DATE: 20240517
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
WALSH CONSTRUCTION COMPANY OF CANADA
Plaintiff
– and –
TORONTO TRANSIT COMMISSION, YORK UNIVERSITY, UNITED PARCEL SERVICE CANADA LTD., THE REGIONAL MUNICIPALITY OF YORK, HIS MAJESTY THE KING IN RIGHT OF ONTARIO AS REPRESENTED BY THE MINISTER OF INFRASTRUCTURE, and CITY OF TORONTO
Defendants
– and –
LEA CONSULTING LTD., IBI GROUP ARCHITECTS (CANADA) INC., WSP CANADA INC. (formerly PARSONS BRINCKERHOFF HALSALL INC. and HALSALL ASSOCIATES LIMITED) and THE SPADINA GROUP ASSOCIATES
Third Parties
– and –
1777546 ONTARIO INC. formerly known as AES INTERNATIONAL ENVIRONMENTAL CONSULTANTS INC., AERCOUSTICS ENGINEERING LIMITED, ALL WORLDWIDE LYD., ALSTON ASSOCIATES INC., BADGER DAYLIGHTING LTD., GOTTSCHALK + ASH INTERNATIONAL INC. c/o ENTRO COMMUNICATIONS INC., GUNTHER HEINRICH FUNK, H.H. ANGUS AND ASSOCIATES LIMITED, JANET ROSENBERG & STUDIO INC. also known as JANET ROSENBERG + ASSOCIATES, LRI ENGINEERING INC. formerly known as LEBER/RUBES INC., MULTIVIEW LOCATES INC., NORBERT M. WOERNS, PETER MAURO, PLANVIEW UTILITY SERVICES LIMITED, PMX INC., RMJM LIMITED, SPEIGHT, VAN NOSTRAND & GIBSON HOLDINGS LIMITED., and WATTERS ENVIRONMENTAL GROUP INC.
Fourth Parties
Howard M. Wise, Graham Smith, Daniel G. Cohen, Bradley Halfin and Meghan de Snoo, for the Plaintiff, Walsh Construction Company of Canada
Paul A. Ivanoff, Kevin O’Brien and Malcolm Aboud, for the Defendant, Toronto Transit Commission
HEARD: February 14-18, March 3-4, 7-11, 21-24, April 5-8, 11-14, 19-21, May, 9-12, 16-19, 30-31, June 1-3, 13-17, 20-23, 27-30, July 12-14, 18-21, 25-28, August 16-19, 22-25, 29-31, September 12-16, 20-23, October 4, 6-7, 14, 17-18, November 1-4, 7, 14-18, 21-23, December 2, 5-7, 12-14, 16, 2022 January 9-12, 16, 19-20, 23, 25-27, 30, February 1-3, 6, 9-10, 13, 15-16, 21-23, 27-28, March 2, 6-9, 20-23, 27-30, April 3-6, 11-12, 26-27, August 28-31, September 1, 2023
HOOD J.
TABLE OF CONTENTS
INTRODUCTION.. 1
DELAY.. 5
EXPERT EVIDENCE ON DELAY AND COMPENSABLE CLAIMS. 14
HEADS OF DAMAGE IN ORDER FROM #1 - #22. 21
a. Extended Contract Performance Period (“ECPP”) – Heads of Damage #1 - #3. 21
b. Original Contract Performance Period (“OCPP”) – Heads of Damage #4 - #6. 23
c. Acceleration Costs – Head of Damage #7. 27
d. Unabsorbed Home Office Costs – Head of Damage #8. 31
e. Supplemental Subcontractor Costs – Head of Damage #9. 33
Testing. 33
Terrazzo Work. 33
Concrete Work. 35
Civil Work. 36
Electrical Work. 37
f. Below The Line RFQs – Head of Damage #10. 38
Temporary Bridge Maintenance: RFQ 267. 38
Earth Retention Monitoring: RFQ 283. 39
Concrete Winterization: RFQ 286. 39
Stair Tower / Street Sweeping: RFQ 313. 41
Temporary Heat and Snow Removal 41
Crane Costs. 42
Survey Costs. 43
g. Interest on Claim Amounts – Head of Damage #11. 44
h. Currency Fluctuation – Head of Damage #12. 45
i. HST – Head of Damage #13. 46
j. Bond Costs – Head of Damage #14. 46
k. Subcontractor Claims – Head of Damage #15 and #16. 47
l. Underfunded CDs – Head of Damage #17. 53
Disposal of Native Stockpile: CD 419. 54
Northern Bypass: CD 567. 55
Site Plan Application: CD 360. 56
Storm Sewer Replacement: CD 123. 57
Fire Alarm Changes: CD 260. 58
Fare Control Revisions: CD 254. 58
Support of Artwork Lights: CD 521. 59
Lighting Revisions: CD 348. 60
Aspirating Smoke Detectors: CD 480. 61
Sewer Revisions: CD 276. 61
Dimension Certification for Stairs: CD 58. 62
Traffic Control Signal: CD 452. 62
Spray Fireproofing Spec Revision: CD 396. 63
Changes to Expansion Joint at FFA Hatch: CD 242. 63
Light Cone Revisions: CD 218. 63
Electrical Revisions: CD 194. 64
CDs 152, 409, 474, 541, 175, 478, 590, 565, 335. 64
CDs 150, 101, 170, 186, 134. 65
CDs 482, 438, 476, 468, 517. 65
Subcontractor Bonding Costs: CD 421. 65
Conclusion: Underfunded CDs. 66
m. NOICs – Head of Damage #19. 66
NOIC #3. 68
NOIC #6. 69
NOIC #17. 70
NOIC #24. 70
NOIC #57. 70
NOIC #62. 71
NOIC #76. 71
NOIC #80. 71
NOIC #81. 72
NOIC #82. 72
NOIC #83. 73
NOIC #98. 73
NOIC #100. 73
NOIC #101. 74
NOIC #102. 74
NOIC #104. 74
NOIC #106. 75
NOIC #107. 76
NOIC #108. 76
NOIC #111. 76
NOIC #112. 77
NOIC #118. 77
NOIC #120. 77
NOIC #121. 78
NOIC #125. 78
NOIC #130. 79
NOIC #132. 80
NOIC #133. 80
NOIC #134. 80
NOIC #137. 81
NOIC #139. 82
NOIC #141. 82
NOIC #142. 82
NOIC #149. 83
NOIC #150. 83
NOIC #151. 84
NOIC #152. 84
NOIC #153. 85
NOIC #154. 85
NOIC #156. 86
NOIC #158. 86
NOIC #161. 87
NOIC #163. 87
NOIC #166. 87
NOIC #169. 88
NOIC #171. 89
NOIC #172. 89
NOIC #173. 89
NOIC #174. 90
NOIC #178. 90
NOIC #181 and #245. 91
NOIC #182. 92
NOIC #185. 92
NOIC #186. 93
NOIC #187. 94
NOIC #188. 94
NOIC #189. 95
NOIC #190. 95
NOIC #191. 96
NOIC #193. 96
NOIC #194. 97
NOIC #198. 98
NOIC #200. 98
NOIC #201. 99
NOIC #202. 99
NOIC #203. 100
NOIC #204. 100
NOIC #207. 100
NOIC #208. 101
NOIC #210. 102
NOIC #211. 102
NOIC #217. 103
NOIC #218. 103
NOIC #220. 103
NOIC #221. 104
NOIC #223. 104
NOIC #224. 105
NOIC #225. 106
NOIC #226. 106
NOIC #227. 107
NOIC #228. 107
NOIC #231. 108
NOIC #232. 108
NOIC #233. 109
NOIC #235. 109
NOIC #237. 110
NOIC #238. 110
NOIC #239. 111
NOIC #240. 111
NOIC #241. 112
NOIC #242. 112
NOIC #243. 112
NOIC #245. 113
n. Interest on Claim Amounts – Head of Damage #19. 113
o. HST – Head of Damage #20. 114
p. Lien & Holdback Bond Costs – Head of Damage #21. 114
q. Bond Costs – Head of Damage #22. 115
LIQUIDATED DAMAGES & UNPAID CONTRACT BALANCE. 115
IMPROPER CONTRACT ADMINISTRATION & PUNITIVE DAMAGES. 117
WALSH’S CLAIM FOR LIEN.. 119
CONCLUSION.. 121
REASONS FOR DECISION
INTRODUCTION
[1] On September 22, 2011, the Toronto Transit Commission (“TTC”) and Walsh Construction Company Canada (“Walsh”) entered into a contract (the “Contract”) for the construction of the Steeles West Subway Station, later re-named the Pioneer Village Station (the “Project”). The Contract was for $165,925,000 inclusive of taxes. Walsh was awarded the Contract on September 8, 2011, following the submission of its tender on August 17, 2011.
[2] Steeles West was part of the Toronto–York Spadina Subway Extension (the “TYSSE”). It consisted of six new subway stations running from Sheppard West in Toronto to the Vaughan Metropolitan Centre station in Vaughan.
[3] Pursuant to the Contract, substantial performance was to be achieved by Walsh on November 5, 2014, 1,154 days from award. Contract completion was to occur on February 4, 2015, 1,245 days from award. This did not happen. Actual substantial performance was achieved on June 15, 2017, 2,107 calendar days from award or an additional 953 days beyond the original substantial performance date. Revenue service was achieved on December 17, 2017, and Contract completion on November 7, 2018. The revenue service date was 1,047 days beyond the original Contract completion date and actual Contract completion was 2,617 days from award, or 1,372 days beyond the original Contract completion date.
[4] While there is a disagreement between TTC and Walsh over some reductions asserted by TTC, the certified value of the Contract is currently $223,267,711 inclusive of taxes. This represents an increase of more than $57,300,000 from the original Contract price. Walsh has been paid $213,695,610 inclusive of taxes. Walsh’s overall claim against TTC is for approximately $193,000,000 inclusive of taxes, including the unpaid Contract amount of approximately $9,500,000. TTC’s counterclaim against Walsh is for approximately $22,000,000 inclusive of taxes.
[5] Included in Walsh’s claim of $193,000,000 are claims for underfunded Change Directives (“CDs”), unpaid Requests for Quotations (“RFQs”) which were linked to either delay or acceleration, and unpaid Notices of Intent to Claim (“NOICs”). The underfunded CDs in the claim totaled 36 and varied in amount from a credit of $500 to TTC to approximately $1,200,000 claimed by Walsh. The unpaid RFQs in the claim totaled 7 and varied in amount from approximately $155,000 to approximately $3,500,000. The unpaid NOICs in the claim totaled 93 and varied in amount from $222 to approximately $1,500,000.
[6] In argument, Walsh acknowledged that underfunded CD 590 should actually be for $197 rather than $3,743 as claimed, that CD 109 should be a credit of $500 to TTC rather than a zero credit, and that NOIC #108 was a claim of $1,779 rather than $21,699 initially as claimed by it.
[7] Included in Walsh’s claim of $193,000,000 are claims on behalf of 22 Walsh subcontractors for their extended time on the Project. Their claims total approximately $51,000,000 plus a markup of approximately $5,000,000. The subcontractor claims without markups varied in amount from approximately $53,000 to approximately $10,000,000. Walsh also claims acceleration costs on behalf of its subcontractors of approximately $5,000,000 plus a markup of $500,000.
[8] This was a different and difficult trial. It took 161 trial days, consisting of a 1-day site view, 4 days of opening submissions, 151 days of evidence and 5 days of closing submissions. The evidence in chief consisted primarily of affidavits with a brief amount of viva voce evidence. Most of the 151 days consisted of cross-examination on the affidavits. The affidavits themselves consisted of, for the most part, a primary affidavit followed by a responding affidavit and then a reply affidavit. It was difficult when reading them to place Walsh’s responding and reply affidavits into context as they were responding to TTC witnesses’ affidavits, which were not available to the court until those affidavits themselves were put into evidence when the TTC witnesses were called. The same could be said for many of the subcontractor affidavits. It was also difficult to put the cross-examinations of the Walsh witnesses into context without the normal presentation of viva voce evidence by them.
[9] The affidavits themselves were massive. As an example, the affirmative affidavit of the first Walsh witness, Tom Sims, was 185 pages of text with numerous attachments. His responding affidavit was 55 pages of text also with numerous attachments, and his reply affidavit was 37 pages of text, again with numerous attachments. Each group of affidavits was provided to me shortly before that witness gave evidence at trial. Unaware of the size of the affidavits, I had requested that Walsh provide me with the Sims affidavits in paper form, including all of the exhibits and attachments.
[10] When provided to me, the Sims affirmative affidavit consisted of 61 bound volumes, the responding affidavit 6 bound volumes, and the reply affidavit 3 bound volumes. In total, the Sims affidavits filled eight file boxes. The affidavits of another Walsh witness, Michael O’Connell, were even larger; the affirmative affidavit was 527 pages of text, the responding affidavit 63 pages of text and the reply affidavit 133 pages of text.
[11] This was not just limited to Walsh’s witnesses. For example, John Pipilas’ affidavits on behalf of TTC were 52 pages, 392 pages and 29 pages of text, respectively.
[12] At one point, I was provided with a witness list. There were 35 Walsh witnesses, although 34 were actually called. Their affidavits, without exhibits, apparently totalled 3,961 pages. The TTC list had 17 witnesses, although 18 were actually called. Their affidavits, without exhibits, apparently totalled 2,579 pages. Both sides also had an immense number of read-ins.
[13] Because of the size of the affidavits, and following the provision of the Sims affidavit, I then directed the parties to provide me only with the body of the affidavits in paper form and all of the attachments electronically. If any of the parties wished to refer to an attachment, they were required to bring it to my attention during examination in chief, cross-examination or re-examination as it was, for the most part, both impractical and impossible to read all of the attachments.
[14] In addition to the countless exhibits appended to all of the affidavits provided, there were over 1,400 additional exhibits marked during the course of the trial. In fairness, some were probably also appended to someone’s affidavit and all of the witness affidavits were also marked as exhibits during the course of the trial, which would have increased the exhibit number.
[15] The same could be said for the closing submissions. They too were massive. Walsh provided a 51-page overview and 1,557 pages of submissions with an additional 4,346 attachments. TTC then provided a 20-page overview and 1,803 pages of submissions with an additional 5,995 attachments. Walsh’s reply submissions consisted of 539 pages of submissions with an additional 865 attachments.
[16] Being such a document-intensive trial, there were not many instances where it was necessary for me to make a credibility assessment of a witness. In making any such assessment and weighing their evidence, I adopt the statements referred to by Newbould J. in Springer v. Aird & Berlis LLP (2009), 2009 CanLII 15661 (ON SC), 96 O.R. (3d) 325 (S.C.), at paras. 14–17, along with his analysis therein, recognizing that it is somewhat different with a case such as this one where so much of the evidence was given by way of affidavit.
[17] I have not attempted to review or summarize in these reasons all of the evidence put before me. Rather I have done so within the context of the issues as presented to me with specific evidentiary issues discussed or findings made where needed.
[18] Walsh claims that the design for the Project was far from complete when the Contract was signed. The design issues were then exacerbated by the lack of full-site access and TTC’s improper contract administration. All of this, according to Walsh, led to the Project’s delay and the requirement to accelerate. This in turn led to a multitude of change claims.
[19] Walsh has claimed a total of 23 Heads of Damage. As mentioned previously, Walsh’s claim totals approximately $193,000,000.
[20] In my reasons I have dealt first with the Project delay followed by the expert evidence on compensable delay. I have found that Walsh is entitled to 1,047 compensable days of delay. TTC has acknowledged that it caused 411 days of delay. Walsh is therefore entitled to a further 636 days.
[21] Following the issue of delay, I have then dealt with the 23 Heads of Damage in order.
[22] I have found that Walsh is entitled to damages inclusive of markup, where appropriate, as follows:
[1]
ECPP Office-Related Overhead
$798,522
[2]
ECPP Field-Related Overhead
$7,425,054
[3]
ECPP Staff-Related Overhead
$10,412,850
[4]
OCPP Office-Related Overhead
$0
[5]
OCPP Field-Related Overhead
$0
[6]
OCPP Staff-Related Overhead
$1,897,636
[7]
Subcontractor Acceleration funded by Walsh
$2,492,427
[8]
Head Office Overhead
$0
[9]
Supplemental Subcontractor Costs
$3,844,499
[10]
Below the Line RFQs
$6,728,883
[11]
Interest
0.8% from 12/09/2017
[12]
Currency Fluctuation
$0
[13]
HST
on claims 1-12
[14]
Bond
allowed at 0.68%
[15]
Subcontractor Extended Performance
$0
[16]
Subcontractor Acceleration
$0
[17]
Underfunded CDs
$6,738,421
[18]
NOICs
$2,250,171
[19]
Interest
0.8% from 12/09/2017
[20]
HST
on claims 15-19
[21]
Lien & Holdback Bond Cost
$0
[22]
Bond
allowed at 0.68%
[23]
Unpaid Contract Balance
$9,572,100
As part of Walsh’s entitlement to the unpaid contract balance, TTC’s counterclaim for missed contractual milestones and liquidated damages has been dismissed.[^1]
[23] Walsh’s claim for punitive damages has also been dismissed. Finally, I have found that Walsh is entitled to a lien in the lands and premises upon which the Project was constructed.
DELAY
[24] One of the larger components of Walsh’s $193,000,000 claim consists of its direct delay damages. With HST, bonding costs, and markup, these direct delay damages amount to approximately $19,000,000. One of the key components of Walsh’s calculation of these direct delay damages is the number of delay days. Walsh argues that it is entitled to be paid for 1,047 days of TTC-caused delay. TTC acknowledges that it has some responsibility for Walsh’s delay in completing the construction of the subway station but argues that this is limited to 411 days, with 307 days being acknowledged under CD 30 (Rev 4), issued by TTC on October 5, 2015, and 104 days being acknowledged under CD 443, issued by TTC on April 27, 2016.
[25] Walsh argues that it should be paid for the difference between the 1,047 and 411 days, or 636 days. It also argues that the amount of compensation paid by TTC under CD 30 (Rev 4) and CD 443 was too low and did not incorporate all of the appropriate heads of damage.
[26] In argument, Walsh took the position that I could find another number of days of TTC-caused delay other than the 1,047 it claims; however, there was no basis to do so on the evidence. TTC, while arguing that I should reject the proposition that there were 1,047 days of TTC-caused delay, also argued that I cannot find another number of days of delay for TTC. In other words, it was 1,047 days of TTC-caused delay or it was 411; there was nothing in between.
[27] On May 17, 2011, TTC issued its request for tender for the Steeles West Station. Walsh decided to bid on the Project. Walsh is a subsidiary of the Walsh Group, based in Chicago, Illinois, which is one of the largest general contracting, construction management and design-build firms in North America. Heavily redacted audited financial statements for the Walsh Group were put into evidence. Walsh Group’s contract revenues were $3,617,810,210 in 2011, $4,351,289,210 in 2012 (restated), and $4,098,462,831 in 2013.
[28] Walsh had some limited familiarity with construction work in Ontario and specifically Toronto, having been involved in the re-construction of Women’s College Hospital, and decided to bid on the TTC Project. Its bid of $165,925,000 as general contractor was accepted on September 8, 2011. This amount was approximately 3.8 percent of the Walsh Group’s 2012 revenue, which puts the size of the Walsh Group into perspective.
[29] On September 22, 2011, the Contract between TTC and Walsh was signed and on September 26, 2011, Walsh received its notice to proceed with work. This was a design-bid-build project, of which there are three phases: the design, followed by bidding, and then construction. As acknowledged in 2016 by TTC’s then-CEO, Andy Byford, during a presentation to the TTC Board as part of a request for further funding, the upside of this type of build was that TTC was the Project manager and could determine the design; however, the downside was that TTC owned the risk of that design and the risk if the build runs late or runs over schedule due to design problems.
[30] As acknowledged by Mr. Byford during the presentation, rather than building the typical box design of previous TTC stations, TTC decided to construct what he called a hybrid design somewhere between the previous box structure and a number of world-class designs from world-class architects. However, again as acknowledged by Mr. Byford, when the contractors and subcontractors were told to start building, the designs were not finalized.
[31] This was not only Mr. Byford’s view but was also the evidence of Larry Glazer, a witness called by Walsh who was qualified as an architect with experience in project design and related construction and contract administration. He testified that there were an excessive number of Requests for Information (“RFIs”) from Walsh and the subcontractors and Contract Changes (“CCs”), which led to delay and additional cost. Not only did this have an impact on Walsh’s work, but it also had an impact on Walsh’s subcontractors and led to, among other things, a lack of coordination between all the subcontractors. Mr. Glazer testified that while a project should not have more than a 10-percent threshold of CCs, he calculated a 35-percent level of CCs for this Project. He also testified that while higher at the start of the construction than at the end, the RFIs and CCs remained too high throughout the life of the Contract.
[32] Dr. William Ibbs, who was called by TTC and qualified as an expert in loss of productivity and disruption damage claims in the construction context, agreed with the proposition that the greater the change activity over the life of a project, the greater the probability of delay and extra cost. In an article written by him in 2008, marked as Exhibit 1457, he wrote that “[a]lmost every change to a construction project has some effect on the project’s cost and schedule” through “[t]he actual direct cost and time of performing the change” and “[t]he impact the change may have on other unchanged or contractual work because of delay, disruption, change of sequence, lack of resources, etc.” He further wrote that “[w]hen numerous changes occur, there is a compounding and negative effect commonly called ‘cumulative impact.’” In another article from 2013, marked as Exhibit 1458, he wrote that “when the amount of change labor hours approaches 10% of the original labor budget, warning bells should start to sound.” There is no doubt that the change in labour hours greatly exceeded ten percent of the original labour budget for most of the subcontractors.
[33] John Pipilas, the Commission’s Representative, also acknowledged somewhat reluctantly after cross-examination that the initial design was not constructible, and that Walsh was never given a complete, comprehensive, constructible and coordinated set of Contract documents, and that the issued-for construction drawings were far short from 100 percent complete.
[34] However, probably the most compelling evidence as to the issues with the design came from Bechtel, which conducted an assessment of the entire TYSSE for TTC and provided a report to TTC dated February 5, 2015 (the “Bechtel Report”). Bechtel is based in the United States and is one of the largest engineering construction companies in the world. Bechtel is currently, among other things, the delivery partner for approximately 50 percent of the new Ontario line project being built in Toronto. While the assessment was directed towards the ability to achieve a Project delivery date earlier than the then-projected dates of May 18, 2018 (which had a 13-percent probability), October 18, 2018 (which had a 50-percent probability), and January 19, 2019 (which had a 90-percent probability), Bechtel also looked at the causes of delay. The date of the Bechtel Report was coincidentally one day after the initial Contract completion date of February 4, 2015. The entire Project and the Steeles West station were anything but complete.
[35] Bechtel, after stating that the status and statistics of RFIs are a good metric for the maturity of the design on most construction projects, concluded that based on the large number of RFIs associated with the design and the processing time for the RFIs, the bulk of the station delays were attributable to the overrun of tunnel boring contracts and the design not being as complete as described at award, resulting in substantial RFIs and CDs as well as excessive response times on RFIs as the primary contributors. The status of the design was identified as a central aspect of the delivery challenges.
[36] Bechtel did its own analysis of the station RFI logs and concluded that the average response time across all stations was 42 days, with 11 percent over 90 days. The response profiles were similar across all stations. It recommended that the cycle times on RFIs be reduced and that the designers’ response times be expedited to minimize the number of RFIs remaining open beyond 15 days.
[37] The Bechtel Report concluded that the number of post-issued-for construction design changes reflected in the number of RFIs was in the thousands, rather than the more-typical hundreds, based upon insufficient constructability reviews.
[38] In looking at the CCs, Bechtel concluded that overall, 47 percent of the approved changes appeared to be the result of errors or omissions in the design, which was extremely high considering that the design was issued for tender on a lump-sum basis, meaning ideally that it should have been 90 to 100 percent complete. For Steeles West, the number was 54 percent. Bechtel concluded that the high percentage of errors and omissions in design was contributing to the contractors’ inability to maintain progress and avoid delays. Bechtel also concluded that while typically on a project of this size there is one poor-performing or claim-orientated contractor resulting in major issues for one station, each station on the TYSSE was facing major issues and the problems were consistent across each and every station.
[39] TTC argues that it is not surprising that on a project of this size and complexity, there would be issues leading to cost and time overruns. As such, it argues that both it and Walsh bear responsibility.
[40] The difficulty with this argument is that at least with the design issues, it is TTC that bears the responsibility. It was the one who designed the station and, as Mr. Byford said, owned the risk if there were some problems with the design, which there clearly were. Moreover, again as Mr. Byford said, the contractors were told to start building before the designs were finalized.
[41] I am satisfied that as between Walsh and TTC, it is TTC that bears responsibility for the design issues. I am also satisfied that the design issues caused delay to the Project. Walsh cites numerous key delay events. Most of them are design issues: revisions to Walsh’s utility work, the changes to the bus terminal concrete piers, the changes to the weathering steel soffit connections, the multiple changes to the fire alarm systems, the changes to the hanging artwork, and the design issues with the escalators.
[42] The weathering steel soffit connections provide an excellent example of how design changes can greatly impact a construction schedule. The soffit of the bus terminal was to be covered with weathering steel panels. The panels were all different sizes and geometrical shapes and fit together like a jigsaw puzzle. Initially the panels were to be attached to the soffit of the bus terminal with self-tapping screws being drilled into the underlying subframing supports. The screws were ¾” long and because they were self-tapping could be drilled directly through holes in the panels into the subframing supports. This work was to be completed by the subcontractor C-ore Metal Inc. (“C-ore”). On February 3, 2015, TTC returned C-ore’s shop drawings with a comment that the panels had to be attached with ½” diameter weathering steel bolts rather than the self-tapping screws.
[43] This was a huge change to C-ore’s work. Zelko Colakovich, the President of C-ore, testified that they had to re-drill the 29,370 holes in the panels to accommodate the larger bolt and then had to not only drill but co-ordinate the location of the holes in the subframing in order to match up with the bolt holes in the panels. Then, rather than merely drilling the screws into the subframing, the bolts had to be pushed through the panels, through a rubber gasket, through the subframing, and then a washer had to be placed on the end of the bolt, a nut attached, and then finally wrenched tight. As an added difficulty, the bolt, washer, and nut had to be custom made as there were no ½” diameter weathering steel bolts, washers or nuts on the market; only ¾” diameter bolts were available. C-ore was paid an additional $1,650,000 for the direct cost of this work but nothing for any indirect costs, such as delay or acceleration costs.
[44] To think that such a major change would not cause a substantial amount of extra time is, in my view, unrealistic. TTC must have known that such a change with the complexity and added work would result in additional costs and add additional time to the Project.
[45] The initial delays to the Project stemmed from the relocation of various utility services under and on Steeles Avenue West by various utility contractors. Enbridge Gas operated a gas main under Steeles Avenue, PowerStream had a hydro duct bank on Steeles Avenue and, with Bell, operated another hydro duct bank under Steeles Avenue. The Contract provided that this relocation work was to be done by Summer/Fall 2011. The latest completion date was to be in December 2011.
[46] The work was not actually completed until March 29, 2012. This impacted Walsh’s planned excavation work around Steeles Avenue and its own required utility work relating to water utilities, sewage and storm drainage. Walsh planned to divert these utilities while it constructed the subway station itself along with diverting Steeles Avenue onto a temporary bridge.
[47] When Walsh commenced its own utility work on March 30, 2012, not only did TTC issue various revisions and design changes to Walsh’s work, but it was discovered that some of the prior third-party utility work was deficient and dangerous, so much so that TTC issued various stop work orders. Walsh’s utility work was completed in December 2012.
[48] Eventually, as mentioned previously, TTC issued CD 30 (Rev 4) on October 5, 2015, acknowledging that it was responsible for 307 days of delay between December 21, 2011 and October 23, 2012 due to the utility work. CD 30 (Rev 4) was based upon the delay analysis done by Navigant Consulting (“Navigant”), who had been retained by Bechtel in April 2015 following Bechtel’s retainer by TTC that same month.
[49] Bechtel’s stated objective, as set out in its contract with TTC, was to achieve revenue service for the entire TYSSE by December 31, 2017. In effect, Bechtel took over the management of the TYSSE from TTC and eventually supplied over 40 personnel and consultants to achieve this. In return, Bechtel was to be paid up to $49 million for the use of its staff, which was based upon salaries multiplied by an overhead multiplier, a management fee of $9 million, and potential incentives of $22 million for, among other things, achieving the December 31, 2017 revenue service and doing so at or under budget, plus expenses. In his evidence at trial, Carl Bergquist, the Project Manager from Bechtel, testified that Bechtel was paid the entire $49 million, $9 million and $22 million pursuant to its contract.
[50] As previously mentioned, Navigant’s delay analysis, dated July 17, 2015, was relied upon by TTC for CD 30 (Rev 4). Leaving aside Navigant’s conclusion as to the amount of delay, Navigant concluded that Walsh was impacted and delayed by the third-party utility operators, the deficiencies in the sanitary sewers, storm drainage and water lines running beside Steeles Avenue, and the deterioration of the 1650 storm drainage pipe, just as Walsh had claimed.
[51] Walsh also claimed that it was delayed due to the failure of the tunneling contractor, OHL, to hand over Launch Shaft 1 (“LS-1”) at the southeast end of the Project and Extraction Shaft 2 (“ES-2”) at the northwest end of the Project. Pursuant to its Contract with TTC, Walsh was to be provided with both locations by August 25, 2012. With respect to ES-2, this handover date was contingent upon Walsh being able to do certain work at ES-2 by June 6, 2012, and first handing it over to OHL on that date.
[52] I accept that a general contractor such as Walsh is entitled to obtain possession of the entire construction site in order to allow it to carry out its work, as it sees fit and in the order that it wishes, unless there is an express provision in the contract to the contrary: Penvidic v. International Nickel, 1975 CanLII 6 (SCC), [1976] 1 S.C.R. 267, at p. 276.
[53] As well, having access to the entire site provides the general contractor with sufficient lay down area to stockpile items such as excavated materials, equipment and personnel. Not having possession of the entire site also impedes access to those areas which the contractor does have.
[54] I also accept that crowded work sites can lead to inefficiencies and resultant delays: Nordic Construction Ltd. v. Hope Brook Gold Inc. (1991), 1991 CanLII 7538 (NL SC), 92 Nfld. & P.E.I.R. 201 (Nfld. T.D.), at paras. 30-34.
[55] Tom Sims, Walsh’s Senior Project Manager, testified that while Walsh was to have the entire site by August 25, 2012, when the two OHL locations were to be handed over, by July 31, 2013 Walsh only had access to 38 percent of the Project area. The photograph at paragraph 179 of his August 6, 2021 affidavit provides a depiction of this.
[56] Because of the previously mentioned utility issues, Walsh could not start its work at ES-2 until November 26, 2012, and was eventually able to hand over ES-2 to OHL on April 29, 2013. Walsh was paid by TTC to accelerate its work to meet this handover date. This meant that OHL was to return ES-2 to Walsh on July 18, 2013. This did not occur. Eventually, Walsh was directed by TTC to complete OHL’s work in order for ES-2 to be handed over to it. Walsh did so and the handover of ES-2 took place on October 11, 2013, rather than August 25, 2012, a difference of 416 days.
[57] With respect to LS-1, this was not handed over to Walsh on August 25, 2012. Rather, on June 3, 2014, Walsh was given access to LS-1 by TTC to carry out OHL’s work. Walsh carried out OHL’s work along with some additional work as directed by TTC. As acknowledged by Mr. Pipilas during cross-examination, Walsh effectively received LS-1 on January 31, 2015. This was 889 days after the date it was supposed to receive it.
[58] As previously mentioned, TTC issued CD 443 on April 27, 2016, adding 104 days of scheduled delay relating to the delayed handover of LS-1.
[59] Neither the delayed handover of LS-1 nor ES-2 were included by Navigant in its July 17, 2015 delay analysis as delay events to Walsh, although it did acknowledge the delay of each. Navigant only considered the time period to December 31, 2013 and concluded that these delayed handovers were not on the critical path or on the longest path to completion. With respect to ES-2, it was concurrent to the utility delays. No mention of concurrency with respect to LS-1 was made by Navigant in its analysis.
[60] Walsh argues that the additional 104 days does not accurately represent the true impacts experienced. Among other things, it had to start the bus terminal footings and concrete foundation work out of sequence as it did not have the entire footprint for the bus terminal without LS-1. Walsh argues that while the out-of-sequence work mitigated some delay, it could not do so entirely. Walsh also argues that the out-of-sequence work led to inefficiencies, such as remobilization of several trades, which led to further delay.
[61] Walsh further argues that delay with respect to the bus terminal was exacerbated by the numerous changes TTC ordered to the bus terminal concrete piers, starting in July 2014 and continuing through to January 15, 2015. Sandra Burnell, an architect with expertise in design and construction, stated in her report provided to TTC that these changes were caused by a lack of coordination during the design process and a specific lack of coordination between the architectural and structural drawings.
[62] The changes to the bus terminal concrete piers were made even worse because they continued over time. The first occurred on July 24, 2014. This was followed by further changes and revisions on December 19, 2014, and additional changes and revisions on January 15, 2015. The changes resulted in work having to be stopped, previous work having to be demolished, and new work having to be done.
[63] I accept the evidence from Walsh that the late handover of LS-1 caused it delay with respect to the bus terminal. I also accept that the multiple changes to the bus terminal concrete piers also caused delay. The evidence on this from Walsh’s witness, Michael O’Connell, was not seriously challenged. Mr. Pipilas’ evidence was that he could not say one way or another and that it was up to Walsh to prove that it had been delayed.
[64] I found Mr. Pipilas during cross-examination on this to be evasive and unwilling to answer straightforward questions. While it may have been reasonable for Mr. Pipilas to say that he could not say how much delay had been caused by the late handover and the changes to the concrete piers, his unwillingness to even acknowledge that these two events would have an impact on the rate of construction was, in my view, simply unreasonable. Much like the changes to the weathering steel soffit connections, to think that these events would not cause extra time to be incurred and delays to completion dates to occur is unrealistic. If one was building a house, having access to only a portion of the foundation would cause problems and lead to delay, as would numerous design changes to the concrete foundation walls or support piers. In my view, a subway station, while much bigger, is not much different.
[65] Walsh argues that other design problems or deficiencies led to additional delay on the Project. Walsh makes specific reference to changes to the fire alarm system, the issues with the artwork, and design issues with the escalators.
[66] Walsh argues that TTC failed to provide a proper design for the fire alarm system and that it became a “design-on-the-fly” approach, where design changes were made on a weekly basis during meetings in the field. Walsh also argues that the delays to the fire alarm system were continuous. They started in 2013, when the parties were determining who was to design the fire alarm system, with TTC eventually confirming that it was responsible for this. This delay continued into 2017, with issues as to design decisions delaying occupancy of the station.
[67] TTC argues that the problems with the fire alarm system were the result of Walsh’s poor management, its relationships with its subcontractors, and its failure to provide timely shop drawings and submittals.
[68] As an example, TTC referred to issues between Walsh and IEI in May 2013 and the failure of IEI to provide submittals on a timely basis.
[69] While that may very well have been an issue in May 2013, it ignores the fact that in July 2013, Walsh had access to less than 50 percent of the entire site and still had not excavated the entire subway station due to the utility issues and the 1650 storm sewer, leading to the resulting “Mountain in the Middle” under Steeles Avenue. Any submittal issues in May 2013 with respect to the fire alarm system were in my view irrelevant to the eventual issues with the fire alarm system that arose when the actual station box was being constructed later on. The delays that Walsh raises with respect to the fire alarm system are for the most part from 2015 and beyond.
[70] TTC issued RFQ 260 on January 13, 2015, outlining changes to the fire alarm system. The RFQ acknowledged that it was issued as a result of an error. This RFQ was revised five times between May 2015 and October 2015. As Mr. O’Connell set out in his affidavit, this constant revision resulted in delays to the Project. TTC also issued RFQ 335 in June 2015, adding more changes to the fire alarm system.
[71] TTC acknowledged that Walsh was not to blame for the resultant delay or cost. As set out by James Cunliffe, TTC’s Commission’s Representative at the time, in an internal email on November 12, 2015 dealing with the fire alarm design and RFQs 260 (Rev 5) and 335, Walsh could not have known the level of complexity required to comply with the electrical code requirements at the time of its bid. Walsh’s estimate of the additional cost of $600,000, based on advice from its consultant Vipond, rather than TTC’s estimated cost of $40,000 was agreed to by TTC. In a further internal email from Mr. Bergquist, he acknowledged that issues with the fire alarm design needed to be resolved and that it was a problem at every station. Further changes were made to the design in December 2015 through the issuance of RFQ 335 (Rev 1).
[72] Further changes came from RFQ 468, which provided that Walsh was to carry out any changes that might arise as the result of decisions made in the field during TTC’s weekly “walkdown” meetings. Scot Norris, a Walsh witness, testified that the last revision came on June 6, 2017, 11 days before substantial completion on June 17, 2017. Walsh argues, and I agree, that this sort of open-ended RFQ demonstrated that the design of the fire alarm was totally uncoordinated and incomplete. TTC was clearly unaware of what was missing in the design until it saw it on the ground. Yet TTC continued to take the position that this all stemmed from Walsh’s failure to provide shop drawings and manage the trades. This position is incompatible with reality and TTC’s own internal recognition, as the walkdowns identified work that was above and beyond code and the Contract documents. There was a total of five revisions to RFQ 468 from July 2016 to June 2017. RFQ 468 stated that the reason for the changes was due to “the evolution of the TYSSE fire alarm design directions.”
[73] Changes were also made pursuant to RFQ 480 issued on August 15, 2016, and the addition of aspirating smoke detectors in certain rooms for maintenance and testing reasons. There were four revisions to RFQ 480 from August 2016 to March 2017. Internal TTC emails from Tom Grasser, the senior person at TTC in charge of the fire alarm system, blamed the designers, not Walsh, for the issues with the fire alarm system and their failure to design a coordinated system. He wrote that blaming Walsh for the designers’ lack of coordinated drawings and design had to stop. Eventually, pursuant to RFQ 480 (Rev 2), issued on November 10, 2016, Walsh was directed to take over the design of the aspirating smoke detectors.
[74] In my view, the evidence is clear that the problems with the fire alarm system caused delay to the Project and that the problems were the responsibility of TTC, not Walsh. While Mr. Cunliffe did not wish to say this in his affidavit and continued to blame Walsh for not providing detailed shop drawings, the RFQs themselves and the internal TTC correspondence says otherwise.
[75] Walsh argues that the issues with the artwork also caused delay to the Project. The artwork issues are also dealt with during the discussion of underfunded CDs, specifically CD 521 on the artwork rigging system, and the disputed NOICs, specifically NOIC #242 on the artwork light cable support.
[76] As indicated elsewhere, I accept the evidence of Mr. Norris as to the history associated with the artwork. Walsh was not provided with the promised prototype of the artwork and it was only provided with shop drawings for the artwork fixtures in June 2016. Mr. Pipilas in cross-examination admitted with some reluctance that TTC did not install a prototype on a suspension system to simulate actual site conditions as it had contracted to do. Mr. Pipilas further acknowledged that Walsh had made continuous requests for the prototype throughout 2015 and it still was not ready by the end of June 2015. Mr. Cunliffe further acknowledged that shop drawings were not sent to Walsh by September 2015 and that without them, Walsh could do nothing. Exhibit 1144 shows that the shop drawings were only given to Walsh on June 22, 2016, following the issuance of CC 420 on May 26, 2016 authorizing Walsh to build the artwork fixtures.
[77] The issues with the rigging system are discussed elsewhere, as mentioned above. It was completely redesigned once the wind resistance specifications were changed and lowered. Turnbuckles were then used to tighten the cables when the previous design from TTC did not work. All of this led to delay.
[78] I am of the view that the delay relating to the artwork installation was not Walsh’s fault. It resulted from TTC’s failure to provide a prototype, TTC’s decision to alter the wind resistance specifications and the resulting changes to the support system, and the subsequent addition of the turnbuckles to correct the issues with the support system design which TTC had provided to Walsh.
[79] TTC argues that Walsh failed to engage subcontractors on a timely basis, that it did not have to provide Walsh with an actual prototype but only with a “proof-of-principle”, and that Walsh failed to properly fabricate the light fixtures. This, however, runs contrary to the fact that the shop drawings were not submitted until June 2016 and as admitted by Mr. Pipilas in cross-examination, it was only after this submittal that Walsh could start to build the light fixtures. TTC’s position also ignores the fact that the wind specifications were changed in late 2016 and a RFQ confirming the change was issued in January 2017.
[80] Walsh’s final argument about design issues causing delay to the Project has to do with the escalators. Walsh raised three issues: 1) gaps in the escalator balustrades, 2) cladding on the escalators, and 3) low lighting above the escalators. All of these issues had to be remedied before the TSSA would approve the operation of the escalators, which is required for an occupancy permit for the station. As admitted by Mr. Cunliffe in cross-examination, all three of the issues associated with the escalators were design issues and not construction issues relating to Walsh or its subcontractors.
[81] The issue with the balustrades ran from September 7, 2016, when Walsh raised the issue through an RFI, until TTC issued a CD on August 2, 2017. The issue with the cladding ran from June 2017, when TTC issued a RFI to its designers, until November 22, 2017, when an engineer’s letter was received approving the system designed to support the porcelain cladding. As to the low-level lighting, the issue ran from May 2017, when TSSA questioned the lighting and Walsh raised the issue through an RFI, until TTC issued a CC in November 2017 to install additional lighting.
[82] In argument, TTC merely states that the delay was caused by Walsh’s failure to obtain timely approval from the TSSA, relying upon one paragraph from Mr. Cunliffe’s affidavit. This is, in my view, a misstatement of Mr. Cunliffe’s affidavit. While it is correct that certain deficiencies, as noted by TSSA, had to be corrected prior to approval, the ones cited by Walsh had nothing to do with its work; they arose from design issues which were TTC’s responsibility, as admitted by Mr. Cunliffe during cross-examination.
[83] In my view, the delay associated with the escalators from September 2016 to December 2017 was not Walsh’s fault. It stemmed from TTC’s design issues and had nothing to do with Walsh’s work.
EXPERT EVIDENCE ON DELAY AND COMPENSABLE CLAIMS
[84] There is no doubt that the Project was plagued by delay. There is also no doubt that TTC was responsible for much of the delay. Not only was the design not ready for tender, but there were also constant changes during the course of construction. As well, the failure to provide Walsh with exclusive possession of the entire jobsite in conjunction with the problems associated with the utility issues, the 1650 mm storm line, the delayed handovers of LS-1 and ES-2, and the eventual direction for Walsh to take over the work associated with LS-1, all caused delay. I have also found, as argued by Walsh, that TTC was responsible for delay associated with the bus terminal concrete piers, the weathering steel soffit, the fire alarm changes, the artwork, and the escalator design issues.
[85] Through CD 30 (Rev 4), TTC admitted Walsh was entitled to 307 days of compensable delay stemming from the utility lines relocation, the sewer, water and storm line defects and deficiencies, and the deterioration of the 1650 storm drainage pipe. TTC also admitted, through CD 443, that Walsh was entitled to 104 days of compensable delay stemming from the late handover of LS-1. But that was it. TTC argues that, despite substantial performance being 953 days more than anticipated and revenue service being 1047 days more than the anticipated contractual completion date, Walsh is entitled to nothing further.
[86] The court is in no position to determine the amount of compensable delay on its own; it does not have the expertise to do so. This is not a situation of there being a single delay leading to a delayed completion, where the delay is readily quantified.
[87] A construction project of any complexity consists of a multitude of moving parts. Work can be carried out at the same time at a number of locations; it is not simply a linear process like the building of a Lego model. A delay on one aspect of a project may not have an impact on its ultimate completion date because there may be other delays happening concurrently that are, in the scheme of things, more important or critical to the eventual completion of the project.
[88] In construction law, delay is categorized as excusable or non-excusable and compensable or non-compensable. Non-excusable delay is delay for which Walsh is not entitled to any time extension or compensation because it is a delay within its control. An example of this would be a delay resulting from Walsh’s failure to perform its own obligations. Excusable delay is generally viewed as delay that is beyond Walsh’s control and for which it may be entitled to compensation.
[89] However, this is complicated by the fact that there may be concurrent delays for which Walsh is responsible; these would make an excusable delay non-compensable. Concurrent delay on a project is often difficult to evaluate, since it involves evaluating how each event delayed completion of the project, which is a more involved and speculative assessment process compared to an isolated or singular cause of delay. Analysis of concurrent delay requires breaking the overall delay into its component parts and apportioning time, responsibility and costs: see Schindler Elevator Corporation v. Walsh Construction Company of Canada, 2021 ONSC 283, 17 C.L.R. (5th) 253, at paras. 301-303.
[90] The other issue to consider is whether the delay was on the Project’s critical path, the series of connected tasks that define the minimum overall duration for completion of a project, also known as the longest path.
[91] The difficulty, certainly for the court, lies in calculating with any precision the impact of one event on the timing of a project, let alone the impact of a multitude of events on a massive project such as this one. These events are closely intertwined, overlap with one another, and may be excusable or non-excusable, concurrent or isolated, or on or off the critical path.
[92] TTC argues that for Walsh to be compensated for delay, Walsh must prove that the delay was the sole responsibility of the TTC, on the critical path, and without any concurrent delay. The onus on Walsh to prove this is on a balance of probabilities, or the typical civil onus of proof. Walsh says that it has met this onus through the evidence of Richard Ott, who prepared a detailed delay impact analysis and who concluded that Walsh was entitled to a total of 1,047 days of excusable and compensable delay.
[93] Mr. Ott was accepted as an expert in construction schedule and delay analysis on the agreement of the parties. He provided an opinion as to the length of the compensable time extension to which Walsh was entitled based on his analysis.
[94] To introduce expert evidence, a party must satisfy the four factors set out in R. v. Mohan, 1994 CanLII 80 (SCC), [1994] 2 S.C.R. 9: 1) relevance; 2) necessity in assisting the trier of fact; 3) absence of an exclusionary rule; and 4) a properly qualified expert: at pp. 20-25.
[95] In White Burgess Langville Inman v. Abbott and Haliburton Co., 2015 SCC 23, [2015] 2 S.C.R. 182, the Supreme Court further clarified that the admission of expert evidence involves a two-stage inquiry. The first stage requires the trial judge to consider the threshold requirements of admissibility laid out in Mohan. The second stage requires the trial judge to balance the potential risks and benefits of admitting the evidence in order to determine whether the benefits justify the risks: at para. 24. As part of this, it was recognized that expert witnesses have a duty to give fair, objective, and non-partisan evidence.
[96] At one point, TTC filed a motion prior to Mr. Ott’s testimony seeking an order to refuse Walsh’s request to qualify Mr. Ott as an expert and to exclude all of his expert reports. A day was set aside to argue this issue. A few days prior to the motion date, TTC advised that it was no longer objecting to him being qualified as an expert witness but would continue to challenge his lack of independence, arguing that this lack of independence should go to the weight of his evidence. TTC now argues that Mr. Ott was not an independent witness and that his evidence should be given no weight.
[97] Any concerns related to Mr. Ott’s duty to the court and his willingness and capacity to comply with it are best addressed initially in the “qualified expert” portion of the Mohan framework: see White Burgess, at para. 53.
[98] I accept that my gatekeeper function continues regardless of Mr. Ott’s qualification and the fact that he was permitted to give evidence. Further, bias that may not be disabling can go to weight: Ontario (Natural Resources and Forestry) v. South Bruce Peninsula (Town), 2022 ONCA 315, 161 O.R. (3d) 436, at paras. 79-80. While TTC did not continue with its motion to disqualify Mr. Ott, its argument that his evidence should be given zero weight is effectively seeking the same result.
[99] As pointed out in South Bruce, excluding evidence, which TTC is effectively asking the court to do after admitting it, is a rare event. This does not mean, however, that TTC’s argument should be automatically dismissed.
[100] TTC argues that Mr. Ott was part of the Walsh team, that he was an advocate for Walsh, and that his lack of independence resulted in a biased methodology to arrive at an impossible conclusion.
[101] In Wise v. Abbott Laboratories, Limited, 2016 ONSC 7275, 34 C.C.L.T. (4th) 25, the court listed 14 factors that should be considered when determining the possible bias of an expert witness. Of those 14 factors, TTC relies on “a history of retainer exclusively or nearly so by the prosecution or defence”, “long association with one lawyer or party”, and “personal involvement or association with a party.” I found no evidence of the latter factor. The first two factors are basically the same and there was evidence that Mr. Ott had a history of being retained by Walsh. But beyond that, there was in my view nothing. Courts recognize that experts are called by one party on an adversarial proceeding and are paid to prepare their report and testify. There were no questions asked of Mr. Ott about this and whether the fee was contingent upon success, which in my view is one of the more telling factors of possible bias. Beyond a listing of previous retainers, there was no inquiry as to any prior findings of bias or the results associated with the previous retainers.
[102] Mr. Ott did have some involvement with Walsh’s Red Book and Blue Book claims as they both contained Mr. Ott’s time impact analysis. It was not unreasonable to include the time impact analysis in the claims as TTC surely required this sort of analysis as part of the claim process. This did not make him a part of the “Walsh Team”, nor did it make him an advocate. As stated by Robert Otruba, another expert in construction schedule and delay analysis on behalf of Walsh, it is not unusual for someone like Mr. Ott to analyze work during construction and to continue with this analysis if litigation ensues. I agree.
[103] In my view, it is also not unreasonable for there to have been communication between Walsh and Mr. Ott so Walsh could answer any of his questions or provide him with the necessary documentation for his analysis and eventual opinion. Nor can I find, as argued by TTC, that Walsh was the one who determined what events led to the fragnets (mathematical models of delay events) that Mr. Ott inserted into his analysis. While Mr. Ott admitted that he communicated with personnel at Walsh, he was clear in his evidence that he was the one who decided whether an issue resulted in a changed condition and whether that condition became a fragnet.
[104] I am satisfied that Mr. Ott was able and willing to provide the court with fair, objective and non-partisan evidence as sworn in his Form 53. TTC has not convinced me that Mr. Ott’s evidence should be given no weight because he was unable or unwilling to comply with his sworn duty.
[105] As for TTC’s allegation that Mr. Ott’s methodology evidenced bias, this is more properly looked at when determining what value I should place on his report if it did in fact contain methodological errors, not as a matter of bias. This is addressed below.
[106] Having considered the other Mohan factors, I find that they have been met. There is no exclusionary rule that was proposed or of which I am aware, the length of compensable delay is certainly relevant, and there is necessity. In order to meet the threshold of necessity, the expert evidence has to be more than merely helpful but is not to be judged on too strict a standard. It is necessary if it provides information which is likely to be outside the experience and knowledge of the court. It is not to substitute the expert for the court as trier of fact. The court must still make an informed judgment, not an act of faith: see R. v. J.-L.J., 2000 SCC 51, [2000] 2 S.C.R. 600, at para. 56.
[107] As I have already indicated, I am unable to make a determination of the amount of compensable delay on my own. While I am able to find, and as admitted by TTC, that there is some compensable delay, any determination of the amount of compensable delay by myself would be mere guess work. Any risks in admitting this opinion evidence are more than offset by the benefits of doing so. The risks are also minimized by the admission of the expert opinions of Kenji Hoshino (for TTC) and Mr. Otruba (for Walsh), who also gave evidence on scheduling analysis and Mr. Ott’s report, and by the court’s recognition that it must, at the end of the day, form an independent judgment.
[108] Mr. Ott’s delay impact analysis, also known as a time impact analysis, entailed identifying and evaluating the changes, delays, events, or conditions (the “Changed Conditions”) that were different than what was in the Contract documents, determining whether these Changed Conditions impacted Walsh’s progress and ability to perform its work as planned, and if so, evaluating the extent to which it was impacted. To do this, Mr. Ott divided the Project into time periods known as Windows. He created a total of 48 Windows tracking the critical path schedules submitted by Walsh to TTC over the course of the Project.
[109] Mr. Ott testified that his analysis assessed Walsh’s performance on the Project and that of its subcontractors to determine whether their performance affected the critical path. It is the critical path delay that must be looked at and measured, as there can be delays throughout a project that do not lead to critical path delay. He testified that he identified and investigated over 780 TTC-related Change Conditions to see how each affected Walsh’s work and the critical path.
[110] Mr. Ott testified that to do so, he created a fragnet for the selected Change Conditions and then placed the fragnet into the software program used for scheduling purposes, Primavera P6, to see the impact. He testified that he determined what fragnets to develop and what to put in each but that he did not know whether any specific fragnet would cause delay to the Project until it was inserted into the schedule.
[111] He further testified that the premise of his methodology was that Walsh was responsible for all the delay until such time as the analysis proved that TTC was responsible. If a fragnet was not created, then the responsibility for the delay would have remained with Walsh.
[112] He also testified that in conducting his analysis, he reviewed a huge amount of Project documentation, including among other things RFIs, RFQs, CDs, NOICs, Walsh Schedules, TTC Schedules, correspondence between Walsh and TTC and between Walsh and its subcontractors, daily reports and meeting minutes.
[113] Mr. Ott testified that each Window had three schedules associated with it: Walsh’s contemporaneous schedule that it submitted to TTC; an update schedule (the “UP”) that he created based upon the Walsh contemporaneous schedule, where he analyzed any anomalies in Walsh’s schedule; and an impacted schedule (the “IM”), which is the schedule created by the scheduling software following the insertion of the fragnets into the UP. If the Contract completion date changed in the IM compared to the UP, then the fragnet had caused a delay to the Project.
[114] Mr. Ott further testified that he analyzed the transition between each Window to determine whether Walsh had caused any delay to the Project and if it had, whether it was concurrent with the TTC-caused delay.
[115] His opinion was that Walsh was entitled to 1,047 days of compensable time extension in achieving Contract completion or revenue service on December 17, 2017, of which TTC acknowledged a total of 411 days through the issuance of CD 30 on October 5, 2015 (for 307 days of delay between December 21, 2011 and October 23, 2012) and CD 443 on April 27, 2016 (for an additional 104 days relating to the issues with LS-1).
[116] TTC did not provide an expert opinion on the amount of compensable delay Walsh was entitled to over the life of the Project. Rather, it provided a critique of Mr. Ott’s opinion from its own expert Mr. Hoshino and maintained its position that Walsh was entitled to 411 days of compensable delay, which flowed primarily from problems early on in the Project and which had been assessed by Navigant, which had been retained by Bechtel.
[117] Mr. Hoshino’s critique of Mr. Ott had to do primarily with his methodology. Among other things, TTC argues that Mr. Ott did not insert fragnets for Walsh or subcontractor delay, that he relied upon Walsh’s erroneous project schedules, that he used what was called “reverse logic”, that his number of changes were excessive, that he failed to account for concurrency, and that he ultimately failed to conduct a proper analysis.
[118] Walsh counters each of these criticisms. It argues that fragnets were not required for Walsh-caused delay as Mr. Ott took the position that Walsh was responsible for all delay unless his analysis showed that TTC was responsible. It disputes TTC’s assertion that Walsh’s project schedules were erroneous as there was no evidence of this and TTC did not complain about them at the time. Bechtel acknowledged that these schedules were realistic and that those criticizing them were either not called to give evidence or were so unreliable that their criticism should not be believed. Walsh further argues that there was no actual evidence of reverse logic, nor actual evidence that the alleged logic errors had any impact on Mr. Ott’s result, that the number of changes was overstated and wrong, or that any change led to an error in the result. Finally, Walsh argues that concurrency was accounted for in the transition between each Window.
[119] Walsh also presented evidence from Mr. Otruba, who replied to Mr. Hoshino’s criticism of Mr. Ott’s methodology. Mr. Otruba was also accepted by me as an expert in construction schedule and delay analysis. He was of the opinion that Mr. Hoshino’s criticisms of Mr. Ott’s methodology were incorrect, that Mr. Ott’s methodology was appropriate, and that Mr. Ott had conducted a reasonable schedule analysis.
[120] Mr. Otruba testified that departures from the Recommended Practice (the “RP”) were not errors and were recognized by the RP itself as being appropriate in certain circumstances. He testified that the goal of delay analysis is to develop an accurate and reasonable evaluation of project delay and that this can be done through many different methodologies. He testified that there were always judgment calls and that the RP allowed for various adjustments and options.
[121] This view is contained in RP No. 29R-03 itself. It sets out in its introduction that schedule analysis is both a science and an art. It relies upon professional judgment and expert opinion and usually requires many subjective decisions.
[122] Mr. Otruba’s evidence was criticized by TTC, who argued that he did not undertake any delay analysis of the Project and his evidence was tendered solely to criticize Mr. Hoshino’s report and to buttress Mr. Ott’s. He was said to be a cheerleader. In my view, much the same could be said about Mr. Hoshino’s evidence and what he did. He did not undertake a delay analysis of the Project. He was there, ultimately, to solely criticize Mr. Ott’s report.
[123] I am left with only one expert opinion as to the amount of compensable delay, with two conflicting expert opinions as to whether the methodology used by the first expert was appropriate. At the end of the day, TTC’s main argument against Mr. Ott’s analysis, and for asking the court to reject Mr. Ott’s opinion as to the amount of the delay, is that it is simply too much. It does this without presenting any other opinion as to the amount of delay.
[124] The 411 days of TTC-acknowledged delay is based upon the work of Ted Douglas of Navigant, working for Bechtel. While a certified scheduling professional, Mr. Douglas was not put forward as an independent expert in delay analysis. The 104 days attributable to CD 443 relating to the delayed handover of LS-1, as determined by Mr. Douglas, is clearly questionable. While he did not want to admit it, he reluctantly agreed during cross-examination that he had re-inserted a logic tie between concrete work at Gridline 12 and Gridline 6e in assessing delay in 2013 and 2014, which placed concrete work on the critical path rather than the delay in receiving LS-1. This was after he had previously acknowledged to TTC that this concrete work was not on the critical path. By doing so, the impact arising from the delay in handing over LS-1 to Walsh was minimized.
[125] Mr. Douglas also acknowledged in cross-examination that Navigant’s delay analysis of July 17, 2015 also wrongly concluded that there was no delay to Walsh in 2013, as in 2013 there were still issues with the 1650 mm storm sewer and the utility work. CD 30 only covered the time period to the end of 2012. Mr. Douglas’ admission of ongoing delay supports the argument that the 307 days for the utility delay and the “Mountain in the Middle” was not enough.
[126] In fact, in September 2015 Navigant advised TTC that its earlier figure for compensable delay would have to be increased to account for delay carried over from the period ending December 2013 that manifested itself in 2014/2015. It estimated this to be an additional 270 days. While Mr. Douglas had difficulty acknowledging this during cross-examination, the total delay as calculated by Navigant was 577 days, which he also acknowledged was not far off Walsh’s Red Book claim from August 29, 2014, of 630 days.
[127] Mr. Ott has a civil engineering degree and is a registered professional engineer in three states in the United States. Since 1993 he has been analyzing critical path schedule and construction claims and has been accepted by multiple courts and arbitral bodies as an expert in construction schedule delay analysis.
[128] Mr. Hoshino has a degree in architecture, a law degree and a Master’s degree in construction engineering and management. He has numerous certificates in forensic schedule analysis. Since 1982 he has been involved in construction scheduling, delay analysis and forensic schedule analysis and has been accepted by multiple courts and arbitral boards as an expert in these areas. He has given numerous presentations in these areas and was the principal author of RP No. 29R-03 when first published in 2007.
[129] Mr. Otruba is a civil engineer. Since 1993 he has been involved in construction, including scheduling work and delay analysis. He has been accepted as an expert in these areas. In 2004, he started teaching at NYU’s Engineering School and developed a course in construction scheduling. Currently he teaches the graduate course in construction scheduling at this school, including teaching on the use of Primavera software.
[130] All three experts are eminently qualified. Their opinions differ. Delay analysis methodology is completely foreign to me, yet I am tasked with having to conclude whose opinion to accept on matters that these three experts have spent their life studying.
[131] I found Mr. Ott to be very patient in the face of repetitive cross-examination and, while a bit of an advocate for Walsh’s position, his evidence was straightforward and ultimately based on an in-depth analysis of much of the file documentation. I found Mr. Hoshino to be dogmatic in his evidence and somewhat surprised that his view of matters could be challenged, let alone disagreed with. He split hairs on the wording of questions, often did not want to answer the question asked, and often threw in something extra that was not asked. He was prone to advocacy, certainly more so than Mr. Ott. Mr. Otruba was reasonable and flexible in his evidence and readily conceded points during cross-examination.
[132] It must also be remembered that Mr. Ott is the only expert who actually did a delay impact analysis and who provided an actual opinion as to the compensable time extension to which Walsh was entitled. Mr. Hoshino was critical of Mr. Ott’s methodology. Mr. Otruba was supportive of Mr. Ott’s methodology. I cannot find that Mr. Ott’s methodology was so inappropriate that his opinion should be rejected and TTC’s position of 411 days of compensable delay accepted. This is especially so considering that the position of 411 days based upon Navigant’s initial assessments is seriously flawed, and that Walsh’s and Navigant’s later delay assessments were at one point closer aligned at 630 vs. 577 days. Navigant’s assessment of September 2015 is apparently as close as TTC came to having its own delay impact analysis conducted. The only delay impact analysis in evidence is Mr. Ott’s. It is detailed. It considers responsibility for the delay, the critical path, and concurrency. Mr. Ott’s methodology was appropriate. That it finds too much delay being compensable is not a compelling argument. If TTC had presented its own delay impact analysis, then I would have been placed in a position of having to choose between the two or arriving at a different number altogether. But it did not do so. Mr. Douglas’ evidence to support the admitted 411 days of compensable delay was flawed. Navigant’s view provided to TTC during the Project itself supported Mr. Ott’s opinion. I was given a binary choice between 1,047 days and 411 days, and I find based upon Mr. Ott’s opinion that Walsh is entitled to 1,047 compensable days of delay.
HEADS OF DAMAGE IN ORDER FROM #1 - #22
a. Extended Contract Performance Period (“ECPP”) – Heads of Damage #1 - #3
[133] Contract completion was meant to be achieved on February 4, 2015. Revenue service was actually achieved on December 17, 2017, 1,047 days later. I have already determined that Walsh is entitled to 1,047 days of compensable delay. These damage claims relate to this extended time on the Project. TTC acknowledged that these damage claims were appropriate when it issued CDs 30 and 443, compensating Walsh for its office, field and site personnel expenses for the additional 411 days that it did recognize as being its responsibility.
[134] During the negotiation of these expenses, Walsh and TTC reached agreement on the office expenses and field expenses. Where they disagreed was on the costs associated with site personnel, along with the amount of time extension.
[135] I find that Walsh is entitled to damages for the 1,047 days, as opposed to the 411 days asserted by TTC. Walsh is also entitled to its claim amount for these three Heads of Damage.
[136] Before addressing these three damage claims, I should address TTC’s argument that Walsh is not entitled to markup on its claims, in that it is contrary to the Contract and that there is no profit guarantee in a fixed-price contract.
[137] TTC argues that since this is a fixed-price contract, the risk of the cost overruns falls on Walsh and not on TTC. While that may be the case where the contractor is responsible for the cost increases to the project, that is not the case here. TTC is responsible for 1,047 days of delay. Walsh should not be the one carrying the burden of the Project going over budget. It would be neither reasonable nor fair for TTC to cause substantial delay to the Project and then say to Walsh that all the cost overrun is on Walsh. Moreover, through its recognition that it was responsible for some payment through CDs 30 and 443, TTC cannot now seriously put this argument forward.
[138] Nor do I accept that the Contract prohibits Walsh from claiming a markup. TTC argues that markup only applies to changes performed on either a lump-sum or force-account basis and cites SC 8.4 in support. Since the change provisions specifically allows for markup then, according to TTC, nothing else does. In my view, that is not a prohibition against markup generally. SC 8 deals specifically with changes and does not deal with delay. That is dealt with in GC 17, where it states that if TTC and Walsh cannot agree as to the length of delay and appropriate compensation, then GC 31 applies. There is no prohibition of markup in GC 31. I can see no basis upon which a contractor such as Walsh, who is required to stay on a project for much longer than anticipated through no fault of its own, should somehow be limited to the profit allowed, and as argued by TTC, make the same profit on a 2,300-day job as on a 1,300-day one. If TTC had wanted to limit profit or markup on a delayed Project, then it could have made it clear in GC 31 that it was not to be liable for any markup on any outstanding monies claimed by the contractor on top of not being liable for interest or financing costs.
[139] As to the claims themselves, they are based upon Walsh’s damages expert Paul Ficca’s review of the Job Costing Transaction Report (the “JCTR”), where these amounts were tracked between the planned Contract completion date and actual revenue service date. The office expenses included the costs associated with office rental, trailer rentals, coffee, office supplies, computer costs, cell phones, office cleaning, photocopying, printing, and immigration fees. The field expenses included utilities, garbage cans, temporary toilets, site maintenance, small tools, safety supplies, and dewatering and hoisting costs. Many of these costs were paid to subcontractors. The staff expenses included the salaries for supervisory and support staff, project management, superintendents, engineers, office managers, accountants, and administration help.
[140] The amount for the office costs for this period totalled $1,264,755, or $1,208 per day. With a markup of 9.89 percent, or $119 per day, the total daily rate was $1,327. Scott Davidson, TTC’s damages expert, took no issue with this as a daily rate, which was understandable considering that TTC had agreed under CDs 30 and 443 to a daily rate of $1,438. Accounting for what was paid under these two CDs, the total outstanding to Walsh for the extended performance period office overhead is $798,522.
[141] The amount for the field costs for the same period totalled $10,283,058, or $9,821 per day. With a markup of $971 per day, the total daily rate according to Mr. Ficca was $10,792. Mr. Davidson took no issue with this as a daily rate. Under the aforementioned CDs, TTC had agreed to pay a daily rate of $9,428. Mr. Davidson felt that the agreed rate was too small of a difference compared to the claimed rate of $9,821. I recognize that this is without the markup of $971, which Mr. Davidson suggests is not applicable under the Contract, but there was no analysis by Mr. Davidson to suggest that any of Mr. Ficca’s numbers or inclusions in the field costs were wrong and I see no reason not to accept Mr. Ficca’s calculation. In addition, to have the costs increase over time is not unreasonable and would be expected. Accounting for what was paid under the two CDs, the total outstanding to Walsh for the extended performance period field overhead is $7,425,054.
[142] The amount calculated by Mr. Ficca for the staff costs for the same period with markup totalled $12,673,351, or $12,104 per day. The staff costs were taken from the JCTR and included base labour wages, burden and, where appropriate, Canadian taxes withheld for foreign workers.
[143] During the negotiations over CDs 30 and 443, Walsh and TTC did not come close to an agreement for this item. In January 2014, Walsh claimed $13,429 for its daily staffing costs, whereas TTC was only prepared to pay $5,500 per day.
[144] In his report, Mr. Davidson recalculated the staff costs by removing any Walsh personnel who had the words “changes” or “claims” in their job title on the rational that these individuals were involved in Contract claim administration and were to be compensated for, not under the delay provisions in GC 31, but under the change provisions of SC 8. Mr. Davidson removed a total of eight individuals who carried a total of $1,809,069 in wages, burden and taxes, for $1,728 per day. Taking this from Mr. Ficca’s pre-markup amount of $11,015 per day resulted in a daily staffing cost amount of $9,287. If markup were added to this daily amount, which Mr. Davidson did not do, the daily total would be $10,205, certainly closer to Mr. Ficca’s amount of $12,104 per day than TTC’s amount of $5,500 per day.
[145] While Mr. Davidson gave no opinion on this and neither Mr. O’Connell or Mr. Ficca were cross-examined on it, TTC in its argument suggests that the claimed-for per diem rate is suspect and unreasonable, as it is approximately 64 percent higher than the staffing cost in the OCPP. In contrast, TTC’s offer of $5,500 was within 22 percent of this same staffing cost.
[146] I do not accept Mr Davidson’s recalculation or TTC’s argument. To remove personnel on the basis of their job title is no analysis. It is simply arbitrary and bears no relationship to what is being claimed for - the staff costs during the extended performance period. As to TTC’s argument, it is another after-the-fact, speculative argument which was not put to any witness and which TTC is now asking me to accept without evidence of the conclusion reached.
[147] While the staffing number is large, the personnel was, according to Mr. O’Connell, required to deal with all the changes, the additional drawings, the multitude of RFIs and RFQs, and the ongoing issues with the Project. It should not be forgotten that TTC’s staff were unable to effectively manage the TYSSE, including the Project, which resulted in the need to add additional personnel from Bechtel and Navigant. While not all the Bechtel and Navigant personnel were dealing exclusively with this Project, it does support Mr. O’Connell’s evidence as to the issues and the need for increased Walsh personnel on the Project.
[148] I am satisfied with Mr. Ficca’s damage calculation. Accounting for what was paid under the two CDs, the total outstanding to Walsh for the extended performance period staff overhead is $10,412,850.
b. Original Contract Performance Period (“OCPP”) – Heads of Damage #4 - #6
[149] The original Contract period was from September 8, 2011 to February 4, 2015. Walsh says that it incurred additional office, field and site personnel expenses during this period as a result of the delays, design defects, and all of the changes to the Project for which TTC was responsible.
[150] TTC raises many of the same arguments that have already been dealt with by me in relation to Heads of Damage #1-3. For the reasons already given, I find that Walsh is entitled to markup on the damages claimed during the OCPP. The risk of cost overruns did not fall on Walsh in the circumstances here, and the Contract does not prohibit Walsh from claiming a markup.
[151] The claimed office and field expenses for this period are the same types of expenses as for Heads of Damage #1 and #2 during the ECPP. Mr. Ficca, again using the JCTR, calculated the daily cost for these expenses over two time periods, took the difference between the two, and then multiplied this number by the claim days in the second period.
[152] The first time period ran from June 1, 2013 to February 28, 2014. It was chosen as the “representative” time period to reflect what Walsh’s office and field expenses were without any acceleration. The start date was picked because according to Mr. O’Connell, this was when Walsh ramped up its staff. It was therefore more representative of what the staff, field and office expenses would have been like without all of the delays that had occurred through 2011, 2012 and 2013, including the utility delays, design changes, and problems associated with the turnover of ES-2 and LS-1.
[153] The second time period ran from March 1, 2014 to February 4, 2015, a total of 341 days. The end date chosen was the original Contract completion date. The start date was chosen based on CD 62 directing implementation of the Amended Revised Construction Plan and Schedule (“ARCPS”), which had been issued on December 24, 2013, followed by Rev #0 on January 7, 2014 and Rev #1 on January 21, 2014. The increased office and field expenses during this period were to reflect the increases associated with the resultant acceleration under CD 62.
[154] Mr. Ficca calculated the increase in the office jobsite overhead to be $153,974 and the increase in the field jobsite overhead to be $1,720,431, both inclusive of markup.
[155] TTC raised a multitude of arguments against these claims. As already mentioned, many of these arguments have already been dealt with, such as the lack of entitlement to markup, the assumption of risk of cost overruns, and that the ARCPS was not an acceleration schedule.
[156] One of the newer arguments put forward by TTC was that Mr. Ficca used a total cost method for his damage calculation. It argues that as required by this damage calculation, Mr. Ficca failed to consider Walsh’s budget to see if it contained errors, failed to show that Walsh took mitigation efforts, and failed to show that it did not have self-inflicted damages. Leaving aside whether Mr. Ficca used a total cost method, which he denied, in my view the onus was on TTC to show that Walsh’s budget contained errors, that Walsh did not mitigate, or that there were self-inflicted damages, to which Walsh could have responded.
[157] TTC also argues that CD 453 was issued on May 9, 2016, and covered all of the expenses within this time period. In my view, CD 453 is more properly dealt with under Head of Damage #6 and the staffing expenses. CD 453 makes no reference to office or field expenses.
[158] TTC also argues that there was no explanation provided as to why the “representative” time period was chosen. In my view, Mr. O’Connell did provide an explanation.
[159] Where I do think TTC has a point is reflected in Mr. Davidson’s opinion and report, where he stated that Walsh incurred much less in office and field expenses during the time period from September 8, 2011, when the Contract was awarded, until the “representative” period starting June 1, 2013. It argues that Mr. Ficca’s damage analysis failed to account for this fact.
[160] In his reply report, Mr. Ficca was of the view that the time period from September 2011 to June 2013 should not be considered because Walsh was not able to fully engage in the Project. He testified that if this period had been considered it would have increased the damages, as it would have lowered the average daily cost which would have in turn increased the difference between the two periods.
[161] It is because Walsh was not able to fully engage on the Project that the time from September 8, 2011 should be considered. As Mr. O’Connell testified, Walsh did not ramp up until June 2013. Accordingly, its office and field overhead expenses were lower. It was not out of pocket for the amounts that it began to incur starting in June 2013.
[162] The OCPP is from September 8, 2011 to February 4, 2015, and the total time period should be considered. The JCTR contains all the costs incurred over this period. Mr. Davidson looked at the monthly costs from beginning to end and concluded that what was increased by Walsh in office and field overhead expenses in the impacted period was offset by the decreased expenses in the period from September 8, 2011 to June 1, 2013. The expenses were incurred in a shorter period of time due to the acceleration.
[163] In my view, Mr. Ficca’s use of the two different averages is inappropriate for this damage calculation where the actual expenses are known. If damages are to reflect the amount of money required to put Walsh into the same situation it would have been if the Contract had been performed, then Mr. Davidson’s analysis for the office and field overhead expenses does this. While Walsh incurred more expenses from February 2014 as a result of the acceleration, it incurred fewer expenses to June 2013 as a result of the issues that eventually led to the need for acceleration. Walsh’s claim for its office and field overhead expenses during the OCPP is dismissed.
[164] TTC recognized through the issuance of CD 453 that Walsh was entitled to compensation for additional staff-related jobsite overhead or staff thickening. It paid $2,678,035, exclusive of HST, pursuant to CD 453. Walsh argues that this was not enough.
[165] Mr. Ficca added up the costs for employees as set out in the JCTR, which included the base labour costs, burden, and taxes for the entire OCPP. He then subtracted the anticipated costs as set out in the tender, which listed not the actual employees but the planned positions, and then applied a markup.
[166] The crux of TTC’s argument is that Walsh’s original planned staffing costs were unreasonable. Patrick Ouellet, who authored the Navigant report upon which CD 453 and TTC’s payment was based, was of the view that Walsh had underestimated the required personnel at tender and increased the planned man-days from 12,019 to 17,955, an increase of 5,936 man-days or nearly 50 percent. Mr. Davidson also concluded that the planned staffing was seemingly implausible because the planned staffing was around 10 people, while the actual staffing was at times as high as 40, and when CD 62 was issued, was approximately 25.
[167] Mr. Ouellet also took issue with Walsh’s calculations of the costs associated with the employees. He did so by, among other things, looking at government websites relating to taxes and occasionally talking to government representatives and looking at exchange rates on the Bank of Canada website. He also acknowledged that his report and assessment from April 2016 was of Walsh’s Red Book claim of August 2014, and that he carried out no further assessment using any subsequently obtained documentation before giving his evidence at trial.
[168] While not going so far as Walsh, who argues that Mr. Ouellet’s report should be ignored on the basis that it was a mere negotiating tool, I must recognize that Mr. Ouellet was not called and accepted as an independent expert, whereas Mr. Ficca was. This is not a criticism of Mr. Ouellet but a fact. Nor is TTC’s reference to a 2010 decision, where the court there found Mr. Ouellet to be a reliable and credible witness, at all helpful. That is completely irrelevant to the task before me, which is to assess whether Walsh has made out this claim on a balance of probabilities. While Mr. Ouellet’s 2016 report may have explained why TTC issued CD 453 for the amount that it did in May 2016, it does not determine whether Walsh’s claim in 2023 was excessive.
[169] Again, it must not be forgotten that Mr. Ficca’s numbers for the cost of the employees was taken from Walsh’s financial records and the JCTR. If Walsh paid these employees too much, as TTC seems to be arguing in its closing submissions, then it should have called clear evidence on this or shown this through cross-examination. It did not do so.
[170] Similarly, TTC now argues that Walsh’s initial tender and bid was far too low with respect to the required staffing and that Walsh through this claim was now seeking damages for the level of employees that is should have had from the start. To make this argument, TTC should have called evidence to this effect, which it did not, or at least cross-examined Mr. O’Connell on this. Mr. Ouellet’s opinion on an apparently arbitrary 50-percent increase in staffing, and Mr. Davidson’s opinion that the planned staffing was implausible because Walsh ended up using far more staff, does not convince me of initial understaffing.
[171] The increase in staffing is not implausible. Rather, it is explained by all of the problems right from the start: the situation that Walsh found itself in at the end of 2013 when TTC decided it needed to accelerate the Project to make up for delays, and thereafter when all of the problems and delays with this Project continued.
[172] Mr. O’Connell testified as to how the problems on the Project required more personnel and how all the changes had a cumulative or snowballing effect. When cross-examined about the need to hire additional personnel to deal with all the changes, Mr. O’Connell was clear that while changes are part of a construction job, no extra staff was planned as part of the tender because in his experience Walsh’s existing staff would have been sufficient to handle whatever minor changes there were. I accept his evidence. It was not contradicted by other evidence.
[173] What ensued was neither normal nor minor. It was far from it. While not conclusive, the fact that Walsh’s bid was within 0.1 percent of the next highest bidder and approximately $6 million more than TTC’s own internal estimate is telling. It is not as if Walsh made an extremely low bid in the hopes that it would get the Project and then worry how to build it later. If TTC wanted to argue that Walsh’s bid was unreasonable from the start, whatever else may have occurred, then it should have called an expert to give evidence to that effect. It is not enough to try to compare what happened against what Walsh planned and then ask the court to reach the conclusion that Walsh seriously misjudged matters going into the Project. Nor is it Walsh’s onus to prove that its bid was reasonable in order to support this claim. Similarly, it was on TTC to show that there was an error in Mr. Ficca’s analysis, which it did not do, as opposed to Walsh having to show that there was no error.
[174] Walsh is entitled to the staff-related jobsite overhead claimed of $1,897,636, inclusive of markup.
c. Acceleration Costs – Head of Damage #7
[175] In the fall of 2013, the Project was supposed to be about one year from the substantial performance date of November 5, 2014. It was nowhere near that. As previously found, LS-1 still had not been handed over to Walsh, there were ongoing utility issues with respect to the duct work, the “Mountain in the Middle” caused by TTC’s problems with the 1650 mm storm line remained, and OHL had not returned ES-2 to Walsh. Also as previously found, Walsh had limited work area primarily as a result of the issues relating to LS-1 and ES-2. The problems continued with design inquiries and changes, the drawings, RFIs and the associated delays.
[176] As I have already found, in early 2015 Bechtel reported to TTC that much of the delay was a result of incomplete design at the time of the Contract award to Walsh, leading to substantial RFIs and CDs, compounded by excessive response times on the RFIs. In 2016, TTC acknowledged that the Project’s design was not ready at tender. I have also found that TTC was responsible for 1,047 days of compensable delay.
[177] However, through the summer of 2013 and into the fall of 2013, TTC refused to acknowledge that it was the cause of any delay. It was seeking ways to get the Project back on track and was asking Walsh to come up with what it called a recovery schedule.
[178] In September 2013, Walsh and TTC met. Mr. Sims was the only attendee from this meeting who gave evidence. He testified that Walsh advised TTC of the issues Walsh was facing, including those issues I have outlined above.
[179] Mr. Sims further testified that TTC, through Don Frank, the then-Senior Resident Superintendent who did not give evidence at trial, requested Walsh to come up with a Revised Construction Plan and Schedule (the “RCPS”) to mitigate the TTC-caused delays. Discussion continued between Walsh and TTC and in November 2013, Mr Sims sent Mr. Frank an updated RCPS based upon certain assumptions, such as a handover of LS-1 by December 13, 2013, along with a CD from TTC for $5,000,000 in order to accelerate the work. On December 4, 2013, this changed to the ARCPS, with many of the same conditions, along with some new conditions in order for the ARCPS to be met. Mr. Sims testified that he and Mr. Frank discussed the requested $5,000,000 CD and that Walsh wanted this so that it and its subcontractors would not be the ones funding the acceleration.
[180] That same day, Walsh received a letter from TTC setting out, among other things, that it believed that the delays to the Project were a shared responsibility between it and Walsh. Mr. Frank, the author of the letter, did not testify at trial so he was unable to explain what he meant by this, especially in light of the fact that TTC had not issued any delay notices to Walsh up to this point. In my view, and as I have already found, it was TTC who was responsible for the delay. The letter included a proposed CD 62, with an amount of $0. Walsh advised that it would not sign the proposed CD 62 with no funding. On December 24, 2013, TTC issued CD 62 for $0 and directed Walsh to implement the ARCPS. It was later re-issued on January 7, 2014 with a TBD dollar amount, and then further re-issued on a force account basis on January 21, 2014, again with no dollar amount.
[181] TTC argues that CD 62 and the ARCPS were a direction to Walsh to maintain the current schedule and to ensure that the Project did not fall further behind. It relies on paragraph 7.2.2 of the Schedule Specification Section 01 32 17 of the Contract, arguing that this allowed for the issuance of CD 62 at no cost to TTC. In my view, all that this paragraph provides for is that TTC can direct Walsh to regain the schedule through additional personnel, additional hours or other means at no cost to TTC. It does not address the cause of needing the schedule to be regained. It cannot and does not allow TTC to be the reason why the schedule needs to be regained and to direct Walsh to regain the schedule without paying for it. Walsh’s progress of work until the end of 2013 was caused, not through its own fault, but because of TTC-caused delay. TTC itself recognized this possibility in a follow-up letter of January 24, 2014, which stated that if TTC were responsible for delays, then the ARCPS would be an acceleration schedule and Walsh would be entitled to payment.
[182] I have found that TTC was responsible for 1,047 days of compensable delay to the Project. It is clear that much of this delay was prior to December 24, 2013, when TTC first issued CD 62. Based upon this, I find that the ARCPS was an acceleration schedule. Being an acceleration schedule, TTC is responsible for the cost of the acceleration.
[183] Walsh is claiming a total of $2,268,111 exclusive of markup for payment it said it made to fund this accelerated work under CD 62. Walsh claims this for a total of 14 subcontractors.
[184] TTC argues that Walsh has failed to prove the acceleration costs for its subcontractors as a result of CD 62. It argues that this claim is not supported by the backup documentation provided.
[185] Walsh as the plaintiff has the burden to prove its damages. While the court sometimes must resort to guess work, it may not quantify damages using a method which is unsupported by trial evidence, nor one which the parties did not advance or have an opportunity to test at trial. There is a difference between situations where the damages are difficult to assess versus situations where the absence of evidence makes it impossible: see TMS Lighting Ltd. v. KJS Transport Inc., 2014 ONCA 1, 40 R.P.R. (5th) 171, at paras. 61-65.
[186] TTC argues that Walsh failed to provide the invoices from its subcontractors to prove that what was claimed was acceleration work. It argues that Walsh has failed to prove that the work, if it was truly acceleration work, actually accelerated the Project. It further argues that Walsh failed to provide sufficient Subcontractor Change Orders (“SCOs”) related to this work. It argues that Walsh failed to prove how certain supporting documentation related to acceleration. With respect to Limen Structures, it argues that there could not have been any acceleration because on May 3, 2013, Walsh wrote to Limen Structures saying that it failed to see how it had achieved any acceleration.
[187] I am satisfied that Walsh has proven its acceleration damages. Tim Brescia, Walsh’s Controller, gave evidence about Walsh’s financial recordkeeping. His evidence as to how the financial system operated and how expenses were tracked was not seriously challenged. When submitted to the jobsite, subcontractor invoices would be reviewed and if acceptable, approved by the project manager. They would then be entered into Walsh’s accounting management system by the project accountant and a cheque cut for payment by head office. The accounting management system has the ability to generate a detailed JCTR, which can in turn place costs into categories or phase codes, such as employees or subcontractors. The JCTR contained an itemized list of all expenses on the Project. On a monthly basis, there would be a meeting between accounting staff and the operations staff to go through the JCTR to ensure that all invoices entered were accurate, coded properly to the correct project and the correct phase code, and not duplicated or entered twice. On a quarterly basis, there was a higher-level review for each project. On an annual basis, Walsh was subject to an audit for the preparation of its audited financial statements. Mr. Brescia testified that what was in Walsh’s accounting system was maintained accurately. He was not seriously challenged on this view point.
[188] The JCTR was put into evidence as a business record. In turn Mr. Ficca, accepted by me as an expert in forensic accounting specializing in damage calculation, testified on behalf of Walsh that he went through the JCTR to track the acceleration costs for the various subcontractors and added up the invoices to arrive at the amount being claimed. His report further set out that he conducted testing of hundreds of transactions for labour, equipment, vendor, and subcontractor costs to validate amounts recorded in the JCTR and concluded that it was reasonable to rely upon the JCTR and related financial documents. In my view, there was no serious challenge to Mr. Ficca’s evidence in cross-examination that the subcontractor acceleration costs amounted to $2,268,111 before markup. Nor did TTC challenge this conclusion through its own expert, Mr. Davidson. Mr. Davidson, also accepted by me as an expert in forensic accounting specializing in damage calculation, gave no opinion on Mr. Ficca’s calculations of the acceleration costs, having been instructed by TTC not to do so and to only make a “quantifiable adjustment” of this damage amount to $0.
[189] If TTC had an issue with the actual invoices, it should have cross-examined on them if it wanted to show that they had no relationship to acceleration. Alternatively, it could have had Mr. Davidson review them and give an opinion that they were unrelated to acceleration or CD 62, if he was able to do so. The same applies to the allegedly insufficient SCOs and its argument that Walsh did not prove that the work being claimed for related to acceleration. Finally, these were amounts actually paid for by Walsh, for which it is seeking reimbursement. It is highly unlikely that Walsh would have paid these amounts without proper invoicing and backup from its subcontractors. In effect, TTC argues that Walsh paid this money out of its own pocket, with no assurance of payment by TTC, on a whim, without being sure that it was for appropriate acceleration work.
[190] As to the argument that Walsh had to prove that the acceleration work actually accelerated the work in order to recover for this cost, the answer is contained in RP No. 29R-03, referred to by Mr. Ott and Mr. Hoshino. At page 125, it states that “[a]ctual acceleration is not required. A valid contractor’s effort to accelerate, supported by contemporaneous records is sufficient to establish constructive acceleration. It is quite common that contractors accelerate to overcome delays but continue to be impacted and delayed by additional events and impacts that actually result in further delay to the project.” That is exactly what happened here. There was a valid attempt to accelerate. Walsh was exhorting its subcontractors to do what they could to accelerate, including adding extra workers and shifts. I am satisfied that Walsh has supported this work with contemporaneous records. Additional events and impacts continued to cause further delay. What is set out in RP No. 29R-03 makes perfect sense. TTC had ordered Walsh to take the steps to accelerate but Walsh had no assurance that what it had been told to do would have any effect.
[191] As to Limen Structures, TTC in its argument cites the letter of May 3, 2014 from Walsh. However, as already stated actual acceleration is not required. Moreover, the letter itself on its own is not all of the evidence. Mr. O’Connell during cross-examination was confronted with this letter. He acknowledged what was in the letter about acceleration but went onto say that Limen Structures followed up with another document to substantiate their acceleration because Walsh did issue SCOs to Limen Structures for acceleration. This evidence was not seriously challenged, and I accept it.
[192] I am satisfied that Walsh is entitled to these acceleration costs flowing from CD 62 in the amount of $2,268,111.
[193] Walsh also claims a markup of 9.89 percent or $224,316, which it argues it is entitled to pursuant to the Contract.
[194] Walsh says that this is its anticipated fee or profit. It argues that as part of its tender, it planned to earn a fee of $7,900,000 on its planned direct costs, or 5.9 percent. It also argues that it was able to negotiate a lower cost with many of its subcontractors than what it anticipated the cost to be as part of its tender. As a result, it anticipated savings in subcontractor costs of $5,236,269. This amount, added to the fee, totalled $13,136,269, which is equivalent to 9.89 percent of its planned direct costs.
[195] Mr. Ficca testified that the negotiation of savings from subcontractors is a very common process on most large construction projects. Mr. Davidson agreed that the markup amount is the anticipated profit but that while that is what is hoped for, no job guarantees a profit.
[196] TTC argues that Mr. Ficca “determined” the markup rate of 9.89 percent. From my review of his report, he made no such determination, either that in his opinion this is an appropriate markup amount on a project such as this, or that he took Walsh’s tender and subcontracts and did this calculation on his own. The calculation was done by Mr. O’Connell in his affidavit. Mr. Ficca merely did the math using some of Mr. O’Connell’s numbers and came up with amounts of 5.95 percent for the fee and 3.94 percent for the savings, for a total of 9.89 percent, the same percentage as set out in Mr. O’Connell’s affidavit. TTC argues that Mr. O’Connell and Mr. Ficca used different numbers, with unexplained differences, to arrive at the same “inflated” markup rate. Why this pejorative was used was never clearly explained in TTC’s argument. There was no markup rate that TTC said was a more appropriate markup amount. Presumably, TTC did not believe that Walsh was not entitled to a profit or markup on a project such as this. The argued “unexplained difference” of $859,960 was 0.65 or 0.64 percent of the direct cost figures, or 0.52 percent of the total Project bid cost. This, to me, is extremely minimal.
[197] Mr. Davidson took no issue with the markup of 9.89 percent. What he took issue with was whether the markup should be applied to every head of damage claimed by Walsh. As he put it, some of the claims by Walsh for markup were “incongruent”.
[198] TTC appears to argue that the only provision for markup is found at SC 8 of the Contract, and that the claimed markup of 9.89 percent is contrary to it. According to TTC, SC 8.4 provides that Walsh is entitled to a markup on subcontractor change work to a maximum of 10 percent on the first $25,000, and to a maximum of 7 percent on the amount above $25,000.
[199] In my view, SC 8.4 does not apply to the situation that arose from CD 62. SC 8.4 applies to negotiated changes to be performed on a lump-sum basis. The use of CD 62 for the ARCPS was new territory and was not part of SC 8.4. Certainly, in none of the versions of CD 62 issued by TTC was SC 8.4 referred to or relied upon by TTC. In its letter of January 21, 2014, TTC admitted that it was not sure whether this was a recovery schedule, an acceleration schedule, or some combination of the two. It also admitted that this CD was a “force account”, with Walsh reserving any and all rights associated with it. The ARCPS was not considered to be a change in the work under SC 7 so that SC 7.4 would apply and thus SC 8. Nor did TTC comply with SC 7.6 by determining a value. Again, this could only be because SC 7 and SC 8 were not applicable.
[200] Ultimately, this appears to be TTC’s real complaint - that the markup should not apply to every head of damage, which is different than whether Walsh is entitled to markup at all or what that markup should be. TTC argues that the 3.94 percent in subcontractor cost savings, which presumably for the point of its argument it rounds to 4 percent, is “arbitrary” and an “alleged profit margin”; however, based upon Mr. O’Connell’s unchallenged evidence, the 3.94 percent was always part of Walsh’s reasonable expectation of profit. According to Mr. O’Connell, the savings were not merely “identified” after the fact but were part of Walsh’s anticipated profit, if the Project had progressed as Walsh had hoped. That it did not is TTC’s fault, not Walsh’s. Nor is it valid for TTC to argue that since it paid markup on COs that Walsh has received all the markup to which it is entitled. This argument ignores both delay, acceleration, and the additional Walsh-incurred subcontractor costs.
[201] I do however agree with TTC that whether a profit markup should apply to every head of damage is another matter. Each head of damage has to be looked at on its own.
[202] The markup amount of 9.89 percent is appropriate on the evidence before me. Walsh is entitled to the subcontractor acceleration costs of $2,268,111. Walsh is also entitled to a markup of $224,316 on those costs, for a total of $2,492,427.
d. Unabsorbed Home Office Costs – Head of Damage #8
[203] This is a claim put forward by Walsh for the Head Office Overhead (“HOOH”) incurred by the Walsh Group, Walsh’s Chicago-based parent company, during the compensable delay period of 1,047 days.
[204] HOOH, according to Mr. Ficca, includes actual fixed costs incurred by the Walsh Group for the benefit of all projects in progress that cannot be directly correlated to individual projects. Because of the delay on the TTC Project, Walsh argues that the Walsh Group was unable to redeploy staff and resources of Walsh on new projects, and as a result there was no new revenue to absorb or pay for the fixed HOOH costs of the Walsh Group.
[205] Mr. Ficca used what is called the Eichleay Formula to calculate the HOOH, inclusive of markup and as adjusted in his reply report, at $2,905,931. Mr. Davidson took no issue with the calculation itself. What he took issue with was Walsh’s entitlement to include this claim as a claim against TTC. He argued that the Walsh Group was neither a party to the Contract nor a plaintiff in the action, the size of the Project was so small in relation to the size of the Walsh Group that the HOOH was not impacted, and there was no evidence that the Walsh Group had to forego other projects.
[206] In my view, this claim must be dismissed for a variety of reasons. Walsh argues that a HOOH claim is a “proxy calculation”, so it is irrelevant that the Walsh Group is neither a party to the Contract or action. No caselaw was provided to me in support of this proposition. In both Gold Hill Ventures Ltd. v. Kemess Mines Inc., 2002 BCSC 1460, 22 C.L.R. (3d) 26, and Bemar Construction (Ontario) Inc. v. Mississauga (City), 30 C.L.R. (3d) 169 (Ont. S.C.), where the court considered overhead claims, the claims were on behalf of the contracting party and plaintiff. This makes sense. While Walsh is a subsidiary of the Walsh Group, it remains a separate legal entity and any claims are its own.
[207] Even if I am wrong in this and Walsh is allowed to make a HOOH claim for the overhead costs incurred by the Walsh Group, I am not satisfied that the third aspect of the Eichleay Formula, as articulated by Mr. Ficca in his report, has been satisfied. Mr. O’Connell stated in his affidavit that if the Project had not been extended by delays, “Walsh could have used its overhead resources to seek additional work and additional revenues.” That is not the same as proving that it was unable to take on other work as required by the third aspect. As stated in Bemar, at para. 363, Walsh had to “demonstrate that as a result of the delay, it was not able to obtain other work to absorb the overhead during the period of delay.” No evidence of foregone tenders by Walsh or tenders that were made and lost as a result of Walsh’s inability to take on other work were presented in evidence. The bald statement by Mr. O’Connell at paragraph 1493 of his August 6, 2021 affidavit is not enough.
[208] I also see some merit in the other argument made by Mr. Davidson that the size of the Project was too small for the purposes of a HOOH claim. The argument is not that Walsh is not entitled to make a damages claim because the amount is too small, but that the overhead would have been incurred with or without the Project being delayed. The revenue generated over the life of the Project was less than one percent of the total revenue of the Walsh Group. In other words, the overhead would have existed with or without this Project.
[209] I am not satisfied that Walsh has proven this aspect of its overall claim and accordingly this claim for HOOH costs is dismissed.
e. Supplemental Subcontractor Costs – Head of Damage #9
[210] This claim also arises from the Project’s delay and the need to accelerate work which resulted in CD 62. What is claimed here is different however from Head of Damage #7, as these claimed damages are for Walsh’s payments to supplemental subcontractors that it retained to assist in getting the Project completed by the desired revenue service date of December 2017.
[211] There are six claims for additional costs - costs to complete the permanent and temporary electrical work of IEI, to supplement the civil work of New Alliance, to supplement the concrete work of Limen Structures, to supplement the terrazzo work of Gemstar, and to retain Peto MacCallum for testing.
[212] Mr. Ficca calculated the damages for each of these claims, once again using the JCTR to track the costs. Mr. Davidson gave his opinion with respect to three of these claims only - the permanent electrical work to complete the work of IEI, the supplemental civil work for New Alliance, and the supplemental concrete work for Limen Structures.
1) Testing
[213] Walsh claims $701,362, before markup, for additional concrete, steel, earthworks and masonry testing by Peto MacCallum as a result of impacts to the schedule caused by TTC. The totality of the evidence is one paragraph in Mr. O’Connell’s affidavit. He states that this amount was based upon Mr. Ficca’s analysis. The analysis by Mr. Ficca was merely the tabulation of the invoices in the JCTR relating to testing and comparing this amount to the tender amount to arrive at the net amount claimed. There was no analysis as to why the testing amount in the JCTR was $701,362 more than the tender amount. Nor does Mr. O’Connell explain why this increased amount related to delay or acceleration.
[214] TTC argues the claim is “absurd” because it includes testing costs as far back as 2012, well before there was any delay. While acceleration is not mentioned, presumably TTC’s argument is that it is equally absurd to include testing costs prior to CD 62. This argument however ignores that Mr. Ficca arrived at his damage amount by adding up all the invoices for testing, which would include 2012 and 2013 invoices and then subtracting the tender amount.
[215] Nevertheless, this methodology does not assist in explaining why the additional testing was related to either delay or acceleration. One paragraph from Mr. O’Connell with this conclusion is not enough. This portion of the claim is dismissed. I come to this decision mindful of what is said in TMS Lighting as well as Penvidic, at pp. 278-79, that the impossibility or difficulty in proving damages will not disentitle the plaintiff from damages for a breach of contract. However, this is not an issue of assessing or calculating damages but of connecting the damages to the breaches of delay and acceleration.
2) Terrazzo Work
[216] Walsh claims $1,302,810 before markup for additional costs to supplement the terrazzo work of Gemstar. York Marble was retained in January 2017 to carry out supplemental terrazzo work at the Project.
[217] Walsh claims that as a result of the multitude of design changes, along with TTC-caused delays and the accelerated schedule, terrazzo work on all of the stations on the TYSSE overlapped, meaning the terrazzo trades were working concurrently on multiple stations. This led to not having enough terrazzo workers on the Project. Gemstar was awarded the Sheppard station terrazzo work along with the Steeles West work. At the time of award Gemstar did not anticipate problems doing both jobs as they were to start and finish at different times with only a minor overlap. However, both projects were delayed which created a major overlap between two stations. Gemstar’s work on the Project began in 2015 with the majority of the work starting in 2016. In August 2015, Gemstar made Walsh aware of the lack of workers and from then until 2017, when York Marble was retained, Walsh and Gemstar looked at a variety of ways to add workers, all of them unsuccessful.
[218] TTC argues that Gemstar was a “problem” subcontractor and that they were unable to keep up with production. This is a mischaracterization of Mr. Norris’s evidence. He was asked whether Gemstar was a “difficult” subcontractor. He responded by saying that they were not difficult but had a problem with their production, which based upon the evidence of a lack of workers, was understandable. Walsh did send a default letter to Gemstar in April 2017 due to their failure to maintain schedule, but Mr. O’Connell said that the reason for the failure was because of the Project delay coupled with the TTC-directed acceleration. I have already found TTC to be the cause of both the delay and the need to accelerate.
[219] TTC then argues that it was Walsh’s failure to act prudently in retaining another terrazzo subcontractor which increased the cost for the terrazzo work and the delays. I accept that Walsh did in fact make reasonable efforts to obtain another subcontractor but were unsuccessful, through no fault of their own, until York Marble was retained in January 2017.
[220] Lastly, TTC argues that the cost of the work provided by York Marble was inflated and TTC should not have to pay for it. There was $239,105 descoped from Gemstar, yet the York Marble work was valued at $1,541,915 by Mr. Ficca for the difference of $1,302,810 claimed. While the cost for York Marble is greater than what was descoped, there is no evidence from TTC that this was an inflated amount. The York Marble contract was made in January 2017 whereas the Gemstar contract had been made in 2011, approximately six years earlier. As well, York Marble was no doubt aware of the situation that Walsh was in at the time and the overall situation with the TYSSE. I accept that it was common knowledge within the construction industry. There certainly was no evidence from TTC that Walsh could have obtained York Marble or any other subcontractor for an amount closer to what was descoped from Gemstar. If it wanted the court to find that Walsh had paid too much for the supplemental work then it should have called evidence to that effect. Mr. Davidson gave no evidence with respect to this claim.
[221] I find that Walsh is entitled to the supplemental terrazzo subcontractor costs of $1,302,810 plus markup of 9.89 percent of $128,848, for a total of $1,431,658.
3) Concrete Work
[222] Walsh claims $2,195,688 before markup for additional costs to supplement the concrete work of Limen Structures. The supplemental work was carried out by Ward & Burke primarily on the bus terminal along with other miscellaneous work.
[223] There is no doubt that Limen Structures was severely impacted by TTC’s delay. The Mountain in the Middle prevented Limen Structures from carrying out its concrete work in that area of the Project and also forced Limen Structures to work in a different sequence than originally planned. As well, Limen Structures required LS-1 to be handed over in order to carry out work on the bus terminal. Under the Contract, it was to be handed over in August 2012, although TTC knew that this was unlikely and at the time of the Contract, it was scheduled for October 2013. Then when CD 62 was issued in December 2013 to accelerate the Project, LS-1 was to be handed over by TTC by January 31, 2014, which TTC knew again was unlikely. In fact, LS-1 was not handed over until January 31, 2015, four days before the original Contract completion date of February 4, 2015.
[224] TTC argues that Limen Structures itself caused the delays to the Project and carried out deficient work, which led to Ward & Burke being retained in order to catch up. TTC argues that the notices from Walsh to Limen Structures complaining about their work both prior to and after the ARCPS prove this. TTC further argues that Mr. Ficca’s calculations are unreliable as he again merely added up what was in the JCTR and failed to conduct a proper analysis of various invoices, including back charges.
[225] In my view, the notices to Limen Structures had nothing to do with the overall delay to the Project and the situation as at December 2013. Complaints about specific pours of concrete had little if anything to do with the utility issues and the Mountain in the Middle and the inability to begin work on the bus terminal. Within any construction job of this size, there will be ongoing issues as between the contractor and subcontractor and there is nothing unusual about default notices being sent in order to attempt to motivate faster work at a specific location. These ongoing issues did not cause the overall delay to the Project. That was the fault of TTC. After December 2013 and following the implementation of the ARCPS, it was, as Mr. O’Connell said, a different job. It required supplemental work to get the Project at revenue service by December 2017.
[226] As to Mr. Ficca’s calculation, what TTC now argues is in my view speculative. TTC argues that some work, rather than being supplemental, ought to have been back charged to Limen Structures. It makes reference to a supplemental claim for $34,477 as properly being a back charge to Limen Structures. In doing so, TTC asks me to reach a conclusion about this specific claim and to find that it was improper without having any evidence supporting this conclusion. If TTC had an issue with a specific claim they should have addressed it when a witness such as Mr. O’Connell was testifying. He was cross-examined for 17 days; there was opportunity to do so. Now it would appear that TTC is placing certain pieces of evidence before me that it did not connect during the course of the trial and asking me to do so in order to reach the conclusion TTC wants. The claim for $34,477 was never established as a back charge. As Mr. Ficca testified, there could be multiple reasons why the letters “BC” were placed beside an invoice amount in an accounting record and that he would not impart any conclusion from it.
[227] In his report, Mr. Davidson did not make any quantifiable adjustments to the amount claimed. In other words, he did not find anything wrong with Mr. Ficca’s mathematical calculation. Rather, he made a judgmental adjustment reducing the amount for Limen Structures by 50 percent, concluding that the amount claimed was “seemingly implausible” and “speculative unsupported”. Leaving aside the fact that I am the one who should be doing any judgmental adjustment, having reviewed his report and considering his evidence I fail to see why a 50-percent reduction is appropriate. To me, the reduction simply appears to be pulled out of thin air. As was the case with the supplemental terrazzo work, if TTC wanted the court to find that the amount claimed of $2,195,688 was too much and therefore implausible then it should have called evidence to that effect, rather than having an expert simply say it.
[228] I find that Walsh is entitled to the supplemental concrete subcontractor costs of $2,195,688 plus markup of 9.89 percent at $217,154, for a total of $2,412,841.
4) Civil Work
[229] Walsh claims $11,233,958 before markup for additional costs to supplement the civil work of New Alliance. The supplemental work was carried out by Ward & Burke and the Downsview Group. New Alliance had two subcontracts, one for $6,850,000 for excavation and one for $5,400,000 for site services, totaling $12,250,000.
[230] Walsh argues that due to numerous scheduling changes issued by TTC and CD 62 directing acceleration to the Project, it was required to supplement the work of New Alliance.
[231] However, Hernan Ayala, the president of New Alliance testified that as at June 2015, it was financially destroyed and could not continue working on the Project. At that time, it only had two people on-site.
[232] I conclude that the need to supplement New Alliance’s work was not due to schedule changes or to CD 62 but because New Alliance was no longer able to do what it had contracted to.
[233] Walsh argues that New Alliance’s financial situation was caused by TTC’s failure to pay it so it in turn could not pay New Alliance, leading to New Alliance’s financial failure and inability to continue its work. This is a conclusion without sufficient supporting evidence. The bald assertion by Mr. Ayala is not enough for me to find that this is why New Alliance was unable to continue working. As admitted by Mr. Ayala in cross-examination, the size of this Project was small for New Alliance and they had much larger jobs on the go. While I accept that there were various CDs which were unpaid, Mr. O’Connell admitted that New Alliance was receiving its regular progress payments for base contract work. I need far more evidence than Mr. Ayala’s say so to find that TTC was the cause of New Alliance’s financial ruin, which in turn necessitated the supplemental work from other subcontractors.
[234] As well, the supplemental work as calculated by Mr. Ficca was a 92-percent increase over the value of the New Alliance work. Under any measure, this is a sizeable amount. I am not satisfied on the evidence presented that this increase was solely as a result of acceleration work under CD 62 and re-scheduling of work by TTC, even without the default of New Alliance.
[235] I find that Walsh has not made outs its claim for the additional costs to supplement the work of New Alliance.
5) Electrical Work
[236] The claim with respect to IEI is framed differently. Walsh is claiming for the additional costs to complete both the permanent and temporary electrical work of IEI. Walsh claims $13,014,798 for permanent electrical work and $1,860,491 for temporary electrical work, both before markup, for the work done by Ozz and Plan Group.
[237] Walsh argues that TTC’s abuse of the CD process led to IEI refusing to do work without receiving an SCO from Walsh along with payment. Walsh, however, was not prepared to pay IEI without first having received payment from TTC. Walsh refused to go along with IEI’s demands and instead terminated IEI.
[238] It is clear from the evidence of Mr. Sims and Nick Soulos, the president of IEI, that the relationship between Walsh and IEI was strained for most of IEI’s time on the Project.
[239] Walsh argues that TTC’s continued revision to drawings, delays to the Project, and abuse of the CD process created conflict between itself and IEI so that it had to terminate IEI and hire new subcontractors.
[240] I am unable to conclude that the reasons given by Walsh in the termination letter of April 4, 2014 flow from whatever may have been the issues between TTC and Walsh. Among other things, Walsh recited that IEI refused to proceed with CD work as directed, failed to maintain adequate work force, failed to produce interference drawings and composite drawings, failed to rectify work related to NCRs, failed to provide Work Method Statements, failed to stop having direct communication with TTC, refused all direction from Walsh, and that it had been a disruptive and subversive influence on the Project. The method of delivery of the termination letter is also telling in that Mr. Soulos refused to accept it, necessitating that Walsh subsequently email it. As well, IEI workers and Mr. Soulos refused to leave the jobsite on April 4, 2014 after termination and Walsh had to return with Toronto Police officers to get them to leave.
[241] Mr. Sims testified that IEI’s conduct prior to termination was disruptive to the Project and was putting the entire Project at risk. In addition to the items set out in the letter of termination, at one point IEI indicated that it would not follow any drawing revisions and intended to carry out its work in accordance with the original September 2011 drawings, which clearly would have been extremely harmful and counterproductive. Mr. Sims’ affirmative affidavit is filled with other examples of the conflict between IEI and Walsh. Numerous exhibits were separately marked of emails from Walsh complaining of IEI’s work and the delays that it was causing. Later, after CD 62 had been issued, Walsh wrote to IEI stating that IEI was not accelerating its work and it had removed work of other subcontractors and had replaced it with work from outdated Issued for Construction (“IFC”) drawings.
[242] Having terminated IEI for the reasons given and considering the history of conflict between IEI and Walsh, I am unable to conclude that TTC is responsible for IEI’s termination and the retaining of new electrical subcontractors.
[243] The cost for the supplemental electrical work, both for the temporary and permanent work, is as between Walsh and IEI and cannot be made the responsibility of TTC. This portion of the claim is dismissed.
f. Below The Line RFQs – Head of Damage #10
[244] These are a variety of costs claimed by Walsh for being on the Project longer than originally contracted. Under the Contract, Walsh was to have achieved substantial performance by November 5, 2014, and to have achieved completion by February 4, 2015. These claims were first put forward in January 2014 as part of Walsh’s per diem expenses, being field-related expenses, but TTC eventually directed Walsh not to include them in its per diem claim. Rather, TTC directed Walsh to submit them separately in what the parties designated as “Below the Line” items. Initially, they included items such as survey, locates, temporary stairs, small tools, general conditions, snow removal, street sweeper, traffic control, temporary heat, environmental controls, concrete winter conditions, bridge deck maintenance, and temporary traffic lines. Seven items remain in dispute.
1) Temporary Bridge Maintenance: RFQ 267
[245] Walsh was required to build a temporary bridge over Steeles Avenue to maintain traffic flow. As Mr. O’Connell testified, and as accepted by TTC in argument, the bridge was initially to be in place from June 2012 to July 2013 for a total of 13 months. However, due to the issues with the utilities under Steeles Avenue, the 1650 mm sewer pipe and the associated delay, the temporary bridge was in place from May 2013 to October 2015 for a total of 29 months, or 16 months more than initially planned.
[246] While TTC acknowledged liability for this cost, it disagreed with the amount claimed by Walsh. TTC’s initial argument with respect to this item, along with the other Below the Line claims, was that since it was not responsible for any delay beyond 307 days, it bore no responsibility for the cost associated with the extended bridge maintenance. I have already found TTC to be responsible for 1,047 days of delay and so this argument is not viable. This is also the case with the other Below the Line claims.
[247] The next argument is that Walsh overspent in its bridge maintenance in that Walsh constructed a wooden underdeck, as opposed to repairing or re-installing the netting system which was initially under the bridge. TTC argues that Walsh was responsible for safety on the Project and that if it overspent to keep workers safe by building the underdeck, then that was Walsh’s responsibility and cost and not TTC’s.
[248] I find this to be a specious argument. If TTC had wanted Walsh to replace the damaged netting with new netting, then it should have directed Walsh to do so. The new decking or netting was only necessary because of TTC’s delays. Based upon the additional delay and the fact that the bridge was required for a further 16 months, if netting had been used, in all likelihood it would have been required to be replaced a second time.
[249] TTC argues that the costs are suspect because Mr. Ficca looked at the total costs incurred as opposed to conducting a detailed analysis of the documents and records and determining if the costs were properly coded to the JCTR, with proper backup. I am satisfied with the validity of the JCTR. It is not an argument to say that there might be problems with the backup documentation which puts the entirety of the claim in question. That is mere speculation. If TTC had an issue with a specific invoice or claimed amount it could have raised it. The effort expended to investigate matters both prior to and during trial appears to me to have been limitless. Literally every stone has been overturned in this matter; to somehow suggest that there may be a problem with an invoice, but we just do not know what it is, is not an acceptable argument. Moreover, Mr. Davidson provided no opinion with respect to this claim.
[250] What is perhaps more telling, and which provides some support to Walsh’s claim – although not required, in my view – is Mr. Pipilas’ evidence that when valuing CD 267, he determined that each monthly maintenance visit would cost $60,000. There were, as it turned out, 16 more months required for the bridge which would equate to $960,000, on Mr. Pipilas’ rough analysis, or just slightly more than the $937,593 found by Mr. Ficca.
[251] Walsh is entitled to markup on this claim. Taking into account what TTC has already paid, Walsh is entitled to a further payment of $446,367.
2) Earth Retention Monitoring: RFQ 283
[252] Mr. O’Connell’s evidence was that Walsh planned to start excavation in January 2012 and finish backfilling in January 2014. Earth retention monitoring was required between the start of excavation and the completion of backfilling. However, due to the delay encountered on the Project, backfill was not completed until September 2015, a delay of approximately 555 days.
[253] TTC acknowledged liability for this cost but disagreed with the amount claimed. The amount paid by TTC pursuant to RFQ 283 was based upon TTC being responsible for 272 days of delay. As I have already determined, TTC was responsible for almost four times that amount of delay to the Project.
[254] TTC also argues that Walsh’s claim is unsubstantiated. As it has done before, TTC delves into an analysis arguing that certain invoices do not relate to the work claimed or are double counted, but without any evidence of these facts, only speculation. Again, Mr. Davidson provided no opinion with respect to this claim.
[255] Walsh is entitled to markup on this claim and, taking into account what TTC has already paid, is entitled to a further payment of $155,503.
3) Concrete Winterization: RFQ 286
[256] While described as concrete winterization, this claim really has to do with the cost incurred by Walsh for pouring more concrete in the summer than planned and the additional costs associated with this. Concrete requires additives depending on the season in which it is poured. If poured in certain conditions in the winter, an additive is needed to heat the concrete. If poured in certain conditions in the summer, an additive is needed to cool the concrete. Both allow the concrete to set. There is a sizeable difference in the cost of the two additives: the winter additive costs $16/m3 and the summer additive costs $75/m3. The additive is added by the concrete supplier, in this case St. Mary’s Cement, to the concrete contained in the cement truck. TTC denied any liability for this cost.
[257] It was Mr. O’Connell’s unchallenged evidence that at the time of tender, based on the baseline schedule, Walsh anticipated carrying out more concrete pouring in the winter than the summer. Due to the delays to the Project, this changed; summer pours were increased and winter pours were decreased. However, not every winter pour required an additive and not every summer pour required an additive.
[258] Mr. Ficca looked at Walsh’s concrete log, which contained the ticket numbers for the trucks, the volumes of concrete poured, and what was actually spent by Walsh on concrete. The cost was what was charged by St. Mary’s and would reflect whether the concrete used had the additive in it, not whether the concrete should have had the additive in it. This is explained at paragraphs 85 and 86 of his August 6, 2021 report, marked as Exhibit 1090A, for an extra cost of $998,266.
[259] TTC seems to argue that as the RFQ changed from a claim for concrete winterization to a claim for pouring more concrete in the summer, this somehow disentitled Walsh to compensation as there was now a credit for the concrete actually poured in the winter and Walsh was taking a “new approach” to its claim. In my view, this change has nothing to do with whether Walsh is entitled to compensation and TTC’s argument is a matter of form over substance.
[260] TTC then argues that it was actually owed a credit because the summer additive was only required when the temperature approached 27℃ and Mr. Ouellet had carried out a “conservative” analysis of how much concrete should actually have been cooled in the summer versus how much Walsh “alleged”.
[261] I prefer the evidence of Mr. Ficca, who looked at the tickets and volumes of concrete poured and what was actually paid to the concrete supplier, rather than an analysis based on Mr. Ouellet’s meetings with certain personnel from Bechtel and TTC, who told him about when concrete needs to be cooled or not.
[262] Mr. Davidson’s report is also not helpful. It merely seems to accept and repeat Mr. Ouellet’s analysis. It certainly does not appear that he looked at the underlying documentation as Mr. Ficca did.
[263] Walsh is entitled to markup on this claim and is entitled to a payment of $1,096,995.
4) Stair Tower / Street Sweeping: RFQ 313
[264] Due to the extended duration of the Project, Walsh had to maintain temporary stairs and carry out street sweeping for longer than anticipated. While TTC acknowledged liability for this cost, it disagreed with the amount claimed by Walsh.
[265] Walsh submitted a proposal of $251,096 and TTC issued a CC of $136,102. Mr. Ficca looked at the costs incurred, calculated the daily rate for these two items, and arrived at a total daily rate of $311.79, including markup. He then multiplied this rate by 1,047, being the compensable number of delay days. Taking what TTC had paid, he determined that Walsh was owed a further $206,004.
[266] TTC argues that this is too simplistic and that the specific costs have not been connected to any TTC-caused delay. However, Mr. Ouellet, who analyzed this claim on behalf of TTC, agreed that if it was determined that Walsh was entitled to additional compensable delay, then the calculation put forward by Walsh would be appropriate. Mr. Davidson gave no opinion on this claim amount.
[267] Having found that Walsh is entitled to 1,047 days of compensable delay, it is entitled to payment of $206,004 for this claim.
5) Temporary Heat and Snow Removal
[268] During winter work, there are additional costs associated with providing temporary heat for the workers and snow removal. While TTC acknowledged liability for this cost, it disagreed with the amount claimed by Walsh.
[269] Walsh claims that it initially anticipated that the outdoor winter work was to take place during the 2012-2013 and 2013-2014 seasons. This makes sense as substantial performance under the Contract was to occur on November 5, 2014. However, due to delays to the Project, revenue service was not achieved until December 17, 2017, so that winter work was extended into the 2014-2015, 2015-2016 and 2016-2017 seasons.
[270] Walsh’s claim, however, is for winter work associated with 2012-2013, 2014-2015 and 2016-2017, totalling $1,958,210. Mr. Davidson analyzed this claim and gave an opinion as to an appropriate award. He removed the amount claimed for 2012-2013 as work was always planned to take place during this season. He also removed the amount claimed for 2016-2017 as this work was beyond the days of compensable delay acknowledged by TTC.
[271] Having found that Walsh is entitled to 1,047 days of compensable delay, the costs associated with 2016-2017 are an appropriate claim and ought to be included. However, I agree with his removal of the costs associated with the 2012-2013 season. As these costs were always anticipated I fail to see how, as concluded by Mr. Ficca, these costs were additional. Walsh’s claim was for the unanticipated winters. I am unable to find any compelling explanation in the evidence presented, including from Mr. O’Connell, as to why this season was part of the calculation. There was no claim put forward for winter work for the 2015-2016 season, but it is not for the court to try to determine why this was done and whether this is somehow related to the claim put forward for the 2012-2013 season. The court can only address what is put before it by the parties. The claim was put forward for specific seasons not as, for example, a cumulation of all the winter seasons less two seasons.
[272] I find that Walsh is entitled to markup on this claim and is entitled to a payment of $1,297,813.
6) Crane Costs
[273] This claim is associated with CD 62. Walsh claims that as a result of CD 62 and TTC’s direction to accelerate the Project, it incurred additional crane costs. TTC argues that it is not liable for any additional crane costs as CD 62 was not a direction to accelerate. I have already found that CD 62 was a direction to accelerate. The issue becomes what is the proper claim amount.
[274] Walsh argues that in order to accelerate the Project, it required additional crane support to assist the additional workers and during the additional working hours. Limen Structures had been contracted to provide crane support and although it provided overtime crane services, additional crane contractors were required to keep up with the accelerated work. The additional contractors were Ward & Burke and Deep Foundations. Walsh also directly rented more cranes for the Project.
[275] Mr. Ficca initially calculated Walsh’s crane costs prior to markup as $4,706,675, being the additional crane costs from Walsh’s JCTR less the additional crane costs of $150,000 as set out in its tender. Mr. Ficca’s amount was $1,425 less than what Walsh had calculated as owing in Mr. O’Connell’s affidavit.
[276] Mr. Davidson gave an opinion that some of the Ward & Burke invoices were already being claimed under other heads of damages.
[277] As a result of this, Mr. Ficca conducted a further review of the Ward & Burke invoices and determined that a number of the invoices were in fact included with other claims. He reduced the claim by $1,645,965, inclusive of markup, for a total of $3,208,846 prior to markup.
[278] TTC argues that Mr. Ficca’s methodology is suspect but does not identify any specifics itself. TTC once again delves into an after-the-fact analysis of the crane costs in Walsh’s bid documents despite not asking questions of Mr. O’Connell about the document when he gave testimony. TTC asks me to reach conclusions as to what certain documents mean or what they prove, without there being any evidence to actually explain the document and certainly none supporting the desired conclusion. TTC then compounds the problem by asking me to then connect the unexplained documents and conclusion to reach another conclusion. Its argument asking the court to deduct $2.6 million from the crane costs as being somehow buried within Walsh’s bid estimate is an example of this.
[279] TTC also argues that Walsh has failed to establish that specific invoices for crane costs are connected to specific acceleration costs. Leaving aside the argument that this is an impossible level of proof, I am satisfied based upon Mr. O’Connell’s unchallenged evidence that Walsh had to engage additional cranes to accelerate the Project as directed by TTC.
[280] TTC’s other arguments, including those as to the timing of the invoices in relation to the issuance of CD 62, its examples of “inefficiencies” in the use of the cranes, and the alleged failure to give credits for the crane usage in various CCs, are once again examples of conclusions that TTC is asking the court to make by piecing together bits of evidence that it did not bother to piece together during the trial, in order to reach its conclusion that the claim is too much.
[281] Walsh is entitled to payment for this claim in the amount of $3,526,201, inclusive of markup.
7) Survey Costs
[282] Walsh claims that it incurred additional survey costs from both the delay and the direction to accelerate under CD 62. I have already found there to be TTC-caused delay and that CD 62 was a direction to accelerate.
[283] Walsh argues that it estimated that it would incur approximately $250,000 in survey costs on the Project. However, as a result of the delay and acceleration, the surveyors had to be on-site longer than anticipated and in extended shifts and overtime.
[284] Mr. Ficca initially calculated the survey costs using the JCTR to be $2,272,133. Deducting the anticipated costs of $279,582, he calculated the additional costs to be $1,992,551. Mr. Davidson reviewed the costs and determined that Walsh had been paid for CC 199, which included a surveying cost of $4,521. Mr. Ficca reviewed this, concluded that Mr. Davidson was correct, and adjusted his calculation by reducing the claim by $4,698 inclusive of markup, for a revised claim amount of $1,987,583.
[285] I am not satisfied that Walsh is entitled to this claim amount. While Walsh has established delay and its acceleration claim, in my view it has not established that these two events were the cause of an eight-fold increase in the original survey costs from approximately $250,000 to $2 million. Surveying is, generally speaking, an activity-based cost; in other words, it is a function of the work being performed. While the work may have been delayed or accelerated, Walsh has not proven, to my satisfaction, that this somehow led to the need for more surveying being done. As TTC argues, this was work that Walsh was always going to have to do, regardless of when it did it. Mr. O’Connell’s bald statements that the delay and acceleration caused Walsh to retain more surveyors for longer and on an overtime basis is not sufficient when coupled with the fact that a lot of the costs claimed by Walsh for acceleration, where conceivably some of the survey costs could be incurred, were recorded before CD 62 was issued in December 2013.
[286] While the other Below the Line items are clearly connected to delay, such as having to street sweep for a longer period of time, or to acceleration, such as having to use more cranes to speed up the work, this one is not.
[287] Walsh is entitled to a total of $6,728,883 for the Below the Line items, inclusive of markup.
g. Interest on Claim Amounts – Head of Damage #11
[288] Walsh is seeking interest on its Heads of Damage #1 to #10, beginning 30 days after the month end for the month in which the claimed amounts were incurred, according to Walsh’s month-end progress billings. The first claim amount was the total of all claims from September 2011 to August 2014, with interest starting on September 30, 2014. Thereafter, the claimed amounts were the monthly progress billings. The date of September 30, 2014 was chosen as being 30 days from the Red Book Claim dated August 29, 2014.
[289] Mr. Ficca used a simple interest rate of 1.18 percent. This rate was the average of the prejudgment interest rate in the Courts of Justice Act, R.S.O. 1990, c. C.43 (the “CJA”) for the period covering Q3 in 2014 through to Q3 in 2021 (as his initial report was dated August 6, 2021).
[290] By his calculation, the interest at the time of his August 6, 2021 report amounted to $4,763,170. By the time of his testimony at trial in November 2022, interest had amounted to $5,699,000.
[291] While normally the award of prejudgment interest is rather uncontroversial, TTC argues that there is no entitlement to prejudgment interest at all due to certain wording in the Contract. It relies on GC 31.10, which states: “The Commission will not be liable for interest or financing costs on outstanding monies claimed by the Contractor”. GC 31 is entitled “Claims and Continuance of the Work”.
[292] Walsh argues that prejudgment interest is a common-law right and a statutory right under the CJA and that if the Contract purported to take away this right, it would have to clearly do so. Walsh argues that GC 31.10 is specific to claims made within the contemplation of GC 31, namely within the contractual claims resolution process during the time of construction, and not with actions or suits, which are dealt with under GC 32.4. GC 32.4 makes no reference to interest and makes no attempt to take away the right to prejudgment interest.
[293] I agree with Walsh. If TTC wished to take away such a fundamental common-law and statutory right through the Contract, then it would have to make this crystal clear. It would have been simple for TTC to stipulate that there was no entitlement to prejudgment interest under any circumstance. GC 31.10 applies to the claims resolution process as provided for in GC 31. It does not apply to a situation where there is an issued claim by a contractor against TTC.
[294] Walsh began its calculation of prejudgment interest on September 30, 2014, being approximately 30 days after its Red Book submission on August 29, 2014. Mr. Ficca stated in his report of August 6, 2021 that pursuant to the Contract and SC 13.4, invoices are to be paid within 30 days of submittal. After this, Mr. Ficca calculated interest on Walsh’s monthly progress billings. This interest calculation was predicated on Walsh being owed the totality of each and every monthly progress billing. Each progress billing was an amalgamation of claims. However, not every amount claimed has been allowed which, in my view, makes it impossible to award interest in the way Mr. Ficca has done. It is similarly impossible to determine when each cause of action arose. As well, many of the claims were in fact made under the contractual claims resolution process which, pursuant to GC 31.10, does exclude interest claims while that process is ongoing.
[295] In my view, a more appropriate start date for the calculation of prejudgment interest is the day the Statement of Claim was issued, that being September 12, 2017.
[296] As to the interest rate itself, Walsh argues for an average rate from Q3 in 2014 to Q4 in 2022. The later date was when Mr. Ficca updated his calculations in November 2022. The result is 1.18 percent. TTC argues, in the alternative to no interest being paid, that the interest should be calculated for each quarter using that quarter’s interest rate. This would require a new calculation for every quarter.
[297] In my view, neither rate is appropriate. The CJA defines the prejudgment interest rate to be used. The applicable rate when the claim was commenced should be used unless there are special circumstances to justify departing from it: see Agribrands Purina Canada Inc. v. Kasamekas, 2011 ONCA 460, 106 O.R. (3d) 427, at para. 74. No special circumstances were argued by either party, nor do I find that there are any which would allow me to exercise my discretion to deviate from the applicable rate. Accordingly, the prejudgment interest rate to be used is 0.8 percent, being the rate for actions commenced in September 2017.
[298] I assume that Walsh and TTC will be able to agree on the amount of prejudgment interest that is owing on the damages allowed on Heads of Damage #1 to #10. If not, I may be spoken to.
h. Currency Fluctuation – Head of Damage #12
[299] Walsh argues that due to the issues created by TTC and its refusal to properly fund the Project, it was necessary for the Walsh Group, based in Chicago, to send funds to Walsh. The funds were sent in U.S. dollars (USD) which were then converted to Canadian dollars (CAD). A total of $30,278,524 USD was sent, which converted to $35,400,500 CAD using the conversion rates applicable on the various transfer dates.
[300] Mr. Ficca then calculated what the cost would be to return the $30,278,524 USD to the Walsh Group from Walsh. When he prepared his initial expert report dated August 6, 2021, he used the conversion rate as of July 30, 2021. Using that conversion rate, the $30,278,524 USD converted to $37,545,370 CAD, or $2,144,870 CAD more than the initial figure of $35,400,500 CAD.
[301] In preparation for his testimony at trial, Mr. Ficca again calculated the cost, this time using the conversion rate as of November 12, 2022. This resulted in a figure of $40,494,498 CAD, or $5,093,988 CAD more than the initial figure of $35,400,500 CAD.
[302] I assume that the figure today, as of the date of judgment, is different again.
[303] This claim is dismissed. First, in my view GC 31.10 specifically provides that TTC is not liable for any financing costs. Second, the currency fluctuation resulting from the Walsh Group providing funds in USD to Walsh is not reasonably foreseeable and is too remote a damage claim.
[304] GC 31.10 provides that TTC “will not be liable for financing costs on outstanding monies claimed by” Walsh. While not a defined term in the Contract, I find that “financing” means the supplying of funds: see Octagon Capital Corp. v. Niko Resources Ltd., 2016 ONSC 3946, at paras. 15-16. Therefore, financing costs means the costs associated with the supplying of funds. The conversion rate was apparently a cost associated with the Walsh Group’s supplying of funds to Walsh.
[305] I do not believe that the claimed cost of converting funds would be within the reasonable contemplation of TTC and Walsh at the time the Contract was entered into. In my view, it is too remote to expect that TTC would be liable to Walsh for costs associated with the conversion of USD if the Walsh Group had to supply funds to Walsh. This does not mean that currency exchange costs are never recoverable, as seemingly argued by TTC. However, the Contract was in CAD. Mr. O’Connell testified that Walsh financed the Project with its own capital. Walsh had carried out projects in Ontario. TTC was not made aware of the Walsh Group’s internal financing or how Walsh was to be funded, if at all, by the Walsh Group. By bidding on the Project, presumably Walsh had the financial wherewithal to carry it out, and if it did not, it would presumably be able to source funds without incurring a $5,000,000 cost due to currency fluctuation. There was no evidence that TTC was aware that any funding from the Walsh Group to Walsh would come with this associated cost.
[306] Moreover, this claim amount is merely a mathematical calculation. There was no evidence as to whether this was in fact a real charge as between the Walsh Group and Walsh. No financial records or documents were produced to evidence this as being a true liability from Walsh to the Walsh Group. This too is reason enough to dismiss this damage claim.
i. HST – Head of Damage #13
[307] HST will apply to Heads of Damage #1 to #12 as awarded by the court.
[308] While Walsh has added a markup of 9.89 percent to its HST as part of its damage claims as submitted at trial, it has clarified in its reply submissions that it does not seek any markup on its HST claims. Accordingly, the markup amount on its HST claims is $0.
j. Bond Costs – Head of Damage #14
[309] While Walsh has added a markup of 9.89 percent to its bond costs claims as part of its damages claim as submitted at trial, it has clarified in its reply submissions that it does not seek any markup on its bond costs claims. Accordingly, the markup amount for these claims is $0.
[310] As to the bond costs claims themselves, Walsh paid Travelers $1,126,869 for a labour and material payment bond and a performance bond on the initial Contract amount of $165,925,000. According to Mr. Ficca, this equates to 0.68 percent of the Contract value.
[311] Walsh claims that as the Contract value has increased due to the claims from Heads of Damage #1 to #13, then the amount owed to Travelers has also increased by 0.68 percent of this amount. It is Mr. O’Connell’s unchallenged evidence, found in his August 6, 2021 affidavit at paragraphs 1500-1501, that Walsh paid for these bonds and paid this amount.
[312] Mr. O’Connell’s evidence that Walsh will be required to pay Travelers for the increased bond costs associated with the increase in Contract value, whatever that amount may be, is equally unchallenged. Mr. Davidson in his report stated that he understood that an increase in the cost of the Contract would result in an increase in the bond costs. Where he differed with Mr. Ficca was over what the increase in the cost of the Contract was – not the premise or the use of 0.68 percent as being the appropriate multiplier.
[313] In argument, TTC takes the position that Walsh has not proven that it paid Travelers for the initial bonds or that under its bond contract with Travelers, it is liable for any increase in Contract value. It argues that Walsh has failed to provide the necessary relevant documentation to prove this claim and that without it, Walsh has not proven the 0.68-percent multiplier used. It argues that this rate was calculated by Mr. Ficca and does not reflect any price or fluctuations in price based on Contract value that might be contained in this relevant documentation.
[314] As already set out above, there is unchallenged evidence from Mr. O’Connell that Walsh paid Travelers the bonding costs and will be liable for the increased bonding costs under its agreement with Travelers. TTC could have cross-examined Mr. O’Connell or even Mr. Brescia about this but chose not to do so. Apparently, no admission of non-payment or admission of no ongoing liability was obtained on discovery, as I was not referred to any read-ins to this effect. TTC could have called someone from Travelers if it wanted to have evidence contrary to Mr. O’Connell’s, but did not. Once again, TTC makes a bald statement that Walsh has not proven a claim in the face of clear evidence to the contrary.
[315] TTC also argues that certain damage claims should not be included as part of the increase in the cost of the Contract. While it suggests that there may be more than two such improper claims, TTC in argument only mentions two: currency fluctuation and interest. The argument with respect to currency fluctuation does not require consideration as this claim was dismissed. As to interest, I agree that prejudgment interest is not a claim that increases Contract value but is intended to compensate for the loss of the use of money. Head of Damage #11 should therefore be excluded from this calculation.
[316] Walsh is entitled to bond costs of 0.68 percent on Heads of Damage #1 to #13 as allowed by me, with the exception of Head of Damage #11.
k. Subcontractor Claims – Head of Damage #15 and #16
[317] Walsh has included two claims on behalf of its subcontractors in its claim for damages: one for the delay costs allegedly incurred by the subcontractors, and another for the subcontractor acceleration costs allegedly incurred in order to implement CD 62. The first amounts to $55,672,419 and the second amounts to $5,735,379, both inclusive of Walsh’s markup.
[318] Walsh argues that it is entitled to recover from TTC the damages which its subcontractors are entitled to recover from Walsh by reason of TTC’s breaches, without the subcontractors having a direct claim against Walsh. Walsh argues that although the subcontractors do not have a contract with TTC, they are treated as part of the enterprise under which Walsh’s Contract with TTC was to be performed and as persons who have sustained loss as a result of the breach of contract by TTC.
[319] Walsh argues that whether litigated or agreed to, the subcontractor claims are recoverable from TTC. The reason for this is that otherwise, these subcontractor claims would disappear into a “black hole” and there would be an inharmonious operation of the construction pyramid. This, so Walsh argues, would lead to additional disputes, litigation, and lien claims by the subcontractors against the general contractor in order for the subcontractors to obtain recovery.
[320] TTC argues that these “flow-through claims” of the subcontractors are a procedural device only and justified on procedural grounds alone. As such, they do not create a new cause of action and do not amount to more than the subcontractor claims against Walsh.
[321] TTC argues that the damages claimed by Walsh must represent damages for which Walsh could potentially be liable to its subcontractors. However, Walsh has entered into various agreements with most of its subcontractors, which TTC argues preclude Walsh from making these subcontractor claims against it on the basis that Walsh has no more liability to the subcontractors.
[322] TTC also argues that Walsh and its subcontractors, with the exception of Limen Structures, IEI and Schindler, entered into executed agreements that transformed their relationships from adversarial ones into cooperative ones, thus fundamentally altering the litigation landscape and thereby requiring disclosure. The applicable principles are summarized in CHU de Quebec-Université Laval v. Tree of Knowledge International Corp., 2022 ONCA 467, 162 O.R. (3d) 514, at para. 55. TTC argues that other than the agreement with Limen Group, Walsh failed to notify TTC of or disclose these agreements to TTC immediately and as a result, the claims by the subcontractors should be stayed.
[323] In my view, TTC’s request for a stay on the basis of late disclosure must be denied. First, despite being aware of these agreements well before the commencement of the trial and well before the final endorsement of Koehnen J., who had been case managing this matter for years, TTC raised this argument for the first time in its closing submissions. This is much too late. Second, none of the subcontractors are parties to this action and from my review of the caselaw, a stay can only apply to an agreement made between the parties to the proceeding. Third, the agreements do not entirely change the landscape of the litigation.
[324] In its Red Book claim, provided to the TTC on August 29, 2014, Walsh put forward both delay and acceleration claims on behalf of its subcontractors. The delay claim was for $37,017,727 and the acceleration claim was for $16,553,468. Most of the subcontractors whose claims were then being advanced by Walsh are still being advanced in the within claim. The exception is the Downsview Group. In its Blue Book claim, provided to TTC on September 19, 2017, Walsh again put forward both delay and acceleration claims on behalf of its subcontractors. The delay claim was now for $66,420,014 and the acceleration claim was for $7,273,781. All of the subcontractor delay claims still being advanced by Walsh in the within claim were part of the Blue Book.
[325] Walsh’s claim against TTC in the within action was issued September 12, 2017, just before the Blue Book was provided to TTC. While it contained claims for acceleration costs paid to Walsh’s subcontractors and subcontractor flow-through claims, none of the subcontractors were parties to the claim then or ever. However, as is clear from the time of the provision of the Red Book, Walsh has been making a claim on behalf of its subcontractors as the general contractor. TTC has known, or it ought to have known, that if Walsh wished to be able to pursue the subcontractors’ delay and acceleration claims, Walsh would always require some level of cooperation from the subcontractors. TTC’s argument that Walsh and the subcontractors have transformed their relationship from an adversarial one to a cooperative one and thereby fundamentally altered the litigation landscape is misplaced. While the agreements perhaps formalized the relationship, they did not fundamentally alter it.
[326] Nor can TTC argue that it only became aware of the agreements during the course of the trial, which would explain its delay in seeking a stay. TTC was aware of the agreements perhaps not immediately, but years ago. As Walsh argues and I accept, the disclosure of Walsh’s settlements with the subcontractors was part of the case management process by Koehnen J.
[327] While TTC may argue that any delay by it is irrelevant, as the failure to disclose amounts to an abuse of process and the courts have determined that the only remedy is to stay the claim, this assumes that the delay would not have made any difference. From my review of the cases relied upon, delay has never been an issue; the motions for a stay in those cases were brought on a timely basis and the responding party had an opportunity to file material opposing the stay. Whether a timely motion on notice and the ability to file material would have made a difference in Walsh’s argument is unknown. Making the argument after the closing of the trial evidence provides no opportunity to the responding party to do anything in response and arguably is itself abusive. Rule 21.02 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 states that a delay in bringing a motion under r. 21.01, including a motion for a stay on the basis that the proceeding is an abuse of process, is in itself a ground sufficient to dismiss the motion: see Dosen v. Meloche Monnex Financial Services Inc., 2021 ONCA 141, 457 D.L.R. (4th) 530, at paras. 70-71.
[328] TTC also argues that the subcontractor claims of Limen Structures, IEI and Schindler, despite there being no written agreements, must also be stayed because clearly they must have some sort of understanding, as their relationships went from being acrimonious to cooperative. As part of this cooperation, they all agreed to give evidence on behalf of Walsh, just like the other subcontractors who had actually signed agreements.
[329] For the same reasons as set out above, these subcontractor claims should also not be stayed.
[330] The dismissal of the stay request does not end matters, however. As already mentioned, TTC also argues that Walsh cannot flow through the subcontractor claims to TTC. I agree.
[331] There are two types of signed agreements between Walsh and its subcontractors. The first is the assignment liquidating agreements. These were entered into by Walsh with New Alliance, Regional Doors, Ritz, Selco and Structural Roofing. The second type is the non-assignment liquidating agreements. These were entered into with AGC Glass, Benson, Bird Mechanical, C-ore, Flynn, Forest City, Gemstar, Harris, Nelmar, Ozz and Limen Group.
[332] TTC argues that as a result of these agreements, Walsh can no longer make claims against TTC. This is because under the agreements, Walsh has immunized itself from any future liability to its subcontractors, which precludes recovery from TTC.
[333] Under the assignment liquidating agreements, Walsh paid to the subcontractor an amount that represents all of the contract payments due and payable to the subcontractor. In exchange for this payment, the subcontractor assigned its claim to Walsh and released Walsh from liability. In some instances, the amount paid by Walsh was less than the subcontractor claim. For example, while New Alliance’s delay and acceleration claim was recited to be $10,298,798, Walsh paid $1,375,000 plus HST. In others, the amount paid was more than the claim amount. For example, Structural Roofing’s claim was $239,000, reduced at trial to $185,000, and Walsh paid $300,000, inclusive of HST. In all instances, any amount awarded at trial for the subcontractor claims would be retained by Walsh.
[334] Under the non-assignment liquidating agreements, Walsh paid to the subcontractor an amount representing the contract payments due and payable to the subcontractor in exchange for a release of Walsh. If Walsh were able to recover anything from TTC with respect to the subcontractor claims, it was to pay it to the subcontractor less a percentage for overhead, markup and costs incurred. If there is a global recovery, the subcontractors would receive a pro-rated recovery as solely determined by Walsh.
[335] In nearly every instance, the amount paid by Walsh was less than the subcontractor claim. For example, while Bird Mechanical’s delay and acceleration claim was recited to be $6,265,504, Walsh paid $966,270 plus HST. For Gemstar, Walsh paid $150,000 plus HST on a $4,439,649 claim. In some instances, there was no payment.
[336] TTC’s Contract is with Walsh. It has no contract with any of the subcontractors. It was for Walsh to enter into contracts with the subcontractors to do the work. The subcontractors clearly acknowledge this in their contracts with Walsh. As a result, the subcontractors have no direct cause of action against TTC, only against Walsh. There is a construction pyramid, and the subcontractors know going in that their contract is with Walsh. They know that they may not be paid if Walsh is not paid. They know that if Walsh does not pay them, they may not be able to go after TTC for what they are owed.
[337] As previously mentioned, one way to attempt to get around this lack of privity of contract between the subcontractors and TTC was for Walsh to assert a flow-through claim from the subcontractor.
[338] There have been very few Canadian cases that deal with flow-through claims. One such case is Mechano Construction Ltd. v. Mushuau Innu Band Council, 2007 NLTD 123, 63 C.L.R. (3d) 14. There, Emery was the general contractor and Mechano its subcontractor, and Mechano in turn had subcontracts with CCC Inc. and LMD Enterprises. Emery argued that since neither CCC nor LMD had started any action against Mechano, Mechano could not advance any claims in relation to loss or damages incurred by CCC or LMD, as there was no proven liability. The court held that these claims could be advanced by Mechano against Emery because they remained as part of Mechano’s potential damages and Mechano may be liable to CCC or LMD.
[339] Another case that touches upon flow-through claims, albeit more indirectly, is Ledcor Construction v. Carleton University (2009), 78 C.L.R. (3d) 213 (Ont. S.C.). There, the defendant owner brought a summary judgment motion to dismiss the claims brought by the general contractor, Ledcor, on behalf of its subcontractors. The court dismissed the motion as it was not satisfied that there was no genuine issue requiring a trial. However, it noted that these flow-through claims of the subcontractors might not be successful at trial, as the contractor’s attempts to ensure that it incurred no liability to its subcontractors for delay unless it recovered from the owner “creates a circular argument which makes it impossible to prove [the contractor] itself has suffered the added costs sustained by the subtrades”: at para. 15. The court agreed with this analysis in a subsequent summary judgment motion in Ledcor Construction Ltd. v. Canada (Attorney General), 2013 ONSC 2407, 20 C.L.R. (4th) 263.
[340] In the United States case of Severin v. United States, 99 Ct. Cl. 435 (1943), the court held that a general contractor cannot flow through a subcontractor’s claim against an owner if the general contractor has no liability to the subcontractor for the damages at issue.
[341] In order to attempt to avoid this result, contractors and subcontractors in the United States began to use liquidating agreements. These agreements would settle the rights and obligations between them and attempted to insulate the contractor from liability while at the same time asserting the subcontractor’s claim against the owner.
[342] Walsh has attempted the same thing here through agreements with its subcontractors. However, in my view the liquidating agreements do not change matters and the subcontractor claims as against TTC must fail.
[343] As stated in Thomas G. Heintzman, Bryan G. West, and Immanuel Goldsmith, Heintzman, West and Goldsmith on Canadian Building Contracts, 5th ed. (Toronto: Thomson Reuters Canada Limited, 2023) at § 7:4 Proof of Damages – Third Party Claims, for Walsh to recover damages against TTC for TTC’s breach of the Contract, which in turn causes a breach of Walsh’s subcontracts with its subcontractors and damages to the subcontractors, Walsh must be liable to its subcontractor for those damages. The requirement is somewhat lessened in Mechano, which is cited in § 7.4 of Heintzman, requiring that Walsh must be potentially liable.
[344] A flow-through claim is a procedural device only. It does not create a new cause of action as between a subcontractor and TTC as there still is no privity of contract between them. Accordingly, for Walsh to pass any liability to TTC on a flow-through claim, the liability (or at a minimum, the potential liability) must remain as between Walsh and its subcontractors.
[345] However, Walsh has settled with most of its subcontractors for which it is advancing a claim. The exceptions are Limen Structures, IEI, Schindler and Forward Signs. Pursuant to the settlements, Walsh paid these subcontractors what was owed to them for contract monies and holdback. This was the money owed by Walsh to the subcontractor pursuant to its own contract. In exchange, the subcontractor fully released Walsh from any and all claims related to the Project, including delay. In some instances, Walsh retains all of any possible flow-through delay claim amounts; in others, it retains a portion of any possible flow-through delay claim amounts. In neither situation does Walsh have any liability. Even with the non-assignment liquidating agreements, any payment is completely dependent upon recovery from TTC.
[346] In passing through the subcontractor claims, presumably because it was facing no liability, Walsh failed to scrutinize any of the subcontractor delay claims despite being in the best position to do so as the direct counterpart to the subcontractors. Moreover, despite Walsh’s subcontracts containing an express provision that the subcontractor waived its right to seek compensation if Walsh could not in good faith certify the subcontractor’s claim, Walsh did not take advantage of this provision to minimize or eliminate the subcontractor’s claim. Nor did Walsh take advantage of the release language that was contained in all of its SCOs that seemingly disentitled the subcontractors to any additional payments for direct and indirect costs and for delay costs, among other things.
[347] It is not as if there were never any issues between Walsh and its subcontractors. There was a substantial amount of communication between Walsh and its subcontractors where Walsh took the position that the subcontractors were not working properly or quickly enough, were not devoting enough manpower or equipment to its work and the Project, and were delaying not only its own work but that of others. Defaults were issued. Mr. Sims from Walsh, when pressed during cross-examination about his communication about the subcontractors’ problems and delays, attempted to explain this prior position away by saying that he was “posturing” with the subcontractors. By this, I take it to mean that he was bluffing or misleading the subcontractors and all of the complaints were more for show.
[348] I have difficulty in accepting this argument when compared to the contemporaneous record of letters and emails between Walsh and many of its subcontractors blaming each other for their delay.
[349] This helps to illuminate the issue with the flow-through claims when there is no liability for Walsh. While Walsh was best positioned to analyze the subcontractor claims, by removing any liability, it also removes any motivation or requirement to do so.
[350] Caselaw in the United States seems to accept liquidating agreements as being a valid way to maintain liability and to flow through both the subcontractor claim and the contractor’s liability to the subcontractor to the owner. While perhaps useful in minimizing litigation, in my view the attempt to place liability upon the owner for the subcontractor’s damages, where the owner has not contracted with the subcontractor and where the contractor has effectively removed itself from the picture, is not right. This makes these claims untenable.
[351] Some subcontractors have not entered into liquidating agreements with Walsh. They have been described as the active subcontractors. As I understand it, Limen Structures, IEI and Schindler have all made claims against Walsh for delay and Walsh has in turn made third-party claims against TTC. That is where these three claims should remain and be dealt with. Walsh will face potential liability from these claims and can defend them, perhaps relying on its previous position that the subcontractors were underperforming, or Walsh can choose not to defend and through the third-party process be free to pass on the claim to TTC. TTC in turn is free to defend the third-party claim and if it wishes, can also defend the main action.
[352] The subcontractor Forward Signs and its claim of $83,722 is also part of Walsh’s claim of $55,672,419. Forward Signs did not enter into a liquidating agreement of any sort with Walsh. According to Simon Ho, the president of Forward Signs, it also did not commence any legal proceeding against Walsh. Mr. Ho stated that Forward Signs suffered damages of $76,187 caused by delay to the Project. The balance of the claim is Walsh’s markup of $7,534.
[353] Not having commenced any proceeding against Walsh, there is no liability or even potential liability as between Walsh and Forward Signs. As a result, Forward Signs’ claim cannot be flowed through to TTC by Walsh. As well, it is questionable whether it has any claim to even bring against TTC.
[354] In chief, Mr. Ho testified that as the sign trade, his company is the last trade on-site and are therefore at the mercy of all the other subtrades if the Project is late. In cross-examination, he stated that he could not pinpoint which subtrade caused the delay to Forward Signs’ work, that he was not saying TTC delayed the Project, and that he did not know what or who caused the delay.
[355] Walsh also claims for two further subcontractor delay claims: Deep Foundations and The Downsview Group. There was no evidence tendered on behalf of either of these subcontractors, either as to liability of Walsh or TTC or even their claimed damages. Their claims as part of this portion of Walsh’s claim for subcontractor delay are also dismissed.
l. Underfunded CDs – Head of Damage #17
[356] Over the course of the Project, TTC directed Walsh to carry out certain additional work or change work. This would have been done by the issuance of a CD. Generally, TTC would issue a CD directing Walsh to carry out additional or changed work and Walsh would submit its own proposal for the value of such work. TTC would then issue a CC, finalizing any previously issued CDs and their value.
[357] There is no issue over whether TTC directed this work to be done or that the work was done as required. What is in issue is the value of the work. As mentioned earlier, there are a total of 36 such CDs in issue, or approximately six percent of the total 576 CDs issued over the course of the Project. Walsh asserts that these CDs were underfunded in the final CCs issued by TTC.
[358] The evidence in relation to these CDs came from Mr. O’Connell for Walsh and Jake Weiland for TTC. Mr. O’Connell was Walsh’s Construction Manager on the Project from March 2014 to October 2015. From October 2015 to November 2018, he had an oversight role on the Project and was responsible for preparing, among other things, Walsh’s submissions in relation to these CDs. Mr. Weiland was a Contracts Manager for Bechtel and was the Senior Contract Administrator for the Steeles West Station from May 2015 to June 2018. He and his team were responsible for reviewing the Walsh submissions for any charge work and determining what if anything was owing.
[359] Despite the issue being the value of the work for each of these 36 CDs, there was an underlying argument by Walsh that TTC’s failure to pay the proper value of the work done was evidence of improper contract administration. This also led to an ensuing debate between the parties as to what the descriptive term “underfunded” for these CDs meant. Neither are part of my analysis in relation to this head of damages as neither are relevant. I am dealing solely with the value of the work in question and whether Walsh is owed more than what has already been paid by TTC.
[360] TTC initially argued that Walsh’s claim included numerous instances of double counting, with amounts claimed as part of these CDs also being claimed under other heads of damages. However, in its final submissions to me, TTC dropped this argument in relation to the CDs.
[361] Although cross-examined for almost 17 full days, Mr. O’Connell was not asked any questions about these CDs or directly challenged at all about his evidence. TTC relied solely upon Mr. Weiland’s affidavit to counter Walsh’s evidence. Mr. Weiland was cross-examined on some of the CDs.
[362] TTC’s argument ultimately became whether Walsh had sufficiently proven that its costs for the CDs were higher than what TTC had valued the CDs at and paid for and whether Walsh had supplied adequate backup to support its various claims. However, this argument was often quite different from what was set out in Mr. Weiland’s affidavit as being the basis for TTC’s denial of the full claim amount. An example of this is the CD for the disposal of native stockpile.
1) Disposal of Native Stockpile: CD 419
[363] This is a claim by Walsh for $975,082. Mr. O’Connell gave evidence in his affidavit that Walsh assumed that the majority of the excavated fill created by digging the subway station was suitable for reuse as backfill, based upon the geotechnical report provided by TTC. However, as it turned out, TTC determined that the excavated soil was unsuitable and directed Walsh to remove this soil and to use new backfill.
[364] TTC and Walsh ended up agreeing as to the cost of hauling away unsuitable material and the importing of fill for use as backfill at the station box. However, they continued to disagree over the price of imported fill used outside the station box areas. Walsh provided a proposal of $1,407,896 for this with supporting documentation. TTC reduced the claim to $432,814, a difference of $975,082 from that claimed by Walsh. Mr. Weiland’s affidavit evidence in responding to this claim focused on the fact that more truckloads of material were hauled off site than imported for backfill and as a result, Walsh could not possibly be entitled to the amount claimed.
[365] Under cross-examination however, Mr. Weiland acknowledged that he failed to account for the fact that the earth being disposed of had a greater volume than what was imported for backfill and that this could account for the difference in the number of truckloads removing versus adding fill. He further acknowledged that this difference could also explain the claimed-for water usage costs, as water was added to the imported backfill causing it to expand.
[366] Having had Mr. Weiland’s evidence as to the reason for non-payment undermined in cross-examination, TTC in argument instead focused on Walsh’s back-up documentation and whether there was evidence of payment by Walsh for the amounts claimed.
[367] This was not the focus of TTC’s evidence, and it was both unfair and untenable for TTC to change its basis for non-payment during argument when Walsh could not respond. Mr. Weiland did not say that this was the basis for non-payment. And, as pointed out by Walsh in its reply argument, its subcontracts contained “pay when paid” clauses which often made it impossible for Walsh to show that it had actually paid its subcontractors without a corresponding payment from TTC. Moreover, there was in fact substantial back-up documentation provided in support of the amounts claimed by Mr. O’Connell that was unchallenged in cross-examination or by Mr. Weiland.
[368] This appears to be a “Hail Mary” argument from TTC requiring Walsh to prove to the penny what items cost and proving payment of every invoice, no matter how small. In doing so, TTC ignores the fact that Mr. Weiland approved large portions of the CDs without requiring this level of exactitude. As Walsh correctly points out in argument, a trial is not an audit. Proof is required on a balance of probabilities.
[369] TTC also raises the argument that because the construction funding was coming from public funds, there was some higher level of proof required from Walsh and some higher obligation on TTC to “guard” these funds. I do not recall any evidence being led to substantiate this assertion.
[370] Nor does this accord with the evidence put before me as to the design and construction of this station or the TYSSE as a whole. These stations were nothing like what TTC had previously constructed. These were not, as TTC CEO Mr. Byford said, “your functional, rudimentary box design”. While perhaps not world-class designs, they were massive, architectural statements encompassing far more than standard subway platforms and finishes. The Steeles West Station contained complicated elliptical columns of concrete, concrete walls that were more akin to works of art, porcelain panels, weathering steel, swooping ceilings and an art installation, which for this station was problematic and which in itself belies this very argument of the TTC assiduously guarding the public purse.
[371] In my view, Walsh was not required to provide backup documentation for every dollar claimed. Walsh provided TTC with its cost proposal documentation relating to this and other CDs. TTC responded in each instance as to why it was not prepared to make payment of the amount claimed. It would now be wrong to allow TTC to change course as to why payment was not appropriate when its response had been explained away by Walsh and there was no longer any reason not to pay them.
[372] I accept Mr. O’Connell’s evidence as to the costs incurred by Walsh and I find that Walsh is entitled to the additional payment of $975,082 for the disposal of native stockpile.
2) Northern Bypass: CD 567
[373] The northern bypass claim relates to Walsh’s requirement to construct a bypass north of Steeles Avenue consisting of two lanes in each direction during the excavation of the station box underneath Steeles Avenue, rather than the contracted-for one lane in each direction. Walsh’s revised proposal valued this work at $1,093,060, whereas TTC valued the work at $327,172. This resulted in a claim amount of $765,888. As TTC correctly indicated in argument, Walsh’s claim amount of $779,215 was wrong.
[374] Much of Mr. Weiland’s affidavit did not have to do with the cost associated with this work. Rather, it concerned whether Walsh was entitled to be paid for this work at all, which was not the real issue, and who was responsible for maintaining the traffic lanes and for obtaining approval from the City of Toronto for any lane reductions to one lane, which was also irrelevant to the issue of cost.
[375] He did however address one major issue: the cost that would have been incurred by Walsh had Walsh proceeded with the original scope of work rather than the actual work done on the northern bypass. Walsh acknowledged that this was an appropriate reduction, but Walsh’s offset amount was only around $12,000. Mr. Weiland in his analysis testified that this amount greatly underestimated the original costs and he reduced the valuation for work done over the original scope to $327,172.
[376] In my view, Walsh’s offset amount of only $12,000 was unreasonable considering the scope of the original work involved, even if for fewer lanes. This puts its overall claim of $1,093,060 in question. However, Mr. Weiland was equally unreasonable in rejecting his own estimators’ value for the additional barriers, signage and markings of nearly $200,000, and deciding on his own that these costs as provided by TTC’s estimators would have been incurred in any event under the original scope of work. I prefer the view of TTC’s estimators that these costs were additional and not within the original scope of work. Accordingly, in relation to this CD Walsh is entitled to an additional $200,000 over TTC’s valuation of $327,172, for a total of $527,172.
3) Site Plan Application: CD 360
[377] TTC did not have an approved site plan from the City of Toronto in place prior to the start of construction of the station. Eventually the city required a number of changes to be made to the site plan. As a result, TTC issued RFQ 360, including changes to street lighting, traffic control, road widening, trees and gate entrances.
[378] Due to multiple subsequent changes by the city, TTC revised RFQ 360 twelve times over less than two years. This resulted in a total of six different CDs varying in price from $650,000 to $865,000 and ultimately resulting in a CC from TTC in the amount of $385,000.
[379] TTC estimators carried out numerous estimations of the work involved. These varied in amount from $685,000 to $1,230,000 to $1,250,000 to $1,420,000 to $730,000 with several TBDs or items to be determined, and finally $990,000.
[380] Ultimately, Walsh provided their proposal for the cost of this work of $1,627,838. Mr. Weiland reviewed the proposal and reduced it. Some of his reductions involved the reduction or outright removal of labour costs that had been recorded on Daily Work Activity Sheets (“DWAS“) and approved by an inspector and TTC representative or resident superintendent at the time of the actual work as being compensable change work. In my view, such retroactive reduction by Mr. Weiland of the time recorded on the DWAS is unreasonable, arbitrary and inappropriate.
[381] In doing so, this puts the entirety of TTC’s valuation for this CD in issue. It suggests that TTC, rather than seeking to conduct a valuation of the work done as required under the Contract and SC 7.7, was putting Walsh to a higher test.
[382] There is a disagreement between the parties as to what transpired after October 24, 2017, when Mr. Weiland provided Walsh with a mark-up of the Walsh cost proposal. Mr. O’Connell says that TTC did not provide specific reasons for its reductions and failed to provide a final cost. Mr. Weiland says that Walsh failed to support the reductions or other items questioned by him.
[383] I prefer the evidence of Mr. O’Connell over that of Mr. Weiland. I find Mr. O’Connell to be a credible and reliable witness. He had excellent recall concerning the Project as a whole and its specifics. He was involved in numerous aspects of the Project including the bid, the construction itself and much of the ongoing paperwork relating to the Project. His testimony was generally corroborated by the documentation presented.
[384] Mr. Weiland was brought on to the Project as part of the Bechtel team in 2015 and lacked the familiarity that Mr. O’Connell had with respect to the Project. While he deposed that his mandate was to determine the fair valuation for Walsh’s CDs, from my review of his affidavit and considering his cross-examination, I am of the view that his mandate was to minimize payments to Walsh. Some examples of this are his arbitrary denial of work approved by TTC inspectors on the DWAS, his seemingly arbitrary rejection of the much higher values arrived at by the TTC estimators which aligned more closely with Walsh’s proposals, and his admission on cross-examination that he intentionally underfunded CDs, having sworn in his affidavit that this had never occurred.
[385] I am left to choose between Mr. O’Connell’s unchallenged statement that Walsh’s proposal of $1,627,838 provides an accurate reflection of the time and material spent to perform the work associated with this change and that the work was performed, and Mr. Weiland’s questionable evidence relating to this CD and his clearly undervalued assessment of $385,000. Based on the evidence presented, I find that Walsh is owed the difference of $1,242,838.
4) Storm Sewer Replacement: CD 123
[386] TTC directed Walsh to remove and replace a City of Toronto 1650 mm storm sewer during the station excavation in 2013. What is at issue are the dewatering costs associated with this work and payments made to New Alliance, one of Walsh’s subcontractors on this work.
[387] Mr. O’Connell says that TTC had been prepared to resolve a portion of this CD for $1,043,571 in early 2018, recognizing the New Alliance payments but not the dewatering costs, but that soon after, TTC issued a CC for a fair lesser amount.
[388] TTC now challenges all of the New Alliance payments, arguing that based on an email from Mr. Ayala of New Alliance to Mr. Sims of Walsh, New Alliance intended to inflate its DWAS to make sure that Walsh got paid. TTC argues that New Alliance proposed a fraud on TTC to which Walsh agreed.
[389] Based upon Exhibit 1109 and the cross-examination of Mr. Pipilas and his admissions, I am satisfied that TTC recognized that the dewatering costs associated with the replacement of this storm sewer were something for which Walsh was to be compensated and were not part of Walsh’s contractual obligation to keep the work and excavated areas drained, which it now argues as the basis for non-payment for these costs. The dewatering costs themselves were not challenged by TTC, just the entitlement to them.
[390] As to the alleged inflated and fraudulent DWAS, there was no evidence of this actually occurring. To the contrary, those at TTC responsible for reviewing these DWAS acknowledged New Alliance’s work and were prepared at one point to pay Walsh for the entirety of this CD less the costs associated with dewatering. Mr. Ayala testified that his email was foolish to send and was done out of frustration due to the unwillingness of TTC to pay for work that his company had done. He testified that there were in fact no inflated DWAS. I accept Mr. Ayala’s explanation and his evidence that there were no inflated DWAS as it aligns with the fact that the DWAS were accepted by TTC and TTC was, in early 2018, prepared to pay for all of them.
[391] I find that Walsh is entitled to the $747,905 claimed.
5) Fire Alarm Changes: CD 260
[392] TTC issued multiple RFQs relating to changes to the fire alarm system during 2015. It also issued multiple CDs steadily increasing its assessment of the value of the work from $25,000 to $790,000. After Walsh submitted its proposal of $1,401,520, Mr. Weiland reviewed it and arrived at a CC of $918,930, for a difference of $482,590.
[393] In his affidavit, Mr. O’Connell takes specific issue with Mr. Weiland’s removal of the costs associated with Plan Group, Accel, All Crane, Selco and Forest City. Forest City’s costs were eventually negotiated so they are no longer at issue.
[394] In cross-examination, Mr. Weiland acknowledged reducing the DWAS for Plan Group despite them being approved by the appropriate inspectors who actually witnessed the work and who indicated on the DWAS that the work was properly within the scope of CD 260. When asked, he was unable to say why he did so. In my view, the costs associated with Plan Group of approximately $160,000 should be added back in. The same should occur with Accel, All Crane and Selco, for an additional $26,000.
[395] Mr. O’Connell’s evidence as to the costs incurred by Walsh was unchallenged in cross-examination. Mr. Weiland’s reduction of the approved DWAS was unexplained, which puts his other reductions in issue.
[396] I find that Walsh is therefore entitled to the $482,590 claimed.
6) Fare Control Revisions: CD 254
[397] TTC issued multiple RFQs with respect to this change, along with multiple CDs increasing its assessment of the value of the work from $70,000 to $375,708. After Walsh submitted its proposal of $855,258, Mr. Weiland reviewed it and arrived at a CC of $399,431.
[398] In his affidavit, Mr. O’Connell takes specific issue with Mr. Weiland’s reduction of Ward & Burke’s costs by $139,000 and Plan Group’s costs by $103,000. He also took issue with a credit from AGC of $81,000 rather than approximately $3,000.
[399] Mr. Weiland in his affidavit addressed the evidence that TTC ignored Plan Group’s DWAS and stated that there was only one DWAS provided and that his reduction based on that amounted to $361. He also addressed the credit issue. He claims that all the deductions were appropriate.
[400] Mr. Weiland was not cross-examined in relation to this CD.
[401] Based on the evidence put before me, I am unable to make a determination that anything further is owing to Walsh in relation to this CD.
[402] I recognize that this is a problem with an action of this size. In addition to the delay claim, there were, as indicated previously, 36 underfunded CD claims, 7 RFQ claims and 93 NOICs, along with 22 subcontractor claims. The trial, despite the evidence in-chief being by way of affidavit, took 151 days of evidence, with most of it being cross-examination. Not every claim was addressed in cross-examination. As already mentioned, Mr. O’Connell was not cross-examined on any of the CDs. That was TTC’s choice. This does not mean that I must accept Mr. O’Connell’s evidence without hesitation. But the failure to cross-examine is certainly something that I am free to consider in weighing the evidence and in considering the arguments now put forward by TTC in seeking to suggest that Mr. O’Connell’s evidence, which stated that the proposals provided an accurate reflection of the time and material spent to perform the work associated with each change and that the work was performed for the purposes of the change, was either wrong, overstated or not credible. The same can be said with respect to the failure to cross-examine Mr. Weiland in relation to this CD or any other.
[403] Walsh must prove its loss and the quantum of damages on a balance of probabilities: see Cassandro v. Glass, 2019 ONCA 654, at para. 35. Difficulties in quantifying damages does not relieve the court from an obligation to assess damages to the extent possible on the evidentiary record, but that does not mean that a party is relieved of their obligation to prove the facts upon which damages may be estimated or that they in fact suffered a loss: TMS Lighting Ltd. v. KJS Transport Inc., 2014 ONCA 1, 314 O.A.C. 133, at para. 61; Kinbauri Gold Corp. v. Iamgold International African Mining Gold Corp. (2004), 2004 CanLII 36051 (ON CA), 192 O.A.C. 24 (C.A.), at para. 76.
[404] With this CD I am unable to conclude that Walsh in fact suffered a loss or in other words that TTC underfunded it. Walsh has not met its onus and this claim is dismissed.
7) Support of Artwork Lights: CD 521
[405] TTC decided that the station should incorporate artwork. It ended up choosing hanging lights running throughout the station that were connected to a computer system and terminals. The lights were designed to spell letters or words. Passengers could access computer terminals throughout the station, input a message and then have the lights display it for everyone to see.
[406] What should have been obvious to anyone with a scintilla of common sense was that this artwork would be subject to abuse and was totally inappropriate for a subway station. However, the artwork was commissioned, it was part of the Walsh Contract and was built and installed at great expense. It has never been operational, despite being installed, because at some point someone realized the problem with it. That there are ongoing disputes between Walsh and TTC relating to costs associated with this artwork, when it has never been operational to date and likely never will be, is not ironic as it is not amusing. It is actually more problematic than anything. While I do not recall any evidence being given on this, in all likelihood it would have been less expensive to simply cancel the artist’s contract and pay whatever damages may have flowed from that rather than proceeding with the construction and installation of the lights. But that was not done.
[407] Under its Contract, TTC was to develop a light prototype and provide it to Walsh. Then, Walsh was to build sufficient lights for the station and to devise the rigging system to attach the lights to the ceiling where required. Some of the lights were to hang in the subway tunnels themselves. The lights were required to resist a wind tunnel piston effect of 2 kilopascals (kPa).
[408] In order to meet the 2 kPa requirement, Walsh and its subcontractor designed a rigid system which had cross-bracing. This system was rejected by the artist and TTC on the basis of aesthetics. TTC then relaxed the wind load requirement to 1.25 kPa and retained Blackwell Engineers to redesign the rigging system. Once this was done, TTC issued CD 521 to Walsh and instructed Walsh to implement the new rigging system. Walsh priced this at $412,316 and in its pricing provided a credit to TTC for the cost of the original rigid rigging system which had been rejected. TTC priced this CD at $0, arguing that Walsh was always responsible for the design of the rigging system and as a result was required to bear any costs associated with it, including any changes.
[409] I accept the detailed evidence of Walsh witness Mr. Norris with respect to this CD. Mr. Norris began working on the Project in July 2015 and was the Senior Project Manager for Walsh from October 2015 to June 2017. I prefer his evidence as to the history associated with the artwork and the rigging system over TTC’s evidence, including that from Mr. Pipilas and Mr. Cunliffe. There was a huge difference between the two design parameters once the wind system requirement was relaxed by TTC. This allowed for a totally new design but increased costs. In changing the design, TTC should be responsible for the costs associated with it. Walsh’s evidence as to the costs associated with this work was not challenged by cross-examination. TTC had no evidence of value, only that it should be $0 because there was no entitlement. In my view, Walsh is entitled to be paid the unchallenged amount of $412,316.
8) Lighting Revisions: CD 348
[410] TTC requested multiple changes to certain lighting circuits. The parties disagree over a number of aspects related to this work: whether this was done for circuits that had been installed, had yet to be installed, or both; why there were multiple revisions to this CD; who was unreasonable in the negotiations that followed with respect to this CD; and what Walsh’s final proposal was.
[411] As admitted by Mr. Weiland in cross-examination, one of the large reductions made by him was for Plan Group and his disallowance of multiple DWAS that had been previously approved by TTC inspectors and superintendents. As previously determined by me, this was inappropriate and puts the entirety of Mr. Weiland’s deductions for this CD in question. Again, Mr. O’Connell’s evidence was not challenged in cross-examination. TTC’s combing through the various claim amounts in final argument and questioning of payment amounts to subcontractors, which are quite frankly inconsequential in the grand scheme of things, is unfair to Walsh.
[412] TTC also argues that Walsh’s claim proposal of $447,941, rather than its earlier claim proposal of $518,420, should be used in valuing any claim amount. The former was sent following Mr. Weiland’s comments on the latter and was Walsh’s final proposal.
[413] While Mr. O’Connell says the smaller proposal should be ignored as this was done as part of a negotiation to settle the claims, there is no corroborating evidence such as a letter or email that this was a without-prejudice offer as part of a resolution of all claims. Nor was it withdrawn. To me, it was an acknowledgement that its first proposal for this work was too high and should be adjusted downwards.
[414] I find that Walsh is entitled to the difference between its final proposal of $447,941 and TTC’s assessment of $155,561, or $292,380 for CD 348.
9) Aspirating Smoke Detectors: CD 480
[415] TTC issued multiple CD 480 revisions to this request along with multiple CDs increasing its assessment of the value of the work from $70,000 to $500,000. Walsh claims it is owed $268,931.
[416] There was little evidence put before me in relation to this CD and I am unable to make a determination if anything further is owing to Walsh in relation to it. Based upon the evidence of Mr. O’Connell, it also seems to be that this claim may really be for the difference between the proposal of $669,474 and the CC of $469,317, or $200,157, rather than the $268,931 as claimed by Walsh in Mr. O’Connell’s affidavit. This in itself makes Walsh’s claim questionable, although in my view Walsh has not proven this claim on a balance of probabilities. This claim is dismissed.
10) Sewer Revisions: CD 276
[417] TTC issued six revisions to this request and multiple CDs, increasing its assessment of the value of the work from $50,000 to $294,000. Walsh eventually submitted its proposal for $526,597 and TTC issued a CC for $210,547, approximately $83,000 less than its final CD, which had been based on its own internal estimates.
[418] As part of its valuation, TTC applied a credit of $123,500. Mr. Weiland in his affidavit stated that he had determined this credit amount. However, during cross-examination he admitted that it was more likely that one of the TTC estimators had calculated this credit and that his affidavit statement was incorrect.
[419] I am left to choose between Mr. O’Connell’s unchallenged statement, at least by cross-examination as to the value of this CD, and Mr. Weiland’s evidence, where it became clear that on one of the larger reductions to this CD, he had made no determination of value despite his statement in his affidavit to the contrary. This puts all of his evidence relating to the value for this CD in question. Based on the evidence presented, I find that Walsh is entitled to the difference of $316,050.
11) Dimension Certification for Stairs: CD 58
[420] TTC issued multiple revisions to this request and multiple CDs, increasing then decreasing and finally increasing the value of the work. Walsh eventually submitted its proposal for $270,230 and TTC issued a CC for $42,174, for a difference of $228,056.
[421] Mr. Weiland acknowledged that he was not involved in the Project when the work involved in this CD was carried out and relied upon assessments made by others at TTC, who did not give evidence.
[422] One of the major items of difference between Walsh and TTC in relation to this CD was Walsh’s claim for $118,584 for concrete and TTC’s allowance of $332 for this. Based upon the cross-examination of Mr. Weiland, this difference resulted not from the amount of concrete that was used, about which the parties agree, but whether or not this concrete was added to the design or was part of the initial design. Walsh says the former and TTC the latter.
[423] In my view, based upon the cross-examination of Mr. Weiland and his acknowledgement that architectural drawings had been changed as part of the work involved with this CD, which enlarged the firefighter’s access shaft, it follows that Walsh should be entitled to payment for the additional concrete as part of Limen’s additional work carrying this change out. The other costs claimed all relate to the enlarged shaft and the additional concrete and are appropriate. Accordingly, Walsh is entitled to the difference claimed of $228,056.
12) Traffic Control Signal: CD 452
[424] TTC issued multiple revisions to this request and multiple CDs ranging in amount from $475,000 to $1,300,000. Walsh submitted its proposal for $1,508,629 and TTC reduced its CC to $1,277,986, for a difference of $230,643.
[425] In his affidavit, Mr. O’Connell simply states that he does not agree with TTC’s reduction of costs and then mentions two subcontractors accounts that were reduced, Plan Group’s by $31,000 and Guild’s by $133,000. Mr. O’Connell says that this was done without explanation or comprehensive review by TTC.
[426] In his affidavit, Mr. Weiland stated that he assessed the fair and reasonable value for this change, and he briefly addressed Plan Group and Guild. As to Plan Group, he stated that its work was not entirely related to this CD and that there were no supporting DWAS. For Guild, he stated that its work included work unrelated to this CD and was unsupported by the submitted DWAS.
[427] Neither Mr. O’Connell or Mr. Weiland was cross-examined on this issue and I am left with two conflicting affidavits. I am unable to make a determination if anything further is owing to Walsh in relation to this specific CD. As Walsh has not proven this claim on a balance of probabilities, this claim is dismissed.
13) Spray Fireproofing Spec Revision: CD 396
[428] This change occurred when it was discovered that certain sprayed fireproofing materials as specified in the Contract were unsuitable. TTC issued multiple CDs starting at $40,000 and ending up at $141,105. Walsh submitted a proposal of $326,735 and TTC reduced its CC to $123,155, for a difference of $203,580.
[429] In his affidavit, Mr. O’Connell simply states that he does not agree with TTC’s reduction of costs and then mentions two subcontractor accounts that were reduced. Walsh’s scaffolding costs were reduced from $114,000 to $19,000 and its fireproofing subcontractor FJ Construction had its costs reduced from $198,000 to $152,000.
[430] In his affidavit, Mr. Weiland states that he assessed the fair and reasonable value for this change and he specifically addressed both the scaffolding costs and the costs associated with FJ Construction. In his view, there was no change in the sequencing of work that would have necessitated the increased scaffolding costs and with respect to FJ Construction, there were no DWAS and the hourly rate for the work was unsupported.
[431] Neither Mr. O’Connell nor Mr. Weiland was cross-examined on this issue and I am left with two conflicting affidavits. I am unable to make a determination if anything further is owing to Walsh in relation to this specific CD. Walsh has not proven this claim on a balance of probabilities and this claim is dismissed.
14) Changes to Expansion Joint at FFA Hatch: CD 242
[432] TTC issued multiple CDs for this request, from $21,000 to $82,633. Walsh made multiple proposals starting at $347,840 and ending up at $220,859. TTC increased its CC to $216,049 for a difference of $4,860. That this amount is still an issue between the parties would be somewhat remarkable to an objective observer, but considering the positions taken by these parties on so many different aspects of this case, it is not truly surprising.
[433] In Mr. O’Connell’s affidavit, no specific items are dealt with following his statement that he does not agree with TTC’s reduction and that Walsh’s proposal is an accurate reflection of the time and material spent. Mr. Weiland goes into more detail in his affidavit as to why there is a difference of $4,860 and how it relates to one invoice out of five for one of the subcontractors.
[434] Once again, neither Mr. O’Connell nor Mr. Weiland was cross-examined and I am left with two conflicting affidavits. I am unable to make a determination if anything further is owing to Walsh in relation to this specific CD. Walsh has not proven this claim on a balance of probabilities and it is dismissed.
15) Light Cone Revisions: CD 218
[435] TTC issued multiple revisions to this request and two CDs increasing the assessment of the value of the work from $20,000 to $100,000. Walsh submitted its proposal for $288,605 and TTC issued a CC for $120,707.
[436] Mr. Weiland in his affidavit stated that one of his deductions related to the subcontractor C-ore. He stated that Walsh had failed to offset C-ore’s base scope of the work as part of Walsh’s proposal, resulting in an inflated claim of approximately $113,000. However, during cross-examination Mr. Weiland admitted, somewhat begrudgingly, that his evidence was incorrect and in fact Walsh had offset C-ore’s base scope of work.
[437] Once again, I am left to choose between Mr. O’Connell’s evidence and Mr. Weiland’s evidence where it became clear that one of the larger reductions to this CD was wrong and, in my view, arbitrary. In my view, this puts all of his evidence relating to this CD in question. Based upon the evidence presented I therefore find that Walsh is entitled to $167,899 for CD 218.
16) Electrical Revisions: CD 194
[438] There are two aspects to this CD. Firstly, Walsh claims that it is entitled to $43,824 for its costs associated with this CD. Secondly, Walsh claims the credit granted by TTC to itself in the amount of $726,837. This credit was made by TTC on its view that the change from the contractually required RHW electrical wiring to the RW90 wiring resulted in savings for Walsh, as reflected in the CD. Together, they add up to Walsh’s claimed amount of $770,661.
[439] Both Mr. O’Connell and Mr. Weiland in their affidavits focus on the change in wire and TTC’s credit. There was little evidence put before me in relation to Walsh’s claim of $43,824 other than Walsh’s proposal and TTC’s rejection of it. I am unable to make a determination if anything further is owing to Walsh in relation to CD 194. Walsh has not proven this portion of the claim on a balance of probabilities and this part of the claim is dismissed.
[440] As to the credit claimed by TTC, it argues that Walsh has failed to establish that no credit is owed. In my view it is TTC that has the onus to prove, on a balance of probabilities, that it is entitled to the credit, not for Walsh to prove that TTC is not. TTC does not refer to any provision in the Contract for this argument. Nor should Walsh have to prove a negative. The party who asserts a position should be the one required to prove it. And in my view, TTC has failed to do so.
[441] One would think that if the TTC wished to prove a $725,000 claim, an actual quote for each type of wire would have been provided in evidence by someone with knowledge of these products. Instead, TTC provided a confusing email chain from some unknown individual to someone at TTC who did not give evidence, who then passed on the information to Mr. Weiland. Moreover, Mr. Weiland could not even say whether the third-hand pricing information he relied on for the claimed credit related to any specific year. The credit of $726,837 should be taken out of the Contract price and Walsh is thereby entitled to payment in the amount of $726,837 with respect to this CD.
17) CDs 152, 409, 474, 541, 175, 478, 590, 565, 335
[442] Rather than dealing with these CDs individually, I find that on the evidence put before me that I am unable to make a determination if anything further is owed to Walsh in relation to them. Walsh has not proven these claims on a balance of probabilities and these claims are dismissed.
[443] There was no cross-examination of either Mr. O’Connell or Mr. Weiland for any of them. Mr. Weiland was on-site and had firsthand knowledge of the CDs with one exception, and no DWAS were involved such that they were signed off and then subsequently rejected by Mr. Weiland after the fact.
[444] With respect to CD 175, Mr. Weiland was not there; however, his lack of firsthand knowledge was not an issue because the issue for this CD was whether the work done was part of CC 1. With respect to CD 565, DWAS were involved but they had been clearly rejected by the TTC inspectors and supervisors as being work unrelated to this CD. The fact that these DWAS had been rejected on the DWAS themselves buttresses Walsh’s argument elsewhere that Mr. Weiland’s rejection of approved DWAS was arbitrary and inappropriate. The TTC inspectors and supervisors were clearly able to make that determination on their own and did so.
[445] With respect to CD 478, Walsh’s proposal was $21,738 and not $26,328. As a result, the appropriate claim on this CD, if awarded, would have been $7,002 rather than $11,592 as claimed. I also point out that the difference with respect to CD 590 is $197. That this amount had to be addressed and that the parties gave evidence on it in their affidavits is even more remarkable than the dispute over CD 242 for $4,860.
18) CDs 150, 101, 170, 186, 134
[446] Rather than dealing with these CDs individually, I find that Walsh is entitled to the amounts claimed for these CDs of $81,209, $66,392, $83,104, $30,845 and $148,663, respectively.
[447] There was no cross-examination with respect to these CDs, either of Mr. O’Connell or Mr. Weiland. Mr. Weiland acknowledged that he was not involved in these CDs and relied upon assessments made by others at TTC, who did not give evidence. In having to choose between Mr. O’Connell’s evidence, with his direct knowledge of the Project, and Mr. Weiland’s, in these circumstances, where his evidence was hearsay based upon others from TTC, I prefer Mr. O’Connell’s and it is on this basis I make my award.
19) CDs 482, 438, 476, 468, 517
[448] Rather than dealing with these CDs individually, I find that Walsh is entitled to the amounts claimed for these CDs of $51,295, $58,290, $56,847, $36,189 and $6,962, respectively.
[449] There was no cross-examination with respect to these CDs, of either Mr. O’Connell or Mr. Weiland. What these CDs have in common is the rejection by Mr. Weiland of various DWAS, claimed for these CDs, which had been accepted by the TTC inspectors and supervisors. In my view it was improper and arbitrary for Mr. Weiland to do so. His rejection of the approved DW