



COURT OF APPEAL FOR ONTARIO

CITATION: Fermar Paving Limited v. 567723
    Ontario Ltd. o/a Winters Pit, 2020 ONCA 173

DATE: 20200306

DOCKET: C66011

Lauwers, Hourigan and Thorburn
    JJ.A.

BETWEEN

Fermar
    Paving Limited

Plaintiff (Respondent)

and

567723 Ontario Ltd. o/a Winters
    Pit

Defendant (Appellant)

Marco Drudi, for the appellant

Charles C. Chang, for the respondent

Heard: February 24, 2020

On
    appeal from the judgment of Justice Carole J. Brown of the Superior Court of Justice,
    dated September 21, 2018, with reasons reported at 2018 ONSC 5485.

REASONS FOR DECISION

[1]

Fermar Paving Limited (Fermar) is an Ontario
    road builder. On July 29, 2010, Fermar entered into a construction contract
    with the Ontario Ministry of Transportation (MTO) to provide road construction
    on a portion of Highway 26 in Simcoe County (the Project).

[2]

To complete the Project, Fermar required two
    types of aggregate: granular A and granular B. The aggregate was required
    to meet the Ministrys specifications.

[3]

Rocco Buono, the principal of 567723 Ontario
    Limited, operating as Winters Pit (Winters Pit), approached Fermar to
    discuss Fermars needs for aggregate.

[4]

After some discussion, Fermar sent a document
    (the Document) to Winters Pit setting out the proposed terms of an
    agreement. Winters Pit requested a higher price for the granular A and
    granular B but asked for no other changes. The Document was signed by both
    parties on September 3, 2010.

[5]

A few days later, through its solicitor,
    Winters Pit said that it could not provide as much aggregate as it was
    required to in accordance with the signed Document. There were discussions over
    several months, but no new signed agreement was reached.

[6]

In November 2010, Fermar was told to leave the
    site or Winters Pit would commence proceedings for trespass.

[7]

Fermar brought an action for breach of contract
    by repudiation of the agreement and sought damages to compensate Fermar for the
    cost of having to source the aggregate from elsewhere.

[8]

The trial judge found that:

a)

The Document was an enforceable agreement;

b)

The agreement was not void or illegal, nor did
contra
    proferentum
apply as the terms were not ambiguous; and

c)

Winters Pit repudiated the terms of the
    agreement such that it was responsible to pay the respondent damages in the
    amount of $816,436.37.

[9]

Winters Pit appeals from the trial judges
    decision. The appeal is allowed on the basis that the trial judge erred in her
    determination of damages. The issue of damages is remitted to a judge of the
    Superior Court of Justice.

WINTERS PITS ARGUMENTS ON APPEAL

[10]

Winters Pit claims that the trial judge made
    palpable and overriding errors of fact and mixed fact and law in finding the
    Document was an enforceable contract and in awarding damages.

[11]

Winters Pit submits that there was no binding
    contract: the Document was only an agreement in principle. Moreover, the
    Document was void as Fermar knew it was illegal for Winters Pit to extract
    more than 100,000 tonnes of aggregate per year, since the extraction licence
    was attached. Winters Pit also argues that the terms of the Document are
    unclear. Because the Document was drafted by Fermar, the rule of
contra
    proferentum
applies.

[12]

Winters Pit denies that it repudiated any
    contract with Fermar.

[13]

Winters Pit argues that Fermar is not entitled
    to damages because Winters Pit did not breach any contract. Alternatively,
    Winters Pit argues that Fermar failed to adduce cogent evidence to support its
    claim for damages or its efforts to mitigate its damages.

ANALYSIS OF THE TRIAL JUDGES DECISION AND
    CONCLUSION

Liability of Winters Pit for Repudiation of the Agreement

[14]

For the following reasons, we see no error in
    the trial judges conclusion that there was a valid agreement between Fermar
    and Winters Pit and that Winters Pit repudiated that agreement:

a)

Fermar provided Winters Pit with a draft
    agreement on September 2, 2010. After Fermar visited the site, engaged in
    testing, and revised the terms at Winters Pits request, Winters Pit signed
    the draft agreement on September 3.

b)

The Document provides that 
Winters Pit
    warrants and represents
that a minimum of 335,000 tonnes of granular B
    material is available to F.P.L. and that F.P.L. shall have the right to
    manufacture a minimum of 140,000 tonnes of granular A (emphasis added).

c)

The terms of the two-page agreement were clear
    and unambiguous.

d)

The agreement was not rendered void because
    Winters Pits licence did not permit it to extract the quantities of granular
    A and B stipulated in the agreement. An increase in the licenced quantities was
    necessary. It was incumbent on Winters Pit to revise the terms of agreement
    before signing. It failed to do so at its peril.

e)

On September 7, 2010, counsel for Winters Pit
    wrote to the Senior Operations manager of Fermar to advise that:

We have been consulted in connection with a
    September 1, 2010 agreement between 567723 Ontario Limited and Fermar Paving
    Limited.
Prior to signing the agreement
, our client did not note the
    quantity requirements of the agreement. O
ur client cannot comply with the
    agreement and is not prepared to fulfil its obligations under the agreement
[Emphasis added.]

f)

On September 15, counsel for Fermar wrote to
    Winters Pit to reiterate that an agreement had been reached and that Winters
    Pit was now seeking to resile from the agreement. He stated that Fermar was
    prepared on a completely without prejudice basis to engage in further
    discussions.

g)

Winters Pit obtained no extension or temporary
    increase to the tonnage of aggregates that could be extracted from Winters
    Pit.

h)

Fermar tried to resolve its differences with
    Winters Pit while maintaining its position that the September 3 Document was
    an enforceable contract. None of Fermars overtures as per Fermars letters of
    October 22 and November 11, were accepted by Winters Pit.

i)

When Fermar put its equipment on the property in
    November 2019, Fermar was told to leave the property, failing which Winters
    Pit would sue Fermar for trespass. At no time thereafter did Winters Pit
    invite Fermar back or indicate that Winters Pit was ready, willing, and able
    to meet the terms of the agreement.

[15]

The appeal in respect of liability is therefore
    dismissed.

Damages

[16]

Fermar sourced its aggregate elsewhere and sued
    Winters Pit for breach of contract.

[17]

The trial judge correctly held that as a result
    of Winters Pits repudiation of the agreement, Fermar was entitled to be
    restored to the position that it would have been in had Winters Pit met its
    obligation to supply all necessary aggregate. Fermar was required to find other
    sources of aggregate and incurred costs for equipment rental, cost of the
    aggregate, transportation, labour and other valid expenses. Fermar had an
    obligation to mitigate its losses.

[18]

The trial judge awarded Fermar damages in the
    amount of $816,436.37, which she found to be the difference between what Fermar
    would have paid to Winters Pit and the amount it did pay to the third-party
    suppliers for the aggregate.

[19]

In so doing, the trial judge relied on only two
    documents. The first was a document entitled, Cost Summary for Alternate
    Sourcing of Granular A and Granular B by Supplier, which purported to
    summarize approximately 1000 pages of invoices and other documents. The second
    was a document entitled, Production Cost Analysis, which compared the costs
    that Fermar says it would have paid to Winters Pit and the costs it paid to
    third parties for the aggregate. These documents were adduced at trial through
    Charles Ezomo, Fermars project manager.

[20]

The trial judge noted that Mr. Ezomo was
    responsible for planning all assigned projects, preparing contracts, progress
    certificates, payments and completion of the projects. He oversaw the
    completion of this project and obtained alternate sources of aggregate. Mr.
    Ezomo testified that Fermar obtained the requisite Granular A from Brock Pit
    and Granular B, as well as some additional Granular A, from Walkers Pit.

[21]

Mr. Ezomo testified that he had to approve all
    invoices used in the analysis when they were originally received and did not
    review them again for purposes of preparing the summary. Mr. Ezomo is not an
    accountant.

[22]

Mr. Ezomo did not do an independent analysis but
    prepared the cost summary based on a report generated by Fermars accounting
    department. It is not clear who prepared the accounting report. None of the
    source documents were produced at trial.

[23]

Although the two summaries were included in a
    Joint Book of Documents, there appears to have been no agreement that the
    parties were thereby acknowledging the truth of the contents of those
    documents.

[24]

We agree with the trial judge that Fermar is
    entitled to damages resulting from the repudiation of the agreement by Winters
    Pit and mitigated its losses by sourcing aggregate from elsewhere. Fermar was
    not required to continue to deal with Winters Pit, who the trial judge found
    was not willing to provide Fermar with any more aggregate.

[25]

It is not possible on this record to calculate
    the amount of the appellants damages because the source documents were not
    part of the trial record, nor was there agreement on the quantum of damages at
    trial. Because it is not possible for this court to make the factual findings
    necessary to determine these issues on the existing trial record, we return
    these issues to a judge of the Superior Court to quantify the damages:

Gholami
    v. The Hospital of Sick Children
, 2018 ONCA 783, 2019 C.L.L.C.
    210-007.

[26]

There is no order as to costs of this appeal
    given the divided success.

P.
    Lauwers J.A.

C.W.
    Hourigan J.A.

J.A.
    Thorburn J.A.


