Supreme Court of Canada
Crump v. Toronto Dominion Centre Ltd., [1977] 1 S.C.R. 25
Date: 1976-01-30
Crump Mechanical Contracting Limited (Plaintiff) Appellant;
and
Toronto-Dominion Centre Limited (Defendant) Respondent.
1975: November 4; 1976: January 30.
Present: Laskin C.J. and Judson, Spence, Pigeon and Dickson JJ.
ON APPEAL FROM THE COURT OF APPEAL FOR ONTARIO.
Contract—Appeal—Trial Court’s finding of fact disturbed by Court of Appeal—Court of Appeal finding no evidence to justify award on a contractual basis—Court of Appeal varying cut-off date and reducing award—Supreme Court of Canada finding evidence to justify findings of trial judge.
APPEAL and CROSS-APPEAL from a judgment of the Court of Appeal for Ontario allowing in part an appeal from a judgment of Hughes J. at trial awarding damages for breach of contract. Appeal allowed in part with costs, Judson and Dickson JJ. dissenting, cross‑appeal dismissed with costs.
Nelles Starr, Q.C., and C.E. Woolcombe, Q.C., for the appellant.
George Finlayson, Q.C., and Tom Heintzman, for the respondent.
The judgment of Laskin C.J. and Spence and Pigeon JJ. was delivered by
SPENCE J.—I have had the opportunity of reading the reasons for judgment which are being delivered by Mr. Justice Judson herein and I adopt such facts as he has set out with the additions which I shall outline hereafter.
I am concerned particularly with the issue as to whether or not the appellant should have been allowed the amount of $13,187 for the preparation of the estimate for the Guaranteed Upset Price referred to throughout the appeal as the G.U.P. This amount was allowed by the learned trial
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judge but was disallowed by the Court of Appeal upon the basis that there was no evidence to justify any award on a contractual basis. I find such evidence in the testimony of J.J. Pigott, the President of the appellant company and also a director of the Pigott Construction Company. There was produced to him at trial a memorandum under date of May 25, 1967 which he had addressed to L. Cianfarani, a project manager for the mechanical work on the Toronto-Dominion Centre. This memorandum, although dated May 25, 1967, has indicated thereon the fact that it was dictated on May 24, 1967 and speaks of a meeting “today” with Mr. E. Diamond and Mr. John Findlay, both officials of the respondent. Paragraph 4 of that memorandum reads:
When all necessary information is available, we will submit an estimated cost for purposes of making it a guaranteed upset price. The Owner reserves the right, of course, to refuse to execute the final contract with us if they do not approve the guaranteed maximum cost. In this eventuality they would, of course, pay us for all work completed plus a fee of Five and One Half Percent (5-½%). Naturally, no one expects this latter circumstance to arise. Nevertheless, I wish to review the summary of your estimated cost with you before it is submitted as a guaranteed maximum cost.
Mr. Pigott identified that memorandum and after reading the memorandum counsel for the appellant continued:
and so on. This paragraph 4, you speak of—that all necessary information is available and if you don’t get the job, nevertheless this is eventually—in this eventuality, they would of course pay you for all work completed plus a fee of five and a half percent.
Q. Did anybody say that?
A. Yes sir, that was agreed upon by Mr. Findlay and Mr. Diamond that we would be paid all costs plus a fee of five and one half percent.
Q. When was that?
A. That was at the meeting of May 24th and in fact it was my suggestion that this be introduced because I felt that this would put the executive committee a little more at ease knowing that they were not locked in inevitably and if they chose not to approve, they could terminate by paying all costs incurred by us to date plus five and a half percent.
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We have, therefore, definite evidence from Mr. Pigott that the agreement set out in paragraph 4 of that memorandum was made on May 24, 1967 between authorized representatives of the appellant and the respondent. The learned trial judge having heard that evidence was entitled to accept it and base an award upon it. I am of the opinion that he did so when he said:
Quite apart from custom, I think that J.J. Pigott was led to believe that these costs would be paid for by the Centre whether or not the contract was awarded, and that they should be chargeable to the Centre.
This constituted a finding of fact by the learned trial judge which, with respect, I do not think should have been disturbed in the Court of Appeal.
I would, therefore, allow the appeal to the extent only of restoring paragraph 1 of the judgment of the learned trial judge which read as follows:
1. THIS COURT DOTH ORDER AND ADJUDGE that the Plaintiff do recover from the Defendant the sum of $13,187.00 for the preparation of the estimate for the G.U.P.
I would not interfere with the judgment of the Court of Appeal as set out in paragraph 1(1) directing a reference nor with its reservation of costs in paragraph 1(2). Since the appellant’s success in this Court is divided, I would allow the appellant only one-half of its costs upon this appeal. As does my brother Judson, I would dismiss the respondent’s cross-appeal with costs.
The judgment of Judson and Dickson JJ. was delivered by
JUDSON J. (dissenting)—The plaintiff, Crump Mechanical Contracting Limited, a wholly owned subsidiary of Pigott Construction Company Limited, sued the defendant, Toronto‑Dominion Centre Limited for $97,236. Crump had been the mechanical contractor for the first tower of the Toronto-Dominion Centre. The work for which payment is claimed in this action was wholly in connection with a proposed second tower, for which Crump hoped to get the contract for the mechanical work. It was not given this contract.
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The basis for the claim is set out in a letter from Toronto-Dominion to Crump, dated July 6, 1967. It reads as follows:
July 6, 1967.
Mr. L. Cianfarani,
Crump Mechanical Contracting Limited,
P.O. Box 4057, Terminal “A”,
Toronto, Ontario.
Dear Mr. Cianfarani: SECOND TOWER
Further to our discussion of July 4th, this will confirm that you are to proceed immediately with the underground drainage required for the Second Tower, commensurate, of course, with the General Contractor’s requirements and schedules. It is also understood that your Drawing Office is to proceed with all work on the Second Tower, working from the drawings now in your possession for tendering. It is further understood that job overhead for the Second Tower is to start 1st July 1967 and that the credits, if any, which will accrue from the overlap between Tower #1 and Tower #2, will be agreed as and when possible. It is further understood that this letter does not constitute a Letter of Intent insofar as the Second Tower is concerned, and that if we do not reach a satisfactory conclusion on the total contract for the Second Tower such work as is carried out under the above instructions will be paid for at agreed rates and costs.
Yours very truly,
(sgd.) John Findlay
Vice-President
I note here that because of strikes, no work was done in connection with the underground drainage mentioned in the first sentence of this letter. This matter requires no further mention. Also, when this letter was written, Crump had already engaged F.C. Hume & Co., an outside firm, to produce detailed drawings and had agreed to pay Hume if it did not get the contract. This fact was unknown to Findlay when he wrote his letter.
After a lengthy trial, the following judgment was delivered:
1. THIS COURT DOTH ORDER AND ADJUDGE that the Plaintiff do recover from the Defendant the sum of $13,187.00 for the preparation of the estimate for the G.U.P.
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2. AND THIS COURT DOTH FURTHER ORDER AND ADJUDGE that it be referred to the Master of this Court at Toronto to inquire and determine what amount of the Plaintiffs indirect costs the Defendant ought to pay during the period July 1st, 1967 to September 30th, 1967, according to the basis of computation set out in the reasons for judgment given at trial and what amount of costs to the Plaintiff for design and drafting performed by F.C. Hume Limited relates to the proposed prefabrication of duct-work and its installation in the second tower, and that the Plaintiff do recover from the Defendant the amount so found by the Master together with a fee of 5.5% thereon, upon confirmation of the said Master’s report.
The first paragraph of this judgment awarding $13,187 for the preparation of the estimate for the G.U.P. needs explanation. G.U.P. means guaranteed upset price which, in turn, means that Toronto-Dominion would not pay for any costs in excess of this price and would receive the benefit of any saving below the price. The Court of Appeal set aside this award of $13,187 on the grounds that there was no evidence to justify any award on a contractual basis for the preparation of this estimate and that there was no basis for any award on the ground of unjust enrichment.
Having set aside the award of $13,187 in paragraph 1 of the judgment at trial, the Court of Appeal was left only with the matter of the reference. It dealt with it in the following terms:
THIS COURT DOTH ORDER AND ADJUDGE that it be referred to the Master of this Court at Toronto to inquire and determine what was the amount of the Plaintiff’s indirect costs for the period July 1st, 1967 to August 31st, 1967, related to Tower No. 2, based upon the computation of costs plus fee, less credit to the owner for overlapping which costs shall include the cost of personnel, if any, held for exclusive employment on Tower No. 2, although not actually employed thereon, and what proportion of the total account of $51,741.55 was incurred by the Plaintiff for design and drafting performed prior to August 31st, 1967; further, that the Plaintiff do recover from the Defendant the total of the amounts so found by the Master together with a fee of 5.5% thereon, upon confirmation of the said Master’s report.
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The only difference between the judgment at trial and that of the Court of Appeal is that of the cut-off date. The trial judge fixed September 30, 1967, the Court of Appeal August 31, 1967. Obviously the Court of Appeal’s date is going to lessen the amount of the award. On August 25, 1967, Findlay, on behalf of Toronto-Dominion stopped the work with a letter in the following terms:
With reference to the proposal submitted by you for Mechanical work on the Second Tower, which cost proposal was delivered to this office on Thursday, August 17th, by Mr. Cianfarani, I have to advise you that we have considered the proposal and have decided that we will make other arrangements for the execution of the work.
Findlay’s reason for stopping this work was that he thought that the estimate for the guaranteed upset price was grossly excessive.
The trial judge thought that Crump needed until September 30, 1967, to enable it to rearrange its own staff and to enable its sub-contractor, F.C. Hume & Co., to do the same. The Court of Appeal was of a different opinion. They thought that an immediate stop work order was needed both in Crump’s own office and that of its sub-contractor. They appreciated the fact that Toronto-Dominion knew nothing of the sub-contractor but held also, correctly in my opinion, that there was nothing in Findlay’s letter of July 6, 1967, which disentitled Crump from hiring an outside agency to do the mechanical drawings.
I would not interfere with the decision of the Court of Appeal on the cut-off date. They recognized that both dates were in a sense arbitrary but they felt if Crump did not move promptly to stop its own workforce and that of its sub-contractor after receiving Toronto‑Dominion’s letter of August 25, 1967, it failed to do so at its own risk.
My opinion, therefore, is that the judgment of the Court of Appeal in disallowing the item of $13,187 and changing the cut-off date should be affirmed and that this appeal should be dismissed with costs.
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Toronto-Dominion filed and argued in this Court a cross-appeal asking for a complete dismissal of the action. The findings of fact both at trial and in the Court of Appeal destroy the basis for any such cross-appeal. There was an agreement to pay something. The amount is to be determined in accordance with the reference directed by the Court of Appeal. The cross-appeal is dismissed with costs.
Appeal allowed in part with costs, JUDSON and DICKSON JJ. dissenting; cross-appeal dismissed with costs.
Solicitors for the appellant: Day, Wilson, Campbell, Toronto.
Solicitors for the respondent: McCarthy & McCarthy, Toronto.