Court File and Parties

COURT FILE NO.: CV-21-654659 DATE: June 1, 2023

ONTARIO

SUPERIOR COURT OF JUSTICE

IN THE MATTER OF the Construction Act, R.S.O. 1990, c.C.30

BETWEEN:

BEN-AIR SYSTEMS INC. Plaintiff Jonathan Frustaglio for the plaintiff, Tel.: 905-695-5500, Fax: 905-695-5501, Email: jfrustaglio@sutherlaw.com,

-and-

2664835 ONTARIO INC. and CASTLEMORE PLUMBING LIMITED Defendants Gregory N. Hemsworth for Castlemore Plumbing Limited; Tel.: 905-850-7000, Fax:: 905-850-7001, Email: ghemsworth@csllp.ca.

DECISION: March 7, 2023.

Associate Justice C. Wiebe

COSTS AND INTEREST DECISION

[1] On March 7, 2023 I released my Reasons for Decision in the trial of this action. Ben-Air originally registered a claim for lien in the amount of $288,701.80. It turned out that this amount did not include HST. With HST, the claim should have been $326,233.03. Ben-Air asserted the lien claim of $288,701.80 in its statement of claim issued January 12, 2021.

[2] Castlemore paid Ben-Air $117,082.31 on November 26, 2021 reducing the Ben-Air lien claim at trial to $209,150.72. Ben-Air also asserted a separate claim for damages for breach of contract in the amount of $31,753, namely its assessment of the value of Ben-Air’s unfinished work.

[3] Castlemore’s statement of defence included a counterclaim of $500,000 in damages, which it reduced at trial to $41,184.01 plus a claim for an order discharging the Ben-Air claim for lien. Castlemore based its counterclaim on its alleged costs to complete Ben-Air’s work.

[4] In my Reasons for Decision I found that Ben-Air has a lien and damages for breach of contract in the amount of $38,900.96. I denied its separate claim for breach of contract damages. I denied Castlemore’s counterclaim in its entirety.

[5] As ordered, the parties uploaded costs outlines and exchanged and uploaded written submissions on costs. Ben-Air wants to be awarded the substantial indemnity costs indicated in its costs outline of $117,723.63 plus $5,500 for the costs of its written costs submissions. In the alternative, it wants its partial indemnity costs of $89,939.08 plus the $5,500. Castlemore wants to be awarded the substantial indemnity costs in its costs outline of $120,936.80 plus $4,000 for the costs of the written costs submissions both as against Ben-Air and its principal, Juan Cumming. In the alternative, Castlemore wants its partial indemnity costs of $81,465.90 plus the $4,000 both as against Ben-Air and its principal, Mr. Cumming.

Result

[6] Applying the factors in Rule 57.01(1) of the Rules of Civil Procedure, the first consideration is the result. I find that Ben-Air was on balance the successful party. On its claim of $326,233.03 plus its damage claim of $31,753 (total $357,986.03), Ben-Air succeeded in getting paid the $117,082.31 on November 26, 2021 and eventually got a judgment of $38,900.96, for a total of $155,983.27. This is a recovery rate of 43%.

[7] Mr. Hemsworth argued that Castlemore should get costs because it succeeded entirely on the issues concerning the disputed Ben-Air extras, and succeeded partially on the issue of the credit for the uncompleted work, both issues which consumed a large part of the trial. I do not agree. The biggest issue was whether Castlemore repudiated the Subcontract, an issue that Ben-Air entirely succeeded on. That eliminated the Castlemore set-off and counterclaim and set the stage for the Ben-Air claim for damages. The other issues concerned only the quantification of Ben-Air’s lien and damages.

[8] Mr. Hemsworth seems to suggest that I ignore the Castlemore payment of $117,082.31 in my analysis of the result. I refuse to do. For reasons stated below, I find that Castlemore acted unreasonably and jettisoned the settlement discussion in December, 2020 that would, in my view, if done in good faith, have led to a timely resolution of Ben-Air’s exit. Had that been done, there would not have been a need for the Ben-Air claim for lien or the Castlemore $117,082.31 payment.

Conduct

[9] There was much discussion about the conduct of the principals of the two parties, Juan Cumming for Ben-Air and Anthony Romano for Castlemore. Mr. Hemsworth urged me to employ the jurisdiction under Construction Act, R.S.O. 1990, c. C.30 (“CA”) section 86 to make an award of costs against Mr. Cumming personally.

[10] Section 86(1)(b) allows the court to make an award of costs (including substantial indemnity costs) against a “person who represented a party” and who “knowingly participated in the preservation or perfection of a lien, or represented a party at the trial of an action, where it is clear that the claim for lien is without foundation, is frivolous, vexatious or an abuse of process, or is for a willfully exaggerated amount, or that the lien has expired. . .” Mr. Hemsworth argued that I made findings concerning Mr. Cumming’s conduct that justify an award of costs against him personally under section 86.

[11] I will not do so. Based on the evidence at the trial, I find the conduct of both Messrs. Cumming and Romano equally censurable.

[12] There was indeed much of the conduct of Mr. Cumming to criticize. I found that Mr. Cumming showed himself to be one lacking integrity by reneging on agreements he made throughout the project, failing to comply with key undertakings and creating baseless claims for extras at the end of December, 2020 to inflate the Ben-Air lien claim. I found that Mr. Cumming had Mr. Atzori grossly underestimate the Ben-Air costs to complete to further inflate the Ben-Air lien claim, and that he became too involved in the creation of the evidence-in-chief of most of Ben-Air’s other witnesses, thereby undermining its credibility. I agree with Mr. Hemsworth that Mr. Cumming inflated the Ben-Air claim for lien as a tactic maneuver. Normally, I would consider making an award of costs against Mr. Cumming personally under section 86 given this conduct.

[13] But then I considered the conduct of Mr. Romano. I find that Mr. Romano played a major role in causing the Ben-Air claim for lien to arise and be perpetuated. He had Castlemore unilaterally and surreptitiously take over Ben-Air’s work, including the lucrative CCN-M16 extra work, at the end of November, 2020 while Ben-Air was on a temporary work stoppage. I found this to be a Subcontract repudiation.

[14] Mr. Romano gave the appearance of negotiating a Ben-Air exit from the project with Mr. Cumming. Mr. Romano agreed to have the December 15, 2020 site meeting to assess the Ben-Air state of completion. He had Castlemore participate in that meeting ostensibly in good faith.

[15] But then, on December 31, 2020, after Mr. Cumming made his exit proposal for payment (which did not include the disputed extras), Mr. Romano jettisoned the entire negotiation. He devised his story of a Ben-Air “agreement” in early December, 2020 to exit with a meagre payment of $60,000. He did not have Castlemore provide Ben-Air with Castlemore’s own assessment of the costs to complete based on its investigation at the December 15, 2020 site meeting. A good faith Castlemore assessment of the costs to complete at that point, would, in my view, have led to a fruitful discussion of a consensual Ben-Air exit from the project. That did not happen. Mr. Romano instead deferred a final resolution of the Ben-Air account until the work was done. That made the Ben-Air claim for lien a certainty. In the end, Mr. Romano’s “negotiation” appeared to be no more than an attempt to buy time to get Castlemore’s work on the Ben-Air scope underway and to extract an unreasonable settlement from Ben-Air.

[16] Mr. Romano then failed to ensure that Mr. Brown properly and accurately account for the Castlemore costs to complete, thereby inflating the costs to complete credit. Then at trial, he and Mr. Brown put forward critical evidence concerning Castlemore’s December 15, 2020 assessment of the costs to complete in the form of Exhibit 3 that was simply wrong. This was at minimum profound sloppiness.

[17] On account of his conduct, I find that Mr. Romano bears equal responsibility for the existence and perpetuation of the Ben-Air claim, and the result.

[18] As a result, I find that neither side is entitled to an award of substantial indemnity costs. I will also not make an award of personal liability for costs as against Mr. Cumming in light of Mr. Romano’s own conduct.

Reasonable expectation of the losing party

[19] In light of the respective costs outlines of the parties, I find that Ben-Air’s claim in partial indemnity costs of $89,939.08 is not unreasonable and is an amount Castlemore could reasonably have anticipated in the event of a loss. That point was not in dispute.

Complexity

[20] This case had complexity that was created by the poor quality of the evidence and the conduct of the principals of the parties. The issues themselves were not complex. These comments apply to both parties.

Ruling

[21] Based on my analysis of the result, I have decided to award Ben-Air about 43% of its partial indemnity claim of $89,939.08, namely $38,000. This amount must be paid by Castlemore. It is fair and reasonable in the circumstances of this case. Neither side deserves costs anywhere near what each claims.

Prejudgment interest

[22] Concerning prejudgment interest, I agree with Mr. Frustaglio that there must be two calculations. One calculation is on the $117,082.31 at the rate of 0.5% per annum running from January 5, 2021 to November 26, 2021, the date that amount was paid by Castlemore. January 5, 2021 was the date Ben-Air rendered the invoices for the disputed extras. Using that date as the starting date for the calculation of the prejudgment interest was not disputed. The 0.5% prejudgment interest rate is the rate specified by the Courts of Justice Act, R.S.O. 1990, c. C.43 (“CJA”) section 128. There was no claim for contractual prejudgment interest. This calculation produces a fixed total of $325.

[23] There must be a second calculation on the $38,900.96 lien amount at the same rate of 0.5% per annum running again from January 5, 2021 to the date of confirmation of my report. As of the date of this decision, June 1, 2023, that prejudgment interest is $464.81.

[24] I enclose a draft report for review and comment by counsel. As you can see, I intend to sign the report on June 9, 2023. I must have comments about this draft report by 12 noon that day, failing which I will sign the report as it is drafted.

Released: June 1, 2023

ASSOCIATE JUSTICE C. WIEBE

COURT FILE NO.: CV-21-654659 ONTARIO SUPERIOR COURT OF JUSTICE In the matter of the Construction Act, R.S.O. 1990, c. C.30 BETWEEN: Ben-Air Systems Inc. Plaintiff - and - 2664835 Ontario Inc. and Castlemore Plumbing Limited Defendants COSTS AND INTEREST DECISION Associate Justice C. Wiebe Released: June 1, 2023