NEWMARKET COURT FILE NOs.:

CV-17-129690/CV-17-131195/CV-17-132117/CV-18-134759

DATE: 20230816

ONTARIO

SUPERIOR COURT OF JUSTICE

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: CV-17-129690

BETWEEN:

1814219 ONTARIO INC. c.o.b. as UM CONSTRUCTION, Plaintiff

AND:

2225955 ONTARIO LTD., DAYTONA AUTO CENTRE LTD., DAYTONA AUTO SALES INC. and ROYAL BANK OF CANADA, Defendants

RE : CV-17-131195

AND BETWEEN:

2225955 ONTARIO LTD., Plaintiff

AND:

UMBERTO MAUTI, FRANK MURDOCCA a.k.a. FRANCESCO MURDOCCA, GIUSEPPE VILLANO, 1814219 ONTARIO INC. c.o.b. as UM CONSTRUCTION, MURDOCCA CORPORATION, and WALDORF CONSTRUCTION INC., Defendants

RE : CV-17-132117

AND BETWEEN:

GIUSEPPE VILLANO, Plaintiff

AND:

2225955 ONTARIO LTD., ROYAL BANK OF CANADA, Defendants

RE : CV-18-134759

AND BETWEEN:

251485 ONTARIO LTD., and 2225955 ONTARIO LTD., Plaintiffs

AND:

GIUSEPPE VILLANO, Defendant

COUNSEL APPEARING:

Maria Ruberto and Neeta Sandhu for 1814219 ONTARIO INC. cob UM CONSTRUCTION, and UMBERTO MAUTI

A. Edward Tonello for 2225955 ONTARIO LTD., DAYTONA AUTO CENTRE LTD, DAYTONA AUTO SALES INC. and 251485 ONTARIO LTD

Emilio Bisceglia and Hana Tariq for GIUSEPPE VILLANO

Paul Feldman for F. MURDOCCA, MURDOCA CORP. and WALDORF CONSTUCTION INC.

HEARD: November 21-25, 28-30, December 1-2, 5-8, 2022 and January 9-13, 16-20, 23-27, 30 31, February 1-2, May 10-12, 2023

REASONS FOR DECISION

VALLEE, J.:

Introduction

[1] This matter concerns the development of a commercial property located at 7393 Weston Road, Vaughan (the project). The owner, 2225955 Ontario Inc. (222), the principal of which is John Duca, purchased the property in 2010. Acting as his own general contractor, Mr. Duca constructed a large building on it (the Daytona building). Mr. Duca is also a principal of Daytona Auto Centre Ltd. and Daytona Auto Sales Inc. His luxury, pre-owned, car sales business, Daytona Auto Sales, which sells Ferraris, among others, operates from this building.

[2] Four actions that arose from the construction project were tried together over seven weeks. The following is a brief overview:

(a) The excavator’s lien action:1814219 Ontario Inc. carrying on business as UM Construction, whose principal is Umberto Mauti, carried out excavation and some site servicing work on the property. UM registered a lien for unpaid site servicing invoices. It also claims a non-lien invoice and loss of profit. It claims $399,990.12.

(b) The owner’s breach of fiduciary duty and fraud action: 222 claims damages based on allegations of fraud and breach of fiduciary duty. In its fraud claim, 222 disputes certain invoices, seven from Murdocca Corporation and five from Waldorf Construction Inc., a related corporation. In total, it claims $271,051.08 from all of the defendants and an additional $50,700 specifically from Mr. Villano. The defendants in the fraud action are Umberto Mauti, 1814219 Inc. c.o.b as UM Construction, Frank Murdocca (Mr. Murdocca), Murdocca Corporation (Murdocca), Waldorf Corporation (Waldorf) and Giuseppe Villano, the site supervisor.

(c) The site supervisor’s lien action: 222 hired Guisippe Villano to be the site supervisor for the project. He registered a lien claim for his supervisor compensation as well as for work that he carried out on the project. Mr. Villano wanted and Mr. Duca agreed to give him a Ferrari 430 as compensation for his site supervision work. It was sold in the interim so Mr. Duca gave him a Ferrari 360 as part payment, which he has in his possession; however, the ownership has not been transferred to him. In total, Mr. Villano claims $198,510.35. In the alternative, Mr. Villano claims this amount less the value of the Ferrari 360.

(d) The owner’s Ferrari action: 222 and a related company 251485 (251) Ontario Ltd. request a declaration that 251 owns the Ferrari 360 and is entitled to possession of it.

[3] 222 has counterclaimed in the excavator’s lien action and the site supervisor’s lien action, repeating and relying on the allegations of fraud and breach of fiduciary duty set out in its claim. Murdocca provided basement excavation services to 222 using UM as its subcontractor for the work. UM and Murdocca also provided trucking services to 222 for the excavated materials. UM did further excavation work directly for 222. Murdocca supplied granular materials and rental equipment for the project. Waldorf also provided some granular materials for the project. Frank Murdocca is the principal of both Murdocca and Waldorf. Some of the parties in the actions made counterclaims and crossclaims.

Invoices

[4] There are several sets of relevant invoices: invoices from UM to Murdocca; invoices from granular and rental equipment suppliers to Murdocca; invoices from Murdocca to 222; invoices from Waldorf to 222; and, invoices from UM to 222.

Witnesses

[5] In addition to the parties, the following witnesses testified:

(a) Nick Sampogna – an experienced construction manager who provided some assistance to Mr. Duca and managed a subsequent project for him;

(b) Kregg Fordyce – project architect;

(c) Bram Toomath – project structural engineer;

(d) Alessandro Nardone - principal of Fourwinds Construction;

(e) Davide Notarantonio – excavator operator for UM;

(f) Wendy Singh – principal of Wendy’s Trucking;

(g) Alex Armellin – John Duca’s business partner;

(h) Dennis Lai – geotechnical engineer with Soil Engineers;

(i) David Comparano – principal of Redimix, the concrete supplier;

(j) John Lachin – principal of Lachin Construction and Landscaping Inc.;

(k) Orietta Sorbara – 222’s bookkeeper, employed by Rankin Spence Group;

(l) Arif Ghaffur – expert regarding the value of Mr. Villano’s site supervision work;

(m) Joseph Emmons – expert regarding the total cost of the site servicing work and the value of UM’s site servicing work;

(n) Izaak de Rijcke – expert regarding the volume of soil excavated in comparison to the volume of soil that remains on site; and

(o) Palo Albanese – expert regarding the volume of soil excavated in comparison to the volume of soil that remains on site.

[6] Many of the witnesses swore affidavits to serve as their evidence in chief. Even though the four actions were tried together, by agreement of the parties, each witness testified only once. Any party could have made a request to recall a witness. None did.

The Soil Issue

[7] As will be seen below, soil quality is a very important factor that must be investigated and considered by a prospective land purchaser who wishes to construct a building. Poor soil can result in significant extra costs because deeper excavation may be required to reach load bearing soil. An extended foundation may be required as well as purchase of backfill materials. This project required both of them. Regarding the soil, there are disputes regarding:

(a) how much soil was excavated;

(b) where the excavated soil should have been placed;

(c) where it was placed;

(d) whether some of it was trucked away;

(e) whether it ought to have been trucked away; and,

(f) whether there is more soil piled on the site than was excavated.

[8] The events that are relevant to the project and these four actions begin in 2010. 222 obtained occupancy of the building in October 2017.

The main issues to be determined are:

(a) Did Mr. Villano, as site supervisor, have a fiduciary duty to 222?

(b) Did any of the defendants in the fraud action perpetrate a fraud on 222?

(c) Could any of the excavated soil have been spread on the property?

(d) Did any of the defendants trespass on the property by dumping soil on it?

(e) How much is UM entitled to be paid by 222?

(f) Is 222 entitled to a set off?

(g) How much is Mr. Villano entitled be paid by 222?

(h) What should happen to the Ferrari 360?

Business Records Notices

[9] Prior to trial, UM, Murdocca and Waldorf served business records notices on 222. They were opposed. The Notice of Intention to Dispute stated that 222, Daytona Auto Centre, Alex Armellin and John Duca,

[…] intend to dispute the correctness, genuineness or authenticity of documents sought to be admitted and relied upon by the producing parties, below, pursuant to section 35 of the Evidence Act, R.S.O. 1990 c.E.23, as amended. The objecting parties require the producing parties to call evidence to prove the correctness, genuineness or authenticity of said document, which include but are not limited to documents produced by affidavits of document, pursuant to court order, or produced pursuant to undertakings.

[10] This trial involved hundreds of pages of business records. UM and Murdocca and Waldorf had to prove the work done, the materials supplied and the related invoices through viva voce evidence. This consumed many trial days. For this reason, and because there are several sets of invoices, the dates of which are interwoven as the project progressed, the dates of various events, the dates of the invoices and the evidence of the witnesses regarding the events and the invoices is set out below in detail in chronological order.

The R Plan

[11] On October 24, 2008, Donald Roberts Ltd. Ontario Land Surveyors registered on title an R-plan, 65R-29508. It defines the boundaries of the property and the parts that comprise it. The property is located at the south-east corner of the intersection of Weston Rd. and Century Place in Vaughan and is a bit more than three acres. The northern portion of the property is more or less a triangular shape. This will be referred to as the development land. The southern portion of the property is a rectangle. This will be referred to as the easement land.

Purchase of the Property

[12] On October 14, 2010, 222 bought the property for $1,400,000 without a mortgage. The easement land is subject to a Hydro easement registered in 1983. It permits an owner to “construct and maintain roads, lanes, walks, drains, sewers, water pipe, oil and gas pipelines and fences” with written permission from Hydro. A representative must be present during the performance of the work. When 222 bought the property, the car sales business was located at 5309 Highway 7.

[13] Mr. Duca testified that he bought the property from the Toronto Star. In the 1970s, there was a pond on the property, which the Toronto Star filled in. Mr. Duca described it as a “massive dump”. He stated that the seller did not disclose the earlier existence of the pond. Nevertheless, the seller did allow him to do some pre-purchase soil investigations.

[14] Nick Sampogna, one of Mr. Duca’s friends at the time and an experienced construction manager, provided $200,000 for the purchase price, as an investment. Mr. Duca stated that Mr. Sampogna withdrew his investment in 2014. Mr. Sampogna testified that he did not participate in any due diligence prior to the purchase. He recommended the project consultants except for the structural engineer. Mr. Sampogna stated that he detached himself from the project after Mr. Duca returned his money. He tried to assist Mr. Duca with a preliminary budget but did not recall whether it was written. He attended a site meeting on June 19, 2015, the significance of which is discussed below.[^1]

The 2010 Survey

[15] KRCMAR Surveyors surveyed the property and prepared a topographical plan of survey dated October 18, 2010, four days after the purchase. It depicts the boundaries and elevations of the property. This survey is very important as a reference point because it shows the pre-construction elevations. As will be seen below, the experts rely on it.

2011 Patriot Engineering Phase 1 ESA Report

[16] Patriot Engineering prepared an environmental site assessment report dated February 2, 2011. It was addressed to Mr. Fordyce, the architect. It commented on a berm along the west side of the property which could be made up of imported fill material, the environmental quality of which was unknown.

[17] The report also refers to a “body of water” near the center of property shown in an aerial photo taken in 1978. It stated that fill was likely brought in to raise the grade and fill in the body of water. The quality of the fill that was used for the body of water was also unknown.

Second Patriot Engineering Phase 2 EST Report

[18] Patriot Engineering prepared a second report dated June 16, 2011. It carried out borehole testing primarily along the berm at the western edge of the property. Boreholes 1, 2 and 3 were in that location. Analysis of the soil samples showed the presence of zinc in the area of borehole 1 which exceeded the acceptable concentration limit. Patriot recommended that the soil in the borehole 1 location be sub-excavated to the native sandy silt till, to a depth of approximately 4m below the top of the berm. Patriot recommended that this soil be removed and taken to a licensed landfill site that would accept contaminated materials. Mr. Fordyce stated that he believed the berm was removed.

2013 Toronto Inspection Ltd. Geotechnical Report

[19] Toronto Inspection Ltd. prepared a soils report dated August 15, 2013 for Mr. Fordyce. At that time, Mr. Duca was contemplating a different development for the property – a seven-storey office building and a two-storey automotive building.[^2] Toronto Inspection carried out borehole sample testing to determine the type of soil under the ground surface. Boreholes 1 and 2 are likely in the Daytona building footprint or close to it. They show deep, imported fill below the ground surface as follows:

(a) borehole 1 – The ground surface elevation was 187.43m. The elevation of the bottom of the fill was approximately 180.88 m. Accordingly, the distance from the ground surface to the bottom of the fill was 6.55m (21.48 feet).

(b) borehole 2 – The ground surface elevation was 187.42m. The elevation of the bottom of the fill was approximately 181.93m. Accordingly, the distance from the ground surface to the bottom of the fill was 5.49m (18.01 feet).

[20] Regarding foundation design, the report stated in para 5.2,

The fill at BH-1 and BH-2 is not capable of supporting the building foundations and all footings will have to be taken through the fill and founded in the underlying native strata, below the depths of 5.5m to 6.6m from grade.

[21] Mr. Fordyce testified that after he received the report, he knew that excavation to a significant depth, 5.5m – 6.5m, would be required to reach load bearing soil. A foundation extension would be required for the building. Mr. Duca stated that he received the report in 2013 but he did not read it. He said he did not read any of the earlier reports. The fact that Mr. Duca did not read the Toronto Inspection report is extremely unfortunate. As will be seen below, it contained very important information that impacted the construction of the foundations and the use that could be made of the excavated soil. Since he decided to be his own general contractor, he ought to have appreciated the significance of the information. He stated that Mr. Fordyce did not tell him about this problem. He stated, “It was missed”. Mr. Duca also stated that except for Mr. Villano, he did not disclose this report to any of the parties in this litigation.

Architectural Drawings

[22] Mr. Fordyce prepared the architectural drawings. On his building sections drawing dated December 2014, he showed the grade (ground surface) at elevation 187.45m and the bottom of the building’s footing at elevation 184.86m even though borehole samples 1 and 2 show that native soil was located much deeper than that. From Mr. Fordyce’s drawing, one might assume that the depth of excavation would be 2.6m (187.45m – 184.86m = 2.59m). Mr. Fordyce conceded that nowhere on his drawings was there any indication that deep excavation would be required, even though he had the Toronto Inspection Report. He suggested that this was within the scope of the structural engineer. He stated that the Toronto Inspection Report was provided to the structural engineer.

Civil Engineering Drawings

[23] Masongsong Associates Engineering Limited was retained to provide the civil engineering services for the project. A.R. Masongsong was the design engineer. In his drawing entitled Site Grading and Erosion & Sediment Control Plan dated February 5, 2015, (the site grading plan) the design elevations for the project are depicted – in other words, the elevations that were required for the finished project. The elevations shown for the development land are all lower than the pre-construction elevations. The drawing also shows elevations for the easement land. They are the same as those on the October 18, 2010, KRCMAR topographical survey. The importance of this cannot be overstated. The implications will be reviewed below.

Structural Engineer

[24] Mr. Duca retained Hannigan Engineering to provide structural engineering services. Hannigan’s letter to Mr. Duca dated September 16, 2014 confirms the retainer.

The Oggi Townhouse Development

[25] To provide context for some of the witnesses’ evidence, some information about another development project that Mr. Duca undertook is required. It was referred to as the Oggi Townhouses and was located on Highway 7 on the same property where Mr. Duca’s car sales business was located. Mr. Sampoga, who was the project manager for the Oggi Townhouse development and invested approximately $2,200,000 in it, testified that in June 2013, the Oggi development was in the land re-zoning stage. When the development progressed to a certain point, Mr. Duca had to move the business to the new property because the Highway 7 building had to be demolished to make way for more townhouse construction. After Daytona Auto Sales moved to the property, construction on the Oggi townhouse development began.

The Region’s Site Plan Approval

[26] Development of the property was subject to municipal site plan approval, which was required before the building department could consider a building permit application. The owner was required to make an application and submit architectural and site grading plans, among others, to obtain site plan approval.

[27] On March 4, 2015, York Region sent a letter to the City of Vaughan stating that the Region had approved the site plan application and had no objection to it subject to certain conditions. The conditions were that specific drawings formed part of the approval. They included the site grading plan prepared by Masongsong Engineering dated February 24, 2015, which was stamped by the Region on March 4, 2015.

Structural Engineering Drawings

[28] Bram Toomath of Hannigan Engineering was the structural design engineer. Surprisingly, he testified that he had the Toronto Inspection Report and did not see anything in it that caused him any concern about the soil conditions.

[29] Three of his drawings, all dated April 15, 2015 are referred to below. On his drawing entitled S1 Specifications, in Foundation Notes item 5.1, he states,

All footings are placed at the proposed founding level on the existing or compacted earth fill designed with a Maximum Allowable Soil Pressure of 300 kPa (S.L.S.) and 450 kPa (U.L.S). This bearing pressure is based on Soil Report No. 3652-13G-KFA prepared by Toronto Inspection dated Aug.15, 2013 and shall be verified by a qualified Geotechnical Engineer prior to placing concrete in footings. Should bearing capacity less than the above be found, contact the Engineer for design of foundations as required.

[underline included]

[30] Mr. Toomath admitted that stating that the footings were to be placed on “compacted earth fill” was a mistake because the fill was inadequate for bearing capacity. He testified that the note should have said, “All footings to be placed on existing native material.”

[31] On his drawing entitled S1.1 Typical Details, he depicts a typical interior column footing with a note, “Footing depth. See footing schedule.” On his drawing entitled S2 Foundation Plan, in the general notes, he states, “Provide lean mix concrete or engineered fill under footings as req’d to raise founding elevation.” He conceded that nowhere on his drawings was there any indication where native soil would be found. Nobody looking at his drawings would be able to tell that there was a gap between the proposed bottom of footing elevation and the location of native soil, how deep the gap was, that deep excavation would be required and that the gap would have to be bridged.

Royal Bank Construction Loan

[32] Mr. Duca stated that he had two business partners, Steve and Alex Armellin. In 2015, Steve Armellin wanted to leave the business. The buyout for his 1/3 share was $2,500,000. It was finalized when construction on this project was about to begin. Mr. Duca stated that he had some money saved to finance the construction, estimated to be $4,500,000 for a 1,300m² building, but not the whole amount. Mr. Armellin’s buyout meant that Mr. Duca needed construction financing.

[33] Mr. Duca stated that he prepared a detailed budget A2100 and obtained a construction loan for the full amount from the Royal Bank. There was no construction schedule for the project.

The Site Supervisor

[34] Mr. Duca stated that he hired Giuseppe Villano to be the “project manager/site superintendent”. He testified that in 2015, he had known Mr. Villano for approximately ten years. Mr. Villano lived across the road from Daytona’s previous location and came by almost daily for a cup of coffee and to chat. He stated that Mr. Villano knew about the Weston Road project. He came to Mr. Duca and requested the job. In fact, he was persistent. He said that he would get the best deals. Mr. Duca understood that he, as the owner, would be responsible for paying the trades.

[35] Mr. Sampogna testified that Mr. Duca hired Mr. Villano because he did not want to pay for Mr. Sampogna’s services. Mr. Sampogna stated that he did not know Mr. Villano very well. He could tell by Mr. Villano’s appearance and mannerisms that he was not qualified to undertake the development. He looked like a labourer, not a manager. Mr. Sampogna stated that at best, Mr. Villano was a “site superintendent”. Earlier, Mr. Duca had suggested that Mr. Villano be hired to work at the Oggi Townhouse development but Mr. Sampogna emphatically refused to do it. He testified that he said, “No way.” He expressed his concern to Mr. Duca about hiring Mr. Villano for this project - that Mr. Villano did not have the qualifications to build the building; however, Mr. Duca hired him anyway.

[36] Mr. Duca acknowledged that Mr. Villano was not a sophisticated businessman. He did not have a fax machine. Before the project, if Mr. Villano needed to fax something, he came to Daytona and used its fax machine. After the suggestion was made that Mr. Villano was often dirty because he was working on the site, Mr. Duca stated that he was usually dirty first thing in the morning.

[37] Mr. Villano stated that he worked in construction as a handyman and drywaller. He had supervised construction of houses for 20 years. Mr. Villano stated that from approximately 2000, he had worked for a home builder, Murdocca Corporation. He did supervision as well as drywall and handy work. He was never Murdocca’s employee. He did not socialize with its principal, Frank Murdocca. During his work for Murdocca, he met Umberto Mauti of UM Construction because UM did excavation work on some of Murdocca’s projects.

[38] Mr. Villano stated that prior to this project, he had never been involved in commercial projects. Mr. Duca mentioned he was going to build a building and move the Daytona business. He asked Mr. Villano to help him. Mr. Villano testified that he told Mr. Duca that he did not know commercial construction. Mr. Duca said that the building was just a box. The project would take six to eight months. He insisted that Mr. Villano help him. Mr. Villano stated that he told Mr. Duca that he was reluctant because he did not have commercial experience; however, he agreed to take the job.

[39] Mr. Villano stated that he understood he would need to be at the site to make sure things were getting done and to answer questions. He was to help out, day by day, supervise and oversee the work. If there were problems, he was to discuss them with Mr. Duca. He stated that Mr. Duca was in charge, was his boss and would make the decisions. Mr. Villano stated that he was not to go out and get trades except for an excavation quote. Mr. Duca already had the other trades lined up. He was his own general contractor. Mr. Villano stated that he had a duty to and in fact did act in Mr. Duca’s best interests. Mr. Villano stated that he did not inspect trades’ work. Mr. Duca had consultants to do that. He did not make any of the big decisions for the project, for example trucking the excavated material. He had to go to Mr. Duca and obtain his instructions.

[40] Mr. Duca confirmed that no formal tender process was put out for the trades. The trades that he organized were clients of his car sales and servicing business. They gave him quotes.

Mr. Villano’s Compensation

[41] Mr. Villano stated that he and Mr. Duca discussed compensation for his site supervision work. There was no agreement in writing. At that time, Daytona had a Ferrari 430 in its show room listed at $150,000. He wanted that one for his compensation. Alex Armellin, the automotive mechanic and Mr. Duca’s partner, testified that he recalled a conversation about this. Mr. Duca stated that he expected the project to take six to eight months and thought $150,000 would be fair compensation for Mr. Villano for that much site supervision work.

[42] As noted above, Mr. Duca prepared a project budget for financing.[^3] Line 10013 entitled site supervision and labour shows $100,000. He stated that this was for supervision and labour to clean up. He stated that prior to construction, he did not know what the total cost of construction would be because the budget had not been completed.

Excavation

[43] Mr. Duca’s budget included line item 10021 for demolition/excavation and backfill, which was $82,000. Mr. Sampogna stated that Mr. Duca needed an excavator. Mr. Sampogna obtained a price from Rafat, a company that had done excavation for the Oggi Townhouse project. It was substantially higher than the quote that Mr. Duca received from Murdocca. Mr. Duca rejected Rafat’s quote.[^4] Mr. Sampogna understood that the principal of Rafat believed that Murdocca’s quote was ridiculously low and not feasible.

[44] Mr. Duca stated that he asked Mr. Villano to get a price for excavation. He wanted the excavated materials to be spread on the site. Mr. Villano stated that he first asked another excavator for a price but nothing came of it. Then he approached Frank Murdocca and gave him the dimensions of the excavation. Mr. Murdocca called him back and said the price would be in the high $40,000s. Mr. Duca was very pleased with the quote and asked when the work could start.

[45] Mr. Duca testified that Mr. Villano said he had found an excavator, Umberto, and had worked with him previously. Mr. Duca testified that Mr. Villano said the price was $80,000 plus tax. There was no written agreement. It did not include any off-site trucking. The excavated materials were to be spread on site. Mr. Duca stated that he was happy with the price. He did not ask questions about who “Umberto” was. Specifically, he did not ask whether Umberto was a subtrade to anyone. He stated that if a party was a subtrade, that would have made a difference to him because he liked to know who he was dealing with. He stated that he thought he had an agreement with “Umberto” but acknowledged that he did not receive invoices for the basement excavation from Umberto (Mauti).

[46] Mr. Murdocca stated that Mr. Villano asked him for an excavation quote. He provided some dimensions and stated that the excavated material had to remain on the site. Mr. Murdocca testified that he had known Umberto Mauti for about 20 years both through work and socially. Mr. Mauti had done work for him previously. Mr. Murdocca stated that he priced out the job. Mr. Villano had nothing to do with it. Mr. Mauti provided a quote dated April 17, 2015 which stated, “Removal of Top Soil and Stock pile within site and Excavate for Basement of size 56mt x 26mt x 2.6mt and spreading excavated material within plot area.” The quantity was 3,800m³ and the rate was 7.50. The price was $32,205.00 including HST. There were two notes on the quote: “1. Rate does not include compaction; 2. Dumping out exc. materials outside plot will charge extra.”

[47] Mr. Murdocca stated that he knew it was a very good price. He could not have a custom home project excavated for that amount. He did not ask anyone else for a quote. He marked up Mr. Mauti’s price to $47,850 for excavation and disposal of garbage such as tree roots. He gave his price to Mr. Villano verbally. Mr. Villano told him that the quote was accepted and called to ask if he could start right away. Mr. Murdocca stated that he never gave a quote of $80,000 for excavation. He dealt only with Mr. Villano and in fact never met Mr. Duca.

Site Plan Letter of Undertaking

[48] On April 28, 2015, Mr. Duca, on behalf of 222, signed a Site Plan Letter of Undertaking in support of its application for site plan approval. Schedule A of the document lists the approved plans. They include the site plan prepared by the architect, and the Masongsong Site Grading Plan. The Letter of Undertaking states,

I/WE 225965 Ontario Ltd. the owner (the “Owner”) of the above-noted lands (the “Lands”) hereby acknowledge(s) that Vaughan Council has enacted By-law Number 123-2013, as amended, designating the whole of the municipality as a Site Plan Control Area, and that site plan approval has been applied for from Vaughan under the Application. As a condition of such approval being granted, the Owner hereby undertakes and agrees as follows: …

(b) To carry out development of the Lands in strict accordance with the various plans approved by Vaughan (which includes site plans, landscape plans, elevation drawings, engineering plans, and all other plans and drawings approved under the Application) and any modifications thereto which may, from time to time, be approved by Vaughan (the “Approved Plans”) and in strict accordance with conditions imposed by Vaughan;

(c) to provide, complete and maintain the Lands in accordance with the Approved Plans, listed on Schedule “A” attached hereto, and the Conditions of Approval (the “Conditions of Approval”) attached hereto as Schedule “B”;

[underlining added]

[49] By signing this undertaking, Mr. Duca agreed to carry out the development in strict accordance with the Site Grading Plan which depicted the finished grade elevations, among other things.[^5] As noted above, the Site Grading Plan showed the finished grade elevations for the development lands to be lower than the pre-construction elevations and the finished elevations for the easement lands to be the same as the pre-construction elevations. Unfortunately, it seems that Mr. Duca completely failed to understand this or decided to do something different to save money.

Fourwinds’ Quote for Site Servicing Work

[50] By letter dated March 11, 2015, Fourwinds Construction provided a quote to Mr. Duca for the site servicing work required for the project. It was $166,000 plus $76,000 for municipal connections for all labour and material plus HST. Fourwinds used the Site Servicing and Site Grading drawings to prepare the quote. At that time, Fourwinds was not awarded the contract. The significance of this will be explained below.

Stripping Topsoil

[51] Mr. Mauti stated that UM began stripping topsoil on May 27, 2015. He stated that there was a fence on one side of the property and power lines on the other side (the south side of the easement land). When asked where he could put the topsoil, he stated that it could be put on the south side. Mr. Villano told him this. Davide Notarantonio, UM’s excavator, testified that the topsoil was dumped on the south side of the property.

Excavation Begins

[52] Mr. Mauti testified that UM began excavation on June 10, 2015. The soil was being spread on the south side of the lot near the power lines. Mr. Notarantonio recalled that it was stockpiled on the southwest corner of the property. As will be seen below, some of the excavated material was piled on the easement land. I will refer to the pile as “the mound”. Mr. Villano stated that it did not look like normal excavated soil. There was a lot of debris in it. Mr. Villano called Soil Engineers Ltd. to come and inspect it. He was already familiar with this geotechnical firm. Mr. Murdocca stated that his company had used Soil Engineers many times.

June 10, 2015 Geotechnical Inspection

[53] Dennis Lai, a geotechnical engineer with Soil Engineers Ltd., stated that Mr. Villano, called him and said he had a problem at a site. Mr. Lai stated that he did not know the property owner. Mr. Lai testified that he attended on June 10, 2015 to inspect the sub-grade soil. Most of the basement level had already been excavated. Mr. Lai stated that a test pit was dug. He recalled that he saw a dump truck at the site that day. He remembered it because he had to wait for it to get out of the way before he could do the test pit.[^6] Mr. Lai stated that the test pit showed that there was a lot of unsuitable soil beneath the basement. It was fill material with debris and garbage in it. Footings were supposed to be constructed but this soil could not bear anything. In addition, it was not suitable for backfill.

[54] Mr. Lai stated that there was a discussion about how to do the foundation construction. The poor soil meant that a foundation extension would be required.

[55] Mr. Mauti recalled that the soil engineer said that the material could not be used for backfilling. Mr. Mauti suggested to Mr. Villano and Mr. Duca that some of the pile be removed off site. He believed that making these types of recommendations was his job. He stated that he could not work anymore. The situation had become unsafe. It was against the law. There was no more room for excavated materials. He recalled that Mr. Lai told Mr. Notarantonio that some of the material had to be removed from the site. Mr. Notarantonio also recalled this. He testified that the soil engineer told him that the excavated fill was previously backfilled, swampy dirt and could not be used for backfill for the project.

[56] Mr. Duca recalled that Mr. Villano called him and said that there was an issue. The soil was soft. It would cause a problem with the footings. A test pit was dug that day. Mr. Duca agreed that there were tree trunks, bricks, blocks and house footings in the excavated material.[^7]

[57] Relating to his fraud claim, Mr. Duca queries: Why did Mr. Villano ask Mr. Lai to attend on the first day of excavation? Mr. Duca states that the answer is that Mr. Villano and Mr. Mauti, as they had planned, used Mr. Lai to try to justify the need for off-site trucking and “they did so by misrepresenting his statements to them.” They alleged that Mr. Lai directed them to remove excavated material off-site, which Mr. Lai unequivocally and repeatedly denied in his testimony. I note that while removal of excavated material off-site was a matter for discussion, that is not the reason why Mr. Villano called Mr. Lai to attend on June 10, 2015. The evidence shows that Mr. Lai’s opinion was required regarding the soil with debris in it and its impact on construction. Much was made of the terms “recommended” and “directed”. Mr. Lai’s evidence was clear that he did not direct anything. He recommended that that the soil be removed.

First Phase of Trucking

[58] Mr. Notarantonio testified that on June 15, 2015, UM was pumping water from the excavation while continuing to excavate. Mr. Mauti stated that he took steps to prepare for trucking the next day and hired rental trucks. They arrived first thing the next morning on June 16, 2015. Wendy’s Trucking began hauling.

Wendy’s Trucking

[59] Wendy Singh, principal of Wendy’s Trucking, testified about when she was contacted to provide trucking services. She first stated that either Davide Notarantonio or Umberto Mauti contacted her in May. Then, a bit later in her testimony, she stated that she was contacted a week ahead of when the trucking job began. It began on June 16, 2015. (One week ahead would be June 10, 2015.) On cross-examination, she stated that she did not recall exactly when she was contacted.

[60] The date when Ms. Singh was contacted is a contentious issue. Mr. Duca relies on Ms. Singh’s first statement that she was contacted in May. This supports his allegation that Mr. Mauti was collaborating to truck materials right from the start and make more money on the project. I find that Mr. Mauti’s contacting Ms. Singh on June 10, 2015 is more likely and logical because Mr. Lai attended on June 10, 2015. As noted above, a test pit was dug which showed unsuitable material under the basement. It contained debris including tires. Although Mr. Duca wanted UM to spread the excavated materials on site, he likely did not want debris and tires spread on the property. Mr. Mauti knew at that point that some trucking would be required for the debris. I accept Ms. Singh’s evidence that she was contacted on June 10, 2015 or shortly afterwards, a week before she began trucking the poor soil. Wendy’s used its own trucks as well as some from a sub-contractor, Berad’s Trucking.

June 19, 2015 Meeting

[61] Mr. Notarantonio testified that on June 18, 2015, he excavated to the depth required by the surveyor for footings. He had to excavate 2.5m – 3m deep to reach the design elevation for the underside of the footings but at 2m he encountered saturated soil.

[62] On June 19, 2015, a number of people attended the site to discuss what to do about the poor soil and the fact that it would not support the footings at the design elevation. Mr. Duca stated that Mr. Fordyce, Mr. Toomath, Mr. Lai, Mr. Villano, Mr. Mauti, Mr. Sampogna and a forming contractor were there. He wanted Mr. Sampogna’s input even though he was not involved with the project. Mr. Duca stated that this was the first time he met Mr. Mauti. He learned there was a problem - the soil was wet and could not support the foundation. Excavation had to stop. They had a discussion about ground conditions. Mr. Duca stated that the architect and the engineer had not read the Toronto Inspection report regarding the soil conditions. It seemed that nobody else had either. Mr. Villano stated that he first learned of the report at this meeting. Mr. Fordyce stated he knew prior to the meeting that there was unsuitable fill on the property.

[63] Mr. Duca stated that he did not see any trucking activity at the meeting. There was no discussion about it.

[64] Mr. Toomath stated that he was asked to go to the meeting at the site. Surprisingly, he testified that he did not take a particular interest then. Others did because of depth of excavation that would be required to reach native soil. That was up to the geotechnical engineer. He stated that when there is a gap between good soil and the design elevation of the underside of a footing, there are two options. One is to extend the footing all the way down to native soil, but that is not economical. The other option is to bridge the gap with a lean concrete mix – in other words, trench excavate the area where the footings would be constructed down to load bearing soil and fill the trench with lean mix concrete up to the design elevation for the footings, then build the footings on top of the concrete.

[65] Mr. Lai stated that he attended the meeting and gave alternatives. A decision was made to do the trenching. He stated that the width of the trench should be 20% more than the design width of the foundation. All of the excavated soil was type 3 so a 1:1 slope of the excavation walls to the basement was required. No slope was needed for the trench because it would go straight down and nobody would be working down in it. Mr. Lai explained that this is why he recommended the 20% increase.

[66] Mr. Lai stated that he recommended that the excavated soil be removed for two reasons: first, the soil created an overburden, which caused collapse, resulting in a safety concern, and second, because its condition made it unsuitable and unusable. He did not know who actually directed the removal. The excavator was directed to remove the unusable soil off site.

[67] Mr. Fordyce stated that based on information from the subconsultants provided at the June 19, 2015 meeting, structural recommendations were made for bridging the gap to native load bearing soil.

Extra Costs

[68] Mr. Duca stated that after the meeting, he knew that the trench excavation would result in a lot of extra costs that were not in the budget. He planned to collect these costs from the Toronto Star. He asked Umberto for a price but did not receive one. Mr. Villano stated that no price was given for the trenching because the soil was bad. Mr. Lai said the trench had to be 10 – 12 feet wide. Mr. Villano understood that it had to be 3m to 4m deep. During excavation, some of the soil was collapsing back into the trench.

[69] Mr. Villano testified that he called Mr. Murdocca and said the project was out of control. The cost was beyond the original pricing for the basement excavation because trenching was required. Nobody knew how deep it would have to be. There was no way to price it.

[70] Mr. Villano stated that Mr. Duca asked how much the trucking would cost. Mr. Villano asked Murdocca for a price and, after he received it, he told Mr. Duca that it would be $425 to $450 per truckload. Initially Mr. Duca said to hold off because he had clients who did trucking and he wanted to ask them about it. Then Mr. Duca said, “Don’t take up too much. Start with a little bit and we’ll go from there.” The trucking was Mr. Duca’s decision. He saw the trucks being loaded. He approved it and paid for it. Mr. Villano stated that he kept track of the number of trucks that left the site by putting tick marks on a page. Approximately 100-110 loads were removed over three to four days.

[71] Mr. Duca’s position on trucking is that it did not happen at all. If it did, he did not authorize it.

[72] Mr. Murdocca testified that the need for trucking arose because Mr. Mauti and Mr. Villano said the soil was bad and there was nowhere to put it. He told Mr. Villano that trucking would be $425 per load. There was nothing in writing. Mr. Murdocca stated that he received confirmation from Mr. Villano. Mr. Murdocca stated that if Mr. Duca had a problem with it, he could have contacted him. His contact information was on all of the invoices.

[73] Wendy Singh, the principal of Wendy’s Trucking, gave detailed evidence about the trucking that her company provided to the project. She stated that UM paid $85 per hour for trucking so there was no need to keep track of the loads. UM gave the drivers pre-paid dump tickets. She testified that in addition to her own trucks, she used subcontracted trucks from another company, Hass Beran. Ms. Singh stated that she prepared and sent five invoices to UM. For each one, she testified as to the related ticket. Together, they show that trucking was carried out from June 16, 2015 to August 4, 2015. The total of the invoices is $21,516.21, all of which were paid.

[74] Mr. Notarantonio stated that the soil was taken away because it was too saturated and there was no room to spread it. He counted the loads and ensured that the trucks were filled. He signed off on all the trucking tickets. He tallied the number of trucks at the end of each day and gave the information, including plate numbers, to Mr. Mauti. In total, 208 loads of fill were removed. He recalled that Mr. Duca sat in his white pick-up truck with “Daytona” on the door at the entrance where dump trucks were coming in and out. He saw the trucking and did not stop it nor did he complain about it.

[75] Mr. Notarantonio recalled seeing Mr. Duca sitting in his truck at the site when material was being trucked off. He did not object to it. Not all of excavated material was taken off site. Some of it was re-used but the saturated soil had to go. Mr. Notarantonio stated that he could not put the excavated material on the easement land. A member of Ontario Hydro told him that.

UM’s Invoice for Basement Excavation and First Phase of Trucking

[76] UM sent invoice 1699 dated June 26, 2015 to Murdocca. Mr. Mauti stated that the basement excavation was done by then. The invoice was for:

$600 - fleet move, $28,500 for basement excavation, removal of top soil and stock pile within site and excavate for basement of size 56 mt x 26mt x 2.6mt and spreading excavated material within plot area,

and

$45,900 removal of excavated material off site, 108 loads.

[77] The basement excavation with tax totaled $32,205 ($28,500 + HST). The entire invoice with tax was $84,750. Mr. Murdocca stated that he paid UM $45,700 toward the invoice and then a further $45,000 which meant he overpaid it. The trucking price was $425 per load. The number of loads, 108, turned out to be incorrect. Mr. Villano gave him the numbers.

[78] Mr. Villano stated that Mr. Duca never challenged the invoices for the trucking because he authorized it and saw it happening.

Damages requested for fraud

[79] 222’s fraud claim was amended a number of times. At the beginning of the trial, 222 claimed $3,000,000 for fraud. On the first day of trial, Mr. Duca advised that he wished to amend his claim to $900,000. On January 18, 2023, it was formally amended. On January 23, 2023, in the sixth week of the trial, it was amended to $271,051.08 plus $50,700 for return of cash payments given to Mr. Villano. In the amendment, Mr. Duca challenged 12 invoices, seven from Murdocca and five from Waldorf that total $334,184.23. His bookkeeper, Ms. Sorbara, prepared a helpful chart as follows. I will refer to it as Ms. Sorbara’s chart.

[80] I will refer to the invoices using Ms. Sorbara’s numbers, for example “Murdocca 1”.

Murdocca 1

[81] Murdocca sent invoice 204-21 dated June 27, 2015 to 222 for two items: the first was “excavation and disposal as per quote $47,850”. Mr. Murdocca stated that the disposal was for tree stumps, blocks or whatever else they found; the second was “Extra – to removal of excavated material off site 111 loads @ $425 per load” $47,175. The invoice totaled $107,378.25 ($47,850 + $47,175 = $95,025 + HST $12,353). Mr. Villano stated that this was for the first trucking off site.

[82] Mr. Duca made a part payment of $80,000 toward this invoice by cheque dated July 10, 2015. Mr. Duca paid a further $25,000 payment toward the invoice by cheque, the date on which is very blurry; however, there is a handwritten note on the invoice that this payment was made on December 16, 2015. Mr. Duca disputes this invoice. It is part of his fraud claim. He maintains that he was charged $80,000 for the basement excavation; however, there is no other invoice for basement excavation.

[83] Mr. Murdocca testified that Mr. Villano told him that 111 loads were removed from the site. Mr. Murdocca testified that he thought that there was an overcharge of three loads.

[84] Mr. Duca stated that he first heard of off-site trucking in the week following June 27, at his office. Mr. Villano said that some trench excavation might be trucked because there was too much on site. Mr. Duca disagreed with this and said “No, just spread as agreed.” He questioned trucking but Mr. Villano said it had to be done, there was no more room, it was becoming dangerous, and people could be hurt. Mr. Duca stated that he believed him and said to go ahead. He did not want an inspector to stop the job. Mr. Duca stated that he told Mr. Villano they would discuss it later.

[85] Mr. Duca stated that on July 10, 2015, he first saw Murdocca’s invoice dated June 27, 2015. He asked Mr. Villano whether this was Umberto’s company and he said yes. He paid the $80,000 because he did not want to be difficult. Umberto still had to do the ramp into the building.

[86] Mr. Duca’s position is that $80,000 included the basement and ramp excavation. He paid the whole amount in advance. But even though he had questions, he did not contact Murdocca. He acknowledged that Murdocca’s contact information was at the bottom of the invoice. Mr. Duca stated that he “had no clue about this”.

UM’s Quote for Foundation Trench Excavation

[87] UM provided a quote to Murdocca dated June 29, 2015 for “additional foundation trench 995.2m³ $11,249.38”. On the same day, UM provided a revised quote which included “move excavated material aside by blade $2,000 plus HST”. The total was $13,509.38.

Municipality Approves the Drawings

[88] Mr. Fordyce stated that the approved drawings came back from the municipality. They are stamped June 16, 2015.[^8]

Trench Pouring

[89] Mr. Mauti stated that the concrete truck arrived on July 3, 2015 and UM attempted to trench pour. On the first day of excavation, a pile of soil beside the excavation collapsed and everything went back into the hole. Mr. Lai attended to inspect. He recommended that the pile be removed for safety concerns and to avoid another collapse. Mr. Lai said it could have been pushed further from the hole to be spread.

[90] Mr. Lai confirmed this. He stated that the trench pouring started on July 3, 2015 but stopped soon after it started because excavated material piled close to the basement excavation caused the excavation wall to collapse. Trench pouring could not resume until the excavated material that had fallen into the basement excavation, along with rainwater, was removed. The trench pouring resumed on July 9.

[91] David Camparano, the sales manager for Redimix, stated that it supplied ready-mix 15 MPa concrete with 22M stone (the lean concrete), which Plastina Drain and Concrete delivered to the site, on July 3, 9, 10, 16, 17, 22, 23 and 24, 2015.

[92] Mr. Notarantonio testified that he was excavating from July 7 – 14, 2015. The material was being moved to the south side of the property. As he was excavating, Mr. Lai inspected the soil every eight inches of depth.

[93] On July 8, 2015, Mr. Lai sent a letter to Murdocca Corporation, Att: Pino Villano. It stated that he had reviewed the Toronto Inspection Report which “revealed that the thickness of the existing earth fill is 6.5m in Borehole 1 and 5.5m in Borehole 2. The existing fill consists predominantly of silty clay with pockets of topsoil and organics. The earth fill is NOT suitable for bearing foundation.” He went on to say, “According to the borehole findings, the suitable founding level generally lies at 7.7m or + below the prevailing ground surface (i.e., El. 179.7m or -) for Borehole 1 and 6.3m or + below the prevailing ground surface (i.e. El.181.1m or -) for Borehole 2”. Mr. Murdocca stated that he was not concerned about the fact that the letter was addressed to Mr. Villano.

Additional Excavation

[94] Mr. Notarantonio stated that after the walls of the excavated basement started to collapse, Mr. Mauti told him that Mr. Villano and the owner approved UM to carry out additional excavation which would increase the size of the area. It was opened four to six feet (1.2m to 1.8m) around the whole perimeter of the building because of the saturated soil.

[95] UM sent a quote to Murdocca dated July 13, 2015 to increase the excavation to 75m x 35m x 2.6m and spread within the plot. The original basement excavation quote was for 3,785.6m³. The larger excavation would be 6,825m³; therefore, there was a difference of 3,039.4m³. The price for the larger excavation was $51,187.50 from which Mr. Mauti subtracted $28,500, being the amount for original size. The total was $25,636.88 ($51,187.50 - $28,500 = $22,687.50 + HST).

[96] Mr. Murdocca stated that he never invoiced Mr. Duca for this. He told Mr. Mauti that he had to deal directly with the owner. Murdocca was not involved with any additional excavation - it only invoiced for the original basement excavation.

[97] Mr. Villano stated that the excavation went down another three feet beyond the original excavation before UM attempted trenching but that the extra depth was not uniform across the whole basement area. Going deeper meant the excavation had to be wider because the soil was not holding. Eventually, the deeper areas were filled with stone up to the underside of where the basement slab would be poured.

[98] Mr. Notarantonio stated that from July 15 to 29, except for five days, he carried out additional excavation. The excavated fill was placed on the south side of property in addition to stockpiling. He testified that the owner was present every morning and saw this.

[99] Mr. Mauti testified that UM sent invoice 1715 to Murdocca dated July 28, 2015 for excavation which stated, “Additional Foundation Trench 1,714.29m³; To move excavated materials aside by blade”. The total was $22,761.43.

[100] Mr. Mauti testified that UM sent invoice 1721 to Murdocca dated August 4, 2015 for “additional excavation, remove top soil and stock pile within site, excavate for basement of size 75m x 35m x 3.8m and spreading material within plot “Additional to contract” $30,510”. Mr. Murdocca stated that he was not concerned about it when he received it. Mr. Mauti and Mr. Villano understood that he had no part of the additional excavation. (This is not included in UM’s claim against 222.)

[101] UM sent another invoice 1721 to Murdocca dated August 4, 2015 for additional excavation. It stated, “Removal of Top Soil and Stock pile within site and Excavate for Basement of size 75mt x 35mt x 3.8 mt and spreading excavated material within plot area – 9975m³, $74,812.50”. The next item stated “Quantity claimed in Invoice No. 1699 still to be paid -$28,500”. The balance to pay with tax was $52,333.13. Mr. Murdocca stated that he was not sure why he received this invoice because he had already told UM that Murdocca would not be involved in additional excavation.

[102] Mr. Murdocca stated that he sent an email dated August 4, 2015 to Umberto’s email address which Manoj Shukla used. Mr. Mauti described Mr. Shukla as his “engineer”. Describing him as UM’s employee is more accurate. He was not called as a witness. It seems that he was doing UM’s invoicing on Mr. Mauti’s instructions. Mr. Murdocca’s email stated, “Please have Umberto call me tomorrow to go through these invoices. I’m confused.” Mr. Murdocca testified that he was confused because he was receiving invoices from UM for work done after he had told UM to deal directly with the owner.

[103] Mr. Notarantonio did not recall excavating to 3.8m. Mr. Villano recalled the excavation was deeper and wider. He stated that he did not measure it. Expanding the basement was not deliberate – it varied every day because the soil was not staying in place.

[104] Mr. Duca stated that he had no issue with UM’s excavation work for the building or the trenching when it was done. There were no deficiencies. It was just fine.

Second Phase of Trucking

[105] Mr. Villano testified that more trucking was done from the end of July into August after the trenching was done. Mr. Duca was there every day and saw it. He said, “Do what you have to do.” There was nowhere to put the bad excavated soil. UM loaded the soil into the trucks and Murdocca did the trucking. For the second phase, there were over 100 truckloads. He counted them and called Mr. Murdocca to let him know. He also told Mr. Duca.

[106] Mr. Duca stated that the only time he gave permission to move dirt off site was for the second phase, which is inconsistent with his position that no trucking was done. The trench pouring was finished by then. He stated that he kept saying, “Why can’t you spread it?” Mr. Villano said it was too dangerous – it had to be moved. Mr. Duca stated that he did agree to it. Mr. Villano convinced him. He stated that he never saw any material trucked off but he paid for it. Nevertheless, regarding his position that no materials were trucked off the site, Mr. Duca stated that he relied on photos that he took. There was a mound on the easement land comprised of soil that was excavated in 2015 and 2016. He stated that it is still there. When asked whether it was spread at the back of building, he stated that it was moved around. The property was nearly two acres. UM could put it beside the hole.

[107] Mr. Lai stated that his last footing inspection was on July 30, 2016. His August 4, 2015 letter confirms that the footing subgrade for all the perimeter strip and spread footings and 13 interior columns had been extended down to sound natural soil capable of supporting the design soil pressure. He stated that he was on site on the date of the last trench pour and did not recall seeing any dump truck activity then.

[108] Mr. Mauti stated that UM sent to Murdocca invoice 1722 dated August 4, 2015. It was for “removal of materials off site, 100 loads” between June 7 and August 14, 2015. The total was $42,500 plus tax, total $48,025. It was not part of the earlier 108 loads. Mr. Duca paid $43,000 by cheque dated August 25, 2015. Mr. Murdocca stated that his handwriting was on the document which stated, “As per agreement $400 per load @ 100 - $40,000, HST $5,200, Total $45,200. Mr. Duca stated that he paid UM $43,000 for invoice 1722 by cheque dated August 25, 2015.

Murdocca 2

[109] Mr. Murdocca stated that his next invoice to 222 was 204-22 dated August 25, 2015. It was for “removal of excavated material offsite 108 loads $425 per load $51,867”. He stated that Mr. Villano gave him the number of loads. Mr. Duca agreed that it was for trucking and he paid it right away without dispute. Murdocca’s contact information was at the bottom of the invoice. Mr. Duca stated that he thought he was dealing with Umberto. Mr. Villano stated that the work was carried out. Mr. Duca knew of it and approved it. Nevertheless, Mr. Duca contests this invoice. It is on Ms. Sorbara’s chart. It is part of his fraud claim.

[110] Mr. Murdocca stated that the truckload numbers came from Mr. Villano so he used them in the invoice. During the litigation, he determined that he overcharged by 11 truckloads. He did not give any credit back to 222.

Granular Supplied

[111] Mr. Villano stated that a lot of granular materials were required for the project. The excavated fill could not be used for backfill. Mr. Lai required stone bedding for the site servicing pipes. The ramps needed stone as well. A flat-bed truck delivered the pre-cast walls for the building which were lifted into place by a crane. More stone was required for the ground surface so the flat bed and the crane could be stabilized. Mr. Duca asked him where the granular should be purchased. He replied that he had used Murdocca in the past to supply granular. Mr. Duca said, “OK, use them.”

[112] Mr. Murdocca stated that on August 10, 2015, Murdocca began purchasing granular from Strada Aggregates and Reno World and supplying it to the project. The invoices for the stone from the suppliers are dated August 20, 2015 to December 13, 2016. They total $85,101.88. Mr. Murdocca stated that he paid the amounts of the invoices. He used a credit that his father had with Strada to pay an invoice in the amount of $10,330.86. Three invoices from Reno World were set off against work that he had done for that company. Mr. Murdocca produced 101 pages of Strada tickets which he stated showed the deliveries to the project. All of the tonnage shown on them is correct. He added them up and confirmed that they total $33,414.42.

Murdocca 3

[113] Mr. Murdocca stated that he sent invoice 204-23 dated August 13, 2015 to 222 for $12,753.22. It was for pumping water, tarping excavated wall, cutting driveway, placing stone and supplying concrete stone. The stone component was $1,858.99. Mr. Mauti provided the information for the invoice except for the stone. Mr. Villano called Strada directly for it – he was authorized to order stone on behalf of Murdocca. Mr. Villano explained that water had to be pumped out of the excavation, the walls had to be tarped to try to prevent collapsing, and concrete stone was required. All of this was done by Murdocca. Mr. Duca knew of it and approved it. Mr. Murdocca stated that Mr. Duca paid the invoice by cheque dated November 2, 2015. Mr. Duca contests the invoice. It is part of his fraud claim.

UM’s Quote for Site Servicing Work

[114] Mr. Mauti stated that Mr. Villano gave him the site servicing drawing. UM provided a written quote to 222 regarding site servicing work dated August 18, 2015 which included drainage, curbs, sidewalks and asphalt for $464,789.23. Item 8.0 states, “All CB, MH and STC 1500 as per drawing SS-1” (the site servicing drawing). Mr. Mauti stated that he met face to face with Mr. Duca who agreed to the quote. Mr. Mauti describes this as the “Site Servicing, Curbs and Sidewalk and Asphalt Contract”.

[115] Regarding UM’s quote for item 4, Light Duty Asphalt, $115,200, Mr. Mauti testified that UM did do this work. Regarding item 3, Heavy Duty Asphalt, $11,550, Mr. Mauti testified that UM did not do this work.

[116] Mr. Duca testified that he did not receive the quote. He stated that he first saw it when litigation began. He agreed that the work described in it is what he hired UM to do. He stated that the price was $380,000. He agreed that there are no documents to confirm this. He stated that he was expecting to receive a contract. As will be seen below, UM sent 222 a CCDC contract for this work dated May 7, 2016. The quote was attached. Mr. Duca testified that he did receive the CCDC contract.

[117] In comparison to the Fourwinds quote dated March 11, 2015 described above, Mr. Duca agreed that UM’s quote does not specifically say municipal connections. A valve chamber is not noted. Mr. Duca agreed that under the heading Asphalt. item 1.0, the UM quote states, “Excavate parking lot to accommodate asphalt and granulars.” It does not state that UM is to supply the granulars. No granulars were mentioned in the quote. Mr. Duca agreed that Murdocca supplied the granulars. He stated that he received invoices for them from Murdocca.

[118] Mr. Duca testified that at this time, August 2015, he did not know there was a difference between UM and Murdocca. He thought UM had changed its name

Rental Equipment

[119] Mr. Villano testified that some rented equipment was needed for the project. Mr. Duca said, “Just get it done.” It came from Stephenson’s through Murdocca. Mr. Villano stated that he had permission to use Murdocca’s account for the project rentals. He did not have to ask Mr. Murdocca each time something was needed. He would call Stephenson’s, they would drop it off or he would pick it up. He did not have a discussion with Mr. Duca about opening his own account with Stephenson’s.

[120] Mr. Murdocca stated that his company rented equipment and supplied some of its own as required for the project between September 21, 2015 and January 20, 2017. The total for the rental equipment is $30,523.71. Three of the rental invoices contain incorrect information. Invoices 1011009887 for $773.94, 1011009887-0002 for $320.92 and 1011009887-0003 for $219.49 show the job site as 224 Garland Drive, Rexdale. Mr. Murdocca confirmed that the equipment shown in those invoices was not used at 224 Garland Drive. It was used at the Daytona project and was invoiced to 222. Stephenson’s sent an invoice/purchase order to Murdocca dated November 30, 2015 for $27.03, job location 3850 Steeles Avenue (Murdocca’s address) which states “53 Coles Ave” pumps and submersibles, and in handwriting “leave in garage as per Pino”. The total of these invoices with the incorrect information is $1,341.38, a tiny percentage (0.0298%) of the anticipated project cost of $4,500,000. Mr. Murdocca stated that some of Murdocca’s own equipment was also used at the project, such as a generator and pump.

Waldorf 1

[121] Mr. Murdocca stated that Waldorf sent invoice 100-27 to 222 dated September 25, 2015 for $12,842.45, which was for granular materials. Mr. Villano stated that the granular was used to backfill the basement and for the ramps. He ordered it and Murdocca provided it. Mr. Duca knew about it and approved it. Mr. Murdocca stated that Mr. Duca paid the full amount by cheque dated November 2, 2015.

[122] Mr. Duca stated that this was the first invoice from Waldorf. Mr. Villano had told him that it was one of “Umberto’s companies” that he used to keep excavation separate from granular supply. Mr. Duca contests this invoice. It is on Ms. Sorbara’s chart. It is part of his fraud claim.

Request for Bank Advance #1

[123] 222 made a request to its bank for advance #1, based on a certificate dated October 19, 2015. The project consultant’s certificate states that he inspected the construction on October 14, 2015. There is a signature under the typed line “Nick Sampogna, Project Manager”. Mr. Sampogna testified that the signature is his but he did not recall signing the document. He stated that he was not a project manager nor a consultant at the time. He did not know the purpose of the document.

[124] Mr. Duca stated that “Nick was doing the talking with the bank. He was not the project manager. The bank form said he was. He did certify that the work was done.” Mr. Duca stated that even though there were site review reports from the architect and engineer, the bank wanted a consultant to sign for the draws.

Waldorf 2

[125] Mr. Murdocca stated that Waldorf sent invoice 100-30 to 222 dated November 18, 2015 for $5,020.16. It stated, “supply generator, compressor and scaffold frame.” Mr. Villano stated that the project needed a compressor so that one of the basement pads could be chipped back. Scaffolding was needed to install something tall, perhaps a column or a piece of wall. Mr. Duca knew about it and approved it.

[126] Mr. Duca stated that no scaffolding was used on the project. He disputes this invoice. It is on Ms. Sorbara’s chart.

[127] Mr. Duca stated that at end of November, Murdocca provided an estimate of $113,000 which stated “deposit regarding materials for sewers, sidewalk, parking lot and drains. Mr. Duca stated that 222 did not pay Murdocca $113,000 with respect to this estimate. 222 paid $95,000 to Umberto.

Waldorf 3

[128] Mr. Murdocca stated that Waldorf sent invoice 100-33 to 222 dated December 14, 2015 for $1,805.75. This was for rental equipment that Mr. Villano ordered. Mr. Duca contests this invoice. It is on Ms. Sorbara’s chart.

Ramp Excavations

[129] Mr. Lai stated that the ramps required the same foundation extension as the basement did. They were attached to the building and had the same soil conditions.

[130] Mr. Notarantonio stated that between December 7 to 14, 2015, the ramps into the building were excavated. The soil there had the same problem as the soil in the basement. It was fill that could not bear footings.

[131] Mr. Lai’s Inspection #1 report dated December 7, 2015 to Murdocca stated that the “footing subgrade for the ramp to the main floor has been extended below the earth fill and topsoil onto sound natural soil 300 kPa.”

[132] The ramps were built shorter in length than their design because Mr. Duca decided that they were taking up too much space in the parking lot; however, the original length was excavated.

[133] Mr. Mauti stated that UM sent invoice 1773 to Murdocca dated December 17, 2015 for work on the ramp (excavation of 3150m³) for $29,182.25. There is no email showing that it was sent. Mr. Mauti stated that UM did not receive payment.

Payment Meeting

[134] Mr. Mauti testified that he met with Mr. Duca at his office on December 16, 2015 about payment for outstanding work. (It was later summarized on UM’s invoice 1821 dated June 1, 2016.) Mr. Duca said he would pay the invoice and those going forward. UM received cash payment $40,000. Mr. Duca kept a handwritten list of the cash payments he made. The first one was $40,000 made on December 16, 2015[^9]. Mr. Mauti said Mr. Duca made this payment to keep him working. Mr. Duca agreed that he met Mr. Mauti in person and gave him $40,000 in cash.

[135] Mr. Duca stated that on December 16, 2015, he paid by cheque $25,000 toward Murdocca’s invoice 204-21 dated June 27, 2015 for the basement excavation and removal of material off site.[^10] As noted above, Mr. Duca contests this invoice, which is Murdocca 1.

Request for Bank Advance #2

[136] 222 made a request for bank advance #2 on December 22, 2015. There is a signature under the text “Nick Sampogna, Project Manager”. Mr. Sampogna stated it was not his signature. The signature looks quite different from Mr. Sampogna’s signature on the request for advance #1.

2016

Waldorf 4

[137] Mr. Murdocca stated that Waldorf sent to 222 invoice 100-35 dated January 8, 2016 for $2,911.88. It stated, “equipment use – hoses, generator, pump, material to form ramp footing.” Mr. Villano stated that Mr. Duca knew about this and approved it. Mr. Duca contests this invoice. It is on Ms. Sorbara’s chart.

Waldorf 5

[138] Mr. Murdocca stated that Waldorf sent to 222 invoice 100-36 dated February 5, 2016 for $8,960.68. It was for “stone, equipment – generator, heaters, propane”. Mr. Villano stated that there was no heat in the building until after Daytona moved in. Propane heaters were needed during construction. Mr. Duca knew about it and approved it. Mr. Duca contests this invoice. It is on Ms. Sorbara’s chart.

Murdocca 4

[139] Mr. Murdocca stated that he sent to 222 invoice 204-31 dated March 7, 2016 for $9,550.60. It was for generator, propane cylinders, saw cutting, 17 loads of stone plus haulage and slinger. Mr. Duca paid $11,928.85 by cheque. Mr. Villano stated that the stone was needed to create a roadway from Weston Road for the trucks that were carrying the pre-cast panels. Murdocca supplied it. Mr. Duca knew about it and approved it. He was in a hurry to get the building done. Daytona had to move out of the Highway 7 location. The building was being torn down for the Oggi townhouse development. Mr. Duca contests this invoice. It is on Ms. Sorbara’s chart.

[140] 222 prepared budgets for its bank advance requests. One is dated March 31, 2016. Ms. Sorbara described it as a draw report. She stated that her boss, Laurie Rankin set it up. She testified that she helped to maintain it. She entered the numbers in accordance with Mr. Duca’s instructions. She prepared the draw requests based on Ms. Rankin’s instructions.

[141] Mr. Murdocca testified that on April 1, 2016, he received a cheque from Mr. Duca for $11,198.47.

Cash Payments

[142] Mr. Duca stated that in his business, he sometimes deals with large amounts of cash. Mr. Villano told him that he had to give some cash to Mr. Mauti to get UM started on the site servicing work. Mr. Mauti stated that he received a $30,000 cash payment from 222 on April 4, 2016.

[143] Between April 4 and May 27, 2016, Mr. Villano sent a series of texts to Mr. Duca requesting cash payments for certain trades. The following are some examples: on April 21, 2016, he sent a text to Mr. Duca requesting $5,500 for payment of construction of the roof parapet. His brother did the work. Mr. Duca gave him the cash which he paid to his brother. On April 29, 2016, Mr. Villano sent a text to Mr. Duca requesting $1,800 for “Joe the concrete guy”. He also requested $1,700 for a pit wash basin. Mr. Villano stated that he received the cash and paid the workers. Mr. Duca saw the work. Mr. Villano states that he paid other trades with cash from Mr. Duca.

[144] Mr. Duca stated that he kept a handwritten list of the cash payments. The list was provided. The entries are from April to November, 2016. He stated that the small trades who did work received these payments. Mr. Villano asked him for the money.

Removal of the Toronto Star Wall

[145] Mr. Notarantonio stated that he carried out work from April 22 to 27, 2016 to remove a large concrete wall on the property. It was a sign that said “Toronto Star”. Six loads were required to haul the concrete off site. UM’s trucks were used.

Murdocca 5

[146] Mr. Murdocca stated that he sent to 222 invoice 204-36 dated April 25, 2016 for $21,107.27. It was for granular and rental equipment. Mr. Villano stated that more granular was needed because some panels were sinking. Murdocca provided it. Mr. Duca knew about it and approved it. Mr. Duca agreed that he did not complain about this invoice. He contests it. It is on Ms. Sorbara’s chart.

The 360 Ferrari Spider

[147] At some point, the Ferrari 430 that Mr. Villano wanted was sold to a customer. Mr. Villano stated that he was disappointed. He searched on-line and found a 2002 360 Ferrari Spider located in Vancouver. He told Mr. Duca that he wanted this one for his compensation. Mr. Duca stated that he purchased the Spider for $72,000 and had it shipped to Daytona. He serviced it and gave it to Mr. Villano in early 2016 to drive with a dealer plate on it. He did not nor has he ever transfered the ownership to Mr. Villano.

Request for Bank Advance #3

[148] 222 made a draw request pursuant to a certificate dated May 2, 2016. On the budget that accompanied it, line 10013 entitled Site Supervision & Labour, in the Revisions to Budget column - $75,000 (minus $75,000) is shown. Mr. Duca agreed that this reflected payment to Mr. Villano because he had given him the Ferrari.

[149] The work to date was $1,252,000. Mr. Duca stated that Mr. Sampogna certified the request for advance. It showed that the trucking was paid. Mr. Sampogna stated that the signature above his name was not his signature.

[150] Mr. Duca stated that the Spider was worth between $90,000 - $100,000. Mr. Villano stated that because he was originally to receive the Ferrari 430 worth $150,000, the deal became that he would receive the Spider and the monetary difference. He understood that Mr. Duca had paid $72,000 so he would be entitled to the car plus $78,000.

UM’s Site Servicing Work

[151] Mr. Duca stated that Mr. Villano gave him a price, approximately $300,000 for UM to do site servicing work. He testified that Mr. Mauti came to his office to finalize the deal. He gave Mr. Mauti $40,000 in cash. Mr. Villano already had the drawings. There was no agreement in writing. Mr. Duca acknowledged that he obtained a price for site servicing work from Fourwinds, prior to the start of any work on the site as noted above, but decided to hire UM. He agreed that if he had any issues, he could have gone with Fourwinds. They had a Ferrari that Daytona serviced.

Waldorf 5

[152] Mr. Murdocca testified that Waldorf sent to 222 invoice 100-36 dated February 5, 2016 for $8,960.68. It was for granular and equipment rental.

Beginning of Site Servicing Work

[153] Mr. Mauti stated that UM began the site servicing work on April 28, 2016. UM bought products such as pipes, catch basins and manholes from Cedar Infrastructure Products Inc., Yorkwest Plumbing Supply Inc. and Noble. UM provided many pages of packing slips, invoices and summaries regarding these purchases.

Mr. Lai’s Report April 29, 2016

[154] Mr. Lai wrote a report dated April 29, 2016 addressed to 222 regarding his inspection of the subgrade of catch basin number 11. He stated,

Our inspection indicated that the catch basin subgrade consists of earth fill and the fill is in a wet and soft condition. It is recommended that the wet and soft earth fill should be subexcavated and replaced with 0.3m of EXTRA bedding material.

We have reviewed the borehole logs attached with Report No. 3652 – 13-G-KFa prepared by Toronto Inspection Ltd. which show that the subgrade for the underground services will likely consist of existing earth fill. The existing earth fill is generally suitable for underground services construction; however, if the subgrade consists of loose/soft fill material, it should be subexcavated and replaced with up to 0.3 of extra bedding stone.

[155] Mr. Duca stated that UM excavated out to the watermain in the road to do the connection.

CCDC Contract

[156] Mr. Mauti stated that UM prepared a CCDC contract for 222 regarding the site servicing work dated May 7, 2016. Mr. Duca did not sign it. It was produced. It does not state that UM would provide the granular required. Rather, Murdocca supplied the granular. Mr. Duca stated that he received the contract from Mr. Villano in June 2016 but did not do anything with it because it was missing the water connection and it was not the price they agreed upon. He never told Mr. Mauti that he disagreed with it. UM was already on site doing the work.

[157] Mr. Mauti testified that on May 7, 2016, UM received a cash payment of $25,000 from 222. Mr. Duca stated that he provided the cash because nothing was happening on site but materials had been brought in.

Strada Invoice M-16-3301

[158] In the fraud claim, 222 describes this as a “false invoice”.

[159] The circumstances concerning payment of Strada invoice M-16-3301 dated February 30, 2016 for $10,330.86 are confusing. As noted above, Mr. Murdocca stated that he used a credit that his father had with Strada to pay this invoice; however, Murdocca sent a cheque to Strada for that amount. “30 Jellico Avenue” is typed on the bottom of the cheque. It has a handwritten question mark above the address. There are two dates on the cheque: 03/30/2016 on the line that states the amount of the cheque and 3/2/17 in the top right hand corner next to the cheque number. Mr. Murdocca stated that 3/2/17 is the correct date of the cheque. He did not know the reason for the other date. A suggestion was made that this granular was not delivered to the project – rather, it was delivered to a residential property, 30 Jellico Avenue that Mr. Murdocca was developing. Mr. Murdocca stated this was impossible. The Jellico property would not have needed that much stone. The quantity would be a lot for one house. The Jellico house was being built in late 2016. There was no building permit on March 30, 2016 – he did not receive it until April 6, 2016, so this stone could not have been used there. The cheque was to pay for stone for the Daytona project.

Strada Invoice M-51816

[160] In the fraud claim, 222 also describes this as a “false invoice”. Mr. Murdocca acknowledged there is a problem with invoice M-51816 dated March 30, 2016. Strada made a mistake. On the first page, the sub-total is $10,096.31. On the second page, a sub-total is carried forward but Strada used a wrong number, $24,972.73. Strada’s invoice is $50,224.77. Mr. Murdocca stated that when the error is corrected, the total is $33,414.42 as verified by the total tonnage on the invoice. He prepared a chart for ease of reference and used $33,414.42. The chart shows Strada’s total invoice amounts to Murdocca as $84,043.83. The chart also shows that Murdocca paid $85,101.88. Mr. Villano stated that the clear stone was used in the basement whereas the other stone was used in the parking lot and for backfilling.

[161] Mr. Murdocca stated that his company has an ongoing account with Strada that is in good standing.

UM invoices to 222

[162] Mr. Mauti stated that he sent invoice 1821 dated June 1, 2016 to Murdocca for $127,341. It was for additional excavation, additional trenching, deeper excavation, excavation for ramps and basement cleaning and preparing base. It was paid.

[163] Mr. Duca agreed that UM did site servicing and sewer connection work. He had no complaints about its work. No deficiency list was sent. The work was done and it “passed”. The sewers worked fine. Some of the manhole lids had to be raised but this issue arose in 2017 when the final asphalt coat was applied.

[164] Mr. Mauti stated that UM re-issued invoice 1821 to 222 dated June 1, 2016 for $127,341. The difference was $188. Mr. Mauti could not explain this. The invoice was paid. Mr. Duca stated that he did not know what “additional excavation, additional trenching and deeper excavation” meant. He stated that he did not know what UM was talking about.

[165] Mr. Mauti testified that he sent invoice 1851 to 222 dated June 1, 2016 for $3,005.80. It was for bobcat work to clean the basement and bring in stone. 222 paid $2,659, 88% of it. Mr. Duca stated that he did not know whether the services on the invoice were legitimate.

[166] Mr. Mauti testified that UM sent invoice 1852 to 222 dated June 1, 2016 for $11,300. This was for the demolition of the Toronto Star concrete wall. Mr. Duca stated that he accepted responsibility for the invoice. It was paid.

[167] Mr. Mauti testified that UM sent invoice 1853 to 222 dated June 1, 2016 for $5,560. It was for labour and equipment to remove trees, clean the site and dispose of garbage. Mr. Duca questioned the trees and stated that there were some just on the boulevard. This was not paid. It is #5 on UM’s chart.

[168] Mr. Mauti testified that UM sent invoice 1858 to 222 dated June 6, 2016 for material and equipment site servicing work for $220,350. 222 paid $95,000 of this invoice. Mr. Villano stated that UM did the work. Mr. Duca did not raise any issues with it. It is not fully paid.

Watermain Connection

[169] Mr. Mauti stated that UM sent a quote to 222 for the connection to the City’s watermain in the amount of $67,800.

Murdocca 6

[170] Mr. Murdocca stated that he sent invoice 204-38 to 222 dated June 17, 2016 for $69,058.56. It was for granular material. Mr. Duca stated that he received it and paid for it in full by cheque dated August 4, 2016. He stated that he did not complain about this to Murdocca. Mr. Villano stated that most of the granular was used to fill the basement to the underside of the slab because it could not be filled with the bad soil. Mr. Duca knew of this before the granular arrived and approved it. Mr. Duca contests this invoice. It is on Ms. Sorbara’s chart.

Mr. Lai’s Inspection

[171] On June 27, 2016, Mr. Lai sent a letter to 222 stating that he had visited the site and had performed a proof-rolling inspection. He stated:

…the subgrade is generally stable with minor deflection observed at the area shown on the enclosed drawing. The area is about 14m by 16m.

It is recommended that the minor deflection section should be EITHER subexcavated to about 0.5m below the proposed subgrade and replaced with clean, dry earth fill OR subexcavated to 0.25m below the proposed subgrade and replaced with extra Granular ‘B’.

Request for Bank Advance #4

[172] 222 made another draw advance request dated July 8, 2016. There is a signature under the text “Nick Sampogna”; however, Mr. Sampogna stated that the signature was not his.

Further UM invoices to 222

[173] Mr. Mauti stated that UM sent to 222 invoice 1864 dated July 12, 2016 for $33,900. This was for removing trees, basement cleaning, granular spreading, electrical trench excavation and backfill. 222 made partial payment of $31,558.40.

[174] Mr. Duca stated that UM sent an email dated August 4, 2016 attaching six invoices, 1712, 1851, 1853, 1858 and 1864. They were not addressed to 222; rather, they stated “Project Daytona” at the top. He stated that he did not respond to the email. He did not advise Mr. Mauti of any issues. He emailed them to Ms. Sorbara stating, “All these invoices are for site servicing #10023 [services], 10026 [service connect], 10028 granular material, 10028. I have paid him some already. I will give you the amounts later but for now [sic] has to be part of the next draw.” Mr. Duca stated that he was directing Ms. Sorbara to post them. The contents of some of them were in dispute. When asked whether he would post invoices that he did not agree with, he responded, “That is not what posting means. I had already paid him some money.”

[175] Ms. Sorbara confirmed that she received the six invoices. She confirmed that Mr. Duca told her that they would be part of the next draw. He did not dispute them. She stated that on August 15, 2016, she received them, properly addressed to 222.

[176] On August 16, 2016, Mr. Duca directed Ms. Sorbara to post invoice 1871 to budget item 100025. He did not say that he was disputing it.

[177] Mr. Mauti testified that he sent an email to 222 attaching invoice 1873 dated August 15, 2016 for site servicing in the amount of $141,069.43. Mr. Duca stated that there was no charge for granulars in it. He did not respond to Mr. Mauti. He directed Ms.Sorbara to speak to Mr. Shukla. She did not say anything to dispute the invoice. It was not paid. Mr. Duca stated that he sent an email to Ms. Sorbara dated August 16, 2016 about the invoice which said, “This gets posted to 10025.”

[178] Mr. Mauti stated that Mr. Shukla sent an email dated August 23, 2016 to 222 attaching invoice 1821 dated June 1, 2016 for five items: additional excavation, additional trenching, deeper excavation, excavation for ramps, basement cleaning and preparing base. The total was $127,341. Mr. Duca stated that he did not respond to it. Ms. Sorbara stated that Mr. Duca told her to not pay it.

[179] Rona sent an invoice to Murdocca dated August 29, 2016 for blades, totaling $54.67. Mr. Duca pointed out that the invoice says “Ship to Jercon.” He did not understand that. He describes it as a false invoice.

Murdocca 7

[180] Mr. Murdocca stated that on September 5, 2016, he sent invoice 204-41 for supplying granular and some rental equipment. The amount was $30,928.18. Mr. Villano stated that the granular was for the ramps, front porch and a handicapped ramp. They had to be backfilled with granular. Mr. Duca knew about it and approved it. 222 paid the amount by cheque dated October 5, 2016. Mr. Duca contests this invoice. It is on Ms. Sorbara’s chart.

[181] Mr. Mauti stated that UM sent 222 invoice 1822 dated September 13, 2016 for $20,662.05 (for five items) and invoice 1883 dated September 14, 2016 for $22,600. This was for grading the sides of the building. Ms. Sorbara stated that Mr. Duca sent her an email dated September 21, 2016 but he did not say he was disputing them. Mr. Duca agreed that it did not indicate that UM was to supply concrete. 222 did not pay this invoice.

[182] Mr. Mauti stated that UM sent an email to Mr. Duca attaching invoices 1886 dated September 21, 2016 for removing concrete, backfilling a curb and sidewalk work totaling $2,966.25 and 1887 of the same date for sidewalk work totaling $26,175.88. At the time, Mr. Duca never said he was disputing the invoices. 222 did not pay them.

[183] Mr. Duca stated that he sent an email to Ms. Sorbara dated September 21, 2016 forwarding invoices 1882 and 1883. He stated that he was not forwarding them to her to post; rather, he just wanted her to keep track of them, although he conceded that if he forwarded invoices to her, she would post them to the ledger. Invoice 1887 was for “extra to contract”, the new sidewalk in the boulevard. Mr. Duca stated that he did not respond to UM regarding these invoices. 222 did not pay them.

[184] Mr. Mauti stated that UM sent an invoice payment status document to 222. It showed that $426,512.01 was owing. UM sent an email to Mr. Duca dated September 23, 2016 inquiring about whether his bank would release funds. Mr. Duca sent a text to UM dated September 26, 2016 stating that he was making arrangements. He stated, “I will get it resolved. There is [sic] no problems.” Mr. Duca stated that this was after he had received all of the invoices. He agreed that he had not raised any issues about the invoices. He confirmed that 222 would pay UM.

[185] Mr. Murdocca stated that he sent invoice 204-43 to 222 dated October 24, 2016 in the amount of $4,368.57 for services rendered and supply of rental equipment. This is not a contested invoice. It is not on Ms. Sorbara’s chart. 222 did not pay this invoice.

[186] Mr. Mauti testified that UM sent invoice 1899 dated November 9, 2016 to 222 for $6,164.15. It was for work related to the ramps: preparing them for concrete and supplying labour and equipment to pour, among other things. Mr. Duca agreed that there was no charge for the concrete. He did not take issue with the invoice. Ms. Sorbara stated that she was not aware of it. 222 did not pay this invoice.

[187] At this point, 222 had not paid the last 6 UM invoices totaling $219,637.76. It had not fully paid earlier invoices.

Termination of UM?

[188] Mr. Duca testified that he was begging UM to come back and finish the work but did not produce any documents to support this. The day before the lien was registered, Mr. Duca obtained quotes from Roadside and Fourwinds to finish the work.

[189] Mr. Duca conceded that he never sent an email to UM stating that he was hiring someone else to complete UM’s work. Mr. Villano stated that there were no problems with UM’s work. There was no deficiency report. Mr. Duca did not tell UM that he would be backcharging UM for costs he says he incurred to complete UM’s work.

Incomplete Work

[190] Mr. Mauti testified that the following work under the Site Servicing, Curbs and Sidewalks and Asphalt Contract, valued at $66,438.00 plus HST remained to be completed by UM as of November 15, 2016:

(a) Supply and install 33.2m² of sidewalks valued at $2,988;

(b) Supplying, placing and compacting 75mm HL8 and 50mm HL3 hot mix asphalt for the heavy duty asphalt valued at $5,850; and

(c) Supplying, placing and compacting 50mmHL8 and 40mm HLK# hot mix asphalt for the light duty asphalt valued at $47,600.

[191] Mr. Mauti stated that as of November 15, 2016, UM could not complete this work because other trades had to finish their work first, for example, electrical work. Mr. Villano stated that the final asphalt could not be laid until the end of the project.

[192] Mr. Mauti testified that UM could not complete the municipal water connection until Mr. Duca obtained a municipal permit. Mr. Emmons corroborated this.

Roadside Paving Quote November 14, 2016

[193] Mr. Gallo, principal of Roadside Paving, stated that Mr. Duca is a family friend. Five days after UM sent the last invoice (which is included the lien amount), Roadside Paving Ltd. sent a quote to 222 dated November 14, 2016 to do paving work and remove some street curb, among other things. It totaled $48,500 plus HST. Mr. Gallo, the principal, stated that when he attended at the site, he saw some granular materials.

[194] Roadside also sent a quote to do the watermain connection which did not include supplying the valve chamber, an expensive item. That quote states, “chambers supplied by others”. Mr. Duca firmly maintained that UM did not supply the valve chamber; however, this was contradicted by Mr. Gallo who testified that he saw it on the property when he initially attended. The difference between Fourwinds’ quote for watermain connection and the quote for site servicing and watermain connection is $21,000. UM’s quote for the watermain work lists the valve chamber for $20,000 plus HST. It was included in UM’s invoice 1910 to 222 for $22,600 dated January 20, 2017.

Other Work Carried Out by UM

[195] Mr. Mauti and Mr. Villano’s evidence at trial was consistent that from time to time, UM Construction was directed to carry out additional work at the Daytona Project for the benefit of the Owner as it would save him time and money, and Mr. Mauti was directed to invoice the Owner for this work including: 242 basement cleaning and preparing base; demolishing and removing the Toronto Star pre-cast concrete wall; removing trees, cleaning the site and disposing of garbage; basement cleaning, granular spreading, electrical trench excavation and backfilling electrical pipe trenching; reforming and forming concrete on deck and ramp entrance; removing and replacing form for drainage at bottom of basement ramp; raising manholes and catch basins to regrade front and side of building; digging and placing post for safety in front of power box; removing concrete, backfilling curb and sidewalks with topsoil; and prepare parking ramp for concrete, pouring concrete for ramp and basement steps and fixing pipes in parking lot.

UM’s Invoices to 222 and Balance Owing

[196] Mr. Mauti testified that UM sent 14 invoices to 222 for its work, totaling $645,276.16 and received $275,000 in payment, leaving a balance owing by 222 of $347,676.16. Adding the amount for the water chamber of $22,600 results in a total of $370,276.16.

[197] Mr. Mauti stated that UM received some cash payments from Mr. Duca. They both agree on the amounts. The amounts are included in the payments shown in the chart.

[198] Regarding invoice 1821 for the balance owing to UM by Murdocca, Mr. Mauti stated that at a meeting on December 15, 2015, Mr. Duca directed him to re-invoice it to 222 less the amount in invoice 1. Mr. Duca agreed that he never raised any issues regarding the invoices when they were emailed to him and never said that 222 would not pay them. He directed Ms. Sorbara to post most of them in the construction budget. Ms. Sorbara testified that this meant that the work was “certified as complete”. He never told UM or anyone else that he would not pay the invoices. Mr. Mauti stated that he was never asked for any related supporting documents.

[199] On September 23 and 26, 2016, Mr. Duca and Mr. Mauti exchanged texts. Mr. Mauti asked about payment. Mr. Duca stated, “I am making arrangements to give you more money this week…, I will get it resolved. There is [sic] no problems.” Mr. Mauti states that Mr. Duca sent this text after he had received the invoices and made some payments. The total owing then was $421,512.01. Mr. Duca’s text acknowledges the debt.

UM’s Lien

[200] Mr. Mauti testified that on November 15, 2016, UM registered a lien in the amount of $352,676.16. In the related statement of claim issued on January 31, 2017, UM also claimed $22,600 for invoice 1910 (invoice 14) dated January 20, 2017, which was not included in the lien and $29,713.96 for loss of profit, totaling $404,990.92. It provided the charts below. Note that 222 paid invoices 1 and 2.

[201] Mr. Villano stated that when UM was working on site, Mr. Duca did not have any issues with its work. Mr. Duca never complained to him about invoices from UM, Murdocca or Waldorf. UM did the work as set out in its invoices. It was not the concrete supplier. Mr. Duca never told him that he would be backcharging UM for anything related to the costs of material. He never said he would backcharge UM for the cost of the concrete.

Fourwinds Quote

[202] Alessandro Nardone, principal of Fourwinds Construction Inc. provided a quote to 222 of $55,000 dated November 17, 2016 to connect the project’s water service to the municipal water supply. It included “internal parts for a valve chamber (supplied by others)”. Mr. Nardone stated that he saw the chamber on the boulevard when he attended the site. Mr. Nardone had a brother, Cosmo, who has since passed away. He stated that there was a trade off in the price because Daytona had stored Cosmo’s Ferrari. He did not know what the trade off was. Mr. Duca conceded that UM had supplied the valve chamber.

Work Done by Roadside

[203] Gusippe Gallo, principal of Roadside, stated that Mr. Duca contacted him approximately one week before November 14, 2016 (the date of UM’s lien) for a quote. Roadside provided a quote of $48,500 for three items: item one: final grading, rolling and compacting the parking lot; item two: removing 35 “In.ft” of street curb, dispose off site; saw cut curb depression 54 In.ft and dispose off site; and item 3 pad low areas, power sweep, install emulsion tack binding coat; and place, roll and compact 1-1/2” of HL# top course asphalt. Regarding item one, Mr. Gallo stated that gravel was already there. Roadside did not supply or prepare it.

[204] Roadside Paving sent to 222 a quote dated August 21, 2017 to remove and replace concrete items and to do the top coat of asphalt, among other things for a total of $49,381. There were three separate prices to lower CB #4, do asphalt base repairs and do concrete work. The total contract was $62,150 including HST. He stated that Roadside did not have a soil report. Mr. Gallo assumed that the ground was good “because of [his] knowledge of the area”. Mr. Gallo stated that Roadside’s site servicing work was more than the quote. There was extra work. His crew told him that other things needed to be done. He contacted Mr. Duca who authorized the extra work. All work was done at Mr. Duca’s direction. There were no engineering or municipal reports for it.

[205] Mr. Gallo stated that 222 paid $36,871.95. The balance was paid in trade for servicing and storage of Mr. Gallo’s brother’s Ferrari. Roadside sent another invoice dated June 11, 2018 for $24,521. It was paid on July 14, 2018.

[206] Mr. Duca testified that he obtained a second quote from Roadside for $48,500 dated August 21, 2017 because the City of Vaughan required some repairs and the grade had to be lowered. Mr. Gallo stated that he did not know the cause of these problems. Mr. Duca just told him to do them. Mr. Duca did not produce any documents from the City regarding these required repairs.

[207] Roadside sent another invoice dated June 11, 2018 for $24,521. It was paid on July 14, 2018. 222 paid for all of Roadside’s invoices. In total, 222 paid Roadside $84,580.50 for its work.

The Owner’s Set Off Claim

[208] 222 claims it is entitled to set off certain amounts.

(a) $43,380.78 for concrete that it purchased. Mr. Duca states that 222 purchased it on behalf of and at the request of UM. A credit of $30,928.18 is shown in Ms. Sorbara’s chart. She notes that this relates to Murdocca (the amount of Murdocca 7). It is subtracted in the calculations that result in $271,051.08 plus $50,700 for cash payments. Mr. Duca conceded that he received a benefit from from the amount billed in Murdocca 7; Ms. Sorbara states in her affidavit that 222 paid $12,452.60 to Rexdale Building Supply

(b) $64,901.50 that it paid to Fourwinds; and,

(c) $84,580 that it paid to Roadside.

[209] Mr. Duca agreed that there was nothing on UM’s invoice 1882 that stated it supplied concrete. He also agreed that 222 provided no notice of backcharge.

[210] Mr. Nardone stated that Fourwinds sent invoice 1605 to 222 dated December 20, 2016 for $1,751.50 which was paid. Mr. Duca stated that this was for drilling into the building for the water service.

The Jellico Property

[211] Mr. Murdocca stated that in the course of its business, Murdocca bought properties with single family dwellings on them, obtained severances, demolished the houses and built new houses on the severed lots. In 2014, Mr. Villano and his brother-in-law approached him about an opportunity to buy a 50’ lot, 30 Jellico Avenue that had a single family residence. Mr. Murdocca stated that he put up money for his part of it. The Villanos put up the other half. The parcel register page for PIN 07576-0388 (LT) shows that Suzy Murdocca purchased the property on December 2, 2014. The plan was for Murdocca to own one of the severed lots and for Mr. Villano’s wife’s corporation to own the other one.

[212] The severance was granted. The addresses of the new lots were 30 and 32 Jellico Avenue. Construction on the new houses began in the spring of 2015. UM Construction was not used for the project.

[213] Mr. Villano stated that he did not bring the property to Mr. Murdocca’s attention. Rather, his brother did. Mr. Villano stated that he did not put any money into the project. His wife’s corporation came to own 32 Jellico and a Murdocca corporation owned 30 Jellico.

[214] Mr. Duca alleges that Mr. Villano was involved with Murdocca “on the eve” of being hired as the site superintendent. He alleges that Mr. Villano was not arm’s length from Murdocca. They had a relationship. After he was hired for the project, Mr. Villano went to Murdocca to get a price on excavation. He gave Murdocca a business opportunity, just as he had done with the Jellico property. Because he was 222’s site superintendent, he had a fiduciary duty to 222. The fact that he went to Murdocca for an excavation quote was a breach of his fiduciary duty.

[215] Miga Markovic of Migas Caulking testified that Mr. Villano hired him to do caulking work on the two houses on Jellico Avenue. This took him one week. He was paid in cash. He stated that Mr. Villano was there working full time on the houses on each of the days that he was doing caulking work. Mr. Markovic swore an affidavit dated December 5, 2017. Attached as Exhibit B is a document that he signed entitled “To Whom It May Concern” It states, “My Name is Miga Markovic. I am a caulking contractor. This is to confirm that I did work on 30 and 32 Jellico St. Etobicoke as sub to Pino Villano. Villano gave me instructions on what to do and paid me for the work in cash.” Mr. Markovic’s signature is dated Dec 5 17. He testified that Mr. Duca made the letter for him to sign and asked him to sign it. He signed it at Mr. Duca’s office.

[216] John Lachin is the owner and operator of Lachin Construction and Landscaping Inc. He testified that Mr. Villano contacted him in 2016 to do some landscaping work for the project after the building had been constructed. Later, he did some landscaping work at the Jellico property. This consisted of a patio and interlocking brick which took four to five days. He stated that Mr. Villano was there most of the days or perhaps all of them. He was in charge of the construction. Mr. Lachin could not provide any dates when he did the work.

2017

[217] Mr. Duca testified that he provided a cheque to Fourwinds dated January 18, 2017 for $35,651.50. It was a payment toward the water connection work. Mr. Mauti stated that UM sent an invoice 1910 to 222 dated January 20, 2017 for $22,600 for the valve chamber.

[218] Mr. Mauti was examined for discovery on January 25, 2017. Mr. Duca stated that at the examination, he learned that the principal of Murdocca was Frank Murdocca. Murdocca was separate from “Umberto”. Invoices were presented that he had never seen before. He learned that Murdocca had obtained a subcontractor for the basement excavation, Umberto Mauti, for $28,500; however, Mr. Villano had brought him an oral quote that he said was from Umberto for $80,000. Mr. Duca stated that he saw invoices for trucking. He had paid Murdocca but Murdocca had not paid Mr. Mauti. He understood that Murdocca was a house builder. Mr. Mauti was the excavator. All the money that he had paid to Murdocca and Waldorf did not go to Umberto.

Mr. Villano’s Questioning Without Counsel

[219] Mr. Villano testified that Mr. Duca had told him that he had to give a statement “to go over things”. Mr. Villano explained that Mr. Mauti had registered a lien against the property. Mr. Duca wanted to sue him. He told Mr. Villano “I want you to be on my side. I’m not suing anyone else, just Umberto.” Mr. Villano stated that on March 28, 2017, he received a text from Mr.Duca stating, “10 am Ed Tonello Are we going together?” Mr. Villano stated that he attended at the Daytona building. Mr. Duca and Mr. Tonello were there. Mr. Duca said that the lien had impacted his financing and that he needed Mr. Villano to speak to his lawyer. Mr. Duca stated that he would not “go after” him, Murdocca, his wife or anyone else and that he would take care of any lawyers’ bills. Mr. Villano stated that he was taken to another location. He was not familiar with it. According to the transcript, it was Unity Court Reporting Suite 100, 400 Applewood Crescent Vaughan. Mr. Villano stated that the three of them went into a room. They made him sit down.

[220] Mr. Villano stated that the lawyer was asking him questions and it was being recorded. He felt like he was being interrogated. The lawyer stated on the record that it was an “examination”. The lawyer asked him if he was happy to proceed without his own lawyer. He said he wasn’t sure. He didn’t want to waste anyone’s time.

[221] Mr. Villano stated that he had never been involved in anything like this. He panicked. He felt like he was being bullied. He did not know what was happening to him. He was scared and had to go outside. Mr. Duca came outside with him and said that he just needed to answer some questions. Mr. Duca repeated that he was just going to sue Umberto. He understood that the point to the questioning was to get information that could be used against Mr. Mauti. Mr. Duca was upset because Mr. Mauti had registered a lien. He wanted to make Mr. Mauti pay for registering the lien. Mr. Villano stated that he had been working for two years. He had not received any money from Mr. Duca. He did not have the ownership for the car, so he went back in to answer questions.

[222] The transcript shows that Mr. Villano was asked detailed questions about topics such as:

(a) his experience in construction,

(b) whether he got more than one quote for certain work,

(c) his relationship with Mr. Duca,

(d) when discussion began about his involvement with the project,

(e) his knowledge of Mr. Duca’s experience in construction,

(f) the nature of the agreement,

(g) what Mr. Duca needed,

(h) was he the manager and if so what did that entail,

(i) how often was he expected to be at the site,

(j) how many hours he was there per day,

(k) how he paid for his gas,

(l) whether he received compensation,

(m) was he working on other jobs,

(n) why would he work for two years with no compensation,

(o) why he believed that he should receive the Ferrari for compensation,

(p) what does Murdocca do,

(q) did he work for Murdocca; did he work for him during the project,

(r) did Mr. Murdocca and Mr. Mauti socialize; did he socialize with them,

(s) did he work for Mr. Mauti,

(t) did he look at invoices for trucking,

(u) how did Mr. Mauti come to be involved,

(v) did Murdocca sub-out the excavation to Mr. Mauti, and;

(w) could he have got a better price directly from Umberto.

[223] Mr. Villano stated that he answered the questions truthfully. He had nothing to hide. The transcript shows that counsel suggested to him four times times that Murdocca charged Mr. Duca $80,000 for the basement excavation. Mr. Villano disagreed and asked four times to see the invoice, “the paper”. Counsel asked Mr. Villano, Q: “Well if you’re an honest guy, why would you put John into an $80,000 contract. A: I didn’t put John. You still haven’t shown me the $80,000. Q: Why would you put John into an $80,000 contract that’s worth $28,500? A: No, I didn’t put John into an $80,000 contract. You still haven’t produced it. Please produce it…”[^11] Mr. Villano stated that Mr. Duca was not billed $80,000 for the basement excavation and repeatedly asked to see the invoice.[^12] Mr. Villano stated, A: “Before we look at this [the number of truckloads], could you show me the invoice of how much – that $80,000 for excavation? Counsel stated Q: “Well, I’d be happy to but first we started this, I want to finish this [questions about trucking].”[^13]

[224] Counsel never showed Mr. Villano an invoice or contract for $80,000 for basement excavation during the questioning. It was never produced in this trial. The documents show that Mr. Villano’s recollection on this subject was correct. Mr. Duca was not billed $80,000 for basement excavation. Rather, Murdocca’s invoice 204-21 dated June 27, 2015 clearly shows that Mr. Duca was billed $47,850 for “Excavation and disposal as per quote” and $47,175 for trucking described as “Extra – to removal of excavated material off site 111 loads 2 $425 per load $47,175” (both amounts subject to tax). Both Mr. Duca and his counsel knew that he had been billed only $47,850 plus tax for the basement excavation prior to Mr. Villano’s questioning. When this court asked counsel why he had suggested to Mr. Villano in questioning that Mr. Duca had been billed $80,000, he stated that he misspoke. Counsel said it four times. One might misspeak once or even twice but not four times.

[225] Mr. Villano stated that despite what Mr. Duca said about only suing Mr. Mauti, Mr. Duca sued everyone, even his parents. 222’s statement of claim alleging fraud was issued two months later, on May 26, 2017.

Mr. Villano’s last work

[226] Mr. Duca stated that Mr. Villano was probably still working on the project at the end of May 2017. Mr. Villano’s last text to Mr. Duca was dated May 27, 2017, which stated, “Please bring me 500 for one of my guys this morning need to give to him.” That was one day after 222 issued its fraud claim.

Occupancy

[227] Mr. Duca stated that occupancy was granted for the building in the summer of 2017. Daytona took occupancy in October, 2017.

Mr. Villano’s Invoice

[228] Mr. Villano testified that on July 5, 2017, he sent an invoice to Mr. Duca for two years of site supervision and other work. It was at the end of the project. Mr. Duca had sued him. The invoice was for $198,510.35, comprised of $150,000, being $75,000 per year for two years of site supervision, as well as $48,510.35 for other miscellaneous work that he had done on the project. He stated that he was supposed to receive the $150,000 Ferrari 430. He acknowledged that he had not produced any documents to support the work items on the invoice. He stated that he had some things on paper before he prepared the list. He did not know about court procedure and likely threw them out. Mr. Villano agreed that he never requested payment for any of the items as he did the work. He stated that Mr. Duca was going to pay him at the end.

Mr. Villano’s lien

[229] Mr. Villano states that his last work on the project was after June 7, 2017. A text from Mr. Duca to Mr. Villano states, “Pino, send me the caulking guy for the fireproof on the mezz and we need to pay the drywall. Please confirm.” Mr. Villano stated that Mr. Duca was on holidays at that time. Mr. Villano was still there and in charge of finishing it up. On July 7, 2017, Mr. Villano registered a lien for $198,510.35.

The Fraud Calculation

[230] Mr. Duca alleges that he ought to have paid only $28,500 plus tax for the basement excavation because that is the price that UM gave Murdocca. In Ms. Sorbara’s chart, his fraud claim totals $334,184.23 comprised of invoices described as Murdocca 1 – 7 and Waldorf invoices 1 – 5. From that, he subtracts $28,500 for the excavation and a set off of $30,928.15. The total is $271,051.08 to which he adds $50,700 for return of the cash payments he gave to Mr. Villano for some of the smaller trades. He advised the court that he was adding $50,700 to the fraud claim near the very end of the trial.

The Ferrari

[231] As noted above, sometime in 2016, Mr. Duca sold the Ferrari 450. Mr. Villano stated that he was disappointed but Mr. Duca told him that he would get another car for him. Mr. Villano testified that he found a Ferrari 360 on AutoTrader in Vancouver for $72,000. Mr. Duca told him that he could have that one and $78,000 would be paid to him in cash. Mr. Duca stated that he had it shipped. Mr. Armellin stated that when the car came in, he serviced it and got it ready for Mr. Villano. It had not been registered as an Ontario vehicle. Mr. Villano stated that Mr. Duca gave him a dealer plate and the keys. He took the car and was very excited. He did not know why the registration and ownership were not given to him. He thought that perhaps it was because at that time the building was not yet finished.

[232] As noted above, the original amount in line 1013 for site supervision was $100,000. In the budget attached to draw advance #3 dated May 2, 2016, line 1013 was revised downward. It shows $75,000; therefore, $25,000 was left. Mr. Duca agreed that he had given Mr. Villano the Ferrari as his compensation. He acknowledged that he had refused to give Mr. Villano the ownership and had held it back for six years. The Ferrari action includes Mr. Villano’s parents as defendants because the car was on their property and they would not release it. Mr. Duca acknowledged that he had certified to the bank that he paid $75,000 for site supervision and labour. Mr. Armellin acknowledged that approximately one year after the litigation started, Mr. Duca decided that the car should be picked up. Mr. Armellin called the police to avoid a potential problem with the pick up, so that the police could observe what would be going on. He attended to get the car but stated, “it didn’t work out” so he left and returned to the shop. He denied attempting to scare Mr. Villano’s elderly parents and putting pressure on them to settle the lawsuit.

Arif Ghaffur’s Evidence

[233] Mr. Ghaffur was qualified on consent as an expert in quantity surveying. He was retained by Mr. Villano to provide an opinion on the nature and value of the site superintendent’s work. He reviewed the following documents:

(a) a motion record by the defendant 222 for a hearing dated November 19, 2018;

(b) a summary of the examinations for discovery of John Duca dated July 10, 2018;

(c) technical documents including mechanical and structural engineering drawings;

(d) Mr. Villano’s invoice dated July 5th 2017; and

(e) UM’s construction lien claim.

[234] Mr. Ghaffur assumed that Mr. Villano provided services during construction from site clearing and foundations to finishes and final completion of the project. He also assumed that Mr. Villano completed specific trade work as set out in his invoice.

[235] Mr. Ghaffur noted that work associated with the foundation took longer to complete due to stoppages for inspection and redesign. The scope of the associated work also increased because the foundation structure was required to be more expansive. He noted that although the owner had no construction experience, he decided to forgo hiring a general contractor in an effort to decrease construction costs.

[236] Mr. Ghaffur assessed the services and work carried out by Mr. Villano using three methods. The first method involved proportion of construction cost. The construction budget was approximately $4,500,000. Mr. Ghaffur stated that based on this, the value for project management would typically be approximately 7.5% to 15% depending on the scope of the services provided. He noted that the role of a site supervisor falls within the role of a project manager and is typically approximately half the value. He stated that the lower range would be $168,750 and the upper range would be $337,500.

[237] The second method that Mr. Ghaffur used was a time allocation with an hourly rate for Mr. Villano. At $65 per hour for 20 months for 20 days per month using an eight hour average work day, this would result in $208,000.

[238] The third method that Mr. Ghaffur used was a variation of the hourly rate method, using six hours per day which would result in $156,000.

[239] Mr. Ghaffur concluded that the value of Mr. Villano’s services should reasonably be in the range of $156,000 to $253,000, not including the amount of his invoice, being $48,510.35.

Mr. Villano’s Invoice for Additional Work

[240] Mr. Villano claims a further $48,510.35 for miscellaneous work that he states he carried out at the project. The value of this work was outside of Mr. Ghaffur’s scope of expertise.

Joseph Emmons’ Evidence

[241] Joseph Emmons was qualified on consent as an expert in quantity surveying. He was retained by Mr. Duca to provide an expert opinion on two items: an estimate of the total cost of the site servicing work, and the value of the work carried out by UM before it left the site. Regarding the first, Mr. Emmons reviewed the Masongsong site servicing plans. Regarding the second, Mr. Emmons understood that UM Construction had completed work up to the paving sub-base but did not complete the watermain installation or the base and topcoats of asphalt. He determined the cost of the work to be completed by reviewing invoices from other contractors that Mr. Duca retained to do it.

[242] Mr. Emmons determined the following amounts:

(a) Estimate for cost of the site servicing work based on 2016 prices - $417,205;

(b) Estimate of cost to install the watermain work - $57,245;

(c) Estimate of cost to install the base and top coat asphalt - $73,207;

(d) Estimate of cost to “remedy deficiencies left by the original contractor [UM]” - $19,375; and

(e) estimate of total value of work completed at the time that the original contractor (UM) left the site - $321,378.

[243] Regarding Mr. Emmons’ estimate to “remedy deficiencies”, no engineer ever identified “deficiencies” in UM’s work. Mr. Emmons agreed that he could confirm whether the alleged deficiencies were actual deficiencies. Mr. Emmons made no independent inquiries. He did not know the scope of UM’s work. He did not know what UM had priced. He did not receive or review UM’s construction contract or any of its documents, nor did he speak to Mr. Mauti.

[244] When asked why he did not do this, he stated, “I have no idea.” He assumed that all work carried out by Fourwinds was in UM’s contract and relied on Fourwinds’ invoices as supplied by Mr. Duca to calculate the value. He did not do independent interviews of Fourwinds or Roadside. He agreed that some of their work was not part of the site servicing work. He used unit prices from another project in Pickering but he did not produce any documents from that job. None of the prices could be verified. He stated that he had provided an independent cost but he relied on only Mr. Duca’s description of what constituted a “deficiency”, photos that he took and the amounts that he paid to other contractors. He agreed that he did not have all of the information. He stated that his report was based on what he had been told and did not know whether any of it was for certain.

[245] If one considers Mr. Emmons’ value for site servicing, $419,995 and then subtracts the work that UM did not do, being Mr. Emmons’ estimate of the watermain work, $50,659 and the estimate of the base and top coat of asphalt work, $64,785, the subtotal is $304,551. When HST of $39,591.63 is added, the total is $344,143. UM invoiced $384,019.43 for the work that it did. The difference is $39,877. Accordingly, UM invoiced 222 approximately 10% more than Mr. Emmons’ estimate. Mr. Emmons agreed that this variation was acceptable and therefore, the amount invoiced by UM for its work was reasonable.

Izaak de Rijcke’s Evidence

[246] Mr. de Rijcke was qualified on consent as a land surveyor with the required expertise, to provide an opinion regarding: 1) the volume of soil in the mound; 2) the volume of soil excavated from the property after deducting backfill; and 3) the net difference. Mr. Duca retained him for this purpose.

Volume of soil in the mound

[247] In order to calculate the volume of soil in the mound, Mr. de Rijcke retained an agent, R-PE Surveying Ltd. R-PE obtained an electronic version of the 2010 KRCMAR topographical survey that showed the elevations of the property five years prior to construction. This information was entered into AutoCAD electronically to construct a mathematical surface of the ground. R-PE’s survey crew attended at the site and took vertical measurements all over the mound at 10 meter intervals. R-PE was not instructed to take any elevations of the developed portion of the property. It then determined the mound elevations.

[248] Using this information, R-PE prepared a document entitled “Sketch Showing Pile Volume” dated February 20, 2019, which depicts the elevations of the mound.[^14] The Sketch is signed by Phillip Swift, OLS. The vertical elevations of the mound were used to create a second mathematical surface. Mr. de Rijcke explained that the 2010 surface of the ground was subtracted from the surface of the mound to obtain the volume of the mound. Mr. de Rijcke stated that it was 7,755m³. This calculation relies on an assumption that the elevations of the easement land did not change between 2010 and 2015. There is no evidence that they did. Therefore, this is a reliable calculation of the volume of soil in the mound that was added to the surface of the easement land and beyond.

Volume of soil excavated from the property after deducting backfill

[249] Mr. de Rijcke was also requested to calculate the volume of soil excavated from the property after deducting backfill. He reviewed the architectural drawings which showed that the basement would be 26m wide, 56m long and 2.6m deep. He was advised that the excavator claimed 995.52m³ for trench excavation while the owner’s position was that it was 540m³. He was also asked to determine the volume of soil excavated for the ramp.

[250] Mr. de Rijcke attended at the property and measured the length and width of the building. Although he is not a geotechnical engineer, in his view, there was no need to excavate beyond 26 x 56. Based on his numbers, he calculated the following excavation volumes: 3,264.3m³ for the basement, 110.4m³ for the ramp (see next paragraph for explanation) and 995.52m³ using the excavator’s claim for trenching, resulting in a total of 4,370.2m³, after deducting backfill. Using the owner’s position on trenching, 540m³, the total was 3,914.7m³ after deducting backfill.

[251] Mr. de Rijcke also measured the ramps. He concluded that the volume of excavation for the up ramp was 151.8m³ and the down ramp was 41.4m³. He then subtracted one from the other and concluded that the total net volume excavated for the ramps was 110.4m³.

[252] Mr. de Rijcke used Mr. Duca’s position and subtracted 3,914.7m³ from the volume of the mound, 7,755.0, resulting in a difference of 3,840m³. In other words, the volume of the mound was comprised of 3,840m³ more soil than he calculated was excavated.

[253] Mr. de Rijcke was also asked to calculate how many triaxle truckloads would be needed to remove the total volume excavated. Using 18m³ as the average carrying capacity of a truck, he determined that 243 dump truck loads would be required for 4,370.2m³ and 218 truckloads for 3,914.7m³. He conceded that he was not qualified to comment regarding the volume of a triaxle truck and that 18m³ was an estimate. If debris, tires and trees were being trucked, that would impact the volume.

[254] Mr. de Rijcke was also asked to determine the consequence to the topography if the total volume excavated were spread on the easement lands. Using 8400m² as the size of the easement lands, he concluded that the height of the grade shown on the 2010 topographical survey would be increased by 0.52m if the excavator’s claim for trench excavation were used. If the owner’s position on trench excavation were used, the height of the grade would be increased by 0.47m.

Analysis

[255] Unfortunately, Mr. de Rijcke’s excavation volumetric calculations are unreliable because he was asked to make certain incorrect assumptions and arrived at some of his own:

(a) Mr. de Rijcke attended at the site and measured the distance from grade to the basement floor, 2.5m and then added the thickness of the concrete floor. He considered this more reliable than the architect’s drawing which shows 2.6m from grade to the bottom of the footing;

(b) The trenches for the foundation extension were excavated to depths of approximately 5.5m to 6.6m; however, in his final calculation, he used the owner’s position of 540m³, which is inconsistent with this.

(c) He was instructed to assume that the excavated materials could be used for backfill, even though Mr. Lai’s letter dated September 15, 2015 states, “It is our opinion that the existing earth fill was placed in a random and uncontrolled manner and its quality renders the existing fill not suitable for backfilling or building construction.” He was not asked to consider the geotechnical information regarding the type of soil that was excavated. He did not receive Soil Engineers inspection report;

(d) He assumed that the excavated material would be used as backfill for the site servicing work so there was no need to take into account the volume of soil excavated for it;

(e) He assumed that the excavated materials from the down ramp could be used to backfill the excavation for the up ramp, resulting in only a net difference of 110.4m³, even though, as noted above, Mr. Lai stated that they could not be used for backfill. Both ramps required deeper excavation because of the poor soil, similar to the basement.

[256] Mr. de Rijcke did not review the site servicing drawings. He did not account for excavation of the site servicing trenches nor excavation required for the parking lot. He agreed that if he had taken into account this material, the volume of excavated material that he calculated would be higher. Curiously, he stated that anything outside the building was not relevant, even though the site grading plan shows that the elevations for the development land are lower than the pre-construction elevations. He agreed that if the excavated material could not be used for backfill, his number would be wrong – the volume would be higher.

[257] For these reasons, I do not accept Mr. deRijcke’s volumetric calculation of the excavated soil.

Palo Albanese’s Evidence

[258] Mr. Albanese is a professional engineer and a designated consulting engineer. On consent, he was qualified as having expertise in land, building and excavation measurements, calculations of area and volume, reading architectural drawing measurements and mathematical modelling of surfaces. He was retained by Mr. Villano to perform an independent earthworks volumetric calculation of the soil that ought to have been excavated to allow for the proper construction of the development site, including the partial removal of a soil berm on the westerly property line, the excavation for the building, ramps, sewer and water servicing installations and the parking lot and landscaped areas. He provided a report dated November 16, 2020.

[259] Mr. Albanese stated that in preparation for his calculations, he reviewed the following documents:

(a) KRCMAR’s topographical survey dated October 18, 2010;

(b) Toronto Inspection Ltd.’s geotechnical report dated August 15, 2013;

(c) Patriot Engineering Ltd.’s Phase 1 environmental site assessment (ESA) report dated November 22, 2013;

(d) The architectural plans;

(e) The structural engineering plans;

(f) Soil Engineers Ltd.’s geotechnical site inspection reports prepared during construction from July 2015 to June 2016;

(g) Mr. de Rijcke’s report dated April 15, 2019;

(h) Masongsong Engineering’s civil site servicing and grading plans dated February 24, 2015 (issued for final site plan agreement submission);

(i) Portions of Mr. Villano’s transcripts from examinations for discovery as well as the transcript of the questioning conducted by Mr. Tonello prior to commencement of proceedings against Mr. Villano; and,

(j) Various photos taken during construction.

The westerly berm

[260] Mr. Albanese stated that there was a berm along the westerly property line which was shown in the KRCMAR topographical survey and the Patriot Engineering Phase 1 ESA report. It conflicted with the proposed building design so he assumed it had to be removed. (Mr. Fordyce stated that it was removed.) The berm was approximately 81m long, 15.5m wide and 1.2m tall. He calculated the volume of the soil in the berm to be 875m³ .

The building excavation

[261] Mr. Albanese noted that the architectural plans show a building footprint of 56m long x 24m wide. The proposed soil cut for the basement excavation was 2.6m down from the surface elevation to the bottom of footing. Nevertheless, the building excavation had to be made larger because of the poorly compacted existing fill material present at the site as well as to allow room for the labourers to form the footings and foundation walls. The structural engineering drawings show that the footing sizes range from 1.5m x 1.5m to 2.7m x 2.7m for the exterior spread footings and the interior column locations. From his review of photos showing the forms for the footings, and by scaling the distance, Mr. Albanese concluded that the excavation was made approximately 3m wider around the entire perimeter than the building footprint. He also noted that in its September 15, 2015 site inspection report, Soil Engineers determined that the existing fill was poor quality and not suitable for backfilling around the basement. He calculated that 4,850m³ of soil had to be excavated for the building.

[262] Mr. Albanese acknowledged that he did not request any of UM’s invoices for the work. Regarding UM’s invoice 1721 for “additional excavation 75 x 35 x 3.8, 9975m³”, Mr. Albanese stated that he did not have those dimensions and did not know the reference for them. If he had used these dimensions, the amount of excavated soil that he calculated would have been higher.

[263] Mr. Albanese conceded that the footing for the largest column on the south side of the building was 1.8m but he used an average of 2.5m to calculate the volume of the excavated materials.

The ramp

[264] Mr. Albanese stated that, similar to the basement, the down ramp had to be over-excavated. The actual length of the constructed ramp was smaller than what was shown on the architectural drawing. Based on Mr. Villano’s evidence in the transcripts, the owner decided to shorten the ramp after it had been fully excavated. Mr. Albanese used the full design ramp area of 175m³ in his calculation. It was excavated to 3m. He calculated that the volume of soil that had to be excavated for the ramp was 445m³.

Building footing sub-excavation

[265] Mr. Albanese noted that Toronto Inspection carried out borehole testing and that its geotechnical report contained borehole logs. Specifically, boreholes #1 and #2 were in the vicinity of the building footprint. The borehole testing showed an extremely deep layer of unsuitable fill material: borehole #1 showed fill down to 6.6m and borehole #2 showed fill down to 5.5m, both below the pre-construction surface of the ground. Mr. Albanese stated that this was very unusual. He noted that both the Toronto Inspection report and the Soils Engineering site inspection reports stated that the fill was not capable of supporting the building foundations. Excavation down through the fill to native soil was required to reach the required load-bearing capacity. The Soil Engineering reports showed that the excavation contractor did excavate down to appropriate soil depth for the building, ramp, and column footings. It was inspected and certified by the geotechnical engineering inspector. Mr. Albanese noted that photos taken by Mr. Duca and Mr. Armellin showed the required trench excavation and concrete pour. Mr. Albanese stated that using an estimated trench width of approximately 3m, an excavation depth of 3m to 4m below the basement excavation and including the 13 interior column footings, the volumetric calculation of excavated soil was from 1,950m³ to 2,640m³.

Sewer and watermain excavation

[266] Mr. Albanese stated that the Masongsong Engineering site servicing plan showed that the development required installation of approximately 333m of storm sewers, sanitary sewers and watermains. He stated that typically, servicing pipes are installed with at least 150mm to 200mm depth of compacted granular bedding. Then, another 150mm to 300mm of compacted granular cover would be placed on top of the pipe after which the excavation would be backfilled. Mr. Albanese stated that photos taken by UM showed that the appropriate granular material was used and that the excavation was wider and larger than what was typical because of the existing poor soil conditions. He stated that he took a conservative approach and estimated that the volume of soil that had to be excavated for the site servicing works was 430m³.

Excavation for parking lot and landscaped areas

[267] Mr. Albanese stated that the Masongsong Engineering site grading plan showed that the elevation of the final asphalt surface for the parking lot was on average 0.65m lower than the pre-construction elevations and that the landscaped areas were also on average 0.5m lower. A typical asphalt structure comprised of granulars, base and top coat would range from 500mm to 600mm in thickness. Mr. Albanese calculated that the total asphalt surface including curbs was approximately 2,050m² and the depth was approximately 1.25m. The volumetric calculation for the soil required to be excavated was 2,565m³. When an area of the sub-grade soil material was proof rolled, the geotechnical engineer observed some soft soil conditions. He recommended that an area of 14m x 16m (224m²) by a depth of 0.5m be removed and replaced with more suitable compacted soil. The volumetric calculation for the excavation required was 110m³.

[268] Mr. Albanese stated that the total landscaped area was approximately 530m³ and the excavation depth was 0.5m. Accordingly, the volumetric calculation for the soil required to be excavated was 265m³.

Summary of volumetric calculations

[269] Mr. Albanese summarized his volumetric calculations as follows:

Original berm 875m³

Building excavation 4,850m³

Ramp excavation 445m³

Building sub-footing excavation 1,950 – 2,640m³

Sewer/watermain excavation 430m³

Parking lot 2,565m³

Landscaped areas 265m³

Proof-rolled area 110m³

Total 11,490 – 12,180m³

[270] Mr. Albanese noted that Mr. de Rijcke calculated the volume of the soil in the mound to be 7,750m³. He stated that this calculation was as accurate as it could be. Using that volume as a comparison to his calculated total excavation volume, 3,740m³ – 4,430m³, more soil (described as surplus soil) was excavated than what is in the mound (11,490 – 7,750 = 3,740; 12,180 – 7,750 = 4,430). Mr. Villano and Mr. Mauti stated that a small amount of the soil was used on site. Mr. Albanese concluded that the rest of it must have been trucked off. He noted that some photos show dump trucks on site being loaded with soil. Mr. Albanese stated that because construction is finished, calculating the amount of the soil used on site would be very difficult.

Differences between Mr. deRijcke’s calculations and Mr. Albanese’s calculations

[271] One of the significant differences between these experts’ calculations is that Mr. Albanese calculated the volume of soil that had to be removed for the foundation sub-excavation, the site servicing work, the landscaped area and the parking lot, whereas Mr. de Rijcke only calculated the volume to be removed for the basement excavation. Accordingly, Mr. de Rijcke’s calculations are not useful in considering the total excavation required for the project. This is not Mr. de Rijcke’s error. He was instructed to do this. In addition, Mr. de Rijcke was incorrectly instructed to assume that the excavated soil could be used for backfill whereas Mr. Albanese was not.

[272] Mr. Albanese’s calculations are not perfect. He stated that he did not take into account any trench excavation for the ramp. Considering this, his volume calculation for ramp excavation is probably lower than it should be. He only considered one ramp, whereas both had to be excavated. The berm extended to the south of the easement land. The zinc contamination was at its southern end. Whether the entire berm or only the berm on the development land was removed is not clear to me. If only the berm on the development land was removed, Mr. Albanese’s calculation would be too high because his calculation is for the removal of the entire berm.

[273] Mr. Albanese conceded that it was customary to allow for an additional 1m width in an excavation for footing construction. This 1m was included in his calculation of the 3m. Taking this into account, the excavation was approximately 2m wider than the building footprint. Mr. Albanese acknowledged that ideally the space around the entire perimeter should be the same but sometimes the space will be too tight on one side and too generous on the other. In this project, the space was more generous on the north and south sides. In some places, it was more than 3m. He maintained that 3m was appropriate, but if one uses 2m, the calculation of this aspect of excavation is probably too high.

[274] Mr. Albanese used an average of 2.5m for the footing size. The sizes for the footings are set out on the Hannigan S2 foundation plan drawing. Logically, the column footings are larger than the spread footings for the walls. Mr. Albanese could have prepared a more precise calculation rather than using an average of 2.5m. Mr. Albanese’s volumetric calculation in this regard is higher than it probably should be for this aspect of the excavation.

Conclusion on volumetric calculations

[275] Mr. Albanese’s calculations are more accurate than Mr. de Rijcke’s because they include the volume of excavated soil for all of the areas that required excavation. The fact that he did not deduct any soil for backfill is supported by the geotechnical investigations and reports which state that the soil was unsuitable for backfill.

Mr. Albanese’s Evidence Regarding the Required Design Grades

[276] As noted above, in order to obtain site plan approval, an owner is required to submit to the municipality a site grading plan, among other things, to show the elevation details of the proposed development. After receiving approval from the municipality, the owner is required to develop the site in accordance with the approved plans. Mr. Albanese stated that the site grading plan dictates the final grades for the completed development. He stated that the owner and the excavator cannot agree between themselves to do something else that would alter the design grades. Mr. Albanese stated that if the owner wanted to change the final grades, a new grading plan would have to be submitted to the municipality.

222’s Position

[277] Mr. Duca did not call any evidence to dispute the evidence in the above two paragraphs. His position is that Mr. Albanese’s evidence regarding compliance with the Site Grading Plan is “outlandish”. He points out that Mr. Albanese did not review any of the excavator’s invoices. He notes that the excavator’s quote states “spread on site”. He wanted the excavated soil spread. He agrees that UM, Murdocca and Mr. Villano did not know about the requirements of the site grading plan.

[278] Mr. Duca states that his undertaking and obligation to the City to develop the land in accordance with the Site Grading Plan had no influence on the need for trucking because the parties agreed to spread the excavated soil.

The Effect of the Site Grading Plan

[279] There is a reason why Mr. Albanese did not review the excavator’s invoices: he was retained to do an independent volumetric calculation of the soil to be excavated. The excavator’s invoices were irrelevant to his calculation. In fact, if he had reviewed them, his opinion might be less objective.

[280] Mr. Albanese’s evidence about the requirement to comply with the Site Grading Plan is not outlandish. What is outlandish is the assertion that 222 did not have to comply with its undertaking to the City to develop the property in accordance with the design grades. I accept Mr. Albanese’s uncontroverted evidence regarding the requirement for 222 to comply with the Site Grading Plan and his evidence that any “spreading of soil across the site” would not be acceptable because that would change the final grades. Mr. Duca asked to have the materials spread on site, contrary to his development obligation. He cannot rely on any agreements based on his request that something be done which is contrary to his signed undertaking to the City.

Credibility

[281] In its submissions, UM sets out the factors that the court ought to take into account in assessing credibility. They are reproduced below:

a. What is the witness’ demeanour while giving evidence? While how a witness gives evidence is relevant, findings of credibility should not be made on demeanour alone. There may be cultural, social, ethnic, or other reasons to explain how specific witness testifies. There are too many factors that affect a witness' ability to testify comfortably to make demeanour the sole or most important factor in determining credibility.

b. Does the evidence make sense in light of the preponderance of probabilities which a practical and informed person would find reasonable given the particular place and condition? Faryna v. Chorny, 1951 252 (BC CA), [1952] 2 D.L.R. 354 (C.A.), at para.11.

c. Does the evidence have an internal consistency and logical flow? R v. C.H., (1999) 18939 (NL CA), 182 Nfld. & P.E.I.R. 32 (C.A.).

d. Is the evidence consistent with the witness' other statements? How significant are the differences and are they adequately explained?: R.v. Dinardo, 2008 SCC 24, [2008] 1 S.C.R. 788.

e. Is there independent confirming or contradicting evidence?: R.v. Khan, 1990 77 (SCC), [1990] 2 S.C.R. 531.

f. Does the witness have a motivation to lie or exaggerate? The witness' motivation to lie must be greater than his or her interest to win or lose the case: R.v. S.D., 2007 ONCA 243, 218 C.C.C. (3d) 323.

Mr. Mauti

[282] Mr. Mauti testified for 10 days regarding the work that UM did on the site. He made contemporaneous notes in his site diary which covered May 27, 2015 to November 15, 2016.

[283] Mr. Mauti testified regarding every quote and invoice. His memory was as good as could be expected, considering the project began in May 2015, over eight years ago. Mr. Villano corroborated most of Mr. Mauti’s evidence. Mr. Mauti testified as to 53 pages of Wendy’s Trucking invoices with statements and cheque stubs showing payment. Generally, there were two invoices per page. The same can be said of the 10 pages of Berad’s trucking invoices. Mr. Mauti also testified as to 16 pages of dump ticket receipts, with multiple tickets per page, as well as receipts and cheque stubs. In addition, he testified as to 49 pages of invoices and packing slips from Cedar, Yorkwest and Noble regarding materials UM purchased for the site servicing work.

Mr. Duca

[284] Mr. Duca’s testimony was often based on suspicion and conjecture. The fact that he did not object to any of UM’s invoices when he received them, nor did he require any supporting documentation or say to anyone that he would not pay them prior to litigation, suggests that his challenging them after UM registered its lien is disingenuous. Part of Mr. Duca’s claim involves backcharging UM for granular materials without demonstrating that UM had any contractual obligation to supply it or that UM charged 222 for any granular.

[285] Mr. Duca stated that Mr. Villano pressured him for the site superintendent job. He was vulnerable and Mr. Villano took advantage of this. This is directly contradicted by Mr. Sampogna’s evidence. Mr. Sampogna stated that he told Mr. Duca that Mr. Villano was not qualified to supervise the development but Mr. Duca hired him anyway to save money.

[286] Unfortunately, Mr. Duca decided to be his own general contractor on a $4,500,000 project for which he had no previous experience. Perhaps most importantly, he either did not understand his contractual obligation to develop the property in accordance with the site grading plan approved by the municipality, for which he signed an undertaking, or he decided to do something different to save money. Furthermore, he stated that he did not read the Toronto Inspection soils report that he had before construction began, which, as a general contractor, he ought to have done. He did not appreciate the importance of the soils report to the development and had no idea of the gravity of the information in it. While parts of it are technical, it plainly states,

The fill at BH-1 and BH-2 is not capable of supporting the building foundations and all footings will have to be taken through the fill and founded in the underlying native strata, below the depths of 5.5m to 6.6m from grade.

[underlining added]

[287] Because he did not understand the soils issue and the grading requirements, he became suspicious of the amount of soil that was excavated. His position throughout the trial was that no soil had been trucked off the site, or if it had been, he did not consent to it; however, he did pay for it.

[288] Mr. Duca made a number of allegations for which there was no evidence. For example, he directed Roadside to do additional work for which it provided a second quote of $48,500 dated August 21, 2017. Mr. Duca stated that the City of Vaughan required some repairs to UM’s work and the catch basin covers had to be lowered. Mr. Duca did not produce any documents from the City nor from Masongsong Engineering regarding these alleged required repairs.

[289] As noted above, Mr. Lai clearly stated in his letter dated September 15, 2015, “It is our opinion that the existing earth fill was placed in a random and uncontrolled manner and its quality renders the existing fill not suitable for backfilling or building construction.” Despite this, Mr. Duca instructed Mr. de Rijcke to assume that it could be, the result of which was a lower soil volumetric calculation in Mr. Duca’s favour. It is hard to imagine how anyone could misinterpret what Mr. Lai said. The letter was emailed to Mr. Duca at the time, three and a half years before Mr. de Rijcke provided his first report.

[290] Mr. Duca provided copies of four bank draw requests. On the consultant’s certificate for three of them, there is a signature above Mr. Sampogna’s typed name; however, Mr. Sampogna testified that the signature is not his. I note that it does not resemble his actual signature that he confirmed on another document. Mr. Sampogna stated that he did not authorize anyone to sign them on his behalf. He did not know that someone was purporting to submit these documents for bank advances. Mr. Duca did not provide any explanation for these signatures.

[291] Where Mr. Mauti’s evidence conflicts with Mr. Duca’s, I prefer Mr. Mauti’s evidence.

Mr. Murdocca

[292] Mr. Murdocca provided extensive documents to support Murdocca’s invoices, including many pages of invoices from Strada for the granular materials and invoices from Stephenson’s for rental equipment. Mr. Duca pointed to a few invoices that had incorrect addresses or job names; however, out of the many pages of suppliers’ invoices, these were a very small percentage. Mr. Murdocca candidly acknowledged that the number of truckloads billed was more than it ought to have been; however, 222 failed to pay all of the Murdocca invoices. As will be seen below, the net is that 222 owed money to Murdocca. Where Mr. Murdocca’s evidence conflicts with Mr. Duca’s, I prefer Mr. Murdocca’s evidence.

Mr. Villano

[293] In addition to his claim for supervision compensation, Mr. Villano claims $48,510.35 for “additional work” that he did on the project. His evidence was that he threw out his notes on the pieces of paper that relate to these items because he did not think he would need them. He had worked in construction all of his life and ought to have known that one must document work and retain receipts if one expects to be paid. This impairs his credibility somewhat.

[294] Mr. Villano did not have the required knowledge and experience to supervise a project of this magnitude; however, Mr. Duca knew him well and knew the skills and abilities that he was hiring. Mr. Villano corroborated Mr. Mauti’s evidence regarding the work done, the invoices provided and that Mr. Duca never complained about UM’s work or invoices, nor did he say that he refused to pay them.

[295] Despite Mr. Villano’s being questioned under oath prior to litigation without counsel, despite counsel’s suggesting to him four times that Mr. Duca had been billed $80,000 for the basement excavation, and despite counsel’s stating that there was a document that showed it, Mr. Villano’s recollection was clear that Mr. Duca was not billed $80,000 for the basement excavation.

[296] Where Mr. Villano’s evidence conflicts with Mr. Duca’s, I prefer Mr. Villano’s evidence.

Could any of the excavated soil have remained or been spread on the property?

[297] 222 states that its obligation to the City as set out in the Undertaking to develop the property in accordance with the Site Grading plan had “no influence on the need to have trucking” because Mr. Duca wanted the excavated soil spread and UM agreed to do it.

[298] As noted above, the development land is the northern area of the property where the building and parking lot were constructed and where the related landscaping work was done. The easement land is the southern portion of the property that is subject to the hydro easement.

[299] When one compares the 2010 KRCMAR topographical survey, which shows the preconstruction elevations, to the Masongsong Site Grading Plan, which shows the design elevations for the finished development, one can easily see that the design elevations for the developed land are lower than the preconstruction elevations. The design elevations for the easement land are the same as the preconstruction elevations. Simple logic dictates that no excavated soil could have been spread on (added to) the developed land. Doing so would have raised the elevations in the developed land which were required to be lower. No excavated soil could have been spread on (added to) the easement land because doing so would have raised the elevations which were required to remain the same as the preconstruction elevations. The Undertaking to the City dated April 28, 2015, which Mr. Duca signed, stated he would develop the land in accordance with the Site Grading Plan. He had a legal obligation to develop the property such that the design elevations would be achieved.

[300] As noted above, Mr. Albanese testified that the owner and the excavator could not just agree between themselves to do something different. The Site Grading Plan dictated the development. If the owner wished to do something different, then the owner would be required to submit for approval to the City a new site grading plan and a new site plan agreement. This was not done. Mr. Lai’s evidence was that none of the excavated soil was suitable for backfill. Accordingly, almost all of the excavated soil had to be taken off the property.

Was trucking carried out?

[301] There was a discrepancy in Mr. Mauti’s evidence about when the trucking began. At examination for discovery, he stated that nothing was trucked before the June 19, 2015 meeting. Counsel submitted that he did not have his diary available at the discovery. Counsel for Mr. Duca pointed out that Mr. Mauti’s diary would not have helped him because he did not make a note of when it began. At trial, he testified that the first phase began on June 15, 2015, after June 10, 2015 when Mr. Lai attended the site. This discrepancy does not concern me. In order to comply with the site grading plan, most of the excavated material had to be removed from the site. Organizing the trucking was not part of any nefarious plan.

[302] As noted above, UM arranged the trucking. The first phase began on June 15, 2015. UM invoiced Murdocca for it - UM’s invoice 1699 dated June 26, 2015 stated, “removal of excavated material offsite [sic] 108 loads - $45,900” which was $425 per load plus HST. Murdocca in turn invoiced 222 – its invoice 204-22 dated August 5, 2015 states, “removal of excavated material off site, 108 loads, $425 per load” plus HST.

[303] The second phase of trucking was done from the end of July into August after the trenching was done. UM’s invoice 1722 dated August 4, 2015 to Murdocca stated, “Removal of excavated material offsite [sic] 100 loads” - $42,500 plus HST, again $425 per load. Murdocca’s invoice to 222 dated August 5, 2015 stated, “removal of excavated soil offsite [sic] 108 loads $425.00 per load” - $45,900 plus HST. There was no evidence that another company would have trucked the soil for a lower amount per load. Mr. Duca paid both invoices.

[304] Mr. Murdocca conceded that 222 was overbilled for 8 loads. This equals $3,842 (8 x $425 = $3,400 + $442 HST = $3,842). Murdocca did not give 222 a credit for this; however, according to Ms. Sorbara’s chart, Murdocca and Waldorf billed 222 $351,776.16 but 222 paid only $334,184.90.

[305] I do not accept Mr. Duca’s position that “no trucking was done.” The evidence shows that trucking was required and was done. I accept Mr. Notarantonio’s evidence that Mr. Duca saw some of the trucking and did not request that it be stopped or complain about anything. Murdocca’s evidence shows that Mr. Duca paid for it. He did not dispute being charged for it until after litigation began. I accept Mr. Mauti’s evidence that the trucking was carried out. As noted above, he provided many pages of documents to corroborate this.

Did Mr. Villano have a fiduciary duty to 222?

Applicable Law Regarding Fiduciary Duty

[306] In Alberta v. Elder Advocates of Alberta Society, 2011 SCC 24, [2011] 2 S.C.R. 261 at para. 22, the Supreme Court of Canada described the doctrine of fiduciary duty as follows:

Fiduciary duty is a doctrine originating in trust. It requires that one party, the fiduciary, act with absolute loyalty toward another party, the beneficiary or cestui que trust, in managing the latter’s affairs.

[307] In Elder, the Supreme Court of Canada unanimously determined that there was no fiduciary duty owed by the Province of Alberta to the plaintiffs, a large class of residents at long-term care facilities who alleged the provincial government inflated the cost for their housing and meals. On a motion to strike, the court found that the residents had not pleaded an undertaking by the province to act with undivided loyalty towards the class members when setting and administering accommodation charges, and there was no legislation imposing an obligation on the government to account for the class member’s particular interests in setting the charge.

[308] A fiduciary duty can be found in a relationship “per se”, or on an “ad hoc” basis: see Galambos v. Perez, 2009 SCC 48, [2009] 3 S.C.R. 247, at paras. 36, 48.

[309] The Court in Elder, at para. 33, clarifies certain classes as per se fiduciary relationships:

Per se, historically recognized, fiduciary relationships exist as a matter of course within the traditional categories of trustee-cestui que trust, executor-beneficiary, solicitor-client, agent-principal, director-corporation, and guardian-ward or parent-child. By contrast, ad hoc fiduciary relationships must be established on a case-by-case basis.

[310] The relationship between Mr. Duca and Mr. Villano does not fall within the historically recognized per se fiduciary relationships; therefore, 222 must demonstrate that an ad hoc fiduciary relationship exists.

[311] In Frame v. Smith, 1987 74 (SCC), [1987] 2 S.C.R. 99, at p. 136, which was adopted and applied in Lac Minerals Ltd. v. International Corona Resources Ltd., 1989 34 (SCC), [1989] 2 S.C.R. 574, the court noted that relationships in which a fiduciary obligation has been imposed seem to possess three general characteristics:

(1) The fiduciary has scope for the exercise of some discretion or power.

(2) The fiduciary can unilaterally exercise that power or discretion so as to affect the beneficiary’s legal or practical interests.

(3) The beneficiary is peculiarly vulnerable to or at the mercy of the fiduciary holding the discretion or power.

[312] While vulnerability in the broad sense is a relevant consideration, the extent to which vulnerability arises from the relationship is more important. Further, vulnerability alone is insufficient to ground a fiduciary duty: see Galambos, at paras. 67-68.

[313] In Galambos, the office manager of a law firm made large personal loans to the firm to support its financial stability, often without informing the owner. The office manager was also a client of the firm, because the firm had prepared her wills and mortgages for free. When the firm went bankrupt, her loans were unsecured. The court determined there was no fiduciary relationship between her and the firm because it is essential to all ad hoc fiduciary relationships, including those involving elements of power-dependency, that the fiduciary itself undertake to exercise a discretionary power in the vulnerable party’s best interests, whether express or implicit. Further, the law firm did not have the required discretionary power to unilaterally affect the office manager’s legal or practical interests.

[314] In Elder, at para. 36, the Supreme Court of Canada set out a further clarification:

In summary, for an ad hoc fiduciary duty to arise, the claimant must show, in addition to the vulnerability arising from the relationship as described by Wilson J. in Frame: (1) an undertaking by the alleged fiduciary to act in the best interests of the alleged beneficiary or beneficiaries; (2) a defined person or class of persons vulnerable to a fiduciary’s control (the beneficiary or beneficiaries); and (3) a legal or substantial practical interest of the beneficiary or beneficiaries that stands to be adversely affected by the alleged fiduciary’s exercise of discretion or control.

[315] In Winter v. Sherman, 2017 ONSC 5492, at para. 38, the court established six factors that need to exist to create an ad hoc fiduciary duty:

(i) the fiduciary has scope for the exercise of some discretion or power;

(ii) the fiduciary can unilaterally exercise that power or discretion so as to affect the beneficiary’s legal or substantial practical interests;

(iii) the beneficiary is peculiarly vulnerable to or at the mercy of the fiduciary holding the discretion or power;

(iv) an undertaking by the alleged fiduciary to act in the best interests of the alleged beneficiary or beneficiaries;

(v) a defined person or class of persons vulnerable to a fiduciary’s control (the beneficiary or beneficiaries); and

(vi) a legal or substantial practical interest of the beneficiary or beneficiaries that stands to be adversely affected by the alleged fiduciary’s exercise of discretion or control. [emphasis added]

[316] In Hodgkinson v. Simms, 1994 70 (SCC), [1994] 3 S.C.R. 377, the court stated that concepts like “trust”, independence from outside interests, and disregard for self-interest, are all hallmarks of the fiduciary principle. The presence of loyalty, trust, and confidence distinguishes the fiduciary relationship from a relationship that simply gives rise to tortious liability. In this case, a stockbroker hired an accountant to advise him regarding investments. The accountant recommended a certain type of investment associated with real estate development. The accountant did not disclose to the stockbroker the fact that he was involved in the development. The stockbroker lost money on the investment. After looking at the specific facts of the relationship, the court held that the accountant had an ad hoc fiduciary duty to the stockbroker and breached his duty by not disclosing his own personal interest in the matter.

[317] This court must consider Mr. Villano and Mr. Duca’s reasonable expectations by looking at factors such as trust, confidence, complexity of subject matter, and community or industry standards: see Hodgkinson at p. 412.

[318] Mr. Duca relies on the following cases:

(a) In Waxman v. Waxman, 2002 49644 (ON SC), [2002] O.T.C. 443, the plaintiff brother successfully claimed that his defendant brother owed him a fiduciary duty. The plaintiff had signed documents provided by the defendant but claimed he did not know the nature and character of the documents he was signing. Importantly, the court determined that a fiduciary duty existed because the brothers had a relationship that developed over a lifetime of complete loyalty and trust in connection with the business and their interests in it. At para. 1359, the court stated:

I find that, in all of the circumstances here, there was a fiduciary expectation that arose from the conduct and the relationship of the parties. Chester owed Morris fiduciary obligations in the exercise of his power and discretion over financial and legal matters, even as they affected Morris personally. They had a special and close personal relationship as brothers. They had a special and close business relationship as 50/50 partners, who had built IWS together. In the financial and legal sphere, Morris was dependent on Chester both in relation to IWS and personally. By his conduct, Chester represented to Morris that their personal and business interests were common, identical and without conflict. Morris relied absolutely and completely on Chester in legal and financial matters. Chester was fully aware of the trust and confidence that Morris reposed in him and of Morris’ vulnerability.

Waxman is distinguishable from this case because Mr. Villano did not have a close, personal and long-standing relationship of trust with Mr. Duca, nor did he have a specific expertise upon which Mr. Duca relied. He had no experience in supervising commercial construction. He was a handyman and drywaller who sometimes supervised residential construction.

(b) In Lac Minerals Ltd. v. Corona International, 1989 34 (SCC), [1989] 2 S.C.R. 574, the Supreme Court of Canada found that a fiduciary duty existed between arm’s length commercial parties. The parties had been negotiating a joint mine exploitation venture. The plaintiff, a junior mining company, left confidential geological findings with the defendant, a senior mining company, regarding the potential of a property and also disclosed its intention to obtain the property. Nevertheless, the defendant obtained the property on its own without communicating with the plaintiff.

Lac Minerals can be distinguished from this case because it involved a very specific relationship with very specific expectations: a joint venture relating to the property and an expectation not to use confidential information in a manner that ran directly counter to that venture. The dealings took place in the context of trust and confidence, industry standards, and vulnerability. Such clear and reasonable expectations, understood by both parties and supported by industry standards, are not present in the dealings between Mr. Duca and Mr. Villano.

(c) In Threemor Enterprises Ltd. v. Parente, Borean, [2000] O.J. No. 1427, the plaintiff sued the solicitor defendant because it failed to perform an adequate corporate search after being retained on a real-estate transaction. The court found that Mr. Parente was in a fiduciary relationship with Threemor.

Threemore can be distinguished from this case because it involves a per se fiduciary duty – a solicitor client relationship. This is distinct from the ad hoc fiduciary duty that 222 must make out in this case.

(d) In Waters Estate v. Henry, 2022 ONSC 5485, a personal service worker brought a motion to set aside, among other things, a Mareva injunction where the court found the plaintiff had a strong prima facie case that the defendant owed the deceased’s estate a fiduciary duty. The defendant was a personal service worker who had acquired millions of dollars from the elderly couple she worked for. While the court did not find that there was a per se fiduciary duty, the court did conclude, at para. 146, that there was a strong prima facie case that an ad hoc duty was owed. It stated,

I am satisfied that the plaintiff has demonstrated a strong prima facie case that Ms. Henry gave Dr. Waters an undertaking to act in his best interests with respect to the investments. Dr. Waters was vulnerable to Ms. Henry as a business partner, not just because of his failing health and the nature of their personal service relationship. The vulnerability was inherent in the nature of the business venture and in the wide discretion he granted to Ms. Henry to purchase and improve the properties. He was very vulnerable to Ms. Henry’s non-disclosures and misrepresentations. The plaintiffs have established a strong prima facie case that Ms. Henry could, and did, exercise her power to affect Dr. Waters’ legal or substantive practical interests.

While the court in Waters decided only that the plaintiff had a strong prima facie case, it is also distinguishable from this case because the degree of vulnerability between the personal service worker Ms. Henry and Dr. Waters was significant, as was her discretion. In her position, Ms. Henry had the ability to exert total control of Dr. Waters’ business ventures. This is very different Mr. Villano’s limited role in ordering granular and rental equipment.

222’s Position

[319] Mr. Duca alleges that Mr. Villano had a fiduciary duty to him for several reasons. He had the following discretionary power:

(a) he could order equipment and materials without checking with 222 or Murdocca.

(b) he decided the type of stone to order;

(c) he hired some subtrades directly and paid them with cash that Mr. Duca provided;

(d) he was the only representative on site. He arranged the construction schedule;

(e) he persuaded Mr. Duca to forego opening accounts in his own name for granular materials and rental equipment. Instead, he persuaded Mr. Duca that they should be ordered through Murdocca;

(f) he decided on his work hours. This is shown by the fact that he took time away from the project to work on the Jellico property;

(g) he picked up every invoice and delivered them to Mr. Duca; and,

(h) he advised Mr. Duca regarding the invoices that should be paid.

[320] Mr. Duca states that he was peculiarly vulnerable to or at the mercy of Mr. Villano because he had gone through a challenging financial time associated with buying out the interest of his business partner, Steve Armellin, shortly before construction began. He used $2,500,000 of money he had set aside for the building’s construction to pay out Mr. Armellin. Mr. Armellin had also been a car salesman in the business, along with Mr. Duca. When Mr. Armellin left, Mr. Duca’s workload increased. He needed to save money on the project so he decided to be his own general contractor rather than hiring one and paying the fee. The project was “just a box”. He decided to bifurcate the role of a general contractor. He would have a final say as to the hiring of trades and would sign cheques. Someone else would oversee all construction matters.

[321] Mr. Duca states that Mr. Villano heard about the construction project and approached him. Mr. Villano told him that he could oversee the project and help him. He alleges that Mr. Villano understood that he “was the only source of protection for Mr. Duca against the depredations that abound in the construction industry and that if he betrayed his promised fealty to Mr. Duca, then Mr. Duca would suffer damages.” Mr. Villano undertook to act in Mr. Duca’s best interests. His interests stood to be adversely affected by Mr. Villano’s exercise of his discretion.

[322] Mr. Duca states that with respect to the gravel ordered from Strata, Mr. Villano should have asked him whether he wished to set up his own account with Strada rather than ordering it through Murdocca, implying that it might have cost less to do so.

Analysis

[323] There is conflicting evidence concerning whether Mr. Villano approached Mr. Duca about the site superintendent position, as Mr. Duca asserts, or whether Mr. Duca approached Mr. Villano, as Mr. Villano asserts. For the reasons stated above, I prefer Mr. Villano’s evidence.

[324] Mr. Sampogna testified that he had been a project manager for many years. He explained the difference between a project manager and a site superintendent. He stated that a project manager assesses a proposed development, advises the client of the potential for highest and best use, hires the consultants to prepare permit drawings, obtains quotes from the trades for the construction and oversees the progress of the development to the end. A project manager meets with the consultants, contractors and sub-contractors to make sure they are proceeding as per the contracts and permit drawings. Mr. Sampogna stated that when he worked as a project manager, he had a site superintendent and an assistant to help him.

[325] Given the nature of Mr. Villano’s duties that he described in his pre-litigation questioning and his evidence at trial, I find that he was a site superintendent.

[326] Mr. Villano’s discretionary power was very limited: he ordered granular materials and rental supplies through Murdocca’s accounts at Strada and Stephensons as required for the project without prior approval. Whether this constituted fraud will be discussed below. Regarding ordering materials, Mr. Villano stated that Mr. Duca said, “Just get the job done.” There is no evidence to support Mr. Duca’s insinuation that Strada, for example, would have provided a better price to Mr. Duca, who would have been a one-project customer, than the price it gave to Murdocca, a contractor who purchased stone from it for years for its residential construction business. There is no evidence that any other supplier would have given Mr. Duca a better price. Mr. Villano’s ordering granular and rental equipment was not to Mr. Duca’s detriment. They were required for the construction to progress. Mr. Villano provided an interesting analogy: he stated that his ordering stone and rental equipment was similar to office staff ordering kitchen supplies. The ability to order materials that are required for the project does not make Mr. Villano a fiduciary.

[327] Mr. Duca hired Mr. Villano to obtain only the basement excavation quote. Mr. Duca made the decisions to hire all the other trades and pay them. He testified that he already knew most of them because they were clients of his business.

[328] Mr. Villano appears to have arranged for some of the smaller trades to do work. In texts, Mr. Villano did request cash payments for the work that they had done. He referred to them as “the guys”. Mr. Duca gave Mr. Villano the cash.

[329] In arranging the construction schedule, Mr. Villano was just doing his job. Similarly, Mr. Villano could determine his own work hours because he knew what was happening on the site and when it was happening.

[330] The fact that Mr. Villano picked up the invoices and delivered them to Mr. Duca is not a discretionary exercise of power. Mr. Duca decided to pay them. Mr. Villano’s delivering the invoices is also alleged to constitute fraud and will be considered below.

[331] Advising Mr. Duca of which invoice he had to pay is also not an exercise of discretionary power. Mr. Duca paid most of the invoices without complaint. He did not pay the invoices that UM sent near the end of the project, starting in August 2016. There was a balance outstanding on two earlier invoices sent in June and July.

[332] Mr. Duca’s financial situation was his own matter. He obtained a construction loan from the Royal Bank. There is no evidence that he could not have obtained more financing to pay a professional contractor or construction manager. Mr. Duca admitted that he often had large amounts of cash at his business.

[333] Mr. Duca knew of Mr. Villano’s training and abilities: that he had little education, had never been involved in commercial construction and that he typically did some drywall work and site supervision for residential construction. He had not worked in a few years. Mr. Duca has operated a successful car sales business; however, he chose to hire Mr. Villano rather than make other inquiries to find a more qualified person. He knew Mr. Sampogna well. As the construction manager for a number of large projects, including the Oggi Townhouses, Mr. Sampogna might have been able to recommend a qualified commercial site supervisor. There is no evidence that Mr. Duca contacted him about this. In fact, Mr. Sampogna warned Mr. Duca that Mr. Villano was not qualified to do the job.

[334] Mr. Duca had a consulting team for the project: an architect, a structural engineer and a site servicing engineer. Mr. Duca could have asked the architect, among others, for a site supervisor reference. Mr. Duca was surrounded by qualified professionals but chose to not consult them. I do not accept Mr. Duca’s argument that he was vulnerable to Mr. Villano. He had other options. He simply decided not to consult the resources that he had.

Conclusion

[335] Mr. Villano did not owe 222 a fiduciary duty.

Did any of the defendants perpetrate a fraud on 222?

Applicable law

[336] The tests for civil fraud, fraudulent misrepresentation, and the tort of deceit have been used interchangeably: see Paulus v. Fleury, 2018 ONCA 1072, 144 O.R. (3d) 791, at para. 8. Some of 222’s allegations regarding breach of fiduciary duty are repeated as fraud allegations.

[337] The elements of civil fraud are set out by the Supreme Court of Canada in Bruno Appliance and Furniture, Inc. v. Hryniak, 2014 SCC 8, [2014] 1 S.C.R. 126, at para. 21:

(1) a false representation made by the defendant;

(2) some level of knowledge of the falsehood of the representation on the part of the defendant (whether through knowledge or recklessness);

(3) the false representation caused the plaintiff to act; and

(4) the plaintiff’s actions resulted in a loss.

[338] In Bruno Appliance, the plaintiff had wired investment funds to a company of which the defendant was the principal. They disappeared. The Supreme Court of Canada found that there was a genuine issue for trial, as the motion judge neither identified the need for a false representation, nor found that the defendant had made one. The defendant was not present at the meeting that had led to the investment. The evidence showed that the defendant was aware of the fraud and even may have benefitted from it, but whether he had perpetuated the fraud through a representation was a genuine issue for trial.

[339] In Caroti v. Vuletic, 2022 ONSC 4695, at para. 547, the court noted that a fifth element has often been applied to the test from Bruno Appliance. It requires an intention on the part of the defendant that the false representation be acted on by the plaintiff: see Crowder v. Canada Builds Company, 2022 ONSC 6018, at para. 25; Paulus, at para. 9. However, there remains some uncertainty as to whether an intention that the false representation be acted on is a necessary element of a fraudulent misrepresentation claim: see Trump v. Singh, 2016 ONCA 747, at para. 141, leave to appeal denied 2017 12224 (SCC); Costanza v. Desjardins Financial Security Life Assurance Company, 2023 ONCA 54, at para. 68.

[340] Each element of civil fraud must be proven on a balance of probabilities: see Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87, at para. 87.

[341] The elements of civil fraud must be pleaded with precision and particularity given the serious nature of an allegation that someone has been dishonest: see J.A.L. Developments Inc. v. Residences of Springhill Inc., 2019 ONSC 177, at para. 36.

[342] If all four elements of civil fraud are not proved, the claim will fail. This was the outcome in Parna v. G. & S. Properties Ltd., 1970 25 (SCC), [1971] S.C.R. 306. An action for damages in fraud was brought by the buyer of a property against the seller. It contained several rental suites. The plaintiff doubted the validity of the defendants` financial statement. The plaintiff later realized the errors and commenced an action, alleging misrepresentation regarding revenues and operating costs; however, the plaintiff failed to prove that the statement was not to the best of the knowledge and ability of the defendants. The court stated that even if the false representations were known to the defendants, who were unsophisticated property owners, the plaintiff had failed to prove he was misled in any way because he was a shrewd and intelligent apartment house operator: see para. 27. The sophistication of the party is an important factor to consider when determining whether any misrepresentation actually caused it to act in a way that resulted in the loss.

[343] In the absence of clear misrepresentations made by the defendants, 222 relies on Midland Resources Holding Ltd. v. Shtaif, 2017 ONCA 320, 135 O.R. (3d) 48, where omissions by the defendants were found to constitute fraudulent conduct. The court stated, at para. 163:

A misrepresentation can involve not only an overt statement of fact, but also certain kinds of silence: the half-truth or representation that is practically false, not because of what is said, but because of what is left unsaid; or where the circumstances raise a duty on the representor to state certain matters, if they exist, and where the representee is entitled, as against the representor, to infer their non-existence from the representor’s silence as to them: Robert van Kessel & Paul Rand, The Law of Fraud in Canada (Toronto: LexisNexis Canada Inc., 2013), at §2.69 and 2.72.

[344] In Midland, shareholders had invested in a “Shamco”. A significant investor in Shamco, through his holding company, had held himself out through two aliases to disguise his criminal history. At a meeting with the plaintiff investors, the defendant, a lawyer and member of the board of Shamco representing the interests of the holding company, was silent as to the true identity of the investor; material information about the holding company; and his own ownership of shares in the Shamco. The Court of Appeal determined that the significance of the defendant’s silence must be considered in its context. The defendant intended that the plaintiffs rely on the favourable impression he created about the Shamco’s investor, through his silence.

[345] 222 alleges that Mr. Murdocca, Murdocca and Mr. Villano concealed certain facts through their silence; however, there is no evidence of what was concealed nor how this allegation caused 222 to suffer a loss. Midland can be distinguished in this regard.

[346] Proof of loss is the fourth element in the fraud test. In​ Angers v. Mutual Reserve Fund Life Association (1904), 1904 44 (SCC), 35 S.C.R. 330, the court stated that “fraud without damage gives ... no cause of action” (p. 340).

[347] Whether Mr. Duca has proven a loss is a significant issue. He relies on SFC Litigation Trust (Trustee of) v. Chan, (referred to as “Chan”) at paras. 942- 944, where the court stated:

Much like causation, the determination of quantum is also a matter of common sense. The Ontario Court of Appeal has held that where damages are by their nature difficult to assess, the court "must do the best it can in the circumstances." The plaintiff has an onus to prove the facts upon which damages are estimated but where the assessment is difficult because of the nature of the damage proved, the difficulty of assessment is no ground for refusing substantial damages, “even to the point of resorting to guess work,” Martin v. Goldfarb, (1998) 4150 (ON CA), 41 O.R. (3d) 161, at para. 75. The difficulty of determining quantum can never excuse the wrongdoer from paying damages.

It follows that determining quantum is a process of holistic assessment, not precise mathematical calculation. While expert evidence is admissible and may be useful, assessment of damages is ultimately a task for the court and not for accountants or other mathematical and statistical experts.

As long as the plaintiff makes reasonable efforts to assess quantum, it will fall to the defendant to lead evidence to disprove the amount of the loss. The plaintiff’s obligations to adduce evidence are determined by the circumstances and the plaintiff is not required to do more than is reasonably possible: see Martin at para. 75.

[348] In Chan, the defendant Mr. Chan was the CEO of a company SFC. Through Mr. Chan’s fraud, the company’s assets were misinterpreted to include a timber asset worth $2.9 billion dollars. There was no proof that the company owned it. These funds remained unaccounted for. The causal link between the fraud and the collapse of SFC was clear; however, the calculation of the loss attributable to the fraud claim was complex because SFC had not actually paid for the asset. It did not actually exist; therefore, counsel argued that the plaintiff had not suffered damages. The court took a broader view of causation with respect to the loss, ultimately concluding that but for the fraud perpetrated by Mr. Chan on the company, the unaccounted-for funds would have been available to the company to invest in legitimate business operations.

[349] 222 does not have the Chan difficulties in proving a loss. Mr. Duca could have provided evidence of the value of the services and materials, including granular, rentals, and trucking by obtaining quotes from other suppliers to show that he paid too much to Murdocca for the services and materials. As stated in Chan, the onus remains on the plaintiff to make a reasonable effort to assess quantum, especially if such an effort is required to prove any loss. Unlike Chan, Mr. Duca had access to the relevant evidence including every single delivery slip, all stone tickets and the number of truckloads.

[350] Mr. Duca relies on several other cases for the proposition that the evidentiary burden should be shifted to the defendant:

(a) In Snell v. Farrell, 1990 70 (SCC), [1990] 2 S.C.R. 311 the court stated that the “legal or ultimate burden remains with the plaintiff, but in the absence of evidence to the contrary adduced by the defendant, an inference of causation may be drawn although positive or scientific proof of causation has not been adduced.” Snell was a medical malpractice case where the issue was the evidence that should be required to prove causation. Snell is unique because the court reversed the burden of proof. It stated, “In many malpractice cases, the facts lie particularly within the knowledge of the defendant. In these circumstances, very little affirmative evidence on the part of the plaintiff will justify the drawing of an inference of causation in the absence of evidence to the contrary”: see para. 31.

Snell can be distinguished from this matter. Mr. Duca is an experienced businessman. Mr. Villano held no special knowledge of the facts nor access to the evidence at issue.

(b) In Huff v. Price, 1990 5402 (BC CA), 76 D.L.R. (4th) 138 (B.C. C.A.) the court stated that, “Once the fraud or breach of fiduciary duty is shown, then the court assessing damages will not be exacting in requiring proof of the precise loss in circumstances where all reasonable efforts have been made by the plaintiff to establish the amount of the loss and the cause of the loss.” In Huff, a stockbroker was found liable for breach of fiduciary duty after using the plaintiffs’ investment funds in a stock manipulation scheme. The assessment of damages was an issue because the manipulation had originally enhanced the value of the plaintiffs’ portfolios. The court had to determine the amount of the loss that had occurred.

Huff can be distinguished from this matter because it involved complex calculations and considerations of damages. Huff does not stand for the proposition that proof of loss is not required; rather, it lessened the burden in situations involving complex investment, where the quantification of damages is not exact.

(c) In Ticketnet Corp. v. Air Canada (1997), 1997 1471 (ON CA), 154 D.L.R. (4th) 271, Air Canada’s conduct prevented Ticketnet from proving its loss using actual earnings. The court allowed Ticketnet to rely on projections, discounted to reflect contingencies. The damages in Ticketnet was a loss of business opportunity. Air Canada’s conduct had prevented Ticketnet from proving its loss based on past performance in the marketplace. Ticketnet can be distinguished from this matter because 222`s claim for damages arises partly from its allegation that it might have been able to purchase the materials and rent the equipment for less from a different supplier. Also, Tickenet can be distinguished because because the issue here is not a loss of future earnings.

[351] The above-noted cases involve complex calculations of damages. That is not the situation here. The question is whether 222 overpaid for services and materials as a result of the fraud. Obtaining other quotes to prove that would not be complex.

222’s Position

Mr. Villano pressured Mr. Duca to hire him

[352] Mr. Duca states that he was considering saving construction cost by bifurcating the role of a general contractor. He submits that,

[Mr.] Villano fostered that idea and [sic] in order to obtain for himself the position of overseer of construction, by representing to Mr. Duca that he would work full time and exclusively for [Mr.] Duca while representing [Mr.] Duca’s best interests. [Mr.] Villano knew ab initio that such representations were false but he hoped that they would induce [Mr.] Duca to believe them and rely upon them in hiring [Mr.] Villano, which [Mr.] Duca did.

Collaboration on the basement excavation quote

[353] Mr. Duca states that the evidence at trial of certain events shows that fraud was perpetrated. Mr. Duca states that he asked Mr. Villano to obtain a quote for the building’s excavation. Mr. Duca had already arranged the trades for the other work. Mr. Duca submits that,

[354] Mr. Villano and Murdocca represented to him that $80,000 was a reasonable price for the excavation when [they knew] that a reasonable price was $28,500 and did so at a time when Mr. Villano was acting of [sic] the plaintiff [in] a fiduciary capacity to the plaintiff.

[355] Mr. Duca maintained throughout the trial that he was charged $80,000 for the basement and ramp excavation. He states that Mr. Villano and Mr. Murdocca were collaborating because Mr. Villano went to Murdocca to get an excavation