the evidence simply because it takes a different view of the evidence from that of the associate judge. See Prescott v. Barbon, 2018 ONCA 504 at para. 11.
19Although the standard of appellate review of palpable and overriding error applies to all factual findings, findings of fact grounded in credibility assessments are particularly difficult to disturb on appeal, in part because credibility assessments are grounded in numerous, often unstated considerations which only the judicial officer who presided the trial can appreciate and calibrate. See Housen at para. 24 and Waxman v. Waxman, 2004 39040 at paras. 359-360 (Ont. C.A.).
20None of the errors alleged by JD are errors of law. Consequently, the applicable standard of appellate review is palpable and overriding error. While I discuss JD’s arguments below, I generally agree with the Plaintiff that it is not possible for this Court to review the decision of the Associate Judge for errors of fact or errors of mixed fact and law without having before it the evidence that was before the Associate Judge, especially given the important role played by credibility findings in the Associate Judge’s decision. As noted above, the transcripts of the evidence heard by the Associate Judge are not before this Court.
21JD also appeals from the Associate Judge’s costs award. Particular restraint is required in such an appeal. A court should set aside a costs award on appeal only if the decision-maker at first instance made an error in principle or the costs award is “plainly wrong”. Costs awards are notoriously difficult to appeal because they represent the trier’s exercise of judgment as to the overall justice of the situation that they saw unfolding before them. A reviewing court must also be mindful that a costs award is a discretionary order and the decision-maker at first instance is in the best position to determine the entitlement, scale and quantum of any such award. See McNaughton Automotive Ltd. v. Co-operators General Insurance Co., 2008 ONCA 597 at paras. 26-27, Smith v. Mackinnon, 2017 ONSC 4638 at para. 13 (Div. Ct.) and Strathmillan Financial Limited v. Teti, 2021 ONSC 7603 at para. 39.
2. First alleged error regarding travel time
22The Associate Judge concluded that the Plaintiff’s travel time was to be compensated under the contract between the Plaintiff and JD. He made the following findings:
[50] A critical issue in the case was whether travel time was to be compensated under the Rowe Subcontract. The June 17, 2017 Rowe quotation did not expressly specify that Mr. Rowe was to be paid for the time it took for him and his crew to travel from Mr. Rowe’s office in Cambridge to the site at the beginning of the day and back at the end of the day. Mr. Rowe charged what in the end was as much as 113 hours of such travel time during the three-month work period from August 23, 2017 to October 23, 2017. Mr. Rowe asserts that he was entitled to charge travel time as he and his crew are federally accredited aerial technicians, and that the Rowe Subcontract in fact included such compensation. The defendants deny this assertion. Mr. Rowe has to [sic] onus of proving this point as the travel time is to his benefit.
[51] Because the contract was oral and travel time was not expressly addressed in the June 17, 2017 Rowe quotation, the issue of travel time will turn on what the parties verbally agreed to. If there is ambiguity in this regard, I should look to their conduct for corroboration. The parties to the Rowe Subcontract were Mr. Rowe and JD. Mr. Rowe stated that when Mr. Didiano called him in early June, 2017 seeking a quotation for this work, Mr. Rowe took the call on his Bluetooth phone in his truck with Mr. Reidpath beside him. The call was on speaker. Mr. Rowe said that he quoted a labour rate of “$65 per hour per man from the shop.” There is no dispute that the phrase, “from the shop,” meant the travel time from the Rowe shop in Cambridge to the job site and back every day. Mr. Reidpath stated that he heard Mr. Rowe give the quotation with that phrase. Both Messrs. Rowe and Reidpath stated that they concluded that travel time would be compensated. Mr. Didiano admitted knowing Mr. Rowe was based in Cambridge but denied hearing this phrase and agreeing to the travel time. In cross-examination, he stated that there was considerable road noise. There was no mention of this issue again until late October, 2017 when the parties were in dispute. Given this conflict in the evidence, I am inclined to believe Mr. Rowe over Mr. Didiano given my analysis of the general credibility of the witnesses as previously discussed. However, I will examine the conduct of the parties to determine whether my inclination is born [sic] out.
[52] I find that the conduct of the parties corroborates Mr. Rowe’s version of this issue. First, there is no doubt that Mr. Rowe tabulated travel time and included it in his billings from the very beginning. The daily forms contain the daily travel times. It was undisputed that this travel time was then included in the bills. I find that Mr. Rowe would have done this only if he believed he had contractual entitlement to payment for travel time. Second, JD had no issue paying the first two Rowe invoices, namely invoice 1157 dated September 19, 2017 and invoice 1158 dated September 27, 2017. These contained travel time.
[53] Third, and most importantly, the referenced emails and text messages show that Mr. Didiano did not raise this issue in correspondence when he said he first became aware of the travel charges. On October 28, 2017 Mr. Didiano sent Mr. Rowe an email stating that “me and Kosta had no idea we were paying travel time until 2 weeks ago.” Two weeks earlier on October 14, 2017 Mr. Didiano sent Mr. Rowe an email wherein he did not refer to travel time but instead to fixing “mistakes that were made on the first building” before settling the outstanding account. The next time travel time came up was in an email from Mr. Didiano to Mr. Rowe ten days later, on October 24, 2017, wherein he stated that he wanted Mr. Rowe to “adjust” his invoices to delete the travel time. By this time the parties were well into a dispute, started on October 14, 2017, about other issues concerning alleged deficiencies. When confronted by this documentation, Mr. Didiano insisted that he raised travel time verbally with Mr. Rowe after October 14, 2017; but Mr. Rowe denied that assertion. If the travel time was such a concern to the defendants as they allege, they would have raised the issue vociferously in written correspondence as soon as they learned about it. They did not do so.
[54] The travel time issue was almost an afterthought or a side issue. This all indicates to me that JD verbally agreed to pay at the outset for travel time and only made it an issue when Mr. Kosta started complaining about costs. This makes sense to me generally as Mr. Didiano obviously needed workers experienced at working on swing stages at height and did not have them readily at hand. Later after Mr. Rowe was dismissed, Mr. Didiano had to get a few of his own workers certified in order to complete the work. In these circumstances, it makes sense that Mr. Didiano would have agreed to pay for the travel time of Mr. Rowe’s experienced and certified crew. I find that Mr. Rowe has proven that travel time was compensable under the Rowe Subcontract.
[56] Mr. Didiano argued that it was not usual industry practice to pay for travel time. There was no evidence as to industry practice in this regard, and furthermore that also does not assist the defendants as there can always be a deviation from industry practice.
23JD argues that it “is clear from JD’s conduct that he did not understand that Rowe meant to charge him significantly for time that Rowe would not spend working, but on the way to and from the Property.” JD also submits that a reasonable person would not expect to pay for time that was not spent in service of the objective of the contract. According to JD, it was a palpable and overriding error to interpret the contract between the parties as including travel time. In the alternative, JD states that the travel time was miscalculated as it was not properly noted. With respect to this alternative point, the Plaintiff’s position is that the issue of alleged miscalculation was not pursued before the Associate Judge and that JD cannot raise a new issue on appeal.
24JD admits that there was conflicting testimony at trial with respect to the issue of whether the Plaintiff was to be paid “from the shop” or when work started at the site.
25In my view, the Associate Judge did not make any palpable and overriding error on the issue of whether travel time was to be compensated under the contract between the parties. As set out in the excerpt from the Associate Judge’s Reasons for Judgment above, there was evidence before the Associate Judge that provided reasonable support for his conclusion on this point. JD is asking this Court to reweigh the evidence and take a different view of the evidence from that of the Associate Judge, which is not something that this Court can do on appeal.
26With respect to the alleged miscalculation, this argument appears to be based on the allegation that the travel time included a breakfast stop. Contrary to what JD states in its Factum, the Associate Judge did not find that the morning commute often included a breakfast stop which was included in the invoiced hours. Rather, in paragraph 12 of his Reasons for Judgment, the Associate Judge stated the following:
Each day Mr. Rowe’s crew would meet at 6:30 a.m. in the shop in Cambridge, have breakfast, travel to the site together, and start working. There was a “tailgate meeting” to start each day to review the day’s work and make safety checks. Each day the team lead, usually Mr. Rowe, would fill out a “Job Site Safety Check Plan” that confirmed the safety checks, and described the work done and the hours spent. Starting with the second daily form dated August 28, 2017, each daily form (with one exception) showed the travel time to and from the site. Every second week Mr. Rowe used the daily forms to generate the invoices to JD based on the contract rate.
27This passage does not suggest that the time spent by the Plaintiff and his crew having breakfast was invoiced to JD. JD did not point out to any evidence that was before the Associate Judge on this point. Further, I note that this alleged miscalculation error is not raised in JD’s Notice of Motion. In light of the foregoing, I find that JD has failed to establish any miscalculation error on the part of the Associate Judge, let alone a palpable and overriding error.
3. Second alleged error regarding the scope of work
28JD challenges the Associate Judge’s finding that the slab bottoms were not part of the initial scope of work.
29The Associate Judge’s Reasons for Judgment contain a section analyzing the scope of the contract between the Plaintiff and JD. Two paragraphs in this section deal with the issue of the slab bottoms. The Associate Judge stated the following:
[48] The next issue concerning the scope was whether the slab underside work was included in the scope from the beginning. The defendants allege that it was. They accept that the painting of the slabs and the application of the chemical were not originally in the scope. Indeed, Mr. Mentis described the chemical application as an unnecessary requirement of the owner. However, they insist that the slab undersides were included in the scope throughout. Mr. Rowe denied this position stating that Mr. Didiano did not specify the undersides when he defined the scope for Mr. Rowe at the outset. Mr. Didiano on the other hand maintained that he did when Mr. Rowe performed a test on the ground floor slab. Mr. Didiano stated that Mr. Rowe in fact did the underside during the test, and that Mr. Rowe decided for some reason not to do the undersides on the upper levels out of Mr. Didiano’s eyesight and scrutiny. I have already discussed my view of Mr. Didiano’s evidence in this regard. I reiterate that I do not find it credible and do not accept it.
[49] But the most telling evidence in this regard was the response of JD when Mr. Rowe was forced to redo the First Building to complete the undersides. This happened just after Mr. Stirling issued his first report on September 29, 2017. The building was almost done. Mr. Stirling criticized the work primarily for failing to deal with the undersides. As a result, Mr. Rowe was ordered to go around the building again doing the undersides. Critically, Mr. Rowe was paid to do this work by JD. If the undersides had been a part of Rowe scope from the beginning, JD would not have paid Mr. Rowe to “correct” this oversight. It would have required that Mr. Rowe do the work without pay. That JD paid Mr. Rowe in full for going around the building a second time to do the undersides is in effect an admission by JD that the undersides were not in the original scope. That is what I find.
30JD admits that there was conflicting evidence on the issue of the scope of work, but it points out that its evidence and position throughout have been that the Plaintiff was hired to perform the removal and application of caulking to the upper and lower parts of the slab. In its Factum, JD submits that the fact that it paid the Plaintiff to go around the building a second time to do the bottoms was not an admission that the slab bottoms were not part of the initial scope of work. JD points out that it had to pay the Plaintiff to go around the building a second time in any event to paint the building, which was not part of the initial scope of work. At the hearing, JD took a different position and argued that the invoices covering the work done by JD going around the building a second time were not in fact paid and, as a result, the Associate Judge erred in finding that JD had been paid for that work.
31In response to the alleged error regarding the payment of the invoices which was raised by JD for the first time at the hearing, the Plaintiff stated that it was accepted at trial that the Plaintiff was paid to go around the building a second time.
32JD also argues that as of the last day that the Plaintiff attended at the property, there were deficiencies that needed to be addressed by another contractor.
33I reach the same conclusion with respect to the alleged error regarding the scope of work than with respect to the alleged error regarding travel time. As set out in the excerpt from the Associate Judge’s Reasons for Judgment above, the Associate Judge’s conclusion on the issue of the scope of work is reasonably supported on the evidence. JD is asking this Court to reweigh the evidence and take a different view of the evidence from that of the Associate Judge, but this is not something that this Court can do on appeal.
34With respect to the allegation that the Associate Judge erred in finding that the Plaintiff had been paid to go around the building a second time, I find it unnecessary to determine, on the incomplete record before me, whether the Associate Judge erred when he made this statement. Assuming that the Associate Judge made an error on this point, such an error was not overriding, i.e. it was not determinative of his conclusion on this issue. Among other things:
a. The Associate Judge relied on other evidence to reach his conclusion, including the evidence of the Plaintiff, and his adverse finding of credibility against Mr. Didiano. In paragraph 37 of his Reasons for Judgment, the Associate Judge stated that Mr. Didiano’s evidence on the issue of the work on the slab undersides made “absolutely no sense”.
b. While the Associate Judge stated in his Reasons for Judgment that the Plaintiff was paid for going around the building a second time, he also stated that had the undersides been part of the scope of work from the beginning, JD “would have required that Mr. Rowe do the work without pay.” JD did not point to any evidence showing that the Plaintiff had been advised before commencing the slab underside work that it would be required to do the work without pay. Thus, it has not been established or even alleged that the Associate Judge erred on this point. While JD may not have paid an invoice subsequently delivered by the Plaintiff because a dispute arose between the parties, the fact that JD did not advise the Plaintiff before the work started that the Plaintiff would be required to do the work without pay supports the Associate Judge’s conclusion.
35Thus, I conclude that the Associate Judge did not make any palpable and overriding error on the issue of the scope of work.
4. Third alleged error regarding costs
36JD challenges the Associate Judge’s costs award, which was rendered by the Associate Judge after he released his decision on the merits and received submissions on costs.
37At the beginning of his decision on costs, the Associate Judge referred to section 86 of the Construction Act, R.S.O. 1990, c. 30, the principle of proportionality, Rule 57.01 of the Rules of Civil Procedure and the principle that the court’s jurisdiction on costs must be exercised with the objective of awarding what is fair and reasonable for the unsuccessful party to pay in the particular proceeding, rather than an amount fixed by the actual costs incurred by the successful party. The Associate Judge then reviewed the parties’ settlement efforts. He found that it was “frankly astonishing” that the Defendants did not accept one of the offers made by the Plaintiff, and that the offers made by the Defendants were not reasonable. He stated the following:
[12] Mr. Gadbois showed that Rowe made numerous unsuccessful attempts to settle the case and clarify the issues in dispute. On the eve of trial Mr. Rowe even offered to mediate. The defendants said they would participate in the mediation only if Mr. Rowe paid for it. Ms. Condotta tried to explain this conduct. She said there was no obligation for the defendants to participate in a mediation and that they were rightfully skeptical of the value of a mediation due to their counterclaim. This just shows me that the defendants were unreasonably dismissive of the plaintiff’s claim as their case was weak. They also seemed more interested in “grinding” the plaintiff down with the costs and anxiety of litigation than in reaching a fair settlement.
[13] This is the major factor in my decision. This case should have settled and should have settled early since the real claims were modest in size. This did not happen because of the defendants.
[14] Mr. Rowe bases his claim for costs in the amount of $46,326.42 on the following calculus: partial indemnity costs to the date of the March 25, 2021 Rowe offer to settle, and substantial indemnity costs thereafter. This parallels the working of Rule 49.10. The partial indemnity costs claim concerns the bulk of the pre-trial hearing work, while the substantial indemnity claim concerns primarily the trial hearing work. Given the serious efforts by Mr. Rowe to settle this case before trial and the not so serious efforts by the defendants, I think that this is a reasonable submission.
38The Associate Judge discussed the issue of proportionality and addressed the Defendants’ arguments in this regard. His reasons read as follows on this issue:
[17] Ms. Condotta raised this issue alleging that the Rowe costs claim was disproportionately high given the complexity and importance of the case and the amounts in issue. Concerning the amounts in issue, Mr. Gadbois is right that the totality of the amounts in dispute must include the counterclaim. Including the counterclaim, the amounts in issue started as high as $141,487.33. The costs claimed by Mr. Rowe are about 33% of that total. This does not seem unreasonable.
[18] Ms. Condotta argued that this was not a complex case. I do not agree. The evidence had some complexity. The contract was oral and, therefore, had to be ascertained from the evidence. The critical parts of the contract were the issues of scope and travel time. The other critical issue was the repudiation of the contract which involved determining whether there was a fundamental breach and, if so, by whom, and the consequences of that. This involved the application of established legal principles to the evidence concerning payment, the conduct of the parties and accusations between the parties.
[19] Ms. Condotta conceded the importance of the matter to the defendants. She submitted that the defendants fought “to preserve professional relationships which have been irreparably broken.” For Mr. Rowe the importance of this action can be gleaned from the way Mr. Gadbois described the manner of Mr. Rowe and his witnesses throughout, namely unsophisticated persons who were unfamiliar with and terrified by court. That Mr. Rowe would undertake and endure this proceeding is a testament to the importance he placed on it.
[20] In the end, I do not find the Rowe claim for costs to be disproportionate. It is in an amount that the defendants could reasonably have anticipated.
39The Associate Judge also found that certain conduct of the Defendants required the Plaintiff to do more work to defend the set-off and counterclaim. He stated that the rates and disbursements claimed by the Plaintiff were reasonable and that he had no difficulty with the quantum of the costs claimed.
40JD submits that a $44,000 costs award is excessive when considering the principle of proportionality. According to JD, the amount of costs ought to be significantly reduced based on the amount of the award and the amount of the combined claims in general.
41I see no error in principle in the Associate Judge’s decision on costs. All the factors that he referred to were appropriate factors to take into account. The Associate Judge considered the proportionality argument raised by JD, and the conclusion that he reached on that point was open to him in light of all the other factors and the circumstances of the case. A costs award in the amount of $44,000 is not so disproportionate to a claim in the amount of $141,487.33 so as to make it plainly wrong. JD is simply repeating the arguments that it made below and that were rejected.
42The case law relied upon by JD does not establish that the Associate Justice made an error in principle or that his costs award is plainly wrong. A costs award is a discretionary order that heavily depends on the particular circumstances of each case. As a result, other cases are of limited utility in assessing whether a particular costs award is plainly wrong.
D. CONCLUSION
43JD’s motion is dismissed.
44If costs cannot be agreed upon, the Plaintiff shall deliver submissions of not more than three pages (double-spaced), excluding the costs outline, by December 23, 2022. JD shall deliver its responding submissions (with the same page limit) by January 6, 2023. The submissions of all parties shall also be sent to my assistant by e-mail and uploaded onto CaseLines.
Vermette J.
Date: December 12, 2022