Court File and Parties

Court File No.: CV-21-654634 Date: 2023-09-18

ONTARIO

SUPERIOR COURT OF JUSTICE

In the Matter of: the Construction Act, RSO 1990, c. C.30, as amended

BETWEEN:

SUNDANCE DEVELOPMENT CORPORATION T. Prpa, for the plaintiff / defendant by counterclaim Plaintiff / Defendant by counterclaim

- and -

ISLINGTON CHAUNCEY RESIDENCES CORP. and LAURENTIAN BANK OF CANADA C. Reed, for the defendant / plaintiff by counterclaim Defendants / Plaintiff by counterclaim

HEARD: November 1-4 and 15-16, 2022

REASONS FOR JUDGMENT

Robinson A.J.

I. OVERVIEW

[1] This action arises from a townhouse development project at 1124-1130 Islington Avenue, Toronto, which involved the construction of two semi-detached units and twelve townhouses. The project was undertaken by the defendant, Islington Chauncey Residences Corp. (“Islington”), whose principal is Steven Heller. Islington is a single-purpose corporation that acquired the subject property to construct a low-rise luxury residential development. The project was Steven Heller’s first venture into a residential development.

[2] Sundance Development Corporation (“Sundance”) was contracted by Islington to act as construction manager for the project. The parties agreed to and signed a formal services agreement with a fixed price management fee of $378,000, plus HST. The fee was payable by monthly installments tied to the various phases of the project. Alon Szpindel and Bruce Isakow are Sundance’s president and vice-president, respectively. Mr. Isakow had the primary management role for Sundance on the project. Mr. Szpindel had an off-site role. He addressed matters such as coordinating delivery and receipt of invoices, processing trade invoices for payment, coordinating financial information and reporting to the quantity surveyor, coordinating draws from the construction lender, and assisting with municipal approvals and permits.

[3] The parties jointly hired a site superintendent for the project, Ameer Hameer, who managed the site and the construction activities. The cost of the site superintendent was agreed to be a project expense, as set out in the services agreement. Mr. Hameer was formally put on Islington’s payroll, but worked for Sundance. Mr. Hameer was assisted during the course of the project by Sundance’s employee, Sue Capobianco.

[4] Throughout the project, Islington maintained ongoing oversight of the project. Islington’s project manager, Jonathan Marmer, handled much of the day-to-day oversight and management of the project for Islington. Steven Heller was ultimately responsible for decision-making, but he appears to have relied heavily on Mr. Marmer during the course of the project.

[5] Sundance commenced its work in July 2019. The project proceeded through its first two phases and into the construction phase. Construction was estimated to take fourteen months, but was delayed. Part of that delay appears to have been related to the COVID-19 pandemic. By late summer 2020, Islington was pushing for Sundance to complete the two model units for the development, identified as units 11 and 12. Islington wanted to have them completed and opened for viewing by prospective purchasers.

[6] In September 2020, construction on the project remained far from being completed and the model units were not ready. Ameer Hameer decided that he would be going overseas and, as a result, advised his intention to leave the job at the end of October 2020. Sundance wanted Sue Capobianco to take over as site superintendent. Islington did not. The parties did not agree on a replacement site superintendent.

[7] It is undisputed that, by no later than mid-October, the relationship between Sundance and Islington had sufficiently frayed that both sides wanted to end it. They attempted to negotiate terms of a mutual termination, but were unable to reach a final agreement.

[8] Sometime after Ameer Hameer announced his intention to leave, Steven Heller reached out to his father, Anthony Heller for assistance. Anthony Heller is a principal in the group of companies operating under “Plazacorp”. A project manager named Tony Murdocca, who worked with Plazacorp, was recommended by Anthony Heller to assist Steven Heller on getting the project finished. Mr. Murdocca became involved at Anthony Heller’s request and came to the site. He began coordinating with trades on completing the model suites and was assisted by Laura Cikoja, who arranged meetings and conducted quality checks. Sundance’s position is that Mr. Murdocca took over on-site construction management to the exclusion of Sundance. Islington’s position is essentially that Mr. Murdocca was assisting to get the model suites finished and working toward transition of construction management per the parties’ agreement.

[9] Sundance ultimately ceased supplying all services to the project. Its last day on site was October 31, 2020. The construction phase remained incomplete. Sundance takes the position that Islington had repudiated the services agreement and that Sundance had accepted the repudiation in writing on October 30, 2020, thereby ending the contract. Islington disagrees. It argues that the contract never ceased and that Sundance breached the contract by unilaterally ceasing all services and demanding payment of amounts to which it had no contractual entitlement.

[10] Sundance preserved and perfected a lien for $60,822.00. At trial, it pursued a claim of $58,110.25, made up of the balance of the construction phase fee (which Sundance argues it had contractually earned despite the construction phase not being complete), and $1,425.00, plus HST for materials that Sundance left behind on site. Islington asserts a set-off and counterclaim for its excess costs to compete construction management of project and damages for costs incurred due to Sundance’s alleged negligent management of the project.

[11] For the reasons that follow, I find that Islington did not repudiate the services agreement, that Sundance breached the contract by withdrawing all services and demanding payments that were not due under the services agreement. I further find that Sundance is liable to Islington for costs of replacement construction management, the cost of an extra paid by Islington to cut down steel columns, and the cost of changing sprinkler heads and associated drywall repairs. Islington has otherwise not made out its claims.

[12] I am accordingly granting judgment in favour of Islington for $38,165.75, including HST, plus pre-judgment interest. Sundance’s lien is discharged, its claim dismissed, and the security posted into court by Islington to vacate Sundance’s lien shall be paid out to Islington.

II. Issues

[13] At the outset of trial, the parties provided me with a joint statement of trial issues. Having considered that joint submission and the trial as it unfolded, the following issues must be decided:

(a) Was Sundance justified in ceasing all services effective October 31, 2020? Specifically:

(i) Did Islington, by its conduct, evince an intention not continue with the contract, and, in so doing, repudiate it?

(ii) If the contract was not repudiated, was Sundance entitled to withdraw its services?

(b) What amounts, if any, have been earned by Sundance and remain unpaid under the contract? Specifically:

(i) Is Sundance entitled to payment of the balance of its construction phase fee when the construction phase was admittedly incomplete?

(ii) Is Sundance entitled to compensation for items belonging to Sundance that were allegedly left on site as of October 31, 2020 that were not subsequently recovered by Sundance?

(c) Do the limitation of liability and default clauses bar Islington from pursuing its claimed losses against Sundance?

(d) If Islington’s claims are not contractually barred, then what is the extent of actual liability for them? Specifically:

(i) Is Sundance liable for the excess construction management fees paid to complete the construction?

(ii) Is Sundance liable to Islington for the costs of labour and materials required to correct steel columns heights, which were paid to the steel trade contractor as extras under its contract?

(iii) Is Sundance liable to Islington for miscommunicated door frame sizes and the costs of resultant door reframing?

(iv) Is Sundance liable to Islington for additional costs incurred for design and installation changes to interior stairs?

(v) Is Sundance liable to Islington for the additional cost of obtaining concealed sprinkler heads?

III. Analysis

[14] Many of the issues require considering the terms of the services agreement executed between Sundance and Islington. It is, in my view, important to note that Sundance drafted the services agreement. It was initially forwarded by Alon Szpindel to Bruce Isakow on April 5, 2019, who then sent it to Steven Heller for review by email on the same day. The version that was later signed by the parties appears to be substantively the same. Evidence supports that there was some negotiation on price and payment schedule, but it does not appear that the terms dealing with the parties’ rights and obligations were substantively changed, if at all. None of the witnesses were examined on any revisions. I was also not directed to any differences in the relevant clauses cited by the parties between the two versions tendered at trial. That is significant, in my view, since it means that the terms I am interpreting and assessing were drafted by Sundance.

Issue 1: Did Islington repudiate the contract?

[15] Sundance argues that Islington repudiated the contract. It points to both Islington’s decision to involve Tony Murdocca and other Islington personnel to take over (as Sundance argues) Sundance’s construction management function on the project and Islington’s conduct during negotiations for termination of the services agreement. Sundance’s position is that Islington’s collective conduct should be viewed as repudiating the contract, which Sundance accepted. Sundance submits it was justified in ceasing all services effective October 31, 2020.

(a) Relevant law on repudiation

[16] Islington does not dispute, and the evidence at trial amply supports, that Steven Heller and others at Islington were unhappy with Sundance’s performance and did not want Sundance to continue as the construction manager for the project. It is also undisputed that the parties were discussing terms of a mutual termination of the contract in mid-late October. I accept and find that Islington did want to end the relationship. So did Sundance. However, Islington’s desire to end the contract is not itself determinative of anything.

[17] Breaching a contract and repudiating a contract are not the same. The Supreme Court of Canada has observed that ordinary, non-repudiatory breach is consistent with ignoring the terms of an agreement, but that more is required to establish repudiation: Jedfro Investments (U.S.A.) Ltd. v. Jacyk, 2007 SCC 55 at para. 21. For a contract to have been repudiated, the repudiating party must have acted in a manner showing an intention not to be bound by the contract: Remedy Drug Store Co. Inc. v. Farnham, 2015 ONCA 576 at para. 42.

[18] A breach giving rise to repudiation must be serious. It must deprive the innocent party of substantially the whole benefit of the contract. For that reason, repudiation is generally viewed as an exceptional remedy. It allows the non-repudiating party to elect to put an end to all unperformed obligations under a contract. It is thereby only available in circumstances where the entire foundation of the contract has been undermined, namely where the very thing bargained for has not been provided: Remedy Drug, supra at paras. 50-51; Spirent Communications of Ottawa Limited v. Quake Technologies (Canada) Inc., 2008 ONCA 92 at para. 37.

[19] Repudiation is assessed on an objective standard. A party can repudiate a contract without subjectively intending to do so. The court must ask whether a reasonable person would conclude that the breaching party no longer intends to be bound by the contract, which requires considering the surrounding circumstances: Remedy Drug, supra at paras. 45-47; Spirent, supra at para. 37.

[20] Sundance accordingly has the onus of establishing three elements: (i) Islington breached the services agreement; (ii) the breach deprived Sundance of substantially the whole benefit of the services agreement; and (iii) Islington objectively evinced an intention to no longer be bound by the services agreement.

(b) Chronology of relevant events

[21] The relevant chronology for the alleged repudiation starts in September 2020. Evidence supports that, by no later than September 2020, Islington was frustrated with the progress of the construction and wanted Sundance to have the model units finished as soon as possible. A triggering event seems to have been when the site superintendent, Ameer Hameer, announced his plan to leave the site (and country) at the end of October 2020.

[22] Following Mr. Ameer’s announcement, Bruce Isakow asked Sue Capobianco to take over the site superintendent role. He proposed her to Islington as the new site superintendent once Mr. Hameer had left at the end of October. Islington did not agree.

[23] On October 15, 2020, a telephone call occurred between Steven Heller and Yoav Bohbot (as individual assisting Mr. Heller on the project) and Alon Szpindel. The call was arranged ostensibly to discuss Sundance’s billings, Ameer Hameer’s pay, and some trade contractor payment matters. This call is significant in the chronology of events. It represents the first time that the parties discussed the possibility of terminating the services agreement.

[24] The discussion was predominantly between Alon Szpindel and Yoav Bohbot. Fairly early in the call, Mr. Szpindel raised a “big picture question” about whether Islington wanted Sundance to finish the job or not. He indicated that Sundance preferred to finish the job, but if Islington did not want that, stated, “I would rather that we sort of part on terms that leaves everybody either equally happy or equally unhappy than for […] things to – to continue to sort of pop up from time to time and leave everybody frustrated.”

[25] In response to that query, Yoav Bohbot raised the proposal to have Sue Capobianco replace Ameer Hameer as the site superintendent. Mr. Bohbot stated expressly that “we” (presumably himself and Steven Heller) lacked confidence in Ms. Capobianco and that they “would like to […] basically finish the contract by the time Ameer is finished.” The call thereafter turned to a discussion of terms for a mutual end to the relationship.

[26] The telephone call was recorded without Mr. Szpindel’s knowledge. Anthony Heller and Steven Heller testified at trial that their office telephone system automatically records all incoming and outgoing calls. Although much was made of the failure to disclose that this and other calls were being recorded, the reality is that a transcript of the call was tendered at trial, permitting examination of the participants on their precise words. Sundance sought to challenge the credibility of several witnesses, including Steven Heller and Anthony Heller, for not disclosing that calls were being recorded. Those challenges were, in my view, unsuccessful.

[27] Much was also made at trial about who suggested the termination first on this call. Although raised initially by Alon Szpindel, it was Yoav Bohbot who indicated a desire to end the contract when Ameer Hameer departed. However, during cross-examination, Mr. Bohbot testified that, notwithstanding Alon Szpindel’s specific words about Sundance preferring to finish the project, Mr. Bohbot felt he was essentially saying that Sundance was not interested in continuing on the project and wanted a way out from the contract.

[28] Regardless of who suggested mutually terminating the contract first, it is undisputed that, by the end of the call, the parties had agreed to try to work out a deal to end their contractual relationship effective October 31, 2020.

[29] From the testimony at trial, it appears that Steven Heller reached out to his father, Anthony Heller, for assistance in how to get the project finished. The timing of their discussion is unclear. It was not clearly after the call with Alon Szpindel and appears to have been prior to it. Anthony Heller recommended Tony Murdocca to assist.

[30] Mr. Murdocca’s evidence is that he was approached about assisting on the project. He had been told that the site superintendent, Ameer Hameer, was leaving the project at the end of the month and that Sundance was ending its work at the end of the month as well. He agreed to assist. Steven Heller’s evidence is that, after the call with Alon Szpindel, he asked Tony Murdocca to get involved in transitioning management of the project.

[31] Tony Murdocca’s affidavit outlines that he arrived on site on October 15, 2020. Although Sundance argues that he was involved earlier, there is no cogent evidence corroborating that assertion. Mr. Murdocca maintained his affidavit evidence during cross-examination. In my view, the fact that Mr. Murdocca appears to have been copied on some emails prior to then, without more, is insufficient to support a finding that he had become materially involved in the project prior to October 2020. Sue Capobianco was asked about when she first met him, but could not recall. She conceded during cross-examination that his evidence about when he arrived on site may be correct.

[32] Mr. Murdocca confirmed in cross-examination that Laura Cikoja joined him to work as an assistant on finishing the model units. His evidence is that, on his first day, he did a site walkthrough with Ameer Hameer. Mr. Hameer is said to have provided him with a list of the trades on site and contact numbers as well as outlining the state of construction. Mr. Murdocca’s evidence is that he contacted the trades to introduce himself and “get the trades working”, which included site meetings with some trades to review the status of their work, their concerns or problems, and necessary coordination between trades for work to proceed. He gave evidence that Steven Heller had advised him that the priority work for the project was completing the two model suites.

[33] In the last two weeks of October 2020, efforts were made to negotiate the terms of a termination/settlement agreement. Each side proposed their own version of an agreement. Many terms had been agreed, but the parties did not agree on the scope of a release in favour of Sundance. Both parties agree, and the evidence supports, that no agreement was ultimately reached on a mutual termination of the contract. Evidence supports that, throughout this period, Tony Murdocca was taking lead on coordinating the finishing of the two model units.

[34] On October 27, 2020, Gianfranco Schirripa (a Plazacorp employee) was sent to the site. Mr. Schirripa’s evidence is that he was asked to work directly under Tony Murdocca. He testified that he did a walkaround with Mr. Murdocca and was introduced to Ameer Hameer and Sue Capobianco, but was never made aware that Sundance was expected to leave the job. Rather, Mr. Schirripa testified that he expected to be working with Mr. Hameer and Ms. Capobianco and, when later looking to ask them to do something, was told they were no longer there.

[35] On October 30, 2020, a telephone call occurred between Alon Szpindel and Anthony Heller. Mr. Szpindel testified that Mr. Heller had reached out the day before to ask if he was available for a call. Mr. Szpindel agreed to speak with him. The telephone call was also recorded, albeit without Mr. Szpindel’s knowledge, and a transcript of the call was tendered at trial. During the call, Mr. Szpindel and Mr. Heller spoke about terms of ending the services agreement. Mr. Heller advised Mr. Szpindel that he would have Steven Heller put together a “list of the things that he thinks was done incorrectly which have -- which have been repaired at a cost.”

[36] Following that call, Steven Heller prepared a memorandum that was sent to Alon Szpindel. It outlined Islington’s position, which was characterized in the memorandum as “a short summary of events that have led to our current impasse”. The memorandum provided a list of alleged damages from Sundance’s “mismanagement” and project delays (the items pursued by Islington in this litigation) and noted Islington’s position that Sundance had breached the services agreement. The memorandum confirmed that Islington agreed in principle with terminating the contract, but would not agree to releasing Sundance from future claims. It also indicated an intention back charge Sundance for costs incurred from delays and Sundance’s alleged “negligent mismanagement.”

[37] In response, Mr. Szpindel sent a letter dated October 30, 2020 to Steven Heller and Yoav Bohbot taking the position that the contract had been repudiated and that, effective October 31, 2020 at 11:59 p.m., Sundance would have no further involvement in the project. Three invoices were attached: one for deferred management fees from June, July, and August 2020, one for materials left on site, and one for the October construction phase fee. The letter included a demand for payment of the invoices as a pre-condition to “deliver all materials and accounting records in [Sundance’s] possession.”

[38] Sundance thereafter withdrew from the site at the end of October 31, 2020. Evidence supports that they did not return after that date, other than to retrieve some of the items they had left behind (some being those in the materials invoice). Steven Heller’s evidence is that all other management work also ceased, including handling project finances, working with the quantity surveyor on loan draws, vetting trade invoices, and assisting with City applications. Sundance does not dispute that it ceased providing all services under the services agreement when it withdrew from the site.

[39] After Sundance ceased services, Islington made no further payments to it. Steven Heller’s affidavit outlines that he refused to make further payments because he did not believe that Sundance had earned the fees it was claiming and Islington had claims against them in negligence and for failing to complete work under the services agreement.

[40] Subsequently, on November 2, 2020, a telephone call occurred between Anthony Heller, Alon Szpindel, and Bruce Isakow. Although the call was addressed in witness testimony, it post-dates Sundance’s withdrawal. In my view, it is not material to assessing whether there had already been a repudiation of the contract prior to that point, which is the basis on which Sundance ceased all services.

(c) Analysis of repudiation

[41] Looking at the totality of the evidence on the circumstances of the parties’ dealings, I find that Islington neither breached the services agreement nor objectively evinced any intention not to be bound by or continue with the services agreement. I also find, in any event, that Sundance was not denied substantially the whole benefit of the contract. Islington accordingly did not repudiate the contract.

[42] I agree with Islington that its conduct through the relevant period was not repudiatory for three primary reasons: (i) Islington had a contractual right to direct Sundance to cooperate or coordinate with it in supervising and managing the construction; (ii) Sundance was never excluded from full and free access to the site or materially impeded in its role as construction manager; and (iii) Islington’s hard bargaining does not rise to the level of repudiatory conduct.

[43] Pursuant to section 3.1 of the services agreement, Sundance expressly agreed “to do all such acts and things as [Islington] considers necessary or desirable, whether independently or in cooperation or coordination with [Islington], to supervise and manage the, accounting, financing and construction […] of the Units”. The enumerated items that follow include the following matters:

(a) supervising and directing the performance of all contracts (s. 3.1(a));

(b) causing the servicing and construction of the project to proceed in accordance with the approvals, plans, and specifications (s. 3.1(e));

(c) representing Islington on site in connection with the construction and the performance of Sundance’s services (s. 3.1(g));

(d) managing the construction of the units by, among other listed items, establishing and implementing appropriate administrative controls for construction of the units and supervising and directing consultants and contractors so as to accomplish completion of that construction (s. 3.1(h)); and

(e) supervising and directing the completion of the project and adherence to all timelines and time schedules (s. 3.1(j)).

[44] In my view, s. 3.1 of the services agreement provided Islington with a contractual right to deploy its own forces and, using the language of s. 3.1, to require that Sundance cooperate and coordinate with those forces in supervising and managing the construction. The enumerate matters outlined above capture the scope of work that was being performed by Tony Murdocca and those working with him in completing the model units.

[45] Sundance points to s. 7.1(d) of the services agreement, by which Islington covenanted and agreed to provide Sundance with “full and free access” to all units to enable Sundance to perform its services under the agreement. Sundance submits that Islington obstructed its full and free access to the model units by taking over the coordination of their construction.

[46] In support of its argument, Sundance points to Delcor Painting & Flooring Ltd v. 20/20 Properties Inc, 2009 ABQB 670. In that case, the plaintiff was successful in proving repudiation when the defendant had hired another contractor to complete the plaintiff’s work to its exclusion. That is not the case here. As discussed below, the fact that Islington assigned personnel to take a primary role in directing construction of the model units did not result in Sundance being excluded from “full and free access” to the units to complete its work.

[47] Based on the evidentiary record before me, Sundance had only four personnel involved in the project at the time: Alon Szpindel, Bruce Isakow, Ameer Hameer, and Sue Capobianco. No specific evidence was tendered on any other individuals that were working on behalf of Sundance. Mr. Isakow’s affidavit refers generally to Sundance dispatching “a number of its employees”, but without identifying anyone other than Sue Capobianco. In closing submissions, I was directed to a reference in a telephone transcript of Mr. Szpindel referring to “staff” assigned to finish the project, but no evidence was tendered on who was being referenced. In the absence of any cogent evidence on others from Sundance, I have considered only whether “full and free access” was impeded for any of Alon Szpindel, Bruce Isakow, and Sue Capobianco. Ameer Hameer was not called to testify at trial and no evidence was tendered on whether his work was impeded.

[48] Alon Szpindel confirmed during his cross-examination that he had no on-site involvement. There is no evidence supporting that his off-site role was in any way impeded. Similarly, no specific evidence was given on how Bruce Isakow’s role was impacted.

[49] The alleged impacts to Sundance’s work were all on-site. However, even taken together, the evidence falls short of establishing that Islington was impeding Sundance’s full and free access of the site.

[50] Mr. Isakow gave evidence about observing Tony Murdocca, Laura Cikoja, and Gianfranco Schirripa “speaking to contractors” and about Ms. Cikoja being the first to meet with contractors arriving on site. However, there was no evidence on what they were speaking about. I am asked to infer that this conduct amounts to taking over the site without any evidence addressing which contractors were being spoken to and without representatives from those contractors being called as witnesses. None of Tony Murdocca, Laura Cikoja, and Gianfranco Schirripa gave testimony supporting Mr. Isakow’s apparent view.

[51] Mr. Isakow’s affidavit also outlines that he spoke with Jonathan Marmer and Yoav Bohbot on site about Sundance’s difficulties managing the project when various contractors were being directed by Islington’s representatives and Sundance was not involved in meetings. Nothing beyond that general evidence was given. The timing of the discussions is unclear and they were not put to either Jonathan Marmer or Yoav Bohbot.

[52] Only one trade contractor gave evidence at trial. An affidavit was tendered from Shelly Katz, the president of March Aluminum Ltd. The affidavit discusses receiving an electronic meeting invitation that did not include representatives of Sundance as attendees. That is consistent with Bruce Isakow’s evidence on an email he received from the drywall contractor forwarding a meeting invitation that did not include Sundance’s representatives. Shelly Katz’s affidavit goes on to discuss attending that meeting with contractors present, but without representatives of Sundance.

[53] Mr. Katz’s evidence is circumstantial. There is no evidence before me supporting that trade contractors were directed to or did cease communicating with Sundance or were directed to coordinate with Tony Murdocca to the exclusion of Sundance. Jonathan Marmer gave specific evidence in his affidavit that none of the trades were told not to speak to Sundance representatives or to hide information from them. Nothing in Shelly Katz’s affidavit indicates that Steven Heller, Tony Murdocca, or anyone on behalf of Islington provided any direction to cease dealing with Sundance or to change how March Aluminum Ltd. coordinated with Sundance on the project. No other trade contractors were called as witnesses at trial.

[54] Sundance’s position on being excluded from the site rests predominantly on the evidence of Sue Capobianco. Ms. Capobianco was the only witness employed by Sundance who had a regular on-site presence throughout the project. She had been on-site since August 2019 and assisting Ameer Hameer in his role as site superintendent. Ms. Capobianco’s affidavit and cross-examination testimony support that she felt she was being excluded from site operations. In my view, though, her subjective view is not supported by the objective evidence. Although she did testify to certain patronizing comments to her, which appear to have been unfair or inappropriate, there is no convincing evidence that Sundance’s on-site work was materially impeded.

[55] Several examples were provided by Ms. Capobianco in the course of her evidence. In my view, they lack sufficient particulars to ground a finding that Sundance was being restricted from “full and free access”. Without going through all of the examples raised by Ms. Capobianco in her affidavit evidence and testimony, I will discuss a few to make the point.

[56] Ms. Capobianco’s affidavit discusses a telephone call that she received from Paul Pagliaroli, a representative of Platinum Electrical Contractors (“Platinum”). Platinum was an electrical trade contractor on the job. Ms. Capobianco outlines that Mr. Pagliaroli asked why Tony Murdocca had called him about coordinating Platinum’s electrical work and Platinum’s progress on the project. No details were provided about what specifically Ms. Capobianco was told about the discussion between Mr. Pagliaroli and Mr. Murdocca. Ms. Capobianco’s evidence on their call is too general to be given any weight.

[57] Moreover, her evidence on what she discussed is also only admissible evidence to the extent of what Paul Pagliaroli said to her, not the truth of its contents. When examined on the call, Tony Murdocca could only recall that he had spoken to Mr. Pagliaroli before, but could not confirm if it was about this job or another job, nor could he recall what was discussed. Ultimately, though, Mr. Pagliaroli had the discussion with Mr. Murdocca, not Ms. Capobianco. Sundance has the onus of proving the alleged repudiatory conduct. Mr. Pagliaroli was not called as a witness.

[58] Ms. Capobianco also gave evidence about a furniture delivery by Islington’s decorator in early October 2020. Her affidavit outlines that she disagreed with the timing of the delivery, but was told by the decorator “the furniture had to be delivered on that date.” She then gave evidence that the furniture was delivered and had to be stored. Jonathan Marmer’s affidavit outlines that he persuaded Sue Capobianco to let the furniture be delivered and stored in a garage after receiving a phone call from the delivery company. He had been told that Ms. Capobianco was refusing to permit delivery and trying to send the truck away.

[59] The problem with Ms. Capobianco’s evidence on the furniture delivery is that there is no indication that she had any information or belief that Islington had directed the furniture delivery and, if so, what directions were given. The decorator was not called as a witness. More importantly, there is no evidence establishing that Sundance had previously been solely responsible for coordinating, managing, and directing all deliveries to site.

[60] Ms. Capobianco also gave evidence on several directions or actions by Islington that “made it difficult for Sundance to do its job”. This, too, is general and non-specific evidence that I give no weight. There is no evidence on the extent of any difficulties and no evidence on no evidence on raising concerns with Islington about what it was doing.

[61] It is, in my view, significant that Sue Capobianco confirmed during her cross-examination that she continued to have involvement with the model units. She testified that Tony Murdocca asked her to take care of certain tasks forwarded to him by Steven Heller. Ms. Capobianco also testified that she continued to have site access, had on-site interactions with both Tony Murdocca and Jonathan Marmer, was asked to help with tasks, and did her best to accommodate what was asked of her. Ms. Capobianco specifically confirmed that the tasks she was performing were the same kinds of things that she had done for Ameer Hameer and Bruce Isakow.

[62] By her own testimony, Ms. Capobianco was not impeded in executing the duties she had been performing prior to Sundance’s decision to have her act as site superintendent.

[63] Ms. Capobianco’s cross-examination clarified that she felt excluded from taking over as the site superintendent and running the site. Her affidavit evidence and testimony do support that she felt she was obstructed in acting as site superintendent. Indeed, much of her evidence appears to be grounded in her view that she had assumed the role of site superintendent. However, I am not convinced that Sundance had any right to unilaterally appoint Ms. Capobianco as site superintendent. I was directed to no provision of the services agreement supporting it.

[64] Islington never agreed to Ms. Capobianco taking over the site superintendent role. Ameer Hameer had been jointly appointed by both Sundance and Islington. The site superintendent position was formally on the payroll of Islington, since it was agreed to be a project cost. Mr. Hameer’s departure left a vacuum as to who would be the site superintendent. When Sue Capobianco was proposed by Sundance to assume the site superintendent role, Islington objected. No other site superintendents were proposed.

[65] Tony Murdocca’s affidavit evidence and testimony is also at odds with Sue Capobianco’s view. Mr. Murdocca’s affidavit outlines that, during October 2020, Ameer Hameer and Sue Capobianco continued to control site access, having both the keys and codes to electronic locks. His affidavit sets out that he was only provided with the door codes when Sundance left the site and that, prior to that time, either Mr. Hameer or Ms. Capobianco had to open the site for Mr. Murdocca, anyone from Islington, and the trades. During cross-examination, he testified that everything he did while on site was communicated with Ameer Hameer and Sue Capobianco and that they were not excluded from anything. He testified that he was working with Mr. Hameer and Ms. Capobianco. Notably, with respect to trade meetings allegedly happening without notice to Sundance, Mr. Murdocca pointed out that both Mr. Hameer and Ms. Capobianco were on-site and the project involved only fourteen houses, so he could not have hidden meetings from them.

[66] Jonathan Marmer’s evidence is along the same lines. He says that Sue Capobianco, Bruce Isakow, and Ameer Hameer were never excluded from the model units and, when he was on site, they “were free to go where they pleased”. Mr. Marmer confirmed that Ms. Capobianco and Mr. Hameer were the ones controlling access to the site. He also gave evidence that none of Mr. Isakow, Ms. Capobianco, or Mr. Hameer raised any complaints with him about what was happening on-site in October 2020. As Islington’s project manager, he would be the person with whom such complaints would reasonably be raised.

[67] Tony Murdocca was unquestionably involved in coordinating and managing the ongoing construction activities to complete the model suites. The evidence supports that he took a primary role in completing them. However, I am not convinced that the evidence goes so far as supporting a finding that Sundance had “lost control” of those units or was excluded from their completion. Moreover, there is no cogent evidence supporting that either Bruce Isakow or Sue Capobianco made any efforts to take control of completing the model units. There is certainly no cogent evidence supporting that any concerns were being raised with Islington about Tony Murdocca taking the primary coordination role in completing them.

[68] The evidence does not support, on a balance of probabilities, that Sundance’s construction management function was genuinely impeded or superseded by the presence of Tony Murdocca or other Islington personnel. Mr. Murdocca’s work for the two model units is fairly characterized as work that typically performed by the site superintendent. However, even ignoring my finding that the contract supports Islington’s right to deploy its own forces and require that Sundance cooperate and coordinate with them, at the time that Mr. Murdocca was asked to assume a more active role, Ameer Hameer was nearing the end of his time on the project and a replacement site superintendent had not been agreed or appointed. Sue Capobianco had been unilaterally appointed by Bruce Isakow, but Islington did not agree to her taking on that role.

[69] Moreover, even if Sundance’s full and free access was impeded, which is not supported by the evidence, that would not be sufficient in and of itself to ground repudiation of the entire contract. Managing the construction work was only one of Sundance’s many duties under the services agreement. Other duties included managing trade invoicing, preparing and submitting monthly draw requests, preparing and maintaining the project schedule, and coordinating and supervising deficiency rectification. No evidence was tendered that any of these functions were removed from Sundance or that it was impeded in performing them, with one exception. Sue Capobianco gave uncorroborated evidence that Islington brought in its own drywall repair contractor at some point. The work allegedly performed by that contractor was not clearly outlined in the evidence.

[70] There is also no cogent evidence that Islington ever advised it would cease all payments to Sundance unless a deal was reached to end their relationship. Notably, as discussed in more detail further below, at the time of Sundance’s cessation of services, no amounts were due and owing under the services agreement.

[71] I accordingly find that, on a balance of probabilities, Sundance was not objectively impeded in any material way from continuing its services. In particular, I find that it was not obstructed from “full and free access” to any of the units while Islington’s personnel were on site. Islington did not breach the contract by deploying personnel to the site and, in any event, Sundance was not deprived of substantially the whole benefit of the contract by Islington doing so.

[72] The broader context is also relevant. Deployment of Islington’s personnel was during the period in which the parties were actively negotiating an end to the contractual relationship by the end of the month. Transition of construction management had been discussed. If those negotiations concluded and Sundance left the site, there would be no one managing the ongoing construction effective November 1, 2020. In that context, putting personnel on site in advance of that date at a time when Sundance was still on site is objectively reasonable.

[73] I agree with Islington’s submissions that what transpired in late October was hard bargaining, not repudiatory conduct. Both Sundance and Islington wanted to end their contractual relationship, but could not agree on terms of a release. Islington was prepared to release Sundance for all known claims to the date of a release, but not future claims. Sundance was not agreeable to that. Islington then provided an ultimatum: agree to the release being proposed or face back charges for all the costs that Islington said were incurred solely by Sundance’s mismanagement of the project.

[74] In my view, the specific language used in Steven Heller’s memorandum is significant. The last two paragraphs state as follows:

Sundance was first to offer to terminate its contractual agreement with Islington Chauncey Residences Corp., and Islington Chauncey Residences Corp. agrees in principle, but Islington Chauncey Residences Corp, will not allow Sundance to be released from future negligence claims that may arise from work completed while it was General Contractor.

If Sundance refuses to release Islington Chauncey Residences Corp, from its contractual obligations and to release all project-related files to it, Islington Chauncey Residences Corp. will pursue back-charges arising from delays and Sundance’s negligent management.

[75] The above language does not support Sundance’s position. In the context of ongoing discussions over the scope of a release, I accept Islington’s submission that the language is consistent with Islington expressing that the parties must agree to terms of a release and Sundance must return all project-related files, failing which Islington would back charge Sundance for costs incurred by its breaches of the contract. There is no language indicating that Islington was treating the contract as being at an end, that it expected Sundance would no longer be supplying construction management services if a deal could not be reached, or that Islington would not continue to pay it.

[76] Sundance argues that Islington denied it an opportunity to come to the site to address the issues identified in Steven Heller’s memorandum. Sundance points to C.S. Bachly Builders Ltd. v. Lajlo, at para. 86, as supporting that Islington denying it site access to address the alleged issues supports a repudiation of the contract.

[77] CS Bachly does not assist Sundance. There is no evidence that Sundance earnestly attempted to return to the site to remedy the alleged breaches of contract and was denied access. In its response to Islington’s notice, Sundance did not directly respond to any of the alleged breaches. Instead, it took the position that Islington had repudiated the agreement, gave notice that it would be withdrawing services, and thereafter proceeded to fully demobilize. That included turning over access codes and keys.

[78] In closing submissions, Sundance argued that it could have investigated the concerns and contacted relevant trade contractors, but was never asked. Sundance argues that its position on repudiation is supported by Islington’s failure to ask that Sundance address the issues, rather indicating that a release should be signed else Sundance would be back charged. I disagree.

[79] Sundance did not need to be asked before it was required to take steps to cure alleged defaults. It opted not to acknowledge or address them in Mr. Szpindel’s responding letter. Sundance argues that it expressed a willingness to return to site, but that return was clearly framed as being conditional on Islington acceding to Sundance’s full control of the construction and making payment of the October fee invoice and the two additional invoices rendered for the first time with Sundance’s letter. I find nothing in the evidence supporting a finding that, objectively, Sundance had any genuine intention or willingness to take steps to investigate and respond to the alleged breaches of contract.

[80] For these reasons, I find that Sundance did not repudiate the service agreement.

Issue 2: If the contract was not repudiated, was Sundance entitled to withdraw its services?

[81] Since Islington did not repudiate the services agreement, I have considered whether Sundance breached the contract by withdrawing from the site pending the demands in Alon Szpindel’s letter of October 30, 2020 being met. I find that it did breach the contract.

[82] Sundance’s position is that, because Islington was in breach of the services agreement, it was entitled to cease work. If an owner ceases to make payments under the contract or by other conduct makes it impossible for the contractor to complete, the contractor is justified in abandoning the work and may enforce a claim in quantum meruit to the extent of the actual value of the work performed and material supplied to that time: D&M Steel Ltd. v. 51 Construction Ltd., 2018 ONSC 2171 at para. 49; Summers v. Harrower, at para. 13. Also, a party cannot rely on its own breach of contract to be relieved of its contractual obligations: Southcott Estates Inc. v. Toronto Catholic School Board, 2010 ONCA 310 at para. 13.

[83] My difficulty with Sundance’s argument is that its stated terms for returning to site are unsupported by the terms of the services agreement. Sundance’s notice letter does not clearly identify any particular breaches of contract by Islington. The demanded pre-conditions for return, namely payment of accounts and ceding control of units 11 and 12 to Sundance’s forces, imply that the alleged breaches were non-payment and excluding Sundance from the model units. No opportunity to remedy the alleged defaults was provided before Sundance walked off the job the next day.

[84] With respect to ceding control of the model units, I find that Sundance lacked a contractual basis to demand that Islington do so. I this for two main reasons.

[85] First, I have already found that Islington had a contractual right in section 3.1 of the services agreement to require Sundance to cooperate or coordinate with Islington on construction of the units. Section 3.1 is broadly drafted. Sundance agreed “to do all such acts and things” that Islington considered “necessary or desirable” in supervising and managing the construction. I am unconvinced by Sundance’s arguments that Islington lacked the contractual authority in that clause to take over primary responsibility for coordinating and constructing the model units. Islington was entitled to do so. It was thereby not a breach of contract for Islington to deploy its own forces and have them assume part of the construction management work.

[86] Second, I have also found that the factual circumstances do not establish, on a balance of probabilities, that Sundance was obstructed from “full and free access” to the units as required by s. 7.1(d). There is no breach of contract there either.

[87] With respect to the unpaid fee invoice, s. 5.1 of the services agreement deals with payment of Sundance’s fee under the contract. For the construction phase, s. 5.1(c) provides for installment payments due to Sundance on the last calendar day of each month. In s. 7.1(b) of the services agreement, Islington covenanted and agreed to pay Islington all amounts payable to Sundance under the agreement on or before the due date for such payments.

[88] The unpaid invoice dated October 15, 2020, represents Sundance’s services supplied in October 2020. It did remain unpaid when Alon Szpindel sent his letter on October 30, 2020. However, payment for Sundance’s services was not contractually due until the last calendar day of each month. Sundance’s invoice for its October fee was accordingly not yet due and payable until the day after Sundance issued its notice letter. There was no breach of contract by Islington at the time that letter was written and sent.

[89] With respect to the deferred payment, as discussed in greater detail below, I have found that the parties agreed to modify the contract by reducing Sundance’s monthly fee from $20,000 to $10,000 for June, July, and August 2020, with $20,000 payments resuming in September 2020. I have found that the remaining $30,000 fee was not yet billable under the contract terms, which is consistent with Bruce Isakow’s own affidavit evidence that the agreement with Steven Heller was for the deferred fees to be paid after the balance of Sundance’s construction phase fee had been paid. There was thereby no breach of contract by Islington for non-payment of that $30,000. Moreover, the request for payment was made for the first time on October 30, 2020, one day before Sundance walked off the job.

[90] With respect to the materials invoice, no clause in the services agreement permits Sundance to invoice for its own materials brought to site and left behind. I accept that Islington was aware of the claim for materials prior to the notice, since they were raised during termination negotiations. Nevertheless, absent a contractual basis to invoice for them, non-payment for those items is not a breach of contract. Moreover, like the deferred payment invoice, an invoice had not been sent before Sundance’s notice.

[91] For the above reasons, I find that Sundance has not met its burden of proving that Islington was in breach of the services agreement when Sundance advised it would be withdrawing all services and made demand for payment. Demanding payment to which a contractor is not entitled or refusing to proceed unless paid is a breach of contract: D&M Steel Ltd., supra at para. 54. It follows that Sundance breached the contract by demobilizing from site with no legitimate basis and by making demand for payment of amounts to which it was not contractually entitled at the time of the demand. I find accordingly.

Issue 3: What amounts, if any, were earned and remain unpaid under the contract?

[92] Sundance’s claim of $58,110.25 is comprised of three aspects: $30,000 in deferred fees, $20,000 as its fee for October 2020, and $1,425.00, plus HST, representing Sundance’s self-assessed value of items that Sundance says it left behind and has not recovered. The first two, taken together, are the balance of the construction phase fee under the contract.

(a) Is Sundance entitled to payment of the balance of the construction phase fee?

[93] The parties agreed to a fixed fee of $378,000, plus HST, for Sundance’s services under the services agreement. Pursuant to s. 5.1 of the contract, that fee was payable in four phases: a pre-development phase ($30,000), a pre-construction/servicing phase ($40,000), a construction phase ($260,000), and a post-construction/service phase ($48,000). There is no dispute that Sundance completed, earned, and was paid its fee for the first two phases.

[94] The construction phase remained incomplete when Sundance ceased supplying services to the project. As set out in s. 5.1(c), the construction phase fee was payable in equal installments of $20,000, plus HST, payable on the last day of each calendar month. The contract contemplated a balloon payment if a phase completed early and no further payments until a phase was completed if the fee was fully paid out. Sundance’s fee for the construction phase was invoiced and paid as contemplated in the services agreement until June 2020.

[95] The parties agree that Sundance’s construction phase fee was reduced for each of June, July, and August 2020. They diverge on the duration of the reduced fee and when the balance of the fee was payable. Sundance’s position is that it was entitled to payment of the $30,000 fee after the summer. Steven Heller’s evidence is that the fee was to remain at $10,000 for the remainder of the project.

[96] Discussions over reducing or deferral Sundance’s fees originated from an email sent by Steven Heller to Bruce Isakow in mid-May 2020 asking to “look at adjusting the contract payments” once a new project completion date was in place. In the email, Mr. Heller expressed concern about Sundance being paid in full in advance of construction being completed, which he commented placed him “in a vulnerable position.” Mr. Heller’s evidence is that he was very concerned about Sundance being paid its construction fee in full long before construction was completed.

[97] Mr. Isakow’s evidence is that he discussed the request with Alon Szpindel and that they agreed to reduce the monthly installment payable to Sundance over the summer months “as a courtesy and an act of good faith.”

[98] The relevant discussion between the parties took place at a meeting between Bruce Isakow and Steven Heller on May 20, 2020. Yoav Bohbot was also in attendance at the meeting, having come with Mr. Heller. According to Mr. Isakov, he and Mr. Heller verbally agreed for Sundance to reduce its monthly installments for June, July, and August 2020 to $10,000 per month, on the understanding that Sundance would be paid the deferred amount once Islington had paid Sundance the balance of the construction phase fee. The total fee of $260,000 would remain unchanged.

[99] Mr. Heller’s version of what transpired is different. His evidence is that the agreement with Bruce Isakow was to reduce the monthly fee from $20,000 to $10,000 moving forward. That evidence is consistent with contemporaneous emails in October 2020 questioning why the fee was billed at $20,000 for September 2020. Mr. Szpindel’s responding email confirmed that Sundance had only agreed to reduce fees by half for the summer months.

[100] During cross-examination, Mr. Heller acknowledged that a call had taken place with Bruce Isakow and Jonathan Marmer about the deferred fee. He confirmed that the call was recorded. Unlike other recorded calls, the transcript was not tendered at trial and I understand that the recording was not produced in the litigation. Mr. Heller testified that he looked for it, but was advised by IT that it had been erased after a few months. He did not deny that the recording may support that Bruce Isakow said that the $30,000 from the summer months was only being deferred. Sundance asks that I draw an adverse inference that the recording would support Sundance’s evidence that Mr. Heller had agreed to Sundance being entitled to the deferred $30,000 after the summer months.

[101] I need not address Sundance’s arguments on what was verbally agreed at the time and whether Mr. Heller may have verbally confirmed that agreement during a telephone call. The parties expressly agreed in s. 9.4 of the services agreement that amendments, modifications, or waivers would only be effective if in writing and signed by the party against whom they would be enforced. That clause states as follows:

No amendment, modification or waiver of, and no consent with respect to, any provision of this Agreement will be effective unless in writing executed by the party against whom such amendment, modification, waiver or consent is sought to be enforced, and any such waiver or consent will be effective only in the specific instance and for the specific purpose given.

[102] Neither party argued that the contract had been varied by the parties’ conduct to permit oral amendments or modifications. During his examination, Alon Szpindel was asked specifically if it was possible for the parties to change the contract, to which he responded that it would have to be by consent in writing. That is consistent with the above clause. I find that s. 9.4 applies in assessing when Sundance was contractually entitled to invoice and be paid for the deferred $30,000.

[103] There is nothing in writing expressly supporting the position of either Sundance or Islington on what was agreed regarding terms of the deferral agreement. Certainly, Sundance did not sign any written agreement that expressly waived its entitlement to $20,000 per month for each of June, July and August 2020. Alon Szpindel testified that the parties never amended the services agreement. However, I give his view little weight. Whether or not the contract was amended or modified and, if so, to what extent is the very issue before me.

[104] The only written documents evidencing the deferral agreement are Sundance’s invoices for each of June, July, and August 2020. Each of them invoiced only $10,000 and include a note, in red text, stating, “Adjusted to $10,000 per month June, July, August as per BI”. Bruce Isakow confirmed during his cross-examination that the three invoices were adjusted to $10,000 each at his instruction. Alon Szpindel acknowledged that he was responsible for preparing all of Sundance’s invoices and sending them to Islington. He confirmed that he wrote the notation, and that “BI” referred to Bruce Isakow.

[105] Importantly, the notation specifically refers to adjusting the fee to $10,000. It says nothing about the balance being due or payable on any specific date. Alon Szpindel is Sundance’s president. He had authority to bind Sundance. Mr. Szpindel testified that each invoice was issued and that they were each paid by a cheque signed by Islington.

[106] In my view, issuing the three invoices for the reduced fee amount with the note as written, which were accepted and paid by Islington, is sufficient to satisfy s. 9.4 of the services agreement. The invoices are in writing. Although perhaps not “executed” in the traditional sense, each of them were issued by Sundance at its own initiative, having been prepared by Sundance’s president with language that he wrote in clear and visible red text. The invoices were accepted and paid by Islington. The invoices contemplate a reduced contractual fee from $20,000 to the adjusted amount of $10,000. There is no language reserving any right to bill the balance other than as provided in s. 5.1 of the services agreement.

[107] Whether viewed as an amendment, modification, or waiver, Islington is contractually entitled to rely on and enforce the reduction against Sundance in accordance with s. 9.4. I accordingly find that the $20,000 per month payment term was contractually changed for the months of June, July, and August 2020 to reduce the fee to $10,000 per month.

[108] Sundance concedes there was an agreement to reduce $30,000 of its fee for the three months. The parties also generally agree that the amount was to be paid after the balance of the $260,000 fee was paid. Bruce Isakow, who negotiated the agreement, says in his affidavit that the agreement was to pay the $30,000 after Islington had paid Sundance a total of $230,000 under the construction phase. That is not wholly inconsistent with Islington’s position that the number of contractual payments would be extended. Notably, both Alon Szpindel and Bruce Isakow conceded during their cross-examinations that they understood the number of payments under the contract would be extended by the arrangement, with $20,000 to be billed in November and $10,000 to be billed in December.

[109] The real disparity between the parties’ positions is over whether Sundance had contractually earned the $30,000. Sundance maintains that the $30,000 had been contractually earned, but payment was deferred solely on a good faith basis. Islington’s position is that the monthly fee was reduced to $10,000 and, accordingly, Sundance had no entitlement to invoice the other $10,000 per month except in accordance with the terms of the services agreement.

[110] Given my finding that there was a contractually enforceable change to the payment terms, Sundance must address s. 9.4 in order to enforce its claimed entitlement to payment of the other $30,000. There is no evidence of anything in writing signed by anyone on behalf of Islington in which Islington agreed to pay Sundance the remaining $30,000 other than in accordance with the provisions of s. 5.1 of the services agreement (i.e., $20,000 per month).

[111] For these reasons, I find that Sundance has failed to meet its onus of proving, on a balance of probabilities, that the $30,000 deferred fee was earned and payable under the contract at the time that Sundance ceased supplying services. I have no hesitation finding, though, that the October fee was contractually earned under the terms of the contract by the time that Sundance withdrew its services. However, since I have found that Sundance breached the contract before it was due and payable, that $20,000 fee is subject to Islington’s proven set-offs.

(b) Is Islington liable for items left by Sundance that have not been recovered?

[112] Sundance claims $1,425, plus HST, for materials that it left behind when leaving the site, which were not subsequently picked up, namely construction signs, two vacuum cleaners, fire extinguishers, a cordless tool set, and an emergency folding stretcher. Sundance concedes that there is no contractual provision in the services agreement permitting it to bill for the materials. The claim is being pursued in unjust enrichment.

[113] I find that unjust enrichment has not been made out and that Islington has no liability for the invoice or these items.

[114] Unjust enrichment requires that three elements be demonstrated: (i) an enrichment of the defendant; (ii) a corresponding deprivation of the plaintiff; and (iii) an absence of juristic reason for the enrichment: Garland v. Consumers’ Gas Co., 2004 SCC 25 at para. 30. Sundance has not established any of the three elements regarding the materials.

[115] Sundance has failed to prove, on a balance of probabilities, that the materials were left on site at all. There is some evidence supporting that at least some of the materials were originally delivered to the site by way of Bruce Isakow’s testimony and purchase orders that were admitted for the truth of their contents. However, what matters is not whether the items were delivered to the site, but whether they were still on site when Sundance demobilized.

[116] Sundance has the burden of proof. The only witness addressing the presence of the materials on site was Bruce Isakow. During cross-examination, Mr. Isakow was demonstrated to lack any personal knowledge on whether the items were on site when Sundance demobilized. The fact that the same list of items outlined in Sundance’s invoice dated October 30, 2020 was included as a schedule to Sundance’s proposed termination/settlement agreement does not assist Sundance. There is simply no cogent evidence that any of the claimed items remained on site as of October 31, 2020.

[117] Similarly, there is no evidence that any of the items have been kept or used by Islington. Steven Heller was examined on the items, but had no knowledge of whether they were left and used. Other Islington representatives were not examined on them.

[118] The evidence does not support a finding that the items remained on site (deprivation to Sundance) or that Islington had any actual use of or benefit from them (enrichment to Islington). Since those required elements of unjust enrichment have not been made out, I find no unjust enrichment. The claimed cost of materials is accordingly not recoverable against Islington.

Issue 4: Do the limitation of liability and default clauses bar Islington’s claims?

[119] Sundance opposes any liability for the claims advanced by Islington by way of set-off and counterclaim on the basis of the lability and default clauses of the services agreement. I find that these clauses do not clearly preclude Islington’s claims, but rather establish the framework in which they must be assessed.

[120] Article 8 of the services agreement deals with default under the contract by Sundance. It is the only provision addressed at trial and to which I was directed during closing submissions that deals with Islington’s obligations upon a breach of the contract by Sundance. Section 8.1 provides that Sundance will be in default under the contract if it becomes insolvent (which does not apply here) or it has not remedied any breach within fifteen days following written notice of such breach being given by Islington.

[121] Sundance also relies on s. 4.7 of the services agreement. It provides a limitation on Sundance’s liability to Islington, as follows:

The Manager shall not be liable to Project Co. for any act, omission or error in judgement in connection with the performance of its services hereunder except to the extent that Project Co. suffers or incurs any costs, damages or loss as a result of a breach by the Manager of its obligations hereunder which is not remedied within the cure period, if any, specified herein or by reason of the negligent or unlawful act of the Manager or those for whom in law, the Manager is responsible.

[122] The Supreme Court of Canada has held that limitation of liability clauses are to be strictly enforced unless the clause was unconscionable at the time the contract was made or the party seeking to avoid enforcement of the clause proves the existence of an overriding public policy that outweighs the very strong public interest in the enforcement of contracts: Tercon Contractors Ltd. v. British Columbia (Transportation and Highways), 2010 SCC 4 at paras. 121-123. In enforcing limitations of liability clauses, though, the specific terms matter.

[123] I agree with Sundance that s. 4.7 provides a limitation on Sundance’s liability to Islington that should be strictly enforced. To recover against Sundance, Islington’s claims must be the type of costs, damages or loss provided for in s. 4.7.

[124] Sundance argues that s. 8.1 obliged Islington to give notice of default to Sundance and provide it with an opportunity to remedy the alleged defaults. Sundance submits that it was not given proper notice of its alleged defaults and was not afforded any reasonable opportunity to return to correct the deficiencies itself or coordinate the correction of any deficiencies. Sundance thereby argues that it should not be liable to Islington for any associated costs pursuant to s. 4.7.

[125] In making its argument, Sundance relies on Rocksolid v. Bertolissi, 2013 ONSC 7343 at paras. 92 and 99 and Otomic Contractors Ltd. v Royal 7 Developments Ltd., 2017 ONSC 1001 at para. 73. Both Rocksolid and Otomic are distinguishable.

[126] In Rocksolid, the contractor had offered to return to complete the work and correct deficiencies. That is not the case here. As noted above, Sundance provided no response to the alleged defaults and, accordingly, made no proposal for how they may be addressed.

[127] In Otomic, the court found it significant that the contractor was never demanded to return to site to complete the work. However, the parties’ arrangement in that case was part in writing and part verbal. Nothing in the decision seems to indicate that there was any formal contract clause governing the parties’ obligations in the event of a default or that any formal contractual notice of default was issued. That is not the case here. The services agreement between Sundance and Islington had express provisions governing the parties’ rights and obligations, including dealing with defaults.

[128] Islington argues that s. 4.7 supports that neither notice of default to Sundance nor a cure period is required for losses incurred by Islington due to Sundance’s negligence. Islington points specifically to the use of “or” in the clause as separating breaches of obligations that are not cured and negligent acts. The same language found in s. 4.7 is used elsewhere in the services agreement. Islington submits that the distinction makes sense, since negligent acts may be discovered at a time when a loss has already been incurred and curing the negligence is not possible.

[129] I agree with Islington that there are two categories set out in s. 4.7, namely (i) costs, damages, or loss resulting from a breach by Sundance of its obligations under the contract that is not remedied with the cure period, if any, specified in the contract; and (ii) costs, damages, or loss resulting from “the negligent or unlawful act” of Sundance or those for whom it is responsible. Use of the word “or” makes them separate categories. One arises from a breach of the agreement that is not remedied within any cure period provided in the contract and the other is direct liability for the negligent or unlawful acts of Sundance. If either criteria has been met, then Islington is entitled to pursue its claims against Sundance.

[130] There is no evidence of Islington issuing any written notice of default to Sundance prior to the memorandum of October 30, 2020. Sundance argues that the memorandum does not constitute proper notice under the services agreement. Sundance points to Steven Heller’s cross-examination testimony, in which Mr. Heller confirmed that:

(a) he did not do any investigation into the accuracy of the issues identified in the memorandum;

(b) he did not call any trade contractors or consultants;

(c) he provided no time period to Sundance to correct the issues;

(d) he did not ask Sundance to return to the project; and

(e) he did not bring claims against any trade contractors or consultants for any of the work complained of in Islington’s counterclaim.

[131] In my view, none of the above concessions bears on whether the memorandum constituted a valid written notice of default. The requirement in s. 8.1(b) is that written notice of the breach of contract be given. No specific form of notice or pre-conditions to its issuance are prescribed, nor is there any stipulated time within which to give the written notice.

[132] With respect to Sundance’s challenges, there is no contractual language requiring the person issuing the notice of default to first investigate or otherwise confirm the accuracy of the alleged breaches. The time period for correcting default is provided in s. 8.1(b) and I find no basis to hold that Islington was required to draw Sundance’s attention to the fifteen day cure period in the clause or provide a specific period within which to respond to or address the alleged breaches. Sundance drafted the clause. Also, any failure by Islington to specifically ask Sundance to return to site does not excuse Sundance from responding to a valid notice of default. Lastly, whether or not Islington pursued claims against trade contractors or consultants has no bearing on whether or not a valid written notice was given.

[133] The memorandum identifies two breaches of contract by Sundance: mismanagement of the project, resulting in delays and additional costs, and improper appointment of a “customer care employee” (i.e., Sue Capobianco) in place of a qualified site superintendent (i.e., Ameer Hameer). With respect to the alleged mismanagement, four specific instances are noted: (i) charges to the project for incorrectly measured steel that ought to have been borne by the trade contractor responsible for the error; (ii) additional carpentry costs due to Sundance’s incorrect guidance on door sizes; (iii) improper sprinkler installation; and (iv) improper stair installation.

[134] I find that the memorandum did constitute a valid written notice of default under s. 8.1(b) of the contract. Sundance took no steps to respond to or address the alleged defaults in any way within the fifteen day cure period. Instead, it opted to allege repudiation and cease providing all services at the end of the next calendar day. I have found that Sundance breached the contract by demobilizing from the project and demanding payment of amounts that were not due and payable at the time of the demand.

[135] Even if I am wrong in that, Islington asserts that its claims arise from Sundance’s negligence in managing the construction. No notice of default is required by s. 4.7 to pursue a claim against Sundance for “any act, omission or error in judgement” arising from a “negligent or unlawful act” of Sundance.

[136] For these reasons, I find that Islington’s claims against Sundance are not barred by any provisions of the services agreement.

Issue 5: If Islington’s claims are not contractually barred, then what is the extent of Sundance’s liability for them?

[137] Islington claims the following by way of set-off and counterclaim:

(a) $11,300.00, representing the excess construction management fees that Islington incurred to complete the construction phase of project;

(b) $7,155.34, representing the amount paid to the steel trade contractor for “extras” per the approval and recommendation of Sundance, which Islington argues ought not to have been approved or paid;

(c) $1,130.00, representing estimated re-framing costs to rectify framing done to door height information provided by Bruce Isakow;

(d) $69,060.00, representing Islington’s costs of redesign and installation work for interior stairs that could not be performed as originally contemplated in the contract negotiated by Sundance on Islington’s behalf; and

(e) $44,493.75, representing the cost of obtaining concealed sprinkler heads.

[138] Islington asserts that Sundance was negligent in its management of the project with respect to the steel columns, door heights, negotiating and reviewing the sprinkler contract, and in managing certain interior stair installations. Expert evidence was not tendered on the standard of care for a construction manager.

[139] I have discussed the law on the professional standard of care for architects and engineers in Onespace Unlimited Inc. v. Plus Development Group Corp., 2022 ONSC 5317 at paras. 132-134. Sundance submits that similar principles apply here. Expert evidence is typically required to prove professional negligence. However, there are two circumstances where expert evidence is not required: (i) where the impugned actions are so egregious that it is obvious that the defendant’s conduct has fallen short of the standard of care without even knowing precisely the parameters of the standard of care; and (ii) non-technical matters or those of which an ordinary person may be expected to have knowledge: Metropolitan Toronto Condominium Corporation No. 1100 v. A. & G. Shanks Plumbing & Heating Limited, 2020 ONCA 67 at para. 4.

[140] Islington submits that the last four items claimed, although dealing with underlying technicality, are fundamentally non-technical matters that do not require expert evidence to decide negligence. Sundance argues that expert evidence is required, particularly since the professional standard of care does not require perfection and a professional may make incorrect decisions or reach erroneous conclusions, but such errors in judgment are not necessarily negligent: Onespace, supra at para. 134.

(a) Is Sundance liable for the excess construction management fees paid to complete the construction?

[141] Islington claims $11,300.00, including HST, for the excess costs paid to complete the construction phase. Islington claims to have paid $60,000, plus HST, to Liberty Fifth Corp. (a corporation controlled by Tony Murdocca) to assume construction management for the balance of the project for the period of November 2020 to July 2021 (with no fee charged in January 2021). The net claim is reached by deducting the unpaid balance of $50,000 in Sundance’s construction fee, and adding HST.

[142] Steven Heller’s evidence is that, once Sundance left the job, Islington hired Tony Murdocca, through his corporation, to supervise and manage the construction. That role formally commenced on November 1, 2020. In his affidavit, Mr. Heller outlines that Mr. Murdocca did not charge for his work in the last two weeks of October, since they were done as a favour to Mr. Heller’s family and Islington.

[143] Sundance argues that it was not given notice of the claim for completion costs until December 8, 2020, when Mr. Heller wrote an email to Sundance’s lawyer stating, “The value of the work outstanding that Sundance has not completed is far greater than what remains of the fee.” Sundance submits that this does not comply with the notice requirement in s. 8.1(b) of the services agreement and, accordingly, it has no liability under s. 4.7.

[144] I find that notice of completion costs being incurred was not required. I have found that Sundance breached the contract by withdrawing services and making improper demand for payments to which it was not entitled as a pre-condition to returning to site to complete its contractual work. Its breach necessitated another construction manager being retained to complete the job. Sundance is not entitled to rely on its own breach of contract and assert that Islington failed to comply with the notice provision: Southcott Estates, supra at para. 13. Islington incurred costs for a new construction manager as a consequence of Sundance’s breach of contract.

[145] Although Tony Murdocca was tendered as a witness on behalf of Islington, he gave no specific evidence-in-chief on the work he performed after October 31, 2020, or the amounts invoiced for that work. His affidavit evidence only addresses his role generally, as follows:

Once they were gone, I assumed full responsibility for managing the on-site construction activity for the Project. I invoiced for my work through my corporation Liberty Fifth Corp. I kept working through both the construction phase (lasting until July 2021 when the last occupancy permits were acquired) and the subsequent finishing phase.

[146] Mr. Murdocca’s cross-examination did not involve examination on the amounts billed by and paid to Liberty Fifth Corp. Islington relies on the invoice and the evidence of Steven Heller to establish the amounts paid and the work performed.

[147] Steven Heller’s affidavit sets out that Liberty Fifth Corp. was paid $67,800, including HST, for Tony Murdocca’s management work during the construction phase. Mr. Heller states that the construction phase continued until the last occupancy permits were obtained in July 2021. No evidence or argument was tendered by Sundance to dispute Mr. Heller’s evidence on when the construction phase was completed or that Sundance’s construction management services for the $260,000 fee would have covered the same period had it remained on the job. Notably, Alon Szpindel testified that Sundance’s role continued until the last occupancy permit was secured. Bruce Isakow similarly confirmed that the construction phase continued until the final occupancy permit was obtained.

[148] I accordingly find that the construction phase contemplated by s. 5.1(c) of the services agreement was not completed until July 2021.

[149] Liberty Fifth Corp.’s invoice was among the documents admitted for the truth of its contents. It outlines a fee of $7,500 per month for November 2020 to July 2021. The invoice indicates that it is in respect of the project at issue stating, “Re:1124 Chauncey Residence”. There is a description in the invoice that states, “All Supervision & assisting all finishes and final interior work and interior and exterior servicing work that was not completed.” Based on the agreement to admit this document for the truth of its contents, I find that Liberty Fifth Corp. did complete all of the remaining on-site construction management services that would have been provided by Sundance in the period of November 2020 to July 2021.

[150] Steven Heller’s affidavit evidence confirms that other off-site services provided by Sundance, such as project accounting work, coordinating with the quantity surveyor and construction lender, and dealing with municipal approvals, were done in-house by Islington personnel or consultants. As a result, the amount spent to perform the work cannot be quantified and Islington is not pursing any claim for the cost of completing those services.

[151] What is missing from the evidence is an explanation for why the construction phase took a further nine months to complete after Sundance left the site. Islington has not tendered any evidence on that point. For example, the construction draw for October 2020 is not in evidence, which many well contain the project quantity surveyor’s estimate of the percentage of work complete as of October 31, 2023. The only evidence I have is Mr. Heller’s statement that the construction phase was only 55% complete at the end of September. No evidentiary foundation for that estimate was provided. I accordingly give it no weight.

[152] I am satisfied that additional construction management services were required. I am further satisfied from the evidence that the project would not reasonably have been completed by the time the construction fee had been billed in full in December 2020. I am also mindful that Sundance did not challenge the completion period, but I do not put much weight on that fact. Islington bears the evidentiary burden of proving its counterclaim. Islington also has an obligation to mitigate its damages, where possible. An explanation for why the project required a further nine months to complete ought to have been tendered in the evidence.

[153] The Court of Appeal has held that a trial judge is obliged to do his or her best to assess the damages suffered by a plaintiff on the available evidence even where difficulties in the quantification of damages render a precise mathematical calculation of a plaintiff’s loss uncertain or impossible: TMS Lighting Ltd. v KJS Transport Inc., 2014 ONCA 1, at para 61.

[154] Islington has not tendered sufficient evidence to convince me that the construction phase could not reasonably be finished until July 2021. However, I am satisfied that it could not have been completed before at least spring 2021. In these circumstances, I cannot award Islington its full claim, but it would be unjust to award nothing. I thereby find that Sundance is liable for five months of the total claim for replacement construction management services.

(b) Is Sundance liable for the costs of rectifying steel column heights?

[155] Islington claims reimbursement of two extras invoices rendered by the steel trade contractor, Mansteel Ltd. The invoices deal with costs for cutting down certain steel columns ($4,972.00, including HST) in Block 1 of the project (confirmed by Steven Heller to be the townhouses) and for increasing the height of other columns ($1,898.40, including HST) in Block 2 of the project (confirmed by Steven Heller to be the semi-detached houses). Islington asserts that Sundance was negligent in its review, approval, and advice to Islington that the invoices reflected valid extras and were properly payable, on which Islington relied in paying them.

[156] Alon Szpindel testified that part of Sundance’s role on the project involved processing trade invoices and preparing a package to be sent to the quantity surveyor for review. The quantity surveyor is said to have then prepared a report that went back to Mr. Szpindel and Jonathan Marmer for review, comments, and finalization. That report then went to the construction lender for the monthly construction draw. Cheques would be prepared and signed by Islington to pay trade contractors, some of which would be provided to Sundance for trade to pick up. It is not disputed that Mansteel Ltd.’s extras invoices were processed by Sundance and included in the draw request sent to the quantity surveyor. They were ultimately paid in full by Islington.

[157] During his cross-examination, Bruce Isakow agreed that his role including reviewing and approving invoices from trade contractors.

[158] Sundance argues that it had no contractual responsibility to approve extras and that Steven Heller had the right to refuse to sign any cheques. In my view, that submission mischaracterizes Sundance’s duties under the services agreement. Sundance had an express contractual duty in s. 3.1(h)(iii) of the services agreement to review with consultants and approve the requests for payment made by any contractor or consultant, as well as to assist Islington to the extent appropriate with respect to such payment requests. I find that the clause captures reviewing the appropriateness of requests for payment by trade contractors, such as Mansteel Ltd., for claimed extras.

[159] Both parties agree that Mansteel Ltd. was contractually responsible for manufacturing and supplying the steel columns in accordance with the architectural and structural drawings for the project. Bruce Isakow specifically acknowledged it during his cross-examination. Mansteel Ltd. had prepared shop drawings prior to manufacturing the structural steel needed for the project, including the steel columns. Those shop drawings had been approved, with modifications, by the structural engineer for the project, Gabris Associates. They were also reviewed by Alfonso Ramirez, a project manager for Guthrie Muscovitch Architects, the project architect. Structural steel was then manufactured based on the shop drawings.

(i) Extra costs for cutting down steel columns

[160] The first invoice deals with an extras claim by Mansteel Ltd. for cutting down structural steel columns from a 10’2” height to 9’3” in Block 1. The relevant invoice is an extra of $4,400, plus HST.

[161] Bruce Isakow acknowledged during his cross-examination that, at the time, he advised Islington that the incorrect column heights had stemmed from coordination errors between the structural and architectural drawings. His evidence at trial, though, is that the problem arose solely from incorrect heights on architectural drawings. Effective cross-examination of Mr. Isakow demonstrated that he had no clear, independent knowledge of whether the column heights as delivered were consistent with the architectural drawings. Rather, he relied largely on information from Mansteel Ltd. in reaching his conclusion. Mr. Isakow’s views are non-expert opinion evidence. I accordingly give no weight to Mr. Isakow’s opinion on the reasons for the height discrepancy.

[162] I am satisfied that Islington has met its onus of establishing, on a balance of probabilities, that the error did arise from Mansteel Ltd.’s manufacturing of the steel columns and not by lack of coordination between the structural and architectural drawings.

[163] Mansteel Ltd.’s invoice for cutting down the columns provides that 10’2” columns had to be cut down to 9’3” and the bottom plates replaced. Mansteel Ltd.’s invoices are two of many documents admitted for the truth of its contents at trial, albeit with a caveat that the invoices are not admitted as proof that Mansteel Ltd. had a valid claim for an extra to its contract or as proof that the reason additional work was required was due to “engineer error”. Based on that admission, though, I may take as admitted the fact that the delivered steel columns were manufactured to a height of 10’2” and that Mansteel Ltd. cut them down to 9’3”, as stated in the invoice.

[164] Sundance was clearly not responsible for review and approval of the structural steel shop drawings. That was performed by the structural engineer and the architect for the project.

[165] The structural review and approval process was explained in the affidavit evidence of the project’s structural engineer, Marek Gabris. He was not cross-examined on his affidavit at trial. I accept his evidence that the heights of columns are architectural dimensions that were not part of his structural review.

[166] Mansteel Ltd.’s shop drawings were put to the architect, Alfonso Ramirez, during his examination. Mr. Ramirez gave specific testimony that the shop drawings showed a height of 10’2” from the ground floor to the top of the subfloor on the second floor. He testified that the steel support columns would need to be shorter than that height since the floor had a substructure that is supported by the steel column. He further pointed out that the shop drawings showed the steel columns running to the bottom of the second floor.

[167] I am satisfied that Mr. Ramirez’s evidence supports, and I find, that the error with the column heights did not result from any failure in his architectural review. I accept his evidence that, based on the approved shop drawings, the steel columns would need to be manufactured to a height less than 10’2”. They were not. I accordingly find that the fault for the incorrect steel column heights lays with Mansteel Ltd., which manufactured the steel columns to an incorrect height.

[168] In my view, Mr. Isakow’s inconsistency and uncertainty over the cause of the height discrepancies supports Islington’s position that a proper investigation into the reasons for the extra and whether it was properly charged to Islington did not occur.

[169] Sundance passed on the extras invoices for payment by Islington on the basis that there was a coordination issue between the structural and architectural drawings. There is no evidence supporting that anyone at Sundance genuinely investigated the reasons why the steel columns had been manufactured to an incorrect height. An email appended to Mr. Isakow’s affidavit from November 6, 2019 (several months before Mansteel Ltd.’s invoices were issued) specifically identified height discrepancies in the shop drawings. This supports that Sundance had notice of height discrepancies in the shop drawings prior to Mansteel Ltd. claiming the extras.

[170] In my view, failing to consult with the project architect and the structural engineer on why the manufactured steel columns were too high before processing the extras invoices and including them in the package for payment by Islington was plainly inconsistent with Sundance’s contractual duty in s. 3.1(h)(iii). Sundance was required to “review with consultants and approve requests for payment by any contractor.”

[171] Sundance points to s. 4.4 of the services agreement, which provides that, in performing its services, Sundance is not responsible “for matters beyond its reasonable control” or for the acts or omissions of consultants, contractors and other third parties. In my view, this clause does not assist Sundance. It is apparent that Sundance was readily capable of confirming at the time that the need to cut down the steel columns arose from the column being manufactured to an incorrect height based on Mansteel Ltd.’s own shop drawings (i.e., to the top of the second floor rather than to the bottom of the floor substructure) and not from lack of coordination between the structural engineer and the architect. I say this for two primary reasons.

[172] First, there is no evidence that Bruce Isakow or anyone from Islington spoke to Alfonso Ramirez or Marek Gabris prior to Sundance providing the extras invoice to Islington for payment. Both Marek Gabris’ affidavit and Alfonso Ramirez’s testimony at trial supports that reviewing the matter with them would have confirmed that the height issue arose from Mansteel Ltd.’s misinterpretation of heights from its shop drawings when manufacturing the steel columns, and not from improperly coordinated structural and architectural drawings. Notably, Marek Gabris quickly identified the shop drawings as the problem when asked about it in February 2020.

[173] Second, Mr. Isakow has given no clear evidence on what steps he took to investigate the legitimacy of Mansteel Ltd.’s claimed extra for cutting down the steel columns before including the extras invoice in the package for payment by Islington. Notably, he did not explain why he did not speak with either Mr. Ramirez or Mr. Gabris at the time of receiving Mansteel Ltd.’s invoice for an extra.

[174] Expert evidence is not required to assess negligence on this issue. I find that it was within Sundance’s reasonable control to investigate the circumstances of the extras and identify that the problem arose from misinterpretation of the shop drawings by Mansteel Ltd. Submitting the extra for payment was plainly negligent and in breach of Sundance’s contractual duty to Islington in in s. 3.1(h)(iii), a clause proposed by Sundance in its original draft of the services agreement. Islington was reasonably entitled to rely on the review and approval of its construction manager, particularly given Mr. Isakow’s erroneous advice that the extra arose from consultant errors.

[175] Sundance argues that the cost to cut down the steel columns would have been incurred in any event, since the manufactured columns were too high. I reject that submission. Nothing before me supports that Mansteel Ltd. would not itself have been responsible to bear the costs of rectifying the non-conformity in its own supply of the steel columns.

[176] I also reject Sundance’s submission that I should consider that Islington did not pursue Mansteel Ltd. once the cause of the error was discovered. By that time, the extras invoice had been approved and paid on Sundance’s recommendation. No argument was advanced for a legal basis on which Islington would be entitled to rescind the approved extra and seek reimbursement directly from its trade contractor. Moreover, nothing ins s. 4.7 of the services agreement requires Islington do to so.

[177] I accordingly find that the amount paid to Mansteel Ltd. as an extra for cutting down the steel columns was not properly an extra and was a cost incurred by reason of Sundance’s negligence. It is recoverable from Sundance under s. 4.7 of the services agreement.

(ii) Extra costs for increasing height of steel columns

[178] The second invoice deals with an extras claim by Mansteel Ltd. for costs associated with welding plates to increase the heigh of steel columns in an area identified as Block 2. The relevant invoice is an extra of $1,680, plus HST.

[179] Mr. Ramirez had no direct knowledge of the reasons for the extra work. He was unable to identify where in the drawings they arose and stated that his recollection of the delivered beams being too short was from discussions with Ameer Hameer. His evidence on the issue is uncorroborated hearsay and based on assumptions about why the error occurred. I give it no weight. No other evidence on the issue was tendered.

[180] I accordingly find that Islington has not met its evidentiary onus of proving, on a balance of probabilities, that the amounts claimed by Mansteel Ltd. in its second invoice resulted from its own errors and omissions. Absent that, I cannot assess whether Sundance ought reasonably to have known about the errors and declined to approve the payment request.

(c) Is Sundance liable for the costs of rectifying door heights?

[181] I need not address Sundance’s liability for Bruce Isakow’s alleged representation to Jonathan Marmer about standard door heights. Islington has failed to prove its claimed damages.

[182] Islington relies entirely on Steven Heller’s estimate of $1,000 for the cost of reframing. No evidentiary foundation has been provided for how Mr. Heller reached his estimate. His affidavit states, “There must have been some charge for this and I estimate that it would have been $1000.” During cross-examination, Mr. Heller agreed that his estimate was nothing more than his “best guess” on the cost. That is the totality of evidence on the additional cost.

[183] It does not matter that no evidence was tendered contradicting Mr. Heller’s evidence. Islington has the evidentiary onus of proving its claimed damages. There is no basis in evidence for me to fairly find Mr. Heller’s estimate is informed, accurate, and reliable. It was open to Islington to call the framing contractor or put forward relevant invoices (if any exist). It opted not to do so.

(d) Is Sundance liable for additional costs incurred for design and installation changes to interior stairs?

[184] Islington claims $69,060 for the costs of altering stair designs and installing new glass railings. The change was required because the stair design as specified in the contract negotiated by Sundance with Alpa Stairs & Railings Inc. (“Alpa Stairs”) could not ultimately be done due to non-compliance with the Building Code, O Reg 33/12. Specifically, the contracted-for design contemplated a closed stringer, with pickets on the stringer and rails on the pickets, running the full length of the stairs. That design was reviewed and approved by Steven Heller before a modified version of Alpa Stairs’ quotation was accepted. However, in order to comply with the Building Code, the pickets had to come off the stringers and be placed directly on the treads. The result was a completely different aesthetic appearance than Steven Heller had wanted.

[185] Islington’s position is that Sundance was aware of the problem from the outset and was negligent in negotiating a contract that it knew could not be performed. Sundance’s obligations with respect to negotiating with trade contractors are outlined in s. 4.2 of the services agreement. That clause provides Sundance with authority, subject to the prior written approval of Islington, to prepare and negotiate contract documents with trade contractors on behalf of Islington. Sundance was required to ensure that the trade contractors “are reasonably experienced and qualified and have the capacity to carry out their duties and obligations”.

[186] There is insufficient evidence to establish, on a balance of probabilities, that Sundance had actual knowledge that the proposed stairs contract could not be performed. It was not addressed in Islington’s examinations of any of Sundance’s witnesses. Islington relies on three paragraphs of Bruce Isakow’s affidavit and read-ins from his examination for discovery on behalf of Sundance. These are not themselves sufficient to find that Sundance knew the contract was incapable of performance.

[187] In Mr. Isakow’s affidavit, he discusses the stair installation and necessary design accommodations. He does not discuss Building Code compliance (or non-compliance) of the stair design included in Alpa Stairs’ contract. His affidavit evidence does not support a finding that he (and thereby Sundance) knew stairs with the proposed design could not be installed.

[188] During examination for discovery, Mr. Isakow was examined on other options discussed with Alpa Stairs. Mr. Isakow agreed that a particular alternative option, which had been offered by Alpa Stairs at an increased cost, was “a possibility given code requirements” and that installing narrower stairs than a picket on stringer design would potentially work. The examination supports that Mr. Isakow was aware that the design did not comply with the Building Code, but is not clear about when he knew or became aware of it.

[189] To find against Sundance on this issue, I must infer that Mr. Isakow knew that the design was non-compliant with the Building Code from uncertain evidence in the absence of Mr. Isakow being expressly asked during discovery about his knowledge at the time of negotiating the contract or afforded an opportunity at trial to address it. I do not find that a fair or proper inference to draw on the evidentiary record before me.

[190] It may be that Sundance reasonably ought to have coordinated the design with consultants or reasonably ought to have investigated or made inquiries into whether the design was capable of being performed. However, that is not a non-technical matter or a matter within the knowledge of an ordinary person, nor is Sundance’s failure to do so egregious that it is clearly below whatever the standard of care may be. In my view, proving negligence with respect to the interior stairs requires expert evidence. None was tendered.

[191] I accordingly find that Islington has not met its evidentiary onus of establishing the requisite standard of care for Sundance in negotiating the stairs contract, including the contractual designs, or any breach of that standard of care by Sundance’s acts or omissions.

(e) Is Sundance liable for additional costs of obtaining concealed sprinkler heads?

[192] Islington claims $44,493.75, including HST as the extra cost for obtaining concealed sprinkler heads that it argues ought to have been included in the contract with Falcon Fire Protection Inc. (“Falcon Fire”), the trade contractor supplying the sprinkler systems for the project. The contract as signed by Islington did not expressly say whether exposed or concealed sprinkler heads were included. Exposed heads were installed. Islington’s actual cost of changing to concealed heads after the work had been completed was $22,980, plus HST. In addition, drywall repair was required (since the drywalling had been completed by the time the concealed heads were replaced), for which Islington incurred an cost of $21,395, plus HST.

[193] As already discussed, s. 4.2 of the services agreement provides Sundance with authority, subject to the prior written approval of Islington, to prepare and negotiate contract documents with trade contractors on behalf of Islington.

[194] Sundance was negotiating the contract with Falcon Fire. Isaac Oziel, the director of Falcon Fire, gave affidavit evidence that he provided a quote for the job to Bruce Isakow in advance of a meeting with Mr. Isakow, Jonathan Marmer, and possibly Steven Heller (although Mr. Oziel could not recall for certain if Mr. Heller was at the meeting). Mr. Oziel’s evidence is that the sprinkler heads to be used on the job were specifically discussed and that he confirmed Falcon Fire’s quote was based on exposed heads. Although he does not indicate by whom, Mr. Oziel’s affidavit indicates he was asked if concealed heads could be supplied. He states in his affidavit, “I said that using concealed heads could be done for a nominal additional cost.”

[195] Mr. Oziel’s affidavit explains that he does not recall any further discussion about the heads until after the sprinkler system was installed. He also states that he did not have any discussions with Jonathan Marmer or Steven Heller until after installation.

[196] Bruce Isakow’s affidavit outlines that Steven Heller was at the meeting and that he recalled both Mr. Heller and Mr. Marmer agreeing not to proceed with concealed sprinkler heads as a result of the increased costs. Evidence from Mr. Marmer was that Mr. Heller was not present. During cross-examination, Mr. Isakow was less certain that he was in his affidavit on whether Mr. Heller was there.

[197] Jonathan Marmer’s evidence on the meeting is that he told Mr. Isakow and Mr. Oziel that Islington wanted concealed sprinkler heads. He denies every telling Bruce Isakow, or anyone from Sundance, that Islington wanted to use exposed heads to save money. Mr. Marmer unequivocally maintained that concealed heads were always required.

[198] There is no dispute that concealed sprinkler heads were discussed at the meeting. Bruce Isakow’s own affidavit evidence and notes from the meeting confirm it was at least discussed. Those notes include a list of items with notes in different coloured pen beside them. The relevant line dealing with the type of finishing head includes a note reading, “concealed with white cap.” Mr. Isakow acknowledged during cross-examination that, at the meeting, Jonathan Marmer wanted concealed heads, but testified that it was never mentioned again when the quote was revised and additional items written into the contract.

[199] Mr. Isakow’s evidence is that, sometime after the meeting, Jonathan Marmer and Steven Heller made the decision to go with exposed heads. That recollection is uncorroborated by any contemporaneous record. Moreover, Mr. Isakow’s cross-examination supports that it was, at best, an assumption on his part. He testified that his view was based on neither Jonathan Marmer nor Steven Heller raising any concerns about concealed heads when they reviewed and executed the contract. He says that Jonathan Marmer went through the contract in detail and no one came back and said that they wanted concealed heads. Moreover, they made no note about it when signing the contract.

[200] Both Mr. Heller and Mr. Marmer gave evidence that Islington always wanted concealed sprinkler heads and never agreed to exposed heads. In his affidavit, Mr. Heller explains that “[a]n exposed head would look ridiculous in Islington Chauncey’s luxury development.” That view was confirmed during cross-examination. I accept that visible sprinkler heads are a significant aesthetic design change from concealed sprinklers. Given the totality of the evidence at trial, which supports that Steven Heller was very concerned about the aesthetic appearance of the development throughout the period of Sundance’s involvement, I find it curious that there is no email, text message, or other document addressing Mr. Heller’s alleged decision not to move forward with concealed sprinkler heads.

[201] I accept and prefer the evidence of Steven Heller and Jonathan Marmer on this issue to that of Mr. Isakow. Mr. Heller and Mr. Marmer corroborate one another and their evidence accords with the evidence that Mr. Marmer had expressed Islington’s desire for concealed sprinkler heads at the meeting with Isaac Oziel. Moreover, Mr. Isakow acknowledged that Mr. Marmer wanted concealed heads at the meeting. No one specifically told Mr. Isakow that Islington no longer wanted them. Mr. Isakow assumed that based solely on the fact that neither Mr. Marmer nor Mr. Heller mentioned it again before signing the contract. Mr. Isakow, though, never asked them about including concealed heads despite knowing that Islington had wanted at the meeting with Isaac Oziel.

[202] Importantly, concealed heads was not the only matter discussed at the meeting. The version of the Falcon Fire contract presented to Steven Heller by Bruce Isakow did have an increased price from the original quote with handwritten changes made by Mr. Isakow. Mr. Isakow acknowledged during his cross-examination that, following the meeting, he may have had further discussions with Isaac Oziel on the contract terms, made the handwritten changes (which deal with fire lines and an increased price), and brought it to Islington.

[203] I reject Sundance’s submission that Mr. Heller or Mr. Marmer could have reviewed the contract themselves and sought an express term about concealed sprinklers. I have accepted their evidence that concealed sprinklers had been requested and were expected. Sundance was coordinating with Islington, but was ultimately the party negotiating the contract on Islington’s behalf.

[204] I accordingly find that Sundance was directed to include concealed sprinklers in the contract, but failed to ensure it was done.

[205] In my view, failing to ensure that concealed sprinkler heads were included was negligent. Sundance’s own position at trial (as expressed clearly through both opening and closing submissions and evidence from Bruce Isakow and Alon Szpindel) is that Sundance was an experienced construction manager, whereas Islington was a single purpose corporation run by Steven Heller, who was inexperienced in managing construction projects like the subject project. The evidence tendered by Sundance and obtained through cross-examination of Islington’s witnesses supports that Sundance was more experienced in managing construction projects than Steven Heller. Notably, Sundance acknowledges that it was aware that Mr. Heller had no prior experience managing a development himself. It is undisputed that, before this project, Mr. Heller’s only related construction experience had been managing the construction of a large summer house for extended family.

[206] Considering the totality of the evidence tendered at trial on relative experience, and given Sundance’s position on its own experience, I find that it was reasonable for Mr. Heller to have relied on Sundance to ensure that the contract included the correct scope of work. Islington ought not to have had to independently verify that the specific words chosen reflected their directions to Sundance before signing it. Accepting Sundance’s argument that Islington had the ultimate responsibility to review and confirm that the precise scope of work matched its directions would, in my view, substantially diminish Sundance’s contractual role as outlined in s. 4.2 of the services agreement, the associated contractual duty of care to Islington, and the very purpose for having Sundance negotiate the contract in the first place.

[207] Expert evidence is not required to assess the standard of care on this issue. It is, in my view, sufficiently non-technical and falls within the scope of matters that an ordinary person would reasonably be expected to have knowledge. Sundance was contractually responsible for preparing and negotiating the contract with Falcon Fire on Islington’s behalf. I have found that Sundance was given direction to include concealed sprinklers. Based on his evidence, I find that Mr. Isakow knew that concealed heads were not included in the contract. He thereby knew or ought to have known that it needed to be added. Nevertheless, the evidence supports that neither Mr. Isakow nor anyone at Sundance took steps to ensure that concealed sprinklers were included or to obtain express confirmation that Islington was willing to accept the contract if they were not. Similarly, none of Steven Heller, Jonathan Marmer, or anyone at Islington were advised that concealed head would not be included in Falcon Fire’s scope of work if the contract was signed as it was. The failure to address Islington’s direction for concealed heads clearly fell below any reasonable standard of care. Knowing the precise parameters of the standard of care is not required.

[208] With respect to damages, Falcon Fire completed the sprinkler head change. Isaac Oziel’s affidavit outlines that, once installed, he was told that Islington wanted concealed heads, so Falcon Fire switched them. He characterizes the timing as “unfortunate”, since removing and replacing the heads after installation involved “a great deal of cost” that could have been avoided. His evidence is that, had there been negotiations about using concealed heads, the only additional cost to Islington for concealed heads would have been a cost of $5,000.

[209] Mr. Oziel was not cross-examined on his affidavit at trial. Since Falcon Fire was the trade contractor who performed the work, and Mr. Oziel’s evidence is unchallenged, I find that including concealed heads in the contract at the time of negotiation would have resulted in an increased price to Islington of only $5,000. Although Isaac Oziel’s affidavit does not specifically discuss the cost of the rectification work, the relevant Falcon Fire invoice for $22,980, plus HST, together with proof of payment, is identified by Jonathan Marmer in his affidavit. Those documents were admitted for the truth of their contents.

[210] Jonathan Marmer’s affidavit also discusses the cost of drywall repairs around the replaced heads. Mr. Marmer sets out that Islington incurred an extra cost of $21,395, plus HST, for that work and identifies invoices from A&E Contracting ($6,815 plus HST) and Avant Drywall Systems Ltd. (totalling $14,580, plus HST), with proof of payment, as supporting that cost. Those documents were similarly admitted for the truth of their contents and were not challenged during the cross-examination of any witness. I accordingly accept them and Mr. Marmer’s unchallenged evidence correlating them to the sprinkler head rectification work.

[211] The actual cost of removing and replacing the sprinkler heads, including related drywall work, was higher because of the timing of when it was done. I have accordingly considered whether the error ought reasonably to have been identified and raised by Islington prior to the installation work and surrounding drywalling completed.

[212] The only cogent evidence before me supporting that Islington was aware that exposed heads were being installed prior to drywalling being complete is Jonathan Marmer’s affidavit. Mr. Marmer refers to several on-site discussions with Ameer Hameer when the sprinklers were being installed. Mr. Hameer is said to have assured Mr. Marmer “on a number of occasions” that the heads would be concealed later. This evidence supports Islington’s position. Sundance asks, though, that I draw an adverse inference from Islington’s failure to produce Ameer Hameer as a witness at trial if his testimony would corroborate Mr. Marmer’s evidence on what was discussed.

[213] An adverse inference may be drawn from the failure of a party to call a relevant witness or submit relevant evidence that would be expected to be called by a party. The adverse inference is that the evidence was not proffered due to fear it would not support that party’s case and may be drawn notwithstanding the witness being available to be summonsed by either party: The Gatti Group Corp. v. Zuccarini, 2020 ONSC 2830 at para. 49.

[214] Drawing an adverse inference is discretionary. I decline to do so in this case. I am not satisfied that Ameer Hameer has clearly material evidence on the sprinkler issue. The discussions raised by Jonathan Marmer and Mr. Hameer’s purported representations about concealed heads post-date the contract being signed. They are thereby immaterial to whether Islington believed concealed heads were included at the time of signing it. I agree that Mr. Hameer is in the best position to give evidence on what was actually discussed with Jonathan Marmer during the course of installation, and confirm (or deny) whether he said anything about concealed heads. However, since Sundance is taking the position that Islington knew that concealed heads were not being provided, Mr. Hameer’s evidence would seem more relevant to Sundance’s position. Moreover, nothing before me suggests that Mr. Hameer is available to both parties equally. Although on Islington’s payroll, he was taking direction from and working for Sundance during the project. As an employee of Sundance (paid for by Islington), I am not convinced that Mr. Hameer is a witness who Islington ought reasonably to have called itself.

[215] I have accepted that Steven Heller and Jonathan Marmer both reasonably believed that concealed sprinkler heads were to be installed. There is nothing before me supporting a corollary finding that anyone at Islington ought reasonably to have known that the heads being installed were not going to be concealed heads at any point during the course of installation. I thereby accept Islington’s evidence and find that drywalling work had already been completed before Islington was reasonably aware that its direction for concealed sprinkler heads had not been followed and the change to concealed sprinklers was made.

[216] For the foregoing reasons, I find that Islington has suffered damages of $17,980, plus HST, to rectify the incorrect sprinkler heads, representing the amount invoiced by and paid to Falcon Fire for the remedial work, less the $5,000 that I have found the concealed sprinkler heads would have cost if included in the original contract. I also find that Islington has suffered damages of $21,395, plus HST, to repair drywall removed and/or damaged in the course of rectifying the incorrect sprinkler heads.

IV. SUMMARY OF FINDINGS & Conclusion

[217] I have found that Islington did not repudiate the services agreement and that Sundance breached the contract by withdrawing services and demanding payment to which it was not yet entitled or was not entitled at all. However, I have found that Sundance had earned $20,000 of the construction fee as of the time it suspended its service, which remains unpaid.

[218] I have further found that Sundance is liable to Islington for $83,775, plus HST, comprised of the following amounts:

(a) partial reimbursement of the costs of replacement construction management for five months in the aggregate amount of $40,000, plus HST;

(b) reimbursement of the extra paid by Islington to Mansteel Ltd. to cut down steel columns in the amount of $4,400, plus HST; and

(c) reimbursement of the cost of changing sprinkler heads and associated drywall repairs in the net amount of $39,375, plus HST.

[219] I find that Sundance is entitled to credit against the above amounts for the earned and unpaid amount of $20,000, plus the unpaid balance of its construction phase fee, namely $30,000 to remove any betterment to Islington. The net result is liability to Islington in the amount of $33,775, plus HST.

[220] Pursuant to s. 17(3) of the Construction Act, the value of a lien is subject to set-off by the balance of outstanding debts, claims, or damages owing to the payer in relation to the improvement. Having found that the earned and unpaid value under the services agreement was only $20,000 plus HST, and in the absence of any evidence separately quantifying the value of work performed by Sundance, I find that the value of its lien cannot be greater than that earned and unpaid amount, namely $22,600.00, including HST. The total amount owing to Islington exceeds that the value. That is sufficient to find that, pursuant to s. 17(3), the amount of Sundance’s lien is nil.

[221] Judgment shall accordingly issue in favour of Islington for the sum of $38,165.75, including HST, plus pre-judgment interest. The balance of Islington’s set-off claims and counterclaim are dismissed. Sundance’s claim is also dismissed. Its lien is hereby discharged and the security posted by Islington to vacated the lien shall be delivered up for cancellation.

V. Costs, INTEREST & Report

[222] The parties should make earnest efforts to resolve costs of the action and agree on a calculation of pre-judgment interest. If they cannot, then written submissions shall be exchanged and filed. Written submissions shall include a date from which pre-judgment interest runs and a per diem rate that may be applied to the date of a report. They should also include the parties’ positions on the impact on costs, if any, of the indemnity clauses in the services agreement.

[223] Written submissions shall not exceed five pages, excluding any attachments such as offers to settle and case law. Given the result, Islington shall serve its costs submissions first within thirty (30) days of release of this decision. Sundance shall serve its responding submissions within a further thirty (30) days. Islington shall be entitled to brief reply not exceeding two pages, if any, to be served within a further seven (7) days. All costs submissions shall be submitted by email to my Assistant Trial Coordinator (ATC) by email, with proof of service.

[224] Both the CLA and the Rules of Civil Procedure require that the results of this trial be embodied in a report. I encourage the parties to discuss an appropriate form of draft report, which shall be filed with my ATC by the deadline for reply costs submissions in Word format. If the parties cannot agree, then my ATC should be so advised and an appropriate form of report will be addressed following my decision on costs and interest.

ASSOCIATE JUSTICE TODD ROBINSON Released: September 18, 2023