Executive Summary: Key Legal and Evidentiary Issues

• The plaintiff, Carniello Contracting, sought summary judgment for $279,752.38 arising from a construction contract dispute with the defendants, Aline and Sam Muzzi.
• Central to the dispute is whether the defendants authorized changes made during construction, as the contract required written approval for modifications.
• Contested facts include whether the defendants removed Carniello Contracting from the job site or whether the plaintiff abandoned the project when invoices went unpaid.
• Compliance with the contract is disputed, with the defendants alleging the home was incomplete and deficient, while the plaintiff maintained at least 90% of the work was satisfactory.
• Leave to bring a summary judgment motion in a construction lien action under the Construction Act was required but had not been sought by the plaintiff prior to the hearing.
• Credibility of both parties is directly at issue, making resolution on a written record alone unjust and requiring a trial.

Facts of the case

In March 2021, 1753430 Ontario Inc. operating as Carniello Contracting entered into a fixed-price contract with Aline and Sam Muzzi to construct a single-family home on a vacant lot at 2207 Grenoble Court, Sudbury, Ontario. The agreed contract price was $499,900, subject to certain conditions, and the home was to be built in accordance with blueprints prepared by registered architect Kimberly E. Zarichney of Kez Cad. The Muzzis wanted the new home to replicate the floor plan of their existing residence. By November 2021, the parties' relationship had broken down. The Muzzis refused to pay certain invoices, and Carniello Contracting ceased construction. On December 21, 2021, Carniello Contracting registered a construction lien against the property title, and on February 2, 2022, commenced this action seeking judgment in the amount of $279,752.38, along with pre- and post-judgment interest and costs on a substantial indemnity basis.

It is agreed that the Muzzis paid Carniello Contracting $275,000, comprising a down payment and two further payments, but did not pay the remaining invoiced amounts. It is also agreed that Carniello Contracting did not complete the home. How the relationship deteriorated and who ultimately walked away from the project are disputed.

Contractual terms at issue

The contract was a fixed-price agreement requiring written approval for changes made during construction. The Muzzis allege that Carniello Contracting made changes without their written authorization, contrary to this requirement, and charged them for those unauthorized modifications. Carniello Contracting, in turn, alleges the Muzzis breached the contract by failing to pay issued invoices and by obtaining poorly prepared blueprints with numerous deficiencies. Carniello also asserts the contract required the defendants to obtain a building mortgage, which the Muzzis failed to do. The contract also included credits for cabinetry, flooring, air conditioning, and other allowances, which the Muzzis say were never provided.

Court's reasoning and analysis

At the outset, Justice Stothart raised whether the plaintiff had obtained leave to bring a summary judgment motion within a construction lien action, as required under s. 13 of O. Reg. 302/18 under the Construction Act. Counsel for the plaintiff acknowledged that leave had not been sought. Despite this procedural deficiency, the court granted leave on pragmatic grounds — the full day had been set aside and both parties were prepared to proceed — citing Industrial Refrigerated Systems Inc. v. Quality Meat Packers Ltd, 2015 ONSC 454.

Turning to the substantive question of whether summary judgment was appropriate, the court applied the framework set out in Hryniak v. Mauldin, 2014 SCC 7, which requires that the process allow the judge to make the necessary findings of fact, apply the law to those facts, and constitute a proportionate, expeditious, and less expensive means to achieve a just result. The court found these conditions were not met. The parties' accounts diverged sharply on four material issues: (a) whether the defendants pre-authorized the changes made during construction; (b) whether the defendants removed the plaintiff from the site or whether the plaintiff left when invoices went unpaid; (c) whether construction was completed in accordance with the contract; and (d) whether the plaintiff accurately billed the defendants for work completed. Both affidavits also contained credibility attacks on the opposing party, which the court found required live testimony to properly assess. Justice Stothart observed that where resolution of important credibility disputes is required to determine key issues, adjudication on a paper record alone poses a risk of substantive unfairness, citing Cook v. Joyce, 2017 ONCA 49.

Ruling and overall outcome

The court dismissed the plaintiff's motion for summary judgment, finding that the matter could not be fairly and justly adjudicated on the written record provided and that a trial was required for the judge to observe the witnesses and make credibility findings. The defendants were the successful party on this motion. On the question of costs, the court directed that if the parties could not agree, the defendants were to file written submissions within 15 days of the decision, with the plaintiff to respond within 15 days thereafter. No monetary award was made at this stage; the costs issue remains to be determined, and if no submissions are received within 45 days of the decision, costs will be deemed addressed by agreement.