COURT FILE NO.: CV-18-594953 DATE: January 14, 2023

ONTARIO SUPERIOR COURT OF JUSTICE

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

BETWEEN:

1917196 ONTARIO LTD. o/a SAVE ON CONTRACTING Plaintiff Noorullah Kamil for the plaintiff, Tel.: 647-229-3444, Fax: NA, Email: Noorullah.kamil@gamil.com,

-and-

SADAF KAZMI, SHAZIA TAREEN, TASNEEM ZAHIR and ADNAN BASHIR Defendants Robert J. Kennaley for the defendants; Tel.: 519-805-8186, Fax:: 519-426-3777, Email: rjk@kennaley.ca.

HEARD: May 10, 13, 17, 18, 19, 20 and June 1, 2022.

Associate Justice C. Wiebe

REASONS FOR JUDGMENT

I. Introduction

[1] This reference concerns this one action wherein the plaintiff, 1917196 Ontario Ltd. operating as Save On Contracting (“Save On”) claims four liens on the four subject lands, each in the amount of $56,426, for a total of $225,704. Save On also claims damages of $45,017.

[2] The defendants, Sadaf Kazmi, Shazia Tareen and Tasneem Zahir, are the registered owners of the subject lands. Adnan Bashir, the husband of Ms. Zahir, is an authorized agent of Cityscape Real Estate Ltd. (“Cityscape”), which signed a project management agreement with the registered owners concerning the subject project. At trial, the defendants asserted a set-off and counterclaim in the amount of $594,263.14 plus the payment of the $80,000 (and any accrued interest thereon) presently posted with the court concerning this action.

II. Background

[3] I begin with a summary of the facts of this case that are undisputed.

[4] The security for warranty coverage under the Ontario New Home Warranties Plan Act, R.S.O. 1990, c. O. 31 (“ONHWPA”) is an important part of this case. ONHWPA is administered by its governing body, Tarion Warranty Corporation (“Tarion”).

[5] It is undisputed that there are three types of security that are posted with Tarion concerning the construction of new homes:

• there is “builder security” which is the security (ie. cash and non-cash) Tarion requires a registrant to post with Tarion as a condition of such registration to secure the registrant’s obligations as a “builder” under ONHWPA concerning all its new home projects;
• there is “project security” which is cash security Tarion requires the builder to post for each new home the builder builds to secure Tarion’s warranty obligations for that home;
• there is “vendor security” which is security Tarion requires from vendors who sell homes not previously occupied to secure Tarion’s warranty obligations concerning those new homes.

[6] The builder security is refundable when the builder stops building. The project security is refundable when the home specific warranties expire without being called upon. There is another payment to be kept in mind, namely “enrollment fees.” These are nonrefundable administrative fees charged by Tarion to enroll a home in the program.

[7] The subject lands are 699, 701, 703 and 705 Markham Street, Toronto. In 2014 Ms. Zahir and Mr. Bashir, at their initiative, got together with their friends, Ms. Kazmi and Ms. Tareen, to purchase these lots and build on them four new, semi-detached houses initially for the purpose of resale. Ms. Zahir became the registered owner of 699 Markham Street (“699”) and 705 Markham Street (“705”); Ms. Kazmi became the registered owner of 701 Markham Street (“701”); and Shazia Tareen became the registered owner of 703 Markham Street (“703”).

[8] On December 15, 2015 the registered owners signed a document called a Project Management Agreement (“PMA”) with Cityscape. According to the words of the PMA, the registered owners hired Cityscape to act as their agent to plan, budget, schedule, supervise and coordinate the project for a fee. Under the PMA Cityscape was authorized to sign contracts on behalf of the registered owners. The PMA expressly stated that Cityscape could act as a “Contractor” provided that was disclosed to the registered owners. Mr. Bashir signed the PMA as agent for Cityscape.

[9] The registered owners and Mr. Bashir obtained financing. Cityscape obtained the designs, rezoning, approvals and permits for the construction. The designs of the houses were similar. They were box configurations with front balconies and flat rooves.

[10] In the summer of 2016, based on recommendations from friends and family, Mr. Bashir approached Noorullah Kamil, the principal of Save On, to explore having Save On do the construction work. Mr. Kamil showed Mr. Bashir a house Save On built near O’Conner and Coxwell in Toronto. On August 25, 2016 Mr. Bashir sent the drawings to Mr. Kamil and asked for a quote.

[11] Obtaining warranty coverage under the ONHWPA was very important to Mr. Bashir and the registered owners. However, it is undisputed that Mr. Bashir knew that Save On was not a registered Tarion builder.

[12] Messrs. Bashir and Kamil met on Saturday, August 27, 2016. Mr. Bashir proposed hiring Save On. That night at 8:28 p.m. Mr. Kamil sent Mr. Bashir an email proposing an “interim agreement” subject to Save On obtaining Tarion warranty coverage. The email provided the following two options:

• Save On would enroll the properties with Tarion and do the construction at $144 per square foot plus HST if Mr. Bashir became “the financial guarantor for your properties” to Tarion;
• Save On would enroll the properties and do the construction at $165 per square foot plus HST if Mr. Kamil became the financial guarantor.

[13] There was a telephone conversation between the two men the next day, Sunday, August 28, 2016 wherein the terms of the contract were discussed. Mr. Bashir alleges the two agreed that, in return for the lower price, the registered owners would pay the Tarion enrollment fees and project security for the four houses, but not the builder security for Save On’s Tarion registration. Mr. Kamil alleges that they agreed that the registered owners would provide all three in return for the lower price – the enrollment fees, the project security and the builder security.

[14] At 1:42 p.m. Mr. Kamil emailed Mr. Bashir a draft agreement he had prepared. Attached was a contract document entitled, “Proposal.” The document stated that the agreement was between Save On and Mr. Bashir and that Save On would build the four houses. The scope and schedule were defined. The price was stated to be based on $144 per square foot plus HST. There was a clause entitled, “Tarion Warranty,” which stated that Save On would register with Tarion and that Mr. Bashir would be “a guarantor with Tarion for enrolling his 4 unit dwellings.” At 4:57 p.m. Mr. Bashir emailed back stating that he agreed with the proposal as long as the Tarion issue was worked out as discussed on the phone.

[15] Mr. Kamil converted the “Proposal” into a document entitled “Agreement” and provided it to Mr. Bashir by email on Monday, August 29, 2016. It was essentially the same as the “Proposal.” There were some changes such as the price which was calculated in detail and shown as being $1,183,680 plus HST, or $1,337,558.40. The “Tarion Warranty” clause was the same. Mr. Bashir signed the Agreement on August 30, 2016. It is undisputed that this was the contract between the parties. It will be called “the Contract.” Mr. Bashir also gave Mr. Kamil a $5,000 cheque deposit for the enrollment fees.

[16] The two men met a Tarion representative on August 30, 2016. This person explained the Save On registration process and confirmed that work could commence before registration was done.

[17] Mr. Kamil began the Save On registration process immediately. He moved so quickly, he said, to avoid a change in the Tarion registration process that came into effect on September 1, 2016. He used his own guarantees and assets to support the registration. Mr. Kamil said that he did this because Mr. Bashir wanted the registration and project to move forward, but was not available to provide the owners’ assets for the registration as he and Ms. Zahir were travelling for a few weeks to Dubai and Saudi Arabia in September, 2016. Therefore, Mr. Kamil alleges, on a “temporary basis,” he used his own assets for the registration. The defendants do not accept this position.

[18] On September 9, 2016 Mr. Kamil emailed Mr. Bashir with a report on the status of Save On’s registration. He indicated that the project security could be between $5,000 and $15,000 per unit for two years, which could be returned as early as one year from the date of deposit. He reported on what he gave Tarion for builder security, but without mentioning any replacement of same by Mr. Bashir. Mr. Kamil said that he needed to pass a test.

[19] The Save On Tarion registration ran into difficulties. On November 7, 2016 Tarion issued a Notice of Proposal to Refuse Registration (“NPRR”) refusing the Save On registration. Mr. Kamil explained the refusal as being the result of Tarion “convicting” Save On of being an “illegal vendor” for selling a newly built home in 2007 without a warranty. This event, he said, resulted in his bankruptcy in 2007. Mr. Kamil challenged the November 7, 2016 NPRR.

[20] Mr. Kamil stated that he did not ask Mr. Bashir for his replacement project security after Mr. Bashir returned from his trip because of this delay in the registration. The defendants do not accept that explanation.

[21] Meanwhile, the project continued. The contract schedule required that the work be done in 9.5 months, namely by mid-June, 2017. There was delay. There were changes. But by June, 2017 the project was approaching completion.

[22] Mr. Kamil succeeded in his dispute with Tarion to the point where Tarion accepted Save On’s registration in May, 2017. On May 29, 2017 Save On and Tarion signed a “Builder Agreement.”

[23] On June 1, 2017 Mr. Kamil sent an email to Mr. Bashir and Ms. Zahir advising them of Save On’s success. He advised that Tarion had inspected the 4 houses, had approved the construction, and had begun the process of enrollment. He stated that the enrollment fee per unit was confirmed at $1,695, or a total of $6,780. He stated that there needed to be a “settlement” of Save On’s legal costs and “other full costs” incurred to “get Tarion.”

[24] Later that same day, June 1, 2017, Mr. Kamil sent another email to Mr. Bashir and Ms. Zahir advising that the project security was confirmed at $20,000 per unit. He said that it would have been $40,000 per unit, but that he posted builder security by way of personal guarantees on his two homes to get the reduction. He stated that, in accordance with the contract, he needed the owners’ replacement builder security failing which the price would revert to $165 per square foot. Mr. Bashir called Mr. Kamil and denied the replacement builder security assertion.

[25] On June 19, 2017 the registered owners paid the $80,000 project security by way of a cheque payable to Tarion that Mr. Kamil delivered to Tarion. It is undisputed that at some point the registered owners paid Save On the $6,780 for the Tarion enrollment fees which Save On then applied to those fees.

[26] On June 22, 2017 Tarion issued a Registration Certificate to Save On and the four enrollment certificates for the four units naming Save On as the builder.

[27] As the project work continued, there were increasing disputes about extras. On August 22, 2017 Mr. Kamil sent Ms. Zahir an email wherein he, amongst other things, said that Mr. Bashir had promised to pay Save On’s legal expenses concerning Tarion. Mr. Bashir denies this assertion.

[28] On October 31, 2017 Mr. Kamil sent an email stating, amongst other things, that “I am underpriced in this project.” On December 12 and 15, 2017 Mr. Kamil sent emails confirming that Save On was in financial stress.

[29] On January 5, 2018 Mr. Kamil delivered a Save On invoice which was based on a recalculation of the contract price using the $165 per square foot option. The stated extra was $218,078. The invoice stated that Save On had been paid $1,481,517.

[30] On January 10, 2018 Mr. Kamil emailed Mr. Bashir and Ms. Zahir demanding payment of Save On’s Tarion legal costs and the extra based on the revised contract price. He stated that owners were responsible under the contract for all Save On costs concerning Tarion, failing which the price reverted to the $165 per square foot option. He stated that he was losing money with the $144 per square foot price.

[31] On January 19, 2019 Mr. Bashir emailed in reply denying responsibility for the Tarion legal costs, stating that he had agreed to pay only the Tarion enrollment fees and project security, and demanding that Save On complete the project.

[32] There was another exchange of emails. Then on January 27 and 31, 2018 Mr. Kamil emailed Mr. Bashir and all the registered owners stating that Save On had left the site and would not return until the issues were resolved. He stated that Save On was removing its security from the site including the fencing effective February 1, 2018. He stated that Save On was not responsible for warranties and that Save On would be registering claims for lien.

[33] On February 8, 2018 Save On registered three claims for lien, one for $56,526 on 701, one for $56,526 on 703 and one for $56,526 x 2 = $112,852 on 699 and 705. The total of these three claims for lien is $225,704. Save On purported to perfect these claims for lien by commencing an action with a statement of claim issued on March 29, 2018. At this time Save On was using lawyer, Stephen Dyment.

[34] In the meantime, Mr. Bashir obtained inspections of the work. One inspection was on February 12, 2018 by Maaz Aslam of Stallion Construction Group Inc. Another was on March 17 and April 28, 2018 by Gord Cumming of Cumming Innovations; and two more were on March 19, 2018 by Andrew Dixon and James Burren of Mike Holmes Inspections.

[35] Mr. Bashir then retained trades to complete the work including alleged deficiency correction. The defendants allege that they incurred $235,446.55 in cost to complete and correct deficiencies concerning 699 and 705. They allege that they incurred $189,110.65 in cost to complete and correct deficiencies concerning 701. They allege that they incurred $169,706.14 in cost to complete and correct deficiencies concerning 703. The total of these figures is $594,263.34.

[36] Using lawyer, Salma Sheikh, the defendants delivered a statement of defence and counterclaim on August 14, 2018. Save On delivered a reply.

[37] Save On obtained a judgment of reference from Justice Favreau on January 8, 2019. On February 19, 2019 the defendants moved for an order vacating the Save On claims for lien with the posting of $283,130 in cash security. I granted the order. On motion by Save On, I made an order for trial on February 20, 2019.

[38] I became seized of the reference at the first trial management conference on December 2, 2019. Although Ms. Sheikh did not appear, the parties had agreed to a scheduling order which included a Scott Schedule. I imposed the agreed upon schedule.

[39] The second trial management conference was adjourned due to the Covid-19 pandemic. It took place on June 15, 2020. Mr. Dyment raised many issues of non-compliance with directions by the defendants. I ordered that the defendants pay $3,500 in costs, and I imposed a new schedule for interlocutory steps.

[40] Shortly thereafter Mr. Dyment asked for an accelerated third trial management conference on account of alleged continued non-compliance with directions by the defendants concerning the Scott Schedule. I convened the conference on August 17, 2020. At this time, Josh Winter of Mr. Kennaley’s firm appeared and advised that his firm had just been retained and would provide a proper Scott Schedule. Mr. Dyment advised that his client, Mr. Kamil, nevertheless wanted a motion to strike the defendants’ pleading because of this alleged non-compliance with directions. I scheduled the requested motion for September 10, 2020.

[41] On September 10, 2020 I heard the argument of the motion and dismissed it. I immediately held the fourth trial management conference and made a new scheduling order. On October 9, 2020 I issued reasons on the motion and awarded the defendants $10,975.06 in substantial indemnity costs.

[42] On January 18, 2021 I held the fifth trial management conference. A new lawyer for Save On, Murray Snider, appeared. I heard that Save On had used yet another lawyer, Peter Mitchell, for discovery. I also heard that the parties and Tarion had agreed to have the $80,000 of project security paid into court pending this action, as there was no risk of warranty claims. I also heard that Save On wanted to amend its pleading to allege that Mr. Bashir was a builder under ONHWPA. I cautioned Mr. Kamil against writing directly to opposing counsel. I made a further scheduling order.

[43] On May 10, 2021 I held the sixth trial management conference. I scheduled the Save On pleadings amendment motion. On July 26, 2021 I heard argument on that motion, and on September 13, 2021 granted that motion. On October 14, 2021 I granted the project security consent motion.

[44] On October 26, 2021 I held the eighth trial management conference. I scheduled a summary trial to take place on May 10, 13, 17, 18, 19, 20 and June 1, 2022.

[45] On April 4, 2022 I held the ninth trial management conference. Save On had delivered a trial affidavit sworn by Mr. Kamil in accordance with my trial schedule. Mr. Dyment appeared at the trial management conference for Save On. I was advised that Save On replaced Mr. Synder with another lawyer, Padeep Chand, in December 2021, then became dissatisfied with and dismissed Mr. Chand in mid-January, 2022, and then rehired Mr. Dyment in February, 2022 but only on a temporary basis. I was advised that Mr. Kamil lacked confidence in Mr. Dyment representing Save On at the trial, particularly concerning the Tarion issues, and that Save On wanted to move to have Mr. Kamil represent the plaintiff as he believed that only he could present the Tarion issues properly. I scheduled that representation motion to be argued on April 11, 2022.

[46] On April 11, 2022 I heard argument on the representation motion, and on April 12, 2022 released reasons granting the motion but on condition that Save On post security for costs of $56,000 by April 27, 2022. I was later advised that Save On posted that security for costs.

[47] The trial hearing took place on May 10, 13, 17, 18, 19, 20 and June 1, 2022. Save On called two witnesses, Mr. Kamil and the expert, Sanjay Verma. The defendants called eight witnesses, Mr. Cumming, Mr. Aslam, Ms. Tareen, Mr. Buren, Mr. Dixon, Ms. Kazmi, Ms. Zahir and Mr. Bashir.

III. Issues

[48] Based on the evidence and submissions, I find that the following are the issues to be determined:

a) Were the defendants obliged under the Contract to post builder security? b) Was there a Contract mistake about the project security, and, if so, what was the effect? c) Was Mr. Bashir a “builder” under ONHWPA? d) Did Save On repudiate the Contract? e) What are the resulting damages?

IV. Witnesses

[49] Before I analyze the issues, I will comment on the credibility of the witnesses.

[50] Concerning the plaintiff’s witnesses, its case focused almost entirely on Mr. Kamil. But I found that he was not a credible witness. Throughout the reference and the trial, I found Mr. Kamil to be an arrogant and overconfident person. There was nothing at the trial concerning Tarion that could not have been dealt with by a lawyer. Yet, Mr. Kamil felt that only he could represent Save On because of the allegedly complex Tarion issues. Save On was much in need of legal help in preparing for and conducting the trial, yet Mr. Kamil insisted that he could do the job better.

[51] This trait showed up elsewhere in this reference. As noted earlier, Mr. Kamil pressured Save On’s lawyer to insist on a motion to strike when Mr. Kennaley’s firm had just been retained by the defendants and Mr. Winter promised to deliver a compliant Scott Schedule. Mr. Kamil also consistently circumvented Save On’s lawyer in corresponding with defendants’ counsel directly.

[52] Given this character, Mr. Kamil was not a careful witness. He consistently made uncorroborated statements that he expected the court to accept. For instance, he alleged throughout that Tarion would not and did not accept the defendants’ project security. He alleged that Tarion would not have accepted builder security from the defendants. Yet, he provided no corroboration for those positions. He did not call any witnesses from Tarion. Save On listed two Tarion persons in its original witness list, but these persons were not called. He did not attach Tarion documentation on the issue of security, such as policy statements or statutory references. Mr. Kamil just assumed the court would accept his uncorroborated assertions without question.

[53] There were many other examples of Mr. Kamil’s arrogance and lack of attention to evidentiary detail. Mr. Kamil asserted that Save On’s work passed all City inspections, but provided no corroboration for that assertion. On the issue of deficiencies, all he provided was what he called a “report” from one Mike Hanas of Tarion dated May 26, 2017, which was only a brief email. In his initial affidavit, Mr. Kamil consistently referred to attached emails without explaining their content or significance. Mr. Kamil also provided no corroboration (ie. emails or letters) for his critical explanation for not asking Mr. Bashir for replacement builder security for ten months, namely the explanation that Mr. Bashir was initially on a trip and that later after his return the Save On registration was delayed.

[54] Mr. Kamil also spent much time in his affidavits and in cross-examination arguing his case and not giving evidence. In his affidavits, Mr. Kamil could not refrain from repeatedly arguing his position on the PMA, the origin and interpretation of the Contract, and the ownership of the properties.

[55] Mr. Kamil also displayed a penchant for focusing on marginal issues usually about credibility. For instance, he spent an inordinate amount of time on the issue of whether the defendants should have posted vendor security, which was in my view not germane to this case. In his reply affidavit, he improperly introduced non-relevant contract documents alleging that this concerned Mr. Bashir’s credibility. They did not. Mr. Kamil devoted several pages of his initial affidavit to his allegation that Mr. Winter had unfairly treated him at discovery to make him look like a shoddy builder, when this was not discovery evidence the defendants were relying on. This all made Mr. Kamil appear less interested in proving relevant facts than in scoring points. It seriously detracted from his credibility.

[56] In cross-examination Mr. Kamil introduced new evidence that was not in his affidavits. For instance, he said that he provided Mr. Bashir with a form of contract based on the $165 per square foot option. This document was not produced. He wanted to introduce videos and pictures that he did not discuss in his affidavits, which I did not allow. This showed again Mr. Kamil’s lack of attention to evidentiary detail and procedural fairness. It all detracted from his credibility.

[57] The plaintiff’s only other witness was the expert, Sanjay Verma of Alpha Costs Consultants Inc. He was accepted without opposition as a quantity surveyor. He gave opinion evidence concerning the cost to finish the Save On work. He filed a report dated March 3, 2021 on the subject. He attended at the homes on February 10, 2020, namely well after the project was completed and the homes were occupied. He based his analysis primarily on the project drawings and what was imparted to him by Mr. Kamil about work-in-place, extras and credits. He concluded that the cost of the unfinished work at the time of the Save On departure for each of 699, 701 and 705 was $32,078, and for 703 $41,803.

[58] The biggest problem with Mr. Verma’s evidence was the fact that key evidence on which he relied, such as the Save On work-in-place, extras and credits, all came from Mr. Kamil. Given my misgivings about Mr. Kamil’s credibility, this seriously undermined the credibility of Mr. Verma’s evidence. Furthermore, Mr. Verma saw the houses well after they were completed, and, therefore, his analysis was speculative at best. He also did not list or attach to his report all the documents he relied upon; he did not attach the video he referred to; he referred to design “gaps” but did not attach the drawings he referred to. This all detracted from his credibility.

[59] The defendants’ primary witness was Mr. Bashir. He came across as a seasoned businessman experienced in the area of construction management. His affidavit was detailed, carefully prepared in chronological order, corroborated and easy to follow. He took care to explain his relationship with the registered owners. He made admissions against interest, such as the admission that he was attracted to the quality of Save On’s work at the outset, and that he did not know much about Tarion at the outset of the project. He corrected errors in his evidence and pleadings, such as the admissions that he knew at the outset that Save On was not registered with Tarion, that he had specified the wrong date for the meeting with the Tarion representative, and that he had attached the wrong document as Exhibit C to his affidavit. This all bolstered Mr. Bashir’s credibility.

[60] Mr. Kamil tried in cross-examination to undermine Mr. Bashir’s credibility. He seemed to make some headway in this regard when he got Mr. Bashir to admit that he and his wife put 699 on the market in November, 2017 as a premise to be leased as of December 4, 2017, when that was not the case. Mr. Bashir admitted this, saying that they were just “testing the market.” He clarified the matter in reply by saying that there was a potential sale, that they informed the purchaser of the misrepresentation, and that the sale never went through due to the dispute with Save On. This, however, did show Mr. Bashir as being capable of dissembling to suit his interests.

[61] Nevertheless, on balance, I found Mr. Bashir a more credible witness than Mr. Kamil. On the core issues in this case, Mr. Bashir’s evidence was more detailed, more corroborated and more understandable that Mr. Kamil’s evidence. Mr. Bashir admitted to the limitations of his evidence. But, most importantly, his evidence, particularly on the key issue of Contract interpretation, seemed vastly more reasonable and in tune with the surrounding evidence and the positions of the parties. That is why I in the end preferred the evidence of Mr. Bashir over that of Mr. Kamil when two conflicted.

[62] The defendants called the registered homeowners, Ms. Kazmi, Ms. Tareen and Ms. Zahir as witnesses. Their affidavits were brief. They all seemed credible. They made sure that their evidence was limited to what they knew. Mr. Kamil attacked them on the issue of the PMA and whether Mr. Bashir was a builder, but they stood up to these attacks well. They all confirmed that Cityscape (as represented by Mr. Bashir) was to manage the project for them, and that Cityscape was their agent in this regard. But they also admitted that, despite their requirement to have a Tarion builder, Mr. Bashir did not give them exact information about Save On’s Tarion status. They admitted not seeing the Contract until 2018 as Cityscape was managing the project. Mr. Kamil questioned them about extras and deficiencies, and they answered forthrightly to the best of their knowledge.

[63] The defendants also called experts as witnesses. They were Gordon Cumming (the project designer), Maaz Aslam (a contractor), James Buren (a registered home inspector) and Andrew Dixon (a registered home inspector). These were participating experts, as they all authored reports in the period shortly after the cessation of Save On’s work (February to April, 2018) that concerned deficiencies and uncompleted work. The purpose of these reports was to facilitate the completion work.

[64] All these experts seemed credible. Mr. Kamil challenged the qualification of only Mr. Buren, but withdrew that challenge when Mr. Buren made it clear that he was not a quantity surveyor. These experts conceded limitations to their evidence. For instance, Mr. Cumming admitted that he did not include the 50 square feet of open space over the kitchen areas of the units when he made submissions for zoning. Mr. Aslam conceded that he was not a Tarion builder. The focus of Mr. Kamil’s cross-examinations was not on the existence of the identified deficiencies and uncompleted work, but on their significance. In these cross-examinations, the expert witnesses stood their ground convincingly. I note in particular that Mr. Aslam defended well his assessment of the state of the work (grade B) and the state of completion (65% done).

[65] In the end, for these reasons, I decided to give these defendant witnesses – the registered owners and the experts – more weight whenever their evidence conflicted with the evidence of Mr. Kamil and Mr. Verma.

V. Analysis

a) Were the defendants obliged under the Contract to post builder security?

[66] There was no issue that the Contract was enforceable. It dealt with price, scope and schedule; see Grelowski v. Koehler, 2022 ONSC 2902 at paragraph 28. The issue is the interpretation of the Contract.

[67] The Save On pleadings are not clear. What I can make out is the following. The pleading appears to be that Save On and Mr. Bashir agreed implicitly in the Contract that the lower Contract price (based on $144/square foot) was based on Mr. Bashir posting all security with Tarion and paying all costs to Tarion to get Tarion warranty coverage for the four units. The pleading then appears to say that this arrangement violated the ONHWPA and was not legally possible. In the alternative, the pleading says that, even if the arrangement was legal, it was not performed by Mr. Bashir because he did not post the builder security.

[68] As for a remedy, the statement of claim is not clear. It simply says that the Contract price should be amended to be based on the higher price based on $165/square foot. I will assume that the implicit remedy pleaded is the equitable doctrine of contract rectification due to a common mistake, or that it was actually implicit in the Contract that the price would revert to the higher price if the arrangement was not legal or was not performed.

[69] The following are three critical questions concerning the Contract interpretation: Was there an implicit condition in the Contract that Mr. Bashir would post the Tarion builder security for Save On along with the project security and enrollment fees he did pay? If so, was it implicit that the price would revert to the $165/square foot option if that arrangement was not legal or was not performed? If that condition was not in the Contract, was this due to a common mistake by the parties about what they intended to do in the Contract?

[70] As I stated in in paragraphs 47 and 48 of my decision in Gibowic v. Sholzberg-Tsilker, 2022 ONSC 1716, the law of contract interpretation seems to have changed to some degree. It used to be the case that the court would look into evidence of surrounding circumstances and the intentions of the parties only if the contract was ambiguous; see Shewchuk v. Blackmont Capital Inc., 2016 ONCA 912 (Ont. C.A.) at paragraph 39. In Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, [2014] 2 S.C.R. 633 at paragraph 47, the Supreme Court of Canada held that the guiding principle should be determining “the intent of the parties and the scope of their understanding.” In the same paragraph the Court stated the following: “To do so, a decision-maker must read the contract as a whole, giving the words used their ordinary and grammatical meaning, consistent with the surrounding circumstances known to the parties at the time of formation of the contract.”

[71] The extent to which this is a change is an open question. In Sattva in paragraph 57 the Supreme Court stated that surrounding circumstances “must never be allowed to overwhelm the words of [the] agreement.” As to what surrounding circumstances can be considered, the Court was specific in paragraph 58 in limiting those to “objective evidence of background facts at the time of the execution of the contract . . . , that is, knowledge that is or reasonably ought to have been within the knowledge of both parties at or before the date of contracting.”

[72] I also comment briefly on the law of implied contract terms. The court should not find implied terms in a contract where such terms are not necessary to and do not fit within the expressed terms of the contract; see M.J.B. Enterprises Ltd. v. Defence Construction (1951) Ltd., [1999] 1 S.C.R. 619 at paragraph 29. I will apply these principles to this issue.

[73] It is undisputed that Save On and Mr. Bashir entered into the contract memorialized by the document entitled “Agreement.” This document contains Mr. Bashir’s initials and has his signature with the date, “Aug 29, 2016” beside it. In the document, Save On is identified as the “contractor” and Mr. Bashir as “the customer.” The critical clause is clause 26 entitled with underlining, “Tarion Warranty.” It says the following and has the following underlining:

The Contractor agrees to register with Tarion Home Warranty. The customer agrees to be a guarantor with Tarion for enrolling his 4 unit dwellings.

[74] In my view, giving this clause its ordinary and grammatical meaning, it has no ambiguity. The clause draws a clear distinction between the registration process that Save On must go through and the enrollment process for the four units that Mr. Bashir will be “a guarantor” of. The former concerns builder security; the latter project security. The clause does not impose expressly or implicitly any requirement on Mr. Bashir to guarantee the Save On registration as a Tarion builder.

[75] This interpretation is, in my view, consistent with the Contract as a whole and the surrounding circumstances at the time of the Contract formation and later:

a) The Contract of which this clause forms a part spells out the responsibilities of the parties throughout. There should be no exception with clause 26. The clause states that it was Save On that would register with Tarion, and that the “customer” would be a guarantor of the enrollment process for this specific project. There is nothing in this clause that puts responsibility on Mr. Bashir to guarantee the Save On registration. b) This was a contract document that was created by Mr. Kamil. Under the doctrine of contra proferentem, any ambiguity in the clause, which I do not find, should be interpreted against the interests of the drafter, namely Mr. Kamil and Save On. c) This interpretation is consistent with the positions of the parties at the time of the Contract. The Save On registration with Tarion concerns its entire new home construction business going forward, not just the subject four units. Mr. Bashir had no knowledge of Save On and its wherewithal to conduct business before this project. It would make no commercial sense for Mr. Bashir, a seasoned businessman, to underwrite Save On’s entire new home construction business going forward with builder security when he had no knowledge of or relationship with Save On prior to this project. Paying the project security, on the other hand, made understandable commercial sense to Mr. Bashir as he was advised by Mr. Kamil that this secured the Tarion warranties for the subject four homes at the lower price, and would be returned if no claims were made on the warranties. This was a limited obligation. Mr. Bashir made this point clearly when I asked him for his assessment at the time of these price options. Mr. Kamil, in my view, knew this and never negotiated for or agreed to have Mr. Bashir post builder security. d) Mr. Kamil put much emphasis on the negotiation process behind the Contract, and, in particular, the August 27, 2016 email he sent to Mr. Bashir that initiated the negotiation. He argued that he made it clear to Mr. Bashir in this email that the price options presented turned on whether Mr. Bashir would or would not put forward all the security required by Tarion – builder security and project security. He put much emphasis on his use of the phrase, “the financial guarantor,” and argued that this phrase meant the provider of all security required by Tarion. Mr. Bashir’s evidence was that this email and the discussion that ensued from it concerned project security only. I agree with Mr. Bashir. The two men did not know the technical details of Tarion security at the time of the Contract, but, in my view, they had a sufficient general understanding to make their thoughts clear. As with the eventual Contract clause 26, the email draws a clear distinction between builder registration and project security. In the third paragraph Mr. Kamil proposed an “interim agreement with a clause subject to obtaining Tarion Warranty by my company.” That paragraph referred to the registration process and put the responsibility for that onto Save On, with the proposal being that the Contract be “interim” and subject to cancellation if Save On did not get registration. The remainder of the email, on the other hand, talks about what would be required “to enroll your units” with Tarion, with the lower price being in place if Mr. Bashir was the guarantor and the higher price being in place if Save On was the guarantor. The phrase that Mr. Kamil relies upon, “the financial guarantor,” needs to be put in the context of the sentence in which it appears: “As I said to you during our meeting today I have no problem to enroll your units under Tarion provided you are the financial guarantor for your properties.” This refers to project-specific security, not the registration process referred to earlier in the email. As such, this email correlates with clause 26 of the Contract, with the exception being that the parties did not in the end make the Contract interim. e) The conduct of the parties supports Mr. Bashir’s evidence on this point. On August 29, 2016 Mr. Bashir paid Save On a $5,000 advance on the Tarion enrollment fees. Mr. Bashir gave no advance and made no payment on account of builder security. f) About ten days later, on September 9, 2016, Mr. Kamil sent Mr. Bashir an email reporting in some detail on the Save On registration process. Mr. Kamil discussed at length what Save On was going through and the documentation and security it was required to submit. At no point did Mr. Kamil mention that Mr. Bashir would be replacing this builder security. Mr. Kamil tried to explain that he did not ask for Mr. Bashir’s builder security at this time because Mr. Bashir was away on a trip and wanted the registration and building to proceed in his absence. Mr. Kamil asserted that he put up the builder security as a temporary measure as a result. There is no corroboration for this bald assertion. I would have thought that any party with such an important commitment from Mr. Bashir concerning the eventual replacement of the builder security would at least have memorialized that commitment in this September 9, 2016 email. Indeed, he would have memorialized this commitment in some other form of writing. There was no evidence this was done. I note that what Mr. Kamil focused on in his September 9, 2016 email was in fact the latest news about the amount of project security that needed to be posted. He said that it was between $5,000 and $15,000 per unit and that it would be returned within one year from the date of deposit. This news he underlined and bolded. This September 9, 2016 email is, in my view, entirely consistent with the above interpretation of the Contract clause 26, namely that Mr. Bashir only committed to post project security. That means that, despite his present denials, Mr. Kamil knew when he wrote this email that Mr. Bashir would only be interested in the project security, not the builder security.

[76] I also found significant the conduct of the parties during the performance of the work. For nine months Mr. Kamil made no reference to or demand for replacement builder security from Mr. Bashir or anyone. This demand was first made in an email from Mr. Kamil dated June 1, 2017. The project was at this point nearing completion. Save On had been paid almost the entirety of the Contract price plus agreed upon extras. Save On was running out of money. In later emails dated October 31, 2017 and December 12, 2017 Mr. Kamil admitted he had underestimated the Contract price. In its January 6, 2018 invoice Save On admitted that it was paid in total $1,481,517. Save On, therefore, had incentive to create claims.

[77] Mr. Kamil tried to explain this delay in demand on the delay in the Save On registration process, arguing that he could not ask Mr. Bashir for the replacement builder security while the Save On registration was pending. I do not believe him. If that was the original deal, as Mr. Kamil alleges, there should have been no impediment to such a demand, at any time. Mr. Bashir could have been required at any time to post his replacement builder security with Save On. In my view, the demand was not made prior to June 1, 2017 because the obligation did not exist. The demand was made on June 1, 2017 because Save On was at that point desperate for money, and decided to create a claim.

[78] I note that on June 19, 2017 Mr. Bashir and the registered owners paid the $20,000 per unit project security, for a total of $80,000, and that they never posted builder security. This conduct further supports the defendants’ version of the Contract.

[79] This all leads me to the conclusion that Mr. Bashir and the defendants had no obligation under the Contract to post builder security for Save On. I also find that this absence of obligation was not on account of a common mistake by the parties. This is what the parties agreed to.

[80] The interpretation Mr. Kamil alleges, namely that there was an implicit agreement that Mr. Bashir post builder security, is a theory Mr. Kamil created well after the fact to justify an extra cost demand to make up a budget shortfall.

b) Was there a Contract mistake about the project security, and, if so, what is the effect?

[81] There is no issue that the parties agreed in the Contract to have Mr Bashir post the project security required by Tarion for the four units, and that he and the registered owners did so with a payment made directly to Tarion. It appears from the statement of claim that Save On alleges that unbeknownst to the parties at the time of the Contract this was not allowed by Tarion, that Tarion requires that only the builder supply the project security, and that this alleged illegality justified the reversion of the Contract price to the price based on $165/square foot as that option was based on Save On providing the security.

[82] The defendants’ statement of defence in paragraph 11 appears to allege that in the end Tarion made it clear to the defendants that under ONHWPA the project security was the obligation of Save On, not the defendants. It appears, therefore, that the parties accept that this part of the Contract, the payment of the project security by the defendants, was a mistaken illegality.

[83] What is the effect of this common mistake? Again, the Save On pleading is not clear, but it appears that Save On seeks Contract rectification based on this common mistake. The remedy for a common mistake in contract usually is rescission of the entire contract. But it can in limited circumstances also lead to rectification if the mistake undermines just a term of the contract; see Wilde v. Wilde at paragraph 46. What is clear thought is that the common mistake must be shown to have frustrated the intentions of the parties. In Miller Paving Limited v. B. Gottardo Construction Ltd., 2007 ONCA 422 at paragraph 25, the Court of Appeal described the elements that must be proven to void a contract due to common mistake. One of the elements is that the mistake must render the contract performance impossible.

[84] In this case the intentions of the parties was the establishment of the Tarion warranties with the posting of the project security by the defendants. It is undisputed that these warranties were critical to the parties. If that did not happen because of this common mistake, this key part of the Contract would indeed be frustrated. The defendants do not accept that there was such a serious consequence. Therefore, Save On must prove this point.

[85] I am not satisfied that Save On has proven this point. There was no evidence as to the effect of the defendants wrongfully posting the project security instead of Save On. There was no evidence that the Tarion warranties were undermined or voided by this mistake. Indeed, Save On produced no evidence from Tarion at all.

[86] What was established was that on June 19, 2017 Mr. Bashir paid the $80,000 of project security to Tarion. That security remained with Tarion until my October 14, 2021 consent order whereby Tarion paid the $80,000 into court. That is a period of four years and four months. There was no evidence as to the actual completion date of the project and the commencement of the warranties. There was no evidence of claims made against Tarion. There was no evidence as to the reason Tarion was prepared to return the project security in 2021.

[87] At the trial management conference dated January 18, 2021 I was advised by counsel that Tarion was prepared to return the project security because there was no risk of warranty claims. That suggests that the Tarion warranties were in place. At the trial management conference dated May 10, 2021 counsel for Save On gave me a different reason for the return. But there was no evidence concerning these two propositions.

[88] Given this evidentiary void and the onus on Save On, I am not prepared to conclude that the Tarion warranties were not in effect because of the common mistake about the payment of the project security.

[89] As a result, I find that Save On has failed to prove that the mistaken illegality of the defendants payment of the Tarion project security undermined the Tarion warranties, and that this part of the Contract was frustrated. Therefore, I am not prepared to rectify the Contract as requested by Save On.

c) Was Mr. Bashir a “builder” under ONHWPA?

[90] The amendments that Save On inserted into its statement of claim by virtue of my leave order given September 13, 2021 inserted a new theory into Save On’s case. As pleaded, this new theory asserted that Mr. Bashir was in fact the “builder” as defined by ONHWPA, that this was the case on account of the PMA wherein Save On alleged that Mr. Bashir “through his company City Scape Real Estate Ltd.” promised to do all the construction work, that Mr. Bashir “misrepresented” his status to Save On as being that of the owner or partner or agent of the owners to get Save On to enter the Contract and assume Mr. Bashir’s builder obligations, and that had Save On known the truth it would not have contracted with Mr. Bashir at all.

[91] As I stated in my reasons of September 13, 2021 on the Save On amendment motion, this new theory was poorly pleaded, particularly since the remedy relied upon was not made clear. But I will assume that what Save On seeks in this new theory is a rescission of the Contract on the basis of either a fraudulent or negligent misrepresentation. Given Mr. Kamil’s conduct throughout the trial, it appears that Save On alleges that Mr. Bashir fraudulently misrepresented his status to Save On to induce Save On to enter into the Contract with Mr. Bashir and off-load his builder responsibility onto Save On.

[92] What is a “builder” under ONHWPA? ONHWP, section 1 defines “builder” to mean, “a person who undertakes the performance of all the work and supply of all the materials necessary to construct a completed home, whether for the purpose of sale by the person or under a contract with a vendor or owner.”

[93] This definition has been refined by the courts. In Tarion Warranty Corporation v. Kozy, 2011 ONCA 795, the Court of Appeal held that the major purpose of ONHWPA is “to protect purchasers of new homes by requiring that vendors and builders be screened for financial responsibility, integrity and technical competence.” The Court held that the statute should, therefore, be given a liberal interpretation. The Court also held that a contractor who leaves some of the work to the owner will still be considered a “builder” under ONHWPA.

[94] In JRC Developments Ltd. v. Tarion Warranty Corporation, 2010 ONSC 6205 (Ont. Div. Ct.) at paragraph 4, Justice Molloy held that the issue of whether a contractor is a “builder” under ONHWPA involves the consideration of “who is responsible for completing the essential elements of the home and who had control over the construction of the home.” In the JRC case, the court found that such essential elements included the footings, foundation, the building envelope, the plumbing and electrical systems, the HVAC system, and the exterior cladding.

[95] Did Mr. Bashir (or, indeed, Cityscape) meet this definition of “builder”? Having reviewed the PMA and the other evidence relevant to this issue, I have concluded that Mr. Bashir and Cityscape did not. The following are my reasons:

a) I will refer to Cityscape, as that is the party to the PMA, not Mr. Bashir. The PMA describes Cityscape as the “manager” of the project on behalf of the registered owners, not the contractor. b) The details of the services to be provided by the “manager” are listed in Schedule A to the PMA. The listed services are the following: preparing cost estimates; preparing schedules; preparing and submitting development and permit applications; contracting with contractors on behalf of the owners; supervising contractors on behalf of the owners; ensuring that contractors perform their duties and rectify deficiencies; reviewing progress claims and invoices prior to submission to the owners for payment; counselling the owners as to holdback obligations; and ensuring that the construction corresponds with the plans and specifications. None of these functions involves the actual construction of the house. c) Clause 7 of the PMA draws a clear distinction between the function of the “manager” and that of a “contractor.” That clause states that nothing in the PMA “shall prevent or restrict Manager from acting as a Contractor for the purpose of performing work or service to the Project, provided such shall be fully disclosed to the Owner.” This clause makes it clear that the functions assigned by the PMA to the “manager” are not those of a “contractor,” which clause 7 describes as “performing work or service to the Project.” d) Clause 6 of the PMA specifies that Cityscape would act as the “limited agent” of the owners in obtaining, reviewing and discussing quotes and bids, and could sign documents on behalf of the owners, including contracts, provided they were consistent with the PMA. In short, Cityscape acted as agent for the registered owners, and not as an arms-length contractor. e) The evidence of the registered owners and Mr. Bashir was that Mr. Bashir and Cityscape acted throughout Save On’s time in the project as the manager on behalf of the owners, and that Cityscape and Mr. Bashir never undertook the function of contractor. This evidence stood up well under cross-examination and I accept it. f) Cityscape and Mr. Bashir in fact did not do any of the construction work themselves, and only contracted with one entity, Save On, to get the construction work done. g) The Contract between Mr. Bashir and Save On made it clear that it was Save On that had the responsibility for the construction of the essential elements of the house. The Contract specified that Save On was “to furnish all labour and material necessary to construct, to completion” the four houses. The Contract then specified what the Save On scope included. It included all of the essential elements of the house construction, such as the demolition, excavations, footings, foundations, roofing, framing, exterior windows and masonry, and the plumbing and electrical systems. h) Save On in fact did all this construction work, and contracted with subcontractors to get it done. i) Mr. Kamil focused on clause 8 of the PMA; but this clause only specified how the “manager’s” fee was to be determined.

[96] In short, I find that Mr. Bashir and Cityscape were at all times nothing more than the owners’ agents and managers of the project. They, as a result, were not “builders” under the ONHWPA at any time. While Mr. Bashir and Cityscape did some of the work concerning the project as a whole, Save On was in control of the construction and built the essential elements of the house. Save On was the “builder.”

[97] I, therefore, refuse to rescind the Contract on account of the alleged misrepresentation by Mr. Bashir.

d) Did Save On repudiate the Contract?

[98] In D & M Steel Ltd. v. 51 Construction Ltd., 2018 ONSC 2171 at paragraph 54, Justice Perell stated that, “if the contractor demands payment before it is due under the contract or if a contractor refuses to proceed unless paid this may be conduct that evidences an intention no longer to be bound by the terms of the contract amounting to a fundamental breach or repudiation of the contract.”

[99] The evidence in this case shows that such a contract repudiation by Save On happened here. The following are my findings in this regard:

a) On January 5, 2018 Save On delivered an invoice for an extra in the amount of $218,078. Mr. Kamil explained in his evidence that this was the result of Save On’s recalculation of the Contract price based on the $165/square foot option. He said that this was done because of Mr. Bashir’s refusal to pay Save On’s legal costs for its registration process and his refusal to post the replacement builder security. There was no obligation in the Contract whereby Mr. Bashir was to pay Save On’s legal costs for its registration process. Furthermore, I have found that there was no explicit or implicit condition in the Contract making the Contract price, based on the $144/square foot option, conditional on Mr. Bashir posting builder security. This was a groundless payment demand by Save On. b) On January 10, 2018 Mr. Kamil emailed Mr. Bashir and Ms. Zahir demanding payment of $30,412 in legal and other costs. Again, there was no obligation in the Contract on Mr. Bashir to pay Save On’s legal costs. This was another groundless payment demand by Save On. c) On January 27, 2018 Mr. Kamil emailed advising that Save On had removed its tools from the site, that none of his trades would attend the site until the issues were resolved, that neither Save On nor its trades would be responsible for security, and that on February 1, 2018 Save On would remove all cameras and fencing from the site. This email confirmed that Save On had ceased work. Based as it was on groundless payment demands, this email, which was extortionary in nature, was clear evidence that Save On no longer wanted to bound by the Contract. d) On January 31, 2018 Mr. Kamil emailed advising that, because Mr. Bashir did not agree with Save On’s version of the Contract, Save On would not honour any warranty claims. As stated earlier, Save On’s version of the Contract was baseless. This email was further evidence of Save On’s intention no longer to be bound by the Contract.

[100] As a result, I find that in January, 2018 Save On was in fundamental breach of and repudiated the Contract. The registered owners accepted the Save On repudiation when Mr. Bashir took steps to correct deficiencies and complete the work without further notice to Save On.

e) What are the resulting damages?

[101] In D & M Steel, op. cit., paragraph 53, Justice Perell states that, “if a contractor abandons the contract, repudiates the contract, fundamentally breaches the contract, . . ., the owner is entitled to terminate the contract, to claim damages for breach of contract, and to be discharged from its obligations to pay including any obligation to pay on a quantum meruit or for work already performed.”

[102] This quotation applies to this case. Save On abandoned the Contract without justification. Therefore, the registered owners were entitled to terminate the Contract, claim damages for breach of contract, and be discharged from their obligation to pay Save On. That is what happened as described above. Save On is therefore not entitled to be paid anything.

[103] The question then becomes: what are the damages the registered owners are entitled to?

[104] The basic rule of contract damages is that the innocent party should, as far as reasonably possible, be monetarily put into the same position he or she would have been in had the contract been performed; see Safe Step Building Treatments Inc. v. 1382680 Ontario Inc. at paragraph 58. The most commonly used method for measuring these damages in construction contract cases is the costs of curing the defective performance of the contract.

e.1) Deficiencies

[105] The defendants claim two sets of these damages. First, they claim the costs of correcting what they allege were the many deficiencies in Save On’s work. Having repudiated the Contract, Save On lost its right to be given notice of and an opportunity to correct its own deficiencies. The defendants in turn had the right to undertake this work and claim the cost of doing so as damage, as this is a cost that resulted from Save On’s failure to perform its contract scope.

[106] Mr. Bashir stated in his affidavit that, after the cessation of the Save On work, he and the registered owners became concerned about the quality of the Save On work. He said they hired four experts to assess the quality of the work and the state of completion, all for the purpose of assisting in the completion of the project. As a result, these experts were “participating experts” who did not have to be qualified as opinion experts under Rule 53.03. Yet, I notice that they all filed their curricula vitarum and Rule 53 Acknowledgments of Expert’s Duty.

[107] Ms. Tareen hired the contractor, Maaz Aslam, to assess the deficiencies and state of completion of her 703 house. Mr. Aslam is a contractor. He attended the property in February, 2018, and wrote a report on February 12, 2018. In his report, Mr. Aslam noted 45 deficiencies and made 12 recommendations as to correction work to be done. He assessed the quality of the Save On work as “substandard.” He took many pictures which were attached to his report. He opined that the work was only 65% done, and estimated that the costs of completion would be $250,000.

[108] I found Mr. Aslam’s evidence credible. Mr. Kamil cross-examined Mr. Aslam as to his credentials and conclusions. While he is not a quantity surveyor or architect, Mr. Aslam showed that he has considerable experience as a contractor in residential construction. Mr. Kamil tried to get Mr. Aslam to minimize the importance of his observations of deficiencies, but did not succeed.

[109] The defendants hired Gordon Cumming, the designer for the project, to examine all four houses for deficiencies. He examined the houses in March and April, 2019, and wrote a report on his findings on March 19, 2018. He updated the report on July 2, 2018. He took many pictures which he included in his reports. He made no overarching observations, but noted numerous deficiencies. He acknowledged that most of the issues he saw concerned uncompleted work, not deficiencies. Mr. Kamil tried to get Mr. Cummings to minimize the importance of the deficiencies, and again did not succeed.

[110] The defendants hired Andrew Dixon, a subconsultant with Mike Holmes Inspections, to examine 699 and 701. Mr. Dixon visited those properties on March 19, 2018 and on March 21, 2018 authored two reports, one for each property. Mr. Dixon noted 101 issues with 699, and 90 issues with 701. Many of the issues were the same for both properties. He attached many photographs. Concerning both properties, Mr. Dixon commented that the homes were unfinished, that only some systems were working and that both homes were “not habitable.” In cross-examination, Mr. Kamil went through several items to have Mr. Dixon identify what was unfinished and what was deficient, and to minimize the deficiencies. Mr. Dixon withstood this well. I found his evidence credible.

[111] The defendants hired James Buren of Mike Holmes Inspections to examine 703 and 705. Mr. Buren visited those properties on March 19, 2018 and on March 21, 2018 authored two reports, one for each property. Mr. Buren noted 83 issues with 703 and 91 issues with 705. He attached many photographs. Concerning both properties, Mr. Buren commented that the homes were unfinished, that only some systems were functional, and that both homes were “not habitable.” Mr. Kamil got Mr. Buren to confirm in cross-examination that Mr. Buren is not a quantity surveyor, which did not detract from his credibility. Mr. Kamil tried again to minimize the deficiency evidence, but without success. I also found Mr. Buren’s evidence credible.

[112] As a result, I find that Save On is responsible for the deficiencies shown in this evidence. The question then is: what damages can the defendants recover for correcting these deficiencies?

[113] The defendants itemized their claim in this regard in updated versions of the Scott Schedules I ordered in this reference. These updated Scott Schedules contain the costs the defendants say they can corroborate. These documents show that the defendants claim $105,599.74 for correcting deficiencies concerning 699 and 701, $129,524.36 for correcting deficiencies concerning 703, and $82,330.56 for correcting deficiencies concerning 705. The total of these three figures is $317,454.66.

[114] The evidence in support of these claims was in Mr. Bashir’s affidavit. He stated that he and Ms. Zahir retained trades to complete this work based not only on the inspection reports, but also on the advice of a “specialized contractor” who was on site. This contractor was not identified and there was no evidence from that contractor. Furthermore, Mr. Bashir stated that “sometimes” they did correction work they themselves identified. Mr. Bashir gave as an example the painting and stucco work. Mr. Bashir attached the bills that he said were paid to complete this work.

[115] There was no evidence from Save On challenging the reasonableness of the defendants’ efforts at mitigating their deficiency correction costs. Mr. Kamil at one point argued that the defendants should have triggered the Tarion warranties. But there was no evidence these warranties were in effect prior to completion of the houses and occupancy. I do not accept that position.

[116] Courts generally give the innocent owner considerable latitude in completing the work of a defaulting contractor, given the exigent circumstances the owner is typically put in. That is the case here. This project was substantially delayed, and Mr. Bashir stated in his affidavit that the defendants were under significant financial pressure to complete the work quickly. I accept that evidence. That the owners did not hire a general completion contractor or obtain competing bids should not, therefore, detract from their claim. I am driven to the conclusion that these costs were reasonably incurred by the defendants.

[117] I, therefore, find that Save On is liable to pay the defendants $317,454.66 to correct its deficiencies.

e.2) Costs to complete

[118] The defendants also claim their full costs to complete. This is somewhat unusual in a case such as this where there is a contract repudiation before the work is done. The costs to complete the unearned and unpaid portion of the contract scope are not a damage to the owner as that is what the owner would have had to pay in any event had the contract been performed. However, in this case, the defendants allege that Save On was grossly overpaid for the work it did.

[119] There was important accounting evidence. Save On admitted in its reply that it completed 90% of its scope. Save On also admitted in its pleading that it has been paid a total of $1,473,890 (HST incl.). The defendants accept that position. This is $136,331.60 more than the original contract price, $1,337,558.40 (HST incl.).

[120] The defendants provided an accounting of the extras in paragraph 8 of their statement of defence and counterclaim. Save On admitted this accounting in its reply. The following items in this accounting are extras to be added to the contract price: items (b) $6,780, (d) $45,200, (g) $71,287, (g) $27,872, (h) $38,825, and (i) $50,000. The following items in this accounting are credits to be deducted from the contract price as they were independently paid by the defendants or are payments to Save On that are unaccounted for: items (c) $5,000, (e) $5,650, (f) $8,475, (h) $18,768, (h) $25,000 and (i) $38,285.

[121] Balancing the extras against the credits produces an extras total of $138,786 to be added to the contract price. This produces a final contract price of $1,337.558.40 + $138,786 = $1,476,344.40. Save On has been paid $1,473,890, which is only $2,454.40 less than this final contract price. Yet, according to Save On, it completed only 90% of its scope when it repudiated the contract.

[122] It should be noted that Save On asserted in its pleading that there were extras in the $250,000 range. However, Mr. Kamil’s evidence-in-chief this point was nothing more than a collection of emails without explanation as to what the claimed extras were, why they were extras and how the claims were calculated. Mr. Kamil tried to introduce evidence concerning extras in his reply evidence which was improper. I accept the defendants’ position on the extras as described above.

[123] I conclude from this accounting evidence that Save On was indeed grossly overpaid by the defendants, and that the defendants can claim their entire costs of completion as damages, with the exception of the above noted $2,454.40.

[124] The question then is: what damages can the defendants recover for simply completing the Save On scope?

[125] In the updated Scott Schedules the defendants itemized the completion work they claim they did. Mr. Bashir in his affidavit also described this work. He described doing a considerable amount of work such as hardwood flooring, interior staircases, exterior doors, electrical work, staining stairs and handrails. The Scott Schedules show that the defendants claim the following totals for completion costs: $123,049.78 for 699 and 705; $51,423.55 for 701; and $87,375.58 for 703. The total of these three figures is $261,848.91.

[126] Save On presented evidence that this amount is grossly excessive. I have already indicated that Save On admits in its reply that it had completed 90% of its scope at the time of its work cessation. 10% of the final contract price of $1,476,344.40 is $147,634.44.

[127] This position dovetails with the expert opinion given by Mr. Verma, Save On’s expert witness. As stated earlier, Mr. Verma was accepted as an expert quantity surveyor. His evidence concerned the costs to complete the Save On scope at the time of Save On’s work cessation. He attended at the homes on February 10, 2020, namely well after the project was completed and the homes were occupied. He based his analysis primarily on the project drawings and what was imparted to him by Mr. Kamil about Save On’s work-in-place, extras and credits. He made it clear that his analysis did not include the costs to correct deficiencies. He concluded that the cost of the unfinished work at the time of Save On’s departure for each of 699, 701 and 705 was $32,078, and for 703 $41,803. The total of these figures is $138,037, which is 9.4 % of the final contract price.

[128] I note that Mr. Kamil asserted in his evidence that Save On was 95% complete. This assertion contradicted Mr. Verma’s evidence, conflicted with the Save On unamended reply admission of 90% completion, and was uncorroborated. Given this and my general misgivings as to Mr. Kamil’s credibility, I do not accept this evidence.

[129] The totals of $138,037 (Mr. Verma’s assessment of the costs to complete) and $147,634.44 (10% of the final contract price) are only 52% and 56% respectively of what the defendants claim they paid to complete the work, namely $261,848.91. This is a significant discrepancy and suggests that the defendants may not have reasonably mitigated their damages.

[130] I struggled to resolve this difference of positions. As stated earlier, I have considerable difficulty accepting the evidence of Mr. Verma. He admitted getting his information about Save On’s work-in-place, extras and credits from Mr. Kamil, who I found not to be a credible witness. There were other problems with Mr. Verma’s evidence that I noted in my discussion about credibility.

[131] On the other hand, the defendants did not present a full and substantiated expert opinion on the state of completion of all four houses (absent the issue of deficiencies) at the time of Save On’s work cessation. As stated earlier, Mr. Aslam made a passing comment in his report that 703 was only 65% complete as of mid-February, 2018. But this was a one-line comment in his report about only one of the properties.

[132] Since the onus rests on the defendants to prove their damages, I have decided, despite my concerns about Mr. Verma, to give some benefit of the doubt to Save On this issue. However, I am mindful that an owner’s cost to complete after a contract default will be higher than it would have been had the defaulting contractor completed the work. This is a function of the shortage of time and resources that typically affects the owner’s efforts. This proposition was accepted by Mr. Verma himself in cross-examination. He admitted that the completion work will always have a premium cost, particularly if the owners are under time pressure to complete as they were in this case.

[133] A lack of clarity in the evidence on the quantum of damages should not stand in the way of a decision on quantum. I have decided to exercise my discretion and award the defendants damages for their costs to complete in the amount of $200,000, which is about halfway between the defendants’ shown costs to complete and Mr. Verma’s assessment.

e.3) Project security

[134] There is the issue of the $80,000 of project security that was paid by Tarion into court. This was done on Save On’s insistence to secure its claims, including its claim for legal costs. Given the result, I have no difficulty ordering that this money, which originally came from the defendants, be returned to them in full plus accrued interest.

VI. Conclusion

[135] In conclusion, for these reasons, I make the following orders:

• the Save On claim is dismissed, its claim for lien discharged, and the security posted for this claim for lien plus all accrued interest thereon must be returned to the defendants;
• Save On must pay the defendants damages in the amount of $317,454.66 + $200,000 = $517,454.66; and
• the $80,000 of project security in court must be returned to the defendants with all accrued interest thereon.

[136] Concerning costs, as directed, the parties filed costs outlines concerning this reference. The defendants’ costs outline (which includes a 14 page written submission on costs) shows $232,238.42 in partial indemnity costs, $269,231.42 in substantial indemnity costs and $298,150.90 in actual costs. Save On’s costs outline shows only one figure, namely fees and disbursements on a full indemnity basis in the total amount of $99,088.55. This amount is stated as “not including Mr. Kamil’s time.”

[137] Given the result, it would appear that the defendants will be entitled to costs. At the closing argument on June 1, 2022, Mr. Kennaley made it clear that, depending on the result, the defendants will be seeking an order under CA section 86(1)(b) as against Mr. Kamil personally of substantial indemnity costs as well as an order of substantial indemnity costs as against Save On. Now that the result is known, it is safe to say that the defendants will indeed be pursuing this course of action.

[138] As a result, I most strongly recommend to Mr. Kamil that he immediately retain legal representation to deal with the issue of costs, and in particularly his potential personal liability for costs. I also believe that there should be a separate oral hearing to hear argument on the issue of costs and Mr. Kamil’s personal liability for costs.

[139] I herewith schedule a trial management conference by Zoom videoconference to take place with me on Tuesday, February 7, 2023 at 10 a.m. with the court circulating the Zoom coordinates in advance. The purpose of this trial management will be to schedule the oral argument as to costs. Mr. Kamil should have his lawyer present to represent him.

[140] Should this appointment be inconvenient, the parties must confer, agree upon six alternative times in the near future in which the trial management conference can take place, and advise my assistant trial coordinator accordingly. I will then, and only then, consider rescheduling the trial management conference.

Released: January 14, 2023

ASSOCIATE JUSTICE C. WIEBE

COURT FILE NO.: CV-18-594953 ONTARIO SUPERIOR COURT OF JUSTICE In the matter of the Construction Act, R.S.O. 1990, c. C.30 BETWEEN: 1917196 Ontario Ltd. o/a Save On Contracting Plaintiff - and - Sadaf Kazmi, Shazia Tareen, Tasneem Zahir and Adnan Bashir Defendants REASONS FOR JUDGMENT Associate Justice C. Wiebe

Released: January 14, 2023