2014 NBCA 43, 2014 NBCA 43

COURT OF APPEAL OF COUR D’APPEL DU NEW BRUNSWICK NOUVEAU-BRUNSWICK 77-13-CA TRI-GIL PAVING & CONSTRUCTION LTD., abody corporate APPELLANT TRI-GIL PAVING & CONSTRUCTION LTD.,corps constitué APPELANTE - and - - et - MAXIM 2000 INC., a body corporate andTRAVELERS GUARANTEE COMPANY OFCANADA, a body corporate RESPONDENTS MAXIM 2000 INC., corps constitué, et LACOMPAGNIE TRAVELERS GARANTIE DUCANADA, corps constitué INTIMÉES Tri-Gil Paving & Construction Ltd. v. Maxim 2000Inc. and Travelers Guarantee Company of Canada,2014 NBCA 43 Tri-Gil Paving & Construction Ltd. c.

Maxim 2000Inc. et La Compagnie Travelers Garantie du Canada,2014 NBCA 43 CORAM: The Honourable Justice Robertson The Honourable Justice Bell The Honourable Justice Green CORAM : l’honorable juge Robertson l’honorable juge Bell l’honorable juge Green Appeal from a decision of the Court of Queen’sBench: June 18, 2013 Appel d’une décision de la Cour du Banc de la Reine: le 18 juin 2013 History of Case: Historique de la cause : Decision under appeal: 2013 NBQB 209 Décision frappée d’appel : 2013 NBQB 209 , 2013 NBBR 209 Preliminary or incidental proceedings: N/A Procédures préliminaires ou accessoires : s.o.

Appeal heard: April 22, 2014 Appel entendu : le 22 avril 2014 Judgment rendered: June 26, 2014 Jugement rendu : le 26 juin 2014

Reasons for judgment by: The Honourable Justice Robertson Motifs de jugement : l’honorable juge Robertson Concurred in by: The Honourable Justice Bell The Honourable Justice Green Souscrivent aux motifs : l’honorable juge Bell l’honorable juge Green Counsel at hearing: For the appellant: R e né LeBlanc For the respondents: Edward W. Keyes Avocats à l’audience : Pour l’appelante : R e né LeBlanc Pour les intimées : Edward W. Keyes THE COURT The appeal is dismissed with one set of costs of $2,500.

The judgment of the Court was delivered by ROBERTSON, J.A. [ 1 ] While the appellant, Tri-Gil Paving & Construction Ltd., alleges 11 errors on the part of the trial judge, this appeal can be reduced to one issue: whether he erred in finding Tri-Gil liable for failing to ensure the 3% slope requirement had been met, prior to paving the roadway in question. That requirement was set out in the plans and specifications provided to all those who submitted a bid with respect to the underlying construction contract.

But it is also common ground that, prior to paving the roadway, Tri-Gil was contractually bound to do the “fine grading only”. Tri-Gil argued that “fine grading” did not include the further obligation to ensure compliance with the slope requirement. Correlatively, Tri-Gil argued that another subcontractor, a non-party to the action, was responsible for ensuring compliance with that requirement. That other subcontractor was the road builder responsible for the “rough grading”.

Alternatively, Tri-Gil argued that the general contractor, the respondent, Maxim 2000 Inc., was responsible for ensuring that the other subcontractor achieved the slope requirement.

The trial judge held otherwise and concluded that it was Tri-Gil that was obligated to ensure compliance with the slope requirement prior to paving the roadway. [ 2 ] Having regard to the deference obligation set out in the lead decisions of the Supreme Court, and regularly applied by this Court, I have not been persuaded the trial judge’s findings of fact and mixed law and fact are infused with “palpable and overriding error”: Housen v. Nikolaisen, 2002 SCC 33 , [2002] 2 S.C.R. 235, and H.L. v. Canada (Attorney General), 2005 SCC 25 , [2005] 1 S.C.R. 401. Moreover, while the trial judge’s

interpretation of the contractual documents gives rise to a question of law, for which correctness is the proper standard of review, I have not been persuaded that he committed reversible error. Accordingly, I

would dismiss the appeal with one set of costs. [ 3 ] As the trial judge’s decision is reported at 2013 NBQB 209 , 405 N.B.R. (2d) 243, and as only one issue need be addressed on this appeal, it is relatively easy to restate the essential facts. [ 4 ] Tri-Gil successfully bid on the paving contract with respect to the “Moncton Hospital Redevelopment Project”. Part of the contract applied to a segment of MacBeath Avenue. Maxim was the general contractor. The successful bidder with respect to the building of the roadway was “Perfection Contracting”. As noted, that company was not a party to the underlying action.

For purposes of facilitating traffic along MacBeath Avenue, it was agreed the west side of the Avenue would be paved first, and then the east side. Perfection Contracting completed its rough grading work on the west side of the roadway. Tri-Gil performed the fine grading and then paved the western portion of the Avenue. Subsequently, it was determined the paved roadway did not meet the 3% slope requirement set out in the underlying bidding contract (plans and specifications). The slope ran from the crown (the center) of the Avenue to the recently installed curb.

As found by the trial judge: “The end result of Tri-Gil’s work is that the West side of MacBeath Avenue had a negative slope and in some places was 5” to 7” negative between the centre line and the West side curb, when it was supposed to have a 3% positive slope” (para. 18). [ 5 ] As between Tri-Gil and Maxim, it was agreed the most cost-effective method of achieving the proper slope was to place additional asphalt on the paved portion. Tri-Gil applied the additional asphalt. However, Maxim insisted Tri- Gil should bear the financial cost of remedying the defect ($17,000).

Tri-Gil disagreed and asked that it be compensated for the “extra”. Maxim refused and Tri-Gil refused to complete the remaining work under the contract. Hence, Maxim was forced to retain another contractor to complete the work. Tri-Gil sued Maxim to recover the amount owing for work performed prior to termination of the contract ($70,455.27). Maxim counterclaimed for damages for breach of contract ($39,675.04). [ 6 ] At trial, Tri-Gil advanced the following argument. Under its contract Tri-Gil was responsible for “fine grading only”.

Both the grading and paving were undertaken by reference to “grading stakes”, which had been placed along the center line of MacBeath Avenue. Tri-Gil also maintained the obligation to achieve the 3% slope requirement rested with the road builder, Perfection Contracting. Tri-Gil’s contractual obligation was simply to ensure the fine grading was completed before the asphalt was laid. To meet its grading obligation, Tri-Gil ran a line from a mark on a survey stake, placed on the center line of the Avenue to its curb.

Using that plumb line, Tri-Gil concluded that further material (crushed stone) had to be added to the roadway and, in fact, Perfection Contracting added the necessary material. Tri-Gil then completed the necessary fine grading before paving the west side of the Avenue. Tri-Gil admitted, however, it did not verify whether the slope requirement had been met before laying the asphalt. Tri-Gil argued that the persons who placed the grading stakes on the center line, or Perfection Contracting, were responsible for ensuring compliance with that requirement. [ 7 ] At trial, Maxim’s thesis was equally succinct.

Maxim argued it was Tri-Gil’s responsibility to ensure that the slope requirement was met. Moreover, Maxim was not responsible for supervising the work of its subcontractors, such as Perfection Contracting. Also, Maxim claimed that the only person with knowledge as to who placed the grading stakes on the center line was Brad Gilcash (Tri-Gil’s Construction Supervisor) and he failed to testify at trial, despite the trial judge’s willingness to grant an adjournment for that limited purpose.

Finally, Maxim argued that Tri-Gil called no evidence, expert or otherwise to establish that Tri-Gil was not required to ensure that the slope requirement had been achieved, prior to paving the west side of MacBeath Ave. Maxim seized on the fact that the only persons to testify on behalf of Tri-Gil were Charles and Dana Gilcash, the President and Project Manager respectively. Maxim argued that their evidence was simply self-serving. [ 8 ] Much of the trial judge’s reasons for decision deals with the question of whether Tri-Gil entered into a binding contract with Maxim: one that included the 3% slope requirement.

That issue arose because Tri-Gil had refused to sign the contract Maxim had forwarded. Tri-Gil refused to do so because the contract contained a “holdback clause”, which it opposed. Apparently, Tri-Gil laboured under the mistaken notion that if it did not sign the contract, it would not be bound even after commencing the work specified in the contractual documents. In my respectful view, the trial judge properly concluded that the parties had entered into a binding contract. Once Tri-Gil commenced performance, it implicitly accepted the terms of the contract Maxim had set forth.

I also agree that the underlying contract, which included the plans and specifications, called for a 3% slope requirement. The only issue left for consideration is whether Tri-Gil was obligated to ensure compliance with the slope requirement, having regard to the fact the subcontract clearly stated Tri-Gil was responsible for “fine grading only”. While the issue was outlined in Tri-Gil’s post-trial submission, the trial judge omitted to deal with it.

Instead, the trial judge reasoned as follows: In this particular matter, this was a requirement of a 3% slope from the centre of the road down to the curb which curb was already installed. I also believe it is common knowledge that roads must have a "crown" which causes moisture to travel to the curb. In this particular situation, the roadway was opposite to what is normal and what was required in the contract. The flow appears to be from the curb down to the centre of the road. That error required the additional asphalt padding to bring the road up to a proper slope. This is the responsibility of Tri-Gil.

If the initial roadway grade was not up to standard, Tri-Gil was obligated to advise Maxim and request corrective action; instead they simply placed the asphalt. [para. 40]

[ 9 ] From the perspective of a trial judge, this case must have been truly problematic. Neither party called an expert witness to outline, for example, general industry practices or expectations regarding the responsibilities of those contractors engaged in the building and paving of roadways. For example, no one testified as to whether the term “fine grading only” is considered a term of art and, therefore, its meaning is well understood in the road building and paving industries.

Moreover, there is no evidence to explain the role of surveyors in the placing of grading stakes or whether it is customary for paving contractors to retain their own surveyor, so as to ensure compliance with the slope requirement. There is also no evidence to explain why the slope requirement was breached. Were the “grade stakes” placed in error? Was the fine grading done improperly? Or was it the rough grading that led to the error? And there are other unanswered questions. Were the grade stakes set with knowledge they would be used and relied on by the paving contractor?

Is it the sole responsibility of the paving contractor, who is responsible for “fine grading only”, to ensure compliance with the 3% slope requirement? Alternatively, does that obligation rest with the road builder who is responsible for the rough grading?

And, finally, and assuming it is the road builder who is responsible for achieving the slope requirement, is it the responsibility of the paving contractor to ensure the road builder performs its tasks in accordance with the plans and specifications attached to the underlying contract? [ 10 ] For purposes of deciding this appeal it is unnecessary to decide whether the trial judge’s decision stands for the dubious proposition that one subcontractor (Tri-Gil) is responsible for ensuring that another subcontractor (Perfection Contracting) fulfills its contractual obligations.

What is clear from the trial judge’s decision is that Tri-Gil had an obligation to ensure the slope requirement was met prior to the laying of the asphalt and, correlatively, that obligation was breached. Having regard to the evidence presented to the trial judge, I can find no palpable and overriding error which would warrant intervention by this Court. Above all, I am unable to conclude that the term “fine grading only” can reasonably be interpreted to exclude the obligation to ensure compliance with the slope requirement.

The addition of the adjective “only” to the term “fine grading” does not negate the obligation to ensure compliance with the slope requirement, no more than the same adjective negates the requirement to pave MacBeath Avenue. A common sense

interpretation of the term “fine grading only” is that Tri-Gil was not responsible for the “rough grading”. Accordingly, there is still room to infer that Tri-Gil was under an obligation to meet the slope requirement set out in the plans and specifications provided to Tri-Gil. [ 11 ] Finally, if one scours the transcript of the two day trial, there is evidence that slope compliance is integral to the work of paving contractors. On cross-examination, Dana Gilcash admitted that the paving equipment which Tri-Gil used was equipped with “slope meters”.

He also testified that Tri-Gil had instead relied on the placement of “grading stakes” placed by others unknown. And yet Tri-Gil introduced no evidence to establish who placed the stakes on the centre line and for what purpose and whether it would have been reasonable for Tri-Gil to rely on those stakes as evidence of compliance with the slope requirement. In brief, Tri-Gil failed to introduce evidence to establish that its reliance on those stakes was reasonable having regard, for example, to industry practices.

What you are left with are slope meters on Tri-Gil’s equipment: a reality which is compatible with a contractual obligation to ensure slope compliance. [ 12 ] I would dismiss the appeal with one set of costs fixed at $2,500. ____________________________________ J.T. ROBERTSON, J.A. WE CONCUR: _____________________________________ B. RICHARD BELL, J.A.

______________________________________ BRADLEY V. GREEN, J.A.