Campus Construction Inc. v. Torbear Contracting Inc.
NEWMARKET COURT FILE NO.: CV-07-087095-00 DATE: 20231211 CORRIGENDA: 20240322
ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
Campus Construction Inc. Plaintiff
– and –
Torbear Contracting Inc. and Rosanna Micoli Defendants
A. Jovanovic and H. Khan, for the Plaintiff
F. Soccol and P. Dipede, for the Defendants
AND:
NEWMARKET COURT FILE NO.: CV-08-087932-00 DATE: 20231211
ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
Campus Construction Inc. Plaintiff
– and –
Torbear Contracting Inc. and Aviva Insurance Company of Canada Defendants
A. Jovanovic and H. Khan, for the Plaintiff
F. Soccol and P. Dipede, for the Defendant, Torbear Contracting Inc.
Heard: May 24, 25, 26, 29, 30, 31, and June 1 and 5, 2023
DECISION FROM TRIAL (TEXT OF ORIGINAL DECISION HAS BEEN AMENDED – CHANGES APPENDED)
sutherland J.:
Introduction
[1] The plaintiff, Campus Construction Inc. (Campus or the plaintiff) entered into a contract dated December 22, 2005 (the Contract), with the defendants, Torbear Contracting Inc. (Torbear or the defendant) to provide material and labour for the installation of high pressured concrete watermains and sewers at the Maple Pumping Station (Pumping Station) in Vaughan, Ontario (the Project) for the amount of $1,407,050 plus GST. Torbear was at all material times the general contractor with respect to the Project. Torbear was bonded and posted a Performance Bond and Labour Material Payment Bond issued by its surety Aviva Insurance Company of Canada. Campus commenced an action against Torbear and its Officer, Rosanna Micoli for breach of trust.
[2] Campus claims that it has not been paid for the work performed and is owed $750,168.10 plus GST. Campus refused to continue the Contract work until it was paid. Work was stopped around August 13, 2007. Torbear issued a notice of default on August 13, 2007, and declared Campus in default of the Contract on August 16, 2007.
[3] Torbear claims that the work was deficient, and that Campus abandoned the Project. Torbear is claiming damages for deficient and incomplete work along with damages for delay.
[4] The parties have agreed to a bifurcated trial. The first trial is to determine who breached the Contract. The second trial is to determine who is responsible for any damages flowing from the breach of the Contract and the assessment of those damages.
[5] Action CV-08-087932 is a claim against the labour and material bond posted.
[6] Action CV-07-087095 is a breach of trust action.
[7] These issues concern both actions.
[8] This decision will deal solely with the issues for the first trial.
[9] For the reasons below, I conclude that Campus breached the Contract.
The Contract
[10] There is no disagreement that the Contract included various sections which described the scope of work, project specifications and contractual obligations between the contractual parties. The Contract also encompassed various layout drawings and appendixes “A” and “B”.
[11] The Contract included the following sections and specifications:
(a) Section 02140 (Dewatering). (b) Section 02141 (Supplementary Dewatering Information). (c) Section 02151 (Shoring and Bracing). (d) Section 02221 (Trenching, Excavation and Backfilling). (e) Section 02270 (Slope Protection and Erosion Control). (f) Section 02610 (Pipe & Fittings). (g) Section 02650 (Disinfection and Hydrostatic Testing). (h) Section 02660 (Watermains). (i) Section 02661 (Watermain Connections). (j) Section 02665 (Chambers). (k) Geotechnical Report by Geo Canada dated April 25, 2005.
[12] The Contract required Campus to complete the work in accordance with the Contract and Prime Contract entered into between Torbear and the owner, the Regional Municipality of York (York Region), bearing No. T-05-64 (the Prime Contract).
[13] The Contract work encompassed four watermain pipes (the Pipes) that Campus was responsible to connect and install to be used to receive and transport portable water under high pressure to various locations in York Region. The Pipes were:
(a) The 1200 Discharge pipe which required the connection of a reducer to connect to the 750 mm Wall pipe to the 1200 mm yard piping. This pipe was never installed by Campus. (b) The 1800 intake pipe to connect an 1800 mm vertical bend. (c) The 1200 intake pipe to connect to a straight 1200 mm pipe. (d) The 1050 Discharge pipe which required a reducer to connect the 600mm Wall pipe to the 1050mm yard piping.
[14] The Project consultants retained by the owner was MacViro Consultants Inc. which later became Genivar Inc. when Genivar Inc. acquired MacViro during the performance of the Contract and Prime Contract (the Consultants). Geo-Canada was the Project’s geotechnical consultants (the Geotechnical).
[15] It is admitted that in order to perform its work under the Contract, Campus was required to excavate portions of the Building backfill around the area of the pipes protruding the foundation wall (the Wall pipes) to a specified depth in order to expose the Wall pipes and permit Torbear, through its subcontractor Malfar Mechanical Inc. (“Malfar”), to install the Couplings onto the Wall pipes that would mechanically attach the reducers to the Wall pipes and the Pipes or Wall pipes to Pipes.
[16] Between the Foundation walls of the Pumping Station and the wooden shoring was the Building backfill-native material. Thus, Campus was required to cut the shoring to expose the Wall pipe which meant that it would encroach into the Building backfill.
[17] It is also admitted that Torbear was responsible for excavating the site to the required depth and dimensions to accommodate the construction of the Pumping Station. Torbear was responsible to construct the Pumping Station. This was the first time Torbear constructed such a pumping station.
[18] Compaction of the Pipes’s bedding was required to 98% spd (standard proctor density)[^1]. The owner obtained compaction test results, but those results were not produced in the proceedings and consequently, not presented at this trial.
Trial Evidence
[19] The plaintiff called the following witnesses: Larry Palleschi (Larry) from Campus, Franco Palleschi (Franco) from Campus, Stewart Dickson who was employed with the Consultant and its expert, Gary Benner.
[20] The defendant called the following witnesses: Michael Helyer from the Consultant, Peter Rusch from Campus and its expert, Dr. Rasko Ojdrovic.
[21] I will briefly describe the evidence presented.
Before Mobilization
[22] In a meeting prior to mobilization and construction on January 10, 2007, concerns were raised on the installation details and process. In the minutes of that meeting drafted by Mr. Dickson, it is evidenced that a procedure was mandated that every joint was to be inspected and accepted by Geotechnical prior to backfilling and Geotechnical was mandated to keep a log of all joints inspected and provide this information to the owner at the completion of the Project. In addition, Larry had concerns with the weight on the bend on the 1800 mm intake pipe header and questioned whether the design would be adequate to hold such weight. A request was made to the Geotechnical to examine and provide a recommendation.
[23] Site Inspection No. 10 dated April 9, 2007, was issued by Mr. Dickson which sets out the recommendations for the bedding and backfill of the pipe concerning the 25-degree bend on the 1800 mm intake pipe, dealing with the concerns of Larry as stated in the January 10, 2007 meeting. In that site inspection, Mr. Dickson stated that the measures were intended to ensure adequate support for the pipe and reduce the possibility of differential settlement and set out three bulletins with a sketch. The three bulletins on the backfill/bedding material were:
• From 300 mm north of the restraining flange to the north end of the lower excavation limit shall be 20 MPa concrete from the bottom of the trench to the spring line of the pipe. • From the top of the concrete noted above to the bottom of the upper trench (approximate elevation 252.75 mm) shall be unshrinkable fill. • Around the coupling shall be backfilled with high performance bedding to 300 mm above the pipe.
[24] The site inspection further stated that above approximate elevation 252.75 mm of the pipe shall be bedded and backfilled as per the original contract.
Construction
[25] The factual sequence of construction is not materially in dispute between the parties. Campus commenced its construction by mobilizing on the site in April 2017. When Campus arrived on site the Pumping Station was constructed. The foundation outer walls of the Pumping Station were poured in place and backfilled. The Pumping Station and the pre-existing pipes were backfilled, and compacted by Torbear, through its subtrade Ambler. The building backfill using native material was required at a rate of 95% spd.[^2] The original design and specifications permitted the use of excavated native material in performing this building backfill. Ambler was to backfill between the concrete foundation walls of the Pumping Station and the shoring supporting the excavation. The Wall pipes connecting to the Pipes where cast into the concrete walls and were protruding from the shoring wall to permit connection.
[26] Campus was first required to excavate to and behind the Wall pipe and to connect to that Wall pipe, either a reducer, if required, or a straight lay pipe. In doing that connection a Victaulic Coupling would be required where the Wall pipe or reducer would be connected to the Pipes. The sequence was that the first watermain pipe to be connected was that of the deepest watermain, the 1800 mm in take, then the second deepest on the opposite side, the 1200 mm intake, followed by the 1050 mm and lastly the 1200 mm discharge on the north side.[^3] After the installation of the Pipes, disinfection of the pipe and a pressure test was required to confirm that there were no leaks in the pipe or the connections. Given that the installation was high pressured watermain pipes, with portable water, it was crucial that the water was clean which means the Pipes were chlorinated and there were no leaks existed for the portable water to reach the destination it was required to travel.
[27] During the construction, either Larry or Franco were on site. Sometimes both Larry and Franco were on site together. Representatives of either Torbear, the Consultant, the Geotechnical or the owner that were on site during the construction were not called as witnesses.
[28] No evidence was presented that, during the installation of the Pipes were there any concerns raised by Torbear, the Consultant, the Geotechnical or the owner, York Region. Nor was there any issue during construction of the use of high-performance bedding.
[29] After the installation of the 1800 mm intake pipe, pressure tests were performed. The test failed repeatedly. The other pipes that were installed, the 1050 mm and the 1200 Intake, were also pressure tested and failed. This is when concerns of the work of Campus were raised and the relationship between Campus and Torbear broke down and became adversarial.
[30] Steps were taken to remedy the failures. The 1800 mm intake pipe was remedied by Campus. The other water main pipes were not. The failure appeared to be mostly at the couplings/joints. Steps were taken to figure out why the pressure tests were failing. Campus and Torbear pointed fingers at the other for the failure of the installed pipes to pass the pressure tests. Costs were incurred by both Campus and Torbear to remedy the failures. Each seeks those costs along with other damages from the other.
Terms of the Contract
[31] Th Contract is not in dispute nor are the terms of the Contract. There are terms of the Contract that are pertinent to the dispute between the parties. I will highlight those terms.
[32] Article 1.1 of the Contract sets out the scope of the work to be performed and Articles 1.2 and 1.3 indicate that Campus is bound by the terms of the Prime Contract between the owner and Torbear.
[33] Articles 1.2 and 1.3 read as follows:
1.2 The subcontractor work shall be performed in accordance with: (a) This agreement and the prime contract, and (b) The plans, specifications and other documents as described and initiated by the parties in Appendix “A” attached.
1.3 The requirements, terms and conditions of the prime contract so far as they are applicable to this subcontractor, shall be binding upon the contractor and the subcontractor as if the word “owner” appearing therein had read “contractor” and the word “contractor” had read “subcontractor”. In the event of any conflict between the terms of this agreement and the prime contract, the prime contract shall govern.
[34] The Appendix “A” listed the drawings, profiles, details, specifications and addenda applicable to the Project, as described in the Prime Contract (No. T-05-64.)
[35] The Contract stated in Article 2.1 (b) that Campus was to substantially complete the work in progress in or about July 2007.
[36] Article 4 sets out the payment method by progress payments and that: “the amounts of such payment shall be approved by the contractor and certified by such person as is empowered by the prime contract to certify the amounts payable by the owner to the contractor, hereinafter called “the certifier”. Pursuant to the terms of the Contract, this was the Consultant.
[37] Article 4.2 (b) indicates that the subcontractor shall submit applications for payment by the 25th day of each month and that the payment certifier is to certify payment, which payment of 90% of the certified amount shall be made by the end of the following month and not before payment has been received by the contractor from the owner for the work certified.[^4] Where the payment certifier or contractor makes any changes to the amount of the applications for payment as submitted, the subcontractor shall be notified in writing and be given the opportunity to defend the subcontractor’s submissions without delay.
[38] Article 5 sets out the contractors right to perform the work, stop the work or terminate the subcontract. Article 5.2 indicates that if the subcontractor should neglect to prosecute the work properly or fail to perform any provision of the agreement, the contractor may notify the subcontractor in writing that the subcontractor is in default and instruct the subcontractor to correct the default within three (3) working days. Article 5.3 continues and reads: “If the work or action stated in such notice as requiring correction cannot be completed within the three (3) working days specified, the subcontractor shall be considered to be in compliance with the contractor’s instruction if the subcontractor commences such work or action within the specified time, provides the contractor with an acceptable schedule for performance, and proceeds to perform in accordance with such schedule.” Article 5.4 describes that if the subcontractor fails to comply with Articles 5.2 and 5.3, the contractor may, without prejudice to any other remedy or right, correct such default and deduct from any payment, then or thereafter due, or terminate the subcontractor’s right to continue withy the subcontract work.
[39] Article 6 describes the subcontractor’s right to stop the work or terminate the subcontract. Article 6.3 (a) indicates that the subcontractor may notify the contractor in writing that the contractor is in default of its obligation for payment if the contractor fails to pay the sum payable in accordance with Article 4. Article 6.3 (b) indicates that such written notice shall advise the contractor that if such default is not corrected within ten (10) working days, the subcontractor may, without prejudice to any other right or remedy that it may have, stop the work. Article 6.3 (c) indicates that the subcontractor may give a further ten (10) days to the contractor to pay by delivering a second notice in writing if the contractor did not pay within the ten (10) days from the time of the notice in writing.
[40] Article 9 concerns changes in work and indicates that there shall be no changes made without a written order from the contractor.
[41] Part 3 of the Specifications section 02610 dealing with Execution reads as follows:
3.1.1 Backfilling In Pipe Zone: All trenches shall be backfilled by hand to a depth of 300 mm above the top of the pipe with materials and in a manner consistent with the type of bedding specified. Compaction of backfill material around the pipe shall be by mechanical or hand tamper in 150 mm lifts from the bottom of the trench. Compaction of all bedding material shall be 95% Standard Proctor Density (A.S.T.M. D698). The material shall be deposited in the trench for its full width on each side of the pipe and fittings simultaneously. The backfill operation shall be completed with special care in order to avoid injury to the pipe, fittings and joints.
3.1.2. Pipe Supports at Structures: Where the pipe is laid into a structure across an excavated area, the pipe shall be supported by one of the following methods to the satisfaction of the Engineer:
.1 A reinforced concrete beam capable of supporting the pipe and overburden between the structure and undisturbed soil shall be installed. Before placing the beam, the backfill must be placed to the Engineer’s satisfaction to the level of the underside4 of the beam. The beam shall be supported on a corbel or cast into the structure using a pocket. Alternatively, the Contractor may use the beam support detail at the end of this section. Pipes shall have a 100 mm sand cushion between the pipe and concrete.
.2 Bedding
.1 Pipe bedding shall be Class “B” unless otherwise shown on the drawings.
The Experts
Role of an Expert Witness
[42] Expert opinion evidence is generally inadmissible. Such evidence is admissible if it meets the requirements of admissibility, and it passes scrutiny at the gatekeeper stage. Where there is a dispute concerning an expert, I will deal with that issue later in my reasons.
[43] The role of an expert witness is to provide the court with impartial objective evidence on issues in the action that the court would not normally have knowledge of. The impartiality is that the evidence given and opined should not unfairly favour one party’s position over another. The expert witness owes a duty to the court to provide fair, objective, nonpartisan answers within the scope of the witness’ expertise. The expert should never assume the role of an advocate, for the expert’s duty to the court prevails over any duty owed to the litigants.[^5]
[44] In determining if an expert opinion is admissible, the Court is to consider a to step analysis as set out in White Burgess. The Supreme Court of Canada indicated paragraphs 23 and 24:
[23] At the first step, the proponent of the evidence must establish the threshold requirements of admissibility. These are the four Mohan factors (relevance, necessity, absence of an exclusionary rule and a properly qualified expert) and in addition, in the case of an opinion based on novel or contested science or science used for a novel purpose, the reliability of the underlying science for that purpose: J.-L.J., at paras. 33, 35-36 and 47; Trochym, at para. 27; Lederman, Bryant and Fuerst, at pp. 788-89 and 800-801. Relevance at this threshold stage refers to logical relevance: Abbey (ONCA), at para. 82; J.-L.J., at para. 47. Evidence that does not meet these threshold requirements should be excluded. Note that I would retain necessity as a threshold requirement: D.D., at para. 57; see D. M. Paciocco and L. Stuesser, The Law of Evidence (7th ed. 2015), at pp. 209-10; R. v. Boswell, 2011 ONCA 283, 85 C.R. (6th) 290, at para. 13; R. v. C. (M.), 2014 ONCA 611, 13 C.R. (7th) 396, at para. 72.
[24] At the second discretionary gatekeeping step, the judge balances the potential risks and benefits of admitting the evidence in order to decide whether the potential benefits justify the risks. The required balancing exercise has been described in various ways. In Mohan, Sopinka J. spoke of the “reliability versus effect factor” (p. 21), while in J.-L.J., Binnie J. spoke about “relevance, reliability and necessity” being “measured against the counterweights of consumption of time, prejudice and confusion”: para. 47. Doherty J.A. summed it up well in Abbey, stating that the “trial judge must decide whether expert evidence that meets the preconditions to admissibility is sufficiently beneficial to the trial process to warrant its admission despite the potential harm to the trial process that may flow from the admission of the expert evidence”: para. 76.
[45] There are different categories of experts. There is a participant expert and a litigation expert. A participant expert is a witness who has not been retrained by or on behalf of a party in the litigation to provide an expert opinion. Generally, such an expert was participant in the factual matrix of the proceeding and has a special knowledge that is useful to the Court. Such an expert is exempt from the requirements of litigation experts under Rule 53 of the Rules of Civil Procedure.[^6] A participant expert is providing expert opinion evidence on their special skills, knowledge, training or experience in the events in issue in the proceeding while observing or participating in such events.[^7] A litigation expert is engaged by one of the litigants to provide an expert opinion on specific issue(s) in the proceeding based on their special knowledge, skills, training or experience and were not involved in observing in participating in such events. A litigation expert is subject to the requirements of Rule 53.03 in the civil litigation context.[^8]
[46] Whether the expert is a participant expert or a litigation expert, the Court’s gatekeeping function applies. This is an important task of ensuring the experts do not exceed their proper role and if they do, that there is strict compliance with Rule 53.03. With participant experts that is an opinion that exceeds their observations and participation in the events. If such occurs the participant expert must comply with Rule 53.03. With litigation experts, their opinion is restricted to the scope of their opinion that they were engaged to provide and qualified by the Court to present.[^9]
[47] I will now briefly summarize the qualification, scope and opinion provided by each of the experts presented.
Gary Benner
[48] Torbear contested the qualifications of Mr. Benner as an expert for the issues at this trial. Torbear argued that Mr. Benner did not have the requisite expertise on the issues concerned in this trial and was not independent. At trial, I found that Mr. Benner had special knowledge and experience concerning underground works such as watermains and the installation of watermains, including high pressure watermains that would assist the Court.[^10] I also was not persuaded at this stage that Mr. Benner was not independent. Mr. Benner signed the required acknowledgement of expert’s duty as required by Rule 53. There was no persuasive evidence presented that showed Mr. Benner could not execute his duties and obligations in providing expert testimony at this trial. I therefore qualified Mr. Benner as an expert to provide opinion evidence on the reason for the failure of the four joints connected to the Pumping Station.
[49] Mr. Benner provided two reports. One dated March 4, 2008, and a supplemental report dated August 30, 2022. Mr. Benner testified that he received and reviewed the Prime Contract, the Contract, the Geotechnical report, the Minutes of meetings, the contract drawings and the specification conditions. He testified that a high level of compaction layering is required, which is a mechanical action. To be effective at the depths required, layering of compaction is necessary to reach the required compaction. Further, he testified that when laying pipe across a trench, vertical supports are required. He also noted that Site Instruction #10 changed the support of the 1800 mm bend.
[50] Mr. Benner directed the Court to Drawing D-1 dated Sept. 2006 showing the watermain detail that all is based on undisturbed soil with the pipe sitting on granular “A” material compacted to minimal 95% spd.
[51] Mr. Benner indicated that he attended on site from October 25-20, 2007, while work was performed by Pachino Construction (Pachino), a subcontractor of Torbear. In his inspection, he observed that the backfill material between the foundation wall and backfill was not granular “A” bedding. Further, contrary to Specification section 01210, 3.1.2.1., concerning the 1200 mm discharge, there was no reinforced concrete beam installed to support the pipe between the structure and undisturbed soil.
[52] Mr. Benner also testified that the fact of all four Pipes connected to the pumping station failed was a “highly unusual circumstance.”[^11] In his experience a common factor when all four pipelines are connected by flexible couplings to a rigid stub in a concrete building is that the building can float due to hydrostatic pressure, i.e. water uplift, and any such movement would have caused deflection in the coupling. As stated in his Report, which was confirmed in his testimony: “When I finally had a chance to review the design-stage geotechnical report of a Geo Canada on site in October, it turned out that this was indeed a concern of theirs. Grouted soil anchors where being considered as a possible remedy to hold the building down.”
[53] Mr. Benner also noted a change in the bedding detail that was being used by Pachino rather than the detail used by Campus. The change was the use of unshrinkable fill as a subbase and bedding with Granular “A” as a pipe cover material. In conclusion he stated: “If this was my project, I would not be able to sleep comfortably waiting for another problem to develop in this critical line. I would re-excavate and encase the entire reducer and coupling in structural concrete across the section between the wall and the solid ground…”
[54] In his Report dated August 30, 2022, Mr. Benner comments on the concrete beam issue and provides a drawing setting out where that concrete beam, if it was installed, would be placed. He testified that in G.C. 1.4, specifications govern over drawings and general conditions govern over specifications when there is a conflict between Contract documents. He provides the opinion that: “The excuses of the failure were due to Torbear’s subcontractors failing to compact the building backfill and installing the concrete support beam. This work was outside of Campus’ scope of work and they are not liable for the resulting failure.” In effect, Mr. Benner’s contention is that the subgrade was unstable. This was the responsibility of Torbear to make suitable. No amount of bedding would correct a faulty and deficient subgrade that did not meet the required compaction.
Dr. Rasko Ojdrovic
[55] There was no contest that Dr. Ojdrovic be qualified as an expert.[^12] Campus agreed that the knowledge and experience of Dr. Ojdrovic qualified him as an expert to provide expert opinion on high performance concrete, pipe failures and in particular to provide an opinion regarding the causes of the leaks/failures to hold pressure for the watermains at the Maple Pumping Station.
[56] Dr. Ojdrovic provided four reports dated October 29, 2007, November 7, 2007, December 7, 2007, and May 31, 2022.
[57] The October 29, 2007, and November 7, 2007, reports deal with remedial measure to rectify the fact that the pipes did not pass the pressure tests. The other two reports provided the Court with Dr. Ojdrovic’s opinion for the purposes of this trial.
[58] Both Dr. Ojdrovic and Mr. Benner agree that there was differential settlement in that the subgrade was not stable which resulted in settlement or movement of the coupling and pipe. Mr. Benner and Dr. Ojdrovic disagree on the reasons for the settlement and movement and whose works was responsible.
[59] Dr. Ojdrovic agrees that there was a “differential settlement of the yard pipe with respect to the corresponding pipe wall piece rigidly attached to the concrete wall and foundation of the pumping station.”[^13]
[60] Dr. Ojdrovic testified to his conclusion that “[t]he most likely cause of an offset in the pipeline joint is installation of the yard pipe pieces.”
[61] As indicated at pages 9 and 10 of his December 7, 2007 report, Dr. Ojdrovic contends:
The likely cause of differential settlement of yard pipeline with respect to the wall piece in all three pipelines is lack of proper soil support for the pipe….Based on the construction photographs, it does not appear that any special effort was spent to compact the disturbed top layer of the in-situ soil and there was mud at the bottom of the trench prior to placement of the gravel bedding…We are not aware that bottom of the trench or bedding were compacted by mechanical means. No compaction data was provided for our review and the level of compaction of gravel bedding under the pipe is not known to us.
[62] Dr. Ojdrovic logically testified that at the time of installation of the pipe and connection, the pipe had to be level in order to fasten the connection with metal rods. In all likelihood, when installation was complete and material was placed around and on top of the pipe, the added weight caused the pipe to settle which resulted in the differential of about one inch between the fixed Wall pipe attached to a rigid concrete wall of the Pumping Station and land pipe installed on unstable soil as shown by the shifting of the couplings.
[63] Dr. Ojdrovic testified to other deficiencies which include twisting of the joint in 1200 mm discharge, and circumferential cracking (not likely detrimental to the pipeline).
[64] Dr. Ojdrovic’s report dated May 31, 2022 was in response to Mr. Benner’s contention that the settlement and shifting of the pipe was due to a lack of a reinforced concrete beam beneath the piping and the presence of unconsolidated backfill soil between the wall of the Pumping Station and shoring. Dr. Ojdrovic testified that he disagrees with both contentions. He is of the view that there was no requirement to install the concrete beam. Specifications Section 02610 indicates methods of support of the pipe which includes the concrete beam. However, no concrete beam is in the project drawings, and Specifications Section 02610 1.3 requires shop drawings of pipe and various pipe related details to be provided to the engineer for review. No such drawings were ever provided. Moreover, other sections of the project specifications do not acknowledge the requirement of a reinforced concrete beam.
[65] Concerning soil between the foundation wall of the Pumping Station and shoring, Dr. Ojdrovic testified that the space between the foundation wall and shoring is not significant to result in the settlement of the pipe. For the pipe would pass through the area between the foundation wall and shoring and be settled inside the concrete foundation wall. This would have resulted in a fixed stable foundation. The area between the shoring and the foundation wall of the Pumping Station would be approximately 300 mm to 1200 mm depending on the pipe. The greater length of the pipe concerned would be supported by the bedding constructed for the installation of the yard pipe. Thus, Dr. Ojdrovic opined, as reflected in his report: “…even if there was inadequate soil support for the 300mm portion of the reducer in the area of the building backfill, this short portion of the reducer would have bridged between the wall stub and the longer reducer portion supported on the bedding layer constructed during the yard pip installation.”[^14]
[66] Dr. Ojdrovic testified that the reason why there was settlement was due to unstable subgrade. Campus installed the Pipes. Campus installed such Pipes on deficient unstable subgrade.
Issue
[67] The issue in this trial is to determine which party breached the Contract. In doing so, I will deal with the following:
(a) Non-Payment of certified progress draw. (b) Did Campus abandon the Maple Pumping Station Project or did Torbear unlawfully terminate the Contract?
A. Non-Payment of Certified Progress Draw
[68] On July 28, 2007, Larry sent an email to Torbear indicating that Campus has not received payment for the June and July progress payment draws totalling approximately $235,000 and have not received confirmation of the extras being claimed will be paid. Unless payment is received and confirmation of payment of the extra is received, Campus will not proceed any further to investigate the 1050 mm pipe leak or perform any further work.
[69] Torbear responded in an email dated July 30, 2007 indicating that Campus has not completed its contracted work as required by July 30, 2007. Torbear has paid Campus $972,000 leaving a balance of $390,000 on the contract. The amount being requested now is for work not complete and yet to be accepted by York Region.
[70] The amounts demanded by Campus were not paid nor was there an agreement for the claimed extra(s). Campus continued to work until August 13, 2007 attempting to remedy the failure of the pipes to pass the pressure tests. Campus sent an email on August 10, 2007 indicating that if payment of $130,000 was not received, it will not proceed any further with the 1800 mm. Campus stopped work on August 13, 2007. Torbear sent notice of default pursuant to Article 5 of the Contract on August 13, 2007 and three days later terminated the Contract with Campus.
[71] Campus sent an invoice dated August 3, 2007 in the amount of $119,886.00 which was received by Torbear on August 3, 2007. There was no evidence presented at trial that this invoice was approved by the payment certifier, accepted by Torbear and that Torbear received money from the owner to pay this invoice.
[72] In December 2007, Campus sent numerous invoices to Torbear. These invoices are dated December 31, 2007 bearing invoice numbers: 2005, 2006, 2007, 2008, 2009, 2010, 2011, 2012, 2013, 2014, 2015, and 2016. It appears that none of these invoices were submitted to the payment certifier for payment.
[73] The only payment certificates that were provided in the Joint Document Book are numbers 17 dated May 30, 2007 certified by Genivar on July 17, 2007; 18 dated June 30, 2007 certified by Genivar on July 19, 2007; and, 19 dated July 31, 2007 certified by Genivar on August 16, 2007. These payment certificates are for set off claims to be deducted from any amount owed to Campus for liquidated damages. The progress certificate in Payment Certificate 18 indicates an amount of $130,197 is owed as of June 30, 2007, which would be payable by August 30, 2007, as signed by the payment certifier. It is not known by the Court if the amount certified by the payment certifier was accepted by Torbear or whether Torbear received the monies to pay from the owner.
[74] Payment Certificate 19 indicates payment amount owing to Campus by Torbear is $194,938.00 for work done as of July 31, 2007, which would have been payable by September 30, 2007.
[75] Torbear provided an accounting summary that indicates that as of August 16, 2007, Torbear has overpaid Campus in the amount of $25,318.50 with payments to Campus inclusive of GST in the amount of $897,204.38 which included payment for approved extras in the amount of $32,961.50. The total percentage of completion as of August 16, 2007 is 69.39% of the Contract. The amount put forth by Torbear is before any set off claim.
[76] No accounting evidence was presented by Campus on the amount owed and amounts received from Torbear as of August 10 or 16, 2007 when Campus demanded payment or Torbear sent notice of default to Campus.
[77] Article 4 of the Contract, as described above, sets out the process for payment. In that process, the subcontractor is to submit for payment by the 25th of the month to be paid by the 30th of the following month. The amount requested for payment must be certified by the payment certifier and those monies have to have been paid by the owner to the contractor.
[78] It is trite to say that the parties to a contract are bound by its terms. As Justice Boswell stated in Pentad Construction Inc. v. 2022988 Ontario Inc.:
[93] It must be noted, of course, that the terms of the parties’ contract will dictate the result. Provided they have agreed to be bound on a final basis by the determination of a payment certifier, then the court will enforce that provision, as long as the payment certifier acts fairly, honestly and impartially and provided there is no collusion between the owner and the certifier. [^15]
[79] In addition, the invoice sent by Campus dated August 3, 2007, did not comply with the payment process in the Contract. It was to be provided by the 25th of each month and monies claimed are not due for payment until the 30th day of the following month. Hence, the monies claimed by Campus on August 3, 2007, were not due until September 30, 2007. Not to mention, that there was no evidence presented that indicated that Torbear was paid by the owner for the amounts claimed (the pay when paid clause). Campus did not challenge the legality of the terms of the Contract including the pay when paid clause.
[80] The payment certifier in Payment Certificates 17 and 18 certified deductions to any amount owing to Campus. No dispute was put forth by Campus on this determination by the payment certifier at the time the payment certificates were sent to Campus.
[81] Lastly, no evidence was presented by Campus to contest that account summary as of August 16, 2007, presented by Torbear. Again, in that summary Torbear claims that Campus has been overpaid.
[82] The onus is on Campus to satisfy this Court, on the balance of probabilities, that pursuant to the terms of the Contract, Campus was owed money as of August 10, 2007, when Campus sent the email demanding payment and stopped work in that Torbear was in breach of the Contract in not paying the monies allegedly owed. I am not satisfied that Campus has met that onus.
B. Did Campus abandon the Maple Pumping Station Project or did Torbear unlawfully terminate the Contract?
[83] Most of the evidence presented at this trial concerned whether Campus or Torbear are responsible for the failure of the Pipes to pass the pressure test.
[84] It is not disputed that the installed Pipes by Campus did not pass the pressure test. After remediation only one pipe, the 1800 mm, passed the pressure test. It is also not disputed that much effort was exerted by Campus to determine why the Pipes in fact were leaking.
[85] The Contract obligates Campus to install four high pressure concrete pipes suitable to transfer portable water to destinations throughout York Region. Campus did not provide what was contracted and did not complete the Contract.
[86] Both Campus and Torbear state that the Pipes failed due to unstable subgrade resulting in differential settlement. Campus asserts that the Pipes could not be properly supported due to Torbear’s failure to install the concrete beam as, Campus alleges, was required in the Contract. Further, Campus presented evidence that the soil between the foundation wall and shoring subgrade was not stable due to the failure to properly compact that area by Torbear (or its subcontractor, Ambler, who performed the backfill work for the Pumping Station). Lastly, Campus indicates that there was a possibility of water uplift of the Pumping Station. I will first deal with the concrete beam.
The Concrete Beam
[87] Mr. Dickson testified that he was the site representative for MacViro, the contract administrator. He was on site generally everyday. MacViro performed on site inspections, material inspections, and material testing including concrete and steel. MacViro prepared the specifications.
[88] Mr. Dickson stated that compaction testing was performed. He has no memory if the area concerned was tested but sees no reason why it would not be tested and why the tests were not shared with Torbear.
[89] Concerning Specification dealing with Part 3 Excavation 3.1.2.1, and section 01210, a reinforced concrete beam, he agrees that the section calls for a beam to apply to the area between the foundation wall and the shoring and the backfill area to be compacted to 95% spd. If the backfill area was not compacted to 95% spd, if wide enough, the pipe would settle. He left the site in June 2007 and does not recall if such a concrete beam was installed. He has no knowledge on why the beam was not installed.
[90] Mr. Dickson confirmed that he drafted a Meeting Summary dated January 10, 2007, and circulated the minutes to all concerned. He confirmed that he issued Site Instruction #10 due to the concerns of Campus of the support for the weight of the 45-degree virtual bend.
[91] It is clear that the concrete beam(s) were not installed. It is also clear that in reviewing the Specifications and Drawings, the only reference for the requirement of the concrete beam is Specification 3.1.2.1. There are no specifications on the composition of the reinforced concrete beam, the position of the wall and the dimensions of the concrete beam(s).
[92] Mr. Benner in his testimony indicated in his opinion where the concrete beam(s) would be installed if they were installed. But again, the indication where the beams would be located is required because the drawings did not have such concrete beams positioned.
[93] I agree with Dr. Ojdrovic that if there was the need and requirement of the concrete beam(s) in the construction, the drawings would indicate such, and the specifications would indicate the composition and location of the beam(s). Further, Specifications Section 02610 1.3 required shop drawings to be provided to the engineer for review and acceptance. No such drawings were produced and there is no evidence presented of any approval of the reinforced concrete beams. Consequently, I accept the opinion of Dr. Ojdrovic that there was no requirement in the drawings and specifications to construct such reinforced concrete beam(s).
[94] Campus would have realized from the review of the drawings and specifications that a reinforced concrete beam(s) was not to be constructed and the joints and pipe itself would have to be supported adequately by the requirements and specifications of the bedding, which included a stable subgrade. To bolster this view, it appears to the Court that the request by Campus on whether the drawings were adequate to support the 45-degree bend indicates that the support of the bend was the bedding itself and not a reinforced concrete beam. In addition, no evidence was presented that during the installation of the Pipes, Campus complained that the site was not properly constructed in that no concrete beam(s) were installed, as Campus contends, was mandated by the drawings.
[95] I accordingly do not accept Campus’ evidence that the differential settlement of the joints and the Pipes was due to Torbear not constructing the reinforced concrete beam(s).
Soil between Pumping Station Foundation Wall and Shoring
[96] There was no evidence presented on whether any compaction testing was performed for this area and if so, the results of such testing. Campus provided evidence that it requested such tests, but none was provided. There is also evidence that any compaction tests were performed by the Geotechnical for the owner. But again, no such compaction testes were presented at trial. There also no evidence presented that Campus sought the production of such compaction test, by way of a motion, from a third party, i.e., the owner.
[97] The evidence at trial indicated that in order for Campus to perform its work, it was necessary for Campus to cut through the shoring and disturb the native material between the shoring and the foundation wall. There was no evidence presented that Campus compacted the area as required to 95% spd after it disturbed the area. In the same vein, there was no evidence that Torbear’s subcontractor Ambler, compacted the native material to 95% spd.
[98] Dr Ojdrovic testified that the compaction of soil between the shoring and foundation wall is not significant. The area is not large. The joints were sitting on the other side and there also was the foundation concrete wall that the Wall pipe passed through. Moreover, the settlement was downwards given the differentiation of the connections and the pipe. This is all consistent with the area of the settlement being not in the area between the shoring and foundation wall, but in the area outside.
[99] I accept the opinion of Dr. Ojdrovic. His explanation makes logical sense. Given the area between the shoring and foundation wall, the existence of the concrete foundation wall, the area in which the differentiations occurred and the differentiation itself, all are consistent to the settlement taking place in the area of the joint(s), outside the shoring where the soil bedding existed.
[100] Furthermore, if the lack of compaction in the area proposed by Campus was material, I fail to understand why Campus did not take the appropriate steps to have these compaction tests produced, if they do exist. It is my view that the onus is on Campus to prove on the balance of probabilities that the lack of compaction at 95% spd in that area they suggest caused the settlement differentiation in the joint and Pipes. Campus has failed to do so.
[101] I therefore do not accept the evidence put forth by Campus the settlement that caused the settlement differentiation between the joint(s) and the Pipes was in the area of the foundation wall and shoring.
Building Uplift
[102] Mr. Benner suggested in his testimony and reports that there was the possibility of uplift of the Pumping Station which could have caused all the pipes having a differentiation. The settlement differentiation could have moved upward due to the Pumping Station uplift which would be consistent with what was observed at the joints. Mr. Benner testified that he brought this up with representatives of the Consultant and Torbear and suggested measurements be done to verify if such an uplift occurred.
[103] I have much difficulty with this suggestion by Mr. Benner. First, no evidence was provided at the trial to support such a suggestion. It appears to the Court that the suggestion was a “throw in” argument to benefit Campus with no evidentiary foundation. Mr. Benner simply indicated that a possibility did exist due to the existence of anchors in the specifications. As far as the Court is aware, no measurements occurred, and no evidence was presented at trial to indicate an uplift of the Pumping Station occurred.
[104] Given the lack of evidence, I do not accept this suggestion by Mr. Benner.
Did Campus abandon the Maple Pumping Station Project or did Torbear unlawfully terminate the Contract?
Legal Principles
[105] There is no dispute between the parties on the law of abandonment.
[106] The law of abandonment and repudiation in the construction setting was succinctly described by Associate Justice (formerly Master) Albert in D & M Steel v. 51 Construction Ltd. and Jing Yin Temple[^16]:
[58] A contractor who abandons a project prior to completion is in breach of the contract. When the contract is for a fixed price, the contractor abandons at his own peril.
[59] In Gokdenz Construction Ltd. v. Dalakis11, relied on by the Temple, I made the following observations beginning at paragraph 32:
“32. There has been ample case law dealing with situations where a contractor demands payment and refuses to proceed unless paid. In facts similar to those in the present case the court found that such conduct amounts to repudiation of the contract by the contractor. Master Sandler describes the test for repudiation in Kaplan v Mihhailelnko (2005), 43 C.L.R. (3d) 223 at paragraph 115, referring to Heyday Homes Ltd. v Gunraj, (2004), 31 C.L.R. (3d) 66:
“…where each party to a contract is alleging fundamental breach and repudiation by the other, the court must determine which party committed a substantial breach which amounts to a repudiation, i.e. evidencing an intention no longer to be bound by the terms of the contract. In making this assessment, the test is an objective one, and even a direct or indirect intention by a party allegedly in breach that it wished to continue the contract Is not necessarily conclusive in rebutting a finding of aepudiationon of the contract. A party may have been found to have repudiated a contract even where the party honestly believes it wants to continue with the contract to completion.”
“33. In the Kaplan case the court found that a demand for immediate payment before it was due constituted repudiation of the contract. Similarly, I find that Mr. Sonmez’ demand for payment on July 27, 2009 and his threat to halt delivery of the concrete if not paid constituted repudiation of the contract.”
[60] In Voka Steel Inc. v. Edgecon Construction Inc. 12, also, relied on by the Temple, I made the following findings beginning at paragraph 38:
“38. In the face of a payment dispute was Voka required to continue to supply services and materials to complete the contract or was Voka entitled to treat the contract as breached by Edgecon? “39. The Construction Lien Act is and its predecessor the Mechanic’s Lien Act was designed to protect contractor’' accounts in these circumstances while allowing a construction project to proceed. When one contractor stops work an entire project can be brought to an abrupt standstill. A contractor eng’ged in a payment dispute has lien rights and remedies with payment of amounts owing secured by the lands. There was no issue in this case as to whether the value of the lands was sufficient to cover the quantum of a lien claim for the value of Voka’s unpaid services and materials. “40. I find that Voka’s proper course of action in this case if its payment dispute could not be resolved was to register a lien and continue the work. Voka breached the contract by refusing to complete the work. Voka walked away from the contract at its peril. Edgecon is entitled to rely on the “pay when paid” condition in the contract. Voka is liable for the completion costs reasonably incurred by Edgecon to finish the contract work.”
[107] Justice Pierce in 1022403 Ontario Ltd. v. Man-Shield (NWO) Construction Inc. et al arrived at a similar conclusion that the law is clear that a contractor who abandons a project prior to completion is in breach of contract.[^17]
[108] I agree with Associate Justice Albert that in a fixed price contract a party that refuses to complete the contract for non-payment of invoices does so at its own peril. In situations where the work performed pursuant to the contract has not been completed for alleged non-payment of work, the contractor or subcontractor must be certain that the payment is due and owing pursuant to the payment terms of the contract and that non-payment goes to the root of the contract to support the decision to not continue with the work. For if that certainty is not present, the contractor or subcontractor puts itself at peril to be liable for breach of the contract in not performing the work as mandated by the contract and be responsible for any damages flowing from the breach to perform the work mandated.
Analysis
[109] In the circumstances here, Campus’s work clearly did not comply with the terms of the Contract, that is, the installation of high-pressured concrete pipes that are suitable for the transmission of portable water to various destinations throughout York Region. The Pipes installed did not pass the required pressure testing, except for the 1800 mm which was remedied by welding.
[110] Campus left the project claiming non-payment pursuant to the terms of the Contract. I have concluded that Campus’ claim for non-payment pursuant to the terms of the Contract is not supported by the evidence presented at trial.
[111] Moreover, Campus alleges that it was unable to complete the Contract due to circumstances outside its control and for the reasons presented, the Contract could not be completed. I am of the view that, if a contractor or subcontractor can prove on the balance of probabilities that the contract could not be performed for reasons outside its control that amounts to a fundamental breach or frustration, the contractor or subcontractor could be justified in failing to complete the contract and could claim damages for any extra work.[^18] I am not persuaded that in the circumstances that Campus has done so.
[112] Campus has not proven that its failure to complete the Contract were for reasons outside its control fir which it is not responsible. Thus, its failure to complete the Contract was a breach of the Contract. Campus has not proven that Torbear breached the Contract and was not justified in complying with the default provisions of the Contract and providing Campus with the mandated notice of default. Torbear, in my view, in the notice of default and based on the factual matrix, clearly sets out that the reason for the notice of default is that Campus has failed to provide what it contracted to do, namely, install four pipes for the transportation of portable water under high pressure to various locations in York Region.
[113] Consequently, I conclude that Campus is in breach of the Contract and abandoned the Project when it did not return after August 13, 2007. I come to this conclusion for various reasons.
[114] First, Campus, in my view, determined that it was in a losing proposition. Campus could not ascertain the reason for the leaks and could not remedy those leaks. Campus, as Larry intimated, was spending good money after bad. Campus could not afford continuing. Campus decided that the best bet for it was to get out of this losing situation and left the Project.
[115] Second, the notice presented by Campus did not comply with the terms of the Contract in that the 10-day notice period was not provided. Campus’ notice of non-payment was defective. This buttresses my view that Campus just wanted out of the ordeal that it was in.
[116] Third, the reasons for the settlement differentiation proposed by Campus were not accepted by this Court. It was Campus’ obligation to complete the work they were contracted for. Campus did not and could not prove on the balance of probabilities that failure to do so, i.e., complete the work, was due to a breach of the Contract by Torbear or for reasons out of its control.
[117] Fourth, Campus was provided notice of default by Torbear per the terms of the Contract. Campus did not respond to that notice of default as contemplated in Article 5.3 of the Contract: “if the subcontractor commences such work or action within the specified time, provides the contractor with an acceptable schedule for performance, and proceeds to perform in accordance with such schedule.”
[118] Campus is in breach of the Contract and Torbear was within its rights to terminate the Contract pursuant to the terms of the Contract.
Conclusion
[119] I find that Campus breached the Contract.
[120] Counsel to contact my judicial assistant Helena Howell at Helena.Howell@ontario.ca to arrange a telephone conference to discuss the next steps on the second part of the bifurcated trial and dealing with the issue of costs.
Justice P. W. Sutherland
Released: December 11, 2023
Amendments
- The name of the Plaintiff has been corrected on the first and last page in the Styles of Cause, the Citation and in Paragraph [1] from “Campus Contracting Inc.” to now read as “Campus Construction Inc.”.
NEWMARKET COURT FILE NO.: CV-07-087095-00
ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
Campus Construction Inc. Plaintiff
– and –
Torbear Contracting Inc. and Rosanna Micoli Defendants
AND
NEWMARKET COURT FILE NO.: CV-08-087932-00
Campus Construction Inc. Plaintiff
– and –
Torbear Contracting Inc. and Aviva Insurance Company of Canada Defendants
DECISION FROM TRIAL
Justice P.W. Sutherland
Released: December 11, 2023
[^1]: Section 02660-Pipe Bedding specification 3.3.5 [^2]: Specifications Section 02221- Backfilling of Structures-3.4.6. [^3]: To understand the water mains, the north side water mains were for discharge and the south side were for intake. [^4]: This also set out in Appendix “B” item 10 to the Contract. [^5]: See White Burgess Langille Inman v. Abbott and Haliburton Co., 2015 SCC 23 and R. v. Abbey, 2017 ONCA 640. The duty of an expert witness is codified in Rule 53 of the Rules of Civil Procedure, R.R.O, 1990, Reg. 194. [^6]: Westerhof v. Gee Estate 2015 ONCA 206; Imeson v. Maryvale (Maryvale Adolescent and Family Service), 2018 ONCA 888 [^7]: Westerhof, at para. 60 and Imeson, at paras. 61-63. [^8]: Imeson, supra, note 6, at para. 60. [^9]: Westerhof and Imeson, supra, note 6. [^10]: Gary Benner received a civil engineering degree form the University of Toronto in 1974 and was designated a consulting engineer by the professional engineers of Ontario since 1988. Mr. Benner is also a certified Ontario construction adjudicator. He has worked in the construction industry since 1974 where started work with the City of Scarborough as a Project Engineer. He founded Underground Consulting Inc. in 1988 and has worked with municipalities, contractors and developers in underground works and earth works. He has consulted on numerous trenching and underground work projects in Canada including Maid of the Mist elevators, shafts and tunnels, Library of Parliament, and Port Lands Microtunneling. He has been qualified in the Superior Court of Ontario as an expert in various trial proceedings. [^11]: Report dated March 4, 2008 at p. 4. [^12]: Dr. Ojdrovic has a degree in civil engineering from Belgrade University in 1884 a master’s and Ph.D. in civil engineering from Duke University in North Carolina. He has 30 years of experience which includes pipeline condition assessment, failure risk analysis, failure investigation, repair design concrete fracture, fracture mechanics seismic analysis. He has published over fifty papers on subjects of his experience. The list of projects and analysis are too numerous to list but involve projects from all parts of the USA, Canada, Mexico, and Puerto Rico [^13]: Report dated December 7, 2007, at p. 9. [^14]: Report dated May 31, 2022, at p. 5. [^15]: 2021 ONSC 824, at para 93. [^16]: 2016 ONSC 1335; aff’d 2018 ONSC 2172 (SCJ). [^17]: 2018 ONSC 168, at para. 51. [^18]: D & M Steel, supra, note 16, paras.52-60.