Consulate Ventures Inc. v. Amico Contracting & Engineering (1992) Inc.

Consulate Ventures Inc. v. Amico Contracting & Engineering (1992) Inc. Collection Decisions of the Court of Appeal Date 2011-06-02 Neutral citation 2011 ONCA 418 Docket numbers C52265 Judges Doherty, David H.; Moldaver, Michael James; Feldman, Kathryn N. Subject Civil Decision Content CITATION: Consulate Ventures Inc. v. Amico Contracting & Engineering (1992) Inc., 2011 ONCA 418 DATE: 20110602 DOCKET: C52265 COURT OF APPEAL FOR ONTARIO Doherty, Moldaver and Feldman JJ.A. BETWEEN Consulate Ventures Inc. Plaintiff (Respondent) and Amico Contracting & Engineering (1992) Inc., Windsor Factory Outlet Mall Ltd. and Dominic Amicone Defendants (Appellants) Harry Underwood, for the appellant Windsor Factory Outlet Mall Ltd. Myron Shulgan, for the appellant Amico Contracting & Engineering (1992) Inc. Patrick Cotter, for the respondent Heard: April 12, 2011 On appeal from the judgment of Justice Frank Newbould of the Superior Court of Justice dated May 10, 2010. Moldaver J.A.: INTRODUCTION [1] From 1997 to 1999, the respondent, Consulate Ventures Inc. (Consulate), through its principal Mr. John Sorokolit, worked with the appellants, Amico Contracting & Engineering (1992) Inc. (Amico) and Windsor Factory Outlet Mall Ltd. (Outlet) on a project that saw 22 acres of raw land on the outskirts of Windsor, Ontario developed into a thriving manufacturers’ outlet mall. For much of that two-year period, through his dealings with the appellants’ principal, Mr. Dominic Amicone, Mr. Sorokolit believed that Consulate and the appellants were working together as partners in a joint venture. [2] To that end, Mr. Sorokolit took an active role in the project. He was in the business of developing shopping malls and the appellants sought him out to help them develop the 22 acre parcel which they had purchased in 1995 and been unable to sell or lease. Mr. Sorokolit conceived of the idea of an American-style manufacturers’ outlet mall and became heavily involved in the planning, design, and naming of the mall. He was also active in leasing the project and played a large part in securing the initial key tenants who were essential to the mall’s development and its eventual success. [3] Unfortunately for Consulate, on the day before Phase I of the mall was to open, the appellants for the first time took the position that they did not have a binding joint venture agreement with Consulate. Their position in this regard was upheld in the litigation that followed, both at trial and on appeal to this court: see Consulate Ventures Inc. v. Amico Contracting and Engineering (1992) Inc. (2007), 282 D.L.R. (4th) 697. Consulate’s alternative claim for restitutionary relief based on a quantum meruit claim was also rejected at trial. However, on the original appeal, this court determined that Consulate was entitled to such relief – but because it could not quantify the damages or determine whether, in addition to Outlet, the defendants Amico and/or Dominic Amicone were liable for them, a new trial was ordered on those issues. [4] At the new trial, Newbould J. valued Consulate’s quantum meruit claim at $2.25 million. He also found Amico to be jointly and severally liable with Outlet. He dismissed the claim against Dominic Amicone. [5] The appellants appeal from that order. They raise four issues: (1) Did the trial judge impermissibly use a “value added” approach rather than a “value received” approach in quantifying Consulate’s quantum meruit claim; (2) Assuming the trial judge did not use the wrong approach in valuing Consulate’s quantum meruit claim, was he entitled to rely on the expert valuation evidence called by Consulate in fixing the amount of the damages; (3) Assuming the trial judge was entitled to rely on the expert valuation evidence called by Consulate, did he err in failing to limit the damages to reflect the actual work done and services provided by Consulate; and (4) Did the trial judge err in holding Amico liable on the quantum meruit claim. THE QUANTUM MERUIT CLAIM Backdrop [6] In his thorough and comprehensive reasons for judgment, the trial judge succinctly summarized the salient facts giving rise to Consulate’s quantum meruit claim. They are found at paras. 3 to 8 of his decision as follows:[1] In 1995, twenty-two acres of land zoned highway commercial in Windsor Ontario were purchased from CIBC under power of sale for $1 million (approximately $45,000 per acre). The land was put in the name of Heritage Centre Holdings Inc. (“Heritage”), a nominee corporation of the shareholders, who intended to ‘flip’ the property to a third party for the development of retail facilities. However, despite its efforts during the next two years, Heritage was unable to sell or lease the property. Heritage is now the defendant Windsor Factory Outlet Mall Ltd. Consulate is an experienced shopping plaza developer, and was introduced to the property by a Heritage representative in the summer of 1996 who visited Consulate’s president, John Sorokolit, in Niagara Falls to try to interest him in developing the property. At that time, Consulate owned forty acres of land in Niagara Falls, Ontario which it was proposing to develop as an outlet mall facility. It was also involved in preliminary plans for a golf resort in Niagara Falls. At that time Mr. Sorokolit declined to become involved with the Windsor site. Manufacturers’ outlet malls were a relatively new concept in Canada in 1996. Mr. Sorokolit had made it his business to learn about the development of manufacturers’ outlet malls by attending many conferences and outlet mall sites in the United States, and he had some experience with leasing an outlet mall in Cookstown, Ontario. Discussions again took place in the summer of 1997 and in September 1997, Consulate and Heritage signed a letter agreement containing terms of a proposed 50/50 joint venture of the Windsor property to develop a manufacturers’ outlet mall on the property. One month later in October 1997, after Heritage received a report from a third party that caused it to question the suitability of the property for an outlet mall, Heritage agreed to sell the property to a Consulate-related company for $2.5 million (approximately $110,000 per acre) under an agreement which gave Consulate a three month due diligence period, later extended to February 22, 1998, to satisfy itself that an acceptable tenancy level could be achieved for the proposed outlet mall. Consulate did not proceed with its purchase. The evidence as to what then occurred and why differed between the parties. What is agreed is that a letter agreement dated June 16, 1998 and signed on November 14, 1998 was entered into which contemplated a 50/50 joint venture between Consulate and Heritage or its nominee Amico regarding the Windsor property and the Niagara Falls property of Consulate and the Niagara Falls golf club property being developed by Consulate. Work on the outlet mall in Windsor proceeded. The extent of the efforts of Mr. Sorokolit on behalf of Consulate is an issue in this action, and highly contested. On June 23, 1999, one day before the opening of Phase 1, Heritage took the position that the letter agreement of June 16, 1998 was not a binding agreement. Litigation followed. It is this letter agreement that was held not to constitute a binding joint venture agreement. [7] As mentioned, in the litigation that followed, Consulate sought damages for breach of contract and alternatively, restitutionary relief based on quantum meruit. The trial judge dismissed Consulate’s claim in its entirety. She rejected Consulate’s claim in contract because she found that Consulate had not entered into a formal joint venture agreement with the appellants. As for Consulate’s quantum meruit claim, she concluded that it was dependent in law on a contractual relationship between the parties and since no such relationship existed, it could not succeed. [8] On appeal from that decision, this court, per Cronk J.A., rejected the proposition that a quantum meruit claim is dependent on the existence of a valid contract. At para. 99 of her reasons, she set out the proper legal test: Thus, where the claim for restitutionary relief is based on quantum meruit, as in this case, an explicit mutual agreement to compensate for services rendered is not a prerequisite to recovery. It suffices if the services in question were furnished at the request, or with the encouragement or acquiescence, of the opposing party in circumstances that render it unjust for the opposing party to retain the benefit conferred by the provision of the services. [Citations omitted.] [9] Having identified the correct legal test, Cronk J.A. reviewed the record and concluded at para. 101 that “there was considerable evidence at trial that Consulate’s services concerning the Windsor outlet mall were provided either at the request of, or with the encouragement or acquiescence of, Heritage and Amicone, in anticipation or in light of the arrangements reflected in the June Letter”. She then identified at para. 102 some of the services furnished by Consulate, that had advanced the development of the Windsor Property: The services furnished by Consulate, without compensation, included: (i) the provision to Heritage, at Amicone’s request, of the business name “Windsor Crossing Premium Outlets”, which was adopted and used by Heritage; (ii) the supply to Heritage of draft signage drawings for the Windsor outlet mall; (iii) the provision of advice, photographs and other documents regarding the design of the Windsor outlet mall; (iv) advice, at Amicone's express request, concerning the draft site plan, blueprints and construction specifications for the Windsor outlet mall; (v) detailed information and advice, again at Amicone’s express request, on the contents and production of a leasing brochure; (vi) the provision of a leasing plan and precedent marketing plans; (vii) extensive efforts to secure suitable tenants for the Windsor outlet mall, including introductions to and discussions with Escada, Holt Renfrew, Adidas, Nike and others, ultimately resulting in letters of intent or completed leasing agreements with, at least, Escada, Adidas and Nike; (viii) advice, also at Amicone’s request, regarding the terms of the proposed leasing agreement with Nike; and (ix) to the knowledge of Amicone, the hiring of a leasing consultant, at Consulate’s sole expense, to secure tenant commitments. [10] In the face of that evidence and additional evidence which showed that the appellants had either requested the services or encouraged or acquiesced in them, Cronk J.A. concluded at para. 109 that “a new trial is required to determine the nature, extent and value of the services provided by Consulate concerning the Windsor Property”. [11] That is the backdrop giving rise to the quantum meruit claim. THE QUANTUM MERUIT PROCEEDING Overview [12] The quantum meruit proceeding consumed 13 days of court time. Most of that time was spent on issues that form no part of this appeal. The issues before us are narrow in scope and by and large straightforward. [13] At trial, the appellants concentrated on trying to downplay Mr. Sorokolit’s skills and abilities as a shopping mall developer and on minimizing the nature and value of the services he provided to the Windsor project. As the trial judge observed at para. 8 of his reasons, set out in full above at para. 6: The extent of the efforts of Mr. Sorokolit on behalf of Consulate is an issue in this action, and highly contested. [Emphasis added.] [14] The resolution of “the extent of the efforts of Mr. Sorokolit on behalf of Consulate” accounts for almost 30 pages of the trial judge’s 54-page judgment. By comparison, the trial judge spent fewer than 14 pages on the issue of valuation and 3 pages on the issue of Amico’s liability on the quantum meruit claim. [15] While numbers can be deceiving, in this case, they tell the story of a trial that was fought out largely on factual issues that are no longer in dispute. Manifestly, the trial judge spent a considerable amount of time crafting his reasons for judgment. They are comprehensive and address in considerable detail the issues and arguments raised by the appellants at trial. As indicated, those issues and arguments related in the main to factual disputes concerning Mr. Sorokolit’s skills and abilities and the nature and extent of his contributions to the project. The trial judge resolved those issues almost entirely in favour of Consulate. [16] As for the valuation of Mr. Sorokolit’s contributions to the project, the appellants paid scant attention to the qualifications of Consulate’s expert, Mr. Geoffrey Moore. A feeble attack on his lack of expertise, designed to prevent him from giving opinion evidence on the value of Consulate’s claim, proved unsuccessful. [17] Nor did the appellants take particular issue with the method Mr. Moore used in calculating the fair market value of the services provided by Mr. Sorokolit. While the appellants certainly disagreed with Mr. Moore’s approach, the focus of this attack was very much tied to their primary attack on his evidence which took direct aim at the factual assumptions he used in arriving at his calculations. Those assumptions related to the nature and extent of Mr. Sorokolit’s contributions to the project and his skills and abilities as a developer, which, as indicated, the appellants had sought to minimize. [18] According to the appellants, Mr. Sorokolit’s services were minor in nature, of little value to the project and clearly not fundamental to its development or ultimate success. As such, the appellants took the position that for quantum meruit purposes, his services should be valued on an item by item basis according to prevailing market rates and practices. In their view, he should not be treated as someone with special skills and abilities whom the appellants had approached in the expectation that he could provide them with the advice and know-how needed to turn a then dormant parcel of land into a successful shopping mall. The trial judge’s findings as to Mr. Sorokolit’s contributions [19] The trial judge made strong findings of fact regarding the nature, extent and significance of Mr. Sorokolit’s contributions to the development of the property. He began by noting that prior to Mr. Sorokolit’s involvement, the 22 acre parcel of land belonging to the appellants had been lying dormant for two years. Their plan to purchase it and “flip it” had not panned out and the appellants were unable to sell or lease the property. Moreover, the appellants had no experience in outlet malls and unlike Mr. Sorokolit, “had not made it [their] business to learn anything about them”. Added to this, the appellants had limited commercial development experience. It was in this context that the trial judge explained what the appellants gained when they “sought out Mr. Sorokolit to see if he was interested in developing an outlet mall”: What Mr. Sorokolit brought to the table for the Windsor mall is an indication of his unique experience and expertise. It was instrumental in my view in the development proceeding as it did. It was also unique in the sense that Mr. Amicone or his employees did not possess the expertise that Mr. Sorokolit had and they had not brought anyone else on board who had that expertise. That is not surprising given the lack of persons in Canada experienced at the time in the outlet mall business. [para. 117.] [20] The trial judge also made detailed findings about the actual services provided by Mr. Sorokolit. In summary form, he found that Mr. Sorokolit: · provided the concept for the development of an outlet mall with a tenant mix of various manufacturers’ outlet stores (a very different concept from the conventional shopping centre mall that the appellants had been considering, for which the City of Windsor had no need); · coined the name “Windsor Crossing Premium Outlets”; · provided instructions for the site plan and prepared a sketch of it showing buildings around the perimeter with “90 x 30 foot bays” for the stores; · provided ideas and photographs used to inspire the exterior design of the mall; · targeted tenants suitable for an outlet mall; · sought out and introduced anchor tenants for the mall and secured Adidas as an anchor tenant; · retained an experienced leasing agent at Consulate’s expense to work exclusively on leasing the mall space; · met on a regular basis with the exclusive leasing agent and the appellants to review and discuss leasing strategies and tenanting issues. [21] Of these services, the trial judge found that Mr. Sorokolit’s role in signing up initial key tenants was very important. At para. 158 of his reasons, he stated: It cannot be overlooked however that once the initial key tenants were signed up, in which Mr. Sorokolit had a large part to play, momentum for signing other tenants was achieved. In the language of Mr. Amicone, it started the snowball rolling. [Emphasis added.] [22] The trial judge also considered it significant that for much of the two-year period during which Mr. Sorokolit worked on the project, he did so under the belief that Consulate and the appellants were working together as partners in a joint venture. That was the context within which Mr. Sorokolit’s contributions to the project were to be measured and the trial judge placed considerable emphasis on this in assessing the value of Consulate’s quantum meruit claim. As the trial judge observed at para. 149 of his reasons: I have some difficulty with the theory of the defence on the market value of what Mr. Sorokolit provided. He was generally not requested by Mr. Amicone to do individual items of work. Rather ... he provided his services with the acquiescence or encouragement of Mr. Amicone in anticipation or in light of the joint venture arrangements contained in the June 16, 1998 letter. These arrangements were discussed between Mr. Sorokolit and Mr. Amicone far in advance of that letter, going back to November 1997. The valuation evidence [23] As indicated, Mr. Geoffrey Moore gave evidence on behalf of Consulate as to the fair market value of Mr. Sorokolit’s contributions to the project. [24] Over the objection of the appellants, Mr. Moore was permitted to give “expert [evidence] in the development of shopping centres, including leasing and related financial matters, and in the quantification of the value of development services”. [25] As mentioned, the appellants sought to prevent Mr. Moore from giving opinion evidence on the value of Mr. Sorokolit’s services. They alleged that he was unqualified to do so because he had never purchased “from a third party” the kind of “development services” that Mr. Sorokolit provided; nor had he done “an investigation as to what the market value would be for these services”. Hence, according to the appellants, he was unqualified to give the expert valuation evidence that Consulate sought to adduce from him. [26] The trial judge rejected that argument. He considered Mr. Moore’s evidence that since 1979, Mr. Moore had “been a seller of these services” to third parties in the marketplace and through his consulting business, he had engaged “in all aspects of shopping centre development, whether it be leasing, management, redeveloping, consulting and … some specialty work in consulting assignments”. According to the trial judge, Mr. Moore’s extensive experience from “the seller’s side” made him “no less an authority on the market value of the services in question than someone on the buyer’s side”. [27] The appellants have not challenged that ruling on appeal, at least not squarely. Regardless, the trial judge in my view made no error in his analysis or conclusion. [28] The trial judge reviewed Mr. Moore’s evidence in considerable detail at paras. 119 to 128 of his reasons. The essence of Mr. Moore’s evidence may be briefly stated as follows. [29] Mr. Moore was retained by Consulate to assess the fair market value of the services provided by Mr. Sorokolit. In doing so, he took into account the following factors: · The City of Windsor was well served by conventional shopping malls and a specialty mall such as a manufacturers’ outlet mall was needed to successfully develop the lands owned by the appellants; · Mr. Sorokolit had “unique and special expertise” in manufacturers’ outlet malls, which was fundamental to the development; · Mr. Sorokolit’s contributions provided “the fundamental blueprint” for the entire development; · Services of the kind provided by Mr. Sorokolit are typically not billed on an hourly or piecemeal basis. Rather, they are bundled together and a developer/consultant typically puts up equity and seeks and obtains equity participation in the project; · Consulate did not put up equity, nor did it take any financial risk in the project. [30] Mr. Moore testified about the importance of Mr. Sorokolit’s contributions to the project. The trial judge summarized his evidence in this regard at para. 123 of his reasons: Mr. Moore’s view is that the most important part of the development was the initial period because the concept, site plan, design, target tenants and the initial key tenant introductions were fundamental to putting the plan in place, which he understood Mr. Sorokolit was responsible for. In his view it was these things that were the key ingredients, which he called the fundamental blueprint for the development that allowed it to proceed to its conclusion. [31] As for the valuation of Mr. Sorokolit’s services, when he prepared his report for the quantum meruit proceeding, Mr. Moore was aware that some years after the appellants had developed the project, they had sold the mall and made a profit of $27 million. Mr. Moore referred to this gain as the “enhanced value of the project”. He stated that had it been up to him, he would have fixed the fair market value of the services provided by Consulate at 25 percent of that value or $6.75 million. However, because he was asked to value the services provided by Consulate without regard to the enhanced value of the project, it was his view that Consulate should receive a fee that was commensurate with the unique expertise and experience it had brought to the project. With that in mind, he concluded that a fee in the range of $20 per sq. ft. would be appropriate. The mall consisted of 248,000 sq. ft. However, making allowances for vacancies, he concluded that Consulate should be paid $20 per sq. ft. for 225,000 sq. ft. or $4.5 million. [32] Mr. Moore did not provide any breakdown as to how he arrived at his value of $20 per sq. ft. figure and neither Consulate’s counsel nor counsel for the defendants asked him about that figure. Accordingly, the trial judge posed several questions to Mr. Moore at the conclusion of his testimony. Mr. Moore’s responses are summarized at para. 125 of the trial judge’s reasons: In answer to questions from me at the end of his evidence, Mr. Moore said that based on his experience, a market rate paid for pre-development work and leasing of a conventional shopping centre, in which a developer already had the development plans for it, would generally be $8 to $9 per sq. ft. If only leasing work was being done, the rate would be $6 to $7 per sq. ft. He said that in this case, because of the uniqueness of the project in Canada, the fact that Windsor did not need any more conventional shopping centres and the fact that Consulate had provided the key to its development as an outlet mall, Consulate would be entitled to an additional fee which took it up to $20 per sq. ft. [33] I pause here to note that Outlet’s factum contains a submission that it was improper for the trial judge to elicit the “breakdown” evidence and in doing so, he impermissibly “descended into the arena” and “created an impression of unfairness to the defence”. In oral argument, however, Outlet did not press this complaint – and properly so, in my view. In posing the questions he did, the trial judge was merely seeking clarification of evidence that was already before him. He was not delving into a new area; nor was he filling in a gap for Consulate’s benefit. [34] After questioning the witness, the trial judge gave counsel an opportunity to engage in follow-up questions. Experienced counsel for Outlet took up the offer and asked a series of further questions. Neither he nor counsel for Amico took exception to the trial judge’s intervention nor to the questions he posed. That, to me, says much about the propriety of the trial judge’s conduct. In short, I am satisfied that the trial judge’s intervention and the questions posed by him were entirely proper. [35] After reviewing Mr. Moore’s evidence, the trial judge resolved an issue relating to a $2 million “break fee” clause that the parties had negotiated and reduced to writing in the context of their joint venture discussions. Without going into detail, the trial judge rejected Mr. Amicone’s evidence and accepted Mr. Sorokolit’s evidence as to the meaning and intent of the clause, namely: Consulate would be paid a $2 million break fee for the work it had performed on the project up to December 31, 1997 should the appellants terminate their involvement with Consulate and then proceed to develop an outlet mall before December 31, 1999. [36] Having determined the factual dispute concerning the “break fee” clause in favour of Consulate, the trial judge quite properly concluded that although the clause may have shed some light on the position of the parties at one point in time as to the value of Consulate’s services, it was “little more than a fleeting notion not long held by either party”. Accordingly, he was not prepared “to put a great deal of weight” on it “in valuing Consulate’s services”. [37] Finally, the trial judge reviewed in some detail the evidence called by the appellants on the issue of valuation. For the most part, that evidence consisted of looking at the services provided by Mr. Sorokolit and ascribing a value to them on a piecemeal basis having regard to prevailing market rates and practices. [38] I do not propose to outline that evidence since the trial judge did not give effect to it and it only becomes relevant on appeal should the appellants succeed in their submission that the trial judge took the wrong approach in valuing Consulate’s quantum meruit claim. The trial judge’s conclusion on value [39] In arriving at a conclusion as to the value of Consulate’s quantum meruit claim, the trial judge began his analysis by observing that he could accept or reject, in whole or in part, the valuation evidence presented by the various expert witnesses. In the end, after considering the methods they had used and the calculations they had made, he agreed with Greenberg J.’s observation in Re Domglas Inc., Domglas Inc. v. Jarislovsky et al. (1980), 13 B.L.R. 135 (Qc. S.C.); aff’d (1982), 138 D.L.R. (3d) 521 (Qc. C.A.) that: The Court, as the objective arbiter of those competing (and conflicting) opinions, must weigh them all and do its best to arrive at a fair and equitable value. [40] With that in mind, the trial judge made a clear finding, at para. 156 of his reasons, that he preferred Mr. Moore’s approach to valuation over that of the appellants’ experts: I prefer the approach of Mr. Moore to the approach and lack of evidence of the defendants. I accept the view of Mr. Moore that the most important part of the development was the initial period because the concept, site plan, design, target tenants and the initial key tenant introductions were fundamental to the development of the mall. His value of $20 per square foot was not a value based on an enhanced value of the project. It was his view of the market value of the services provided by Mr. Sorokolit. [Emphasis added.] [41] Having accepted Mr. Moore’s approach to valuation as the “preferable approach”, the trial judge was not prepared to blindly accept the $20 per sq. ft. figure that Mr. Moore used in calculating the fair market value of Mr. Sorokolit’s services. In a word, the trial judge considered the $20 figure to be excessive. He provided four reasons for this: (1) The “market rate of $8-$9 per square foot that Mr. Moore quoted were fees for a development that a consultant presumably was involved in through to completion”. Here, Mr. Sorokolit “was not involved through to the completion of the mall and in the leasing efforts that continued for the later phases of the mall”. (2) It was an overstatement to say that Mr. Sorokolit’s recommendations regarding the design of the mall formed “the entire basis for [its] design”. Some of the design work was attributable to Dominic Amicone and his brother Dan Amicone. (3) Mr. Moore wrongly assumed that Mr. Sorokolit “was entirely responsible for the advice to develop an outlet mall on the site”. The appellants had used the term “outlet mall” in the initial material they had sent to Mr. Sorokolit, albeit that their concept of an outlet mall differed from Mr. Sorokolit’s and it was Mr. Sorokolit’s concept that “carried the day”; and (4) In arriving at the figure of $20 per sq. ft., Mr. Moore included an amount of $11 or so per sq. ft. for the “uniqueness of the development”. In Mr. Moore’s view, uniqueness was “the key to the development” and that is what “Mr. Sorokolit provided”. The $11 figure, however, involved a degree of speculation as to the amount that “would be paid in the marketplace for this unique concept” given that Canada at the time had “little or no experience” with manufacturers’ outlet malls. Hence, while Mr. Moore’s opinion was not to be “completely disregarded”, it had to be viewed in that light and assessed accordingly. [42] In the end, having regard to all of the circumstances, including his findings of fact, his preference for Mr. Moore’s approach, and the features of Mr. Moore’s calculations which he accepted, the trial judge determined the fair market value of Mr. Sorokolit’s services as follows: Mr. Moore’s $8 to $9 rate was derived from $2 for the development work and $6 to $7 for the leasing work. I would allow $2 for the development work and $4 for the leasing work. I would not allow the entire balance of $11 for the uniqueness involved in what Mr. Sorokolit provided. I would allow $4 for that. The total is thus $10 per sq. ft. that I would apply to 225,000 sq. ft. to get $2.25 million. That is the amount that I find represents the market value of what one would pay for all of the services and materials provided by Mr. Sorokolit. I fix $2.25 million as the amount to be paid to Consulate for its quantum meruit claim. [43] Against that background, I turn to the issues raised by the appellants. Issue One: Did the trial judge impermissibly use a “value added” approach rather than a “value received” approach in quantifying Consulate’s quantum meruit claim? [44] The appellants submit that in valuing Consulate’s quantum meruit claim, the trial judge impermissibly looked at the amount by which Mr. Sorokolit’s services increased the value of the project, instead of costing out his services on an item by item basis according to prevailing market rates and practices, without regard to their impact on the project’s value. [45] I would not give effect to this ground of appeal. Mr. Moore was keenly aware of the different approaches to valuation. At Consulate’s instance, he performed a valuation that reflected the market value of Mr. Sorokolit’s contributions to the project, bearing in mind his “unique expertise and experience”. That is a “value received” approach and Mr. Moore clearly understood the difference between it and a “value added” approach. As Mr. Moore explained in his testimony, had he applied the latter approach, he would have valued Mr. Sorokolit’s services at 25 percent of the total enhanced value of the project or $6.75 million. [46] The trial judge was equally familiar with the distinction between the “value added” approach and the “value received” approach. At para. 12-18 of his reasons, he set out the principles that govern a quantum meruit award for services provided. In particular, at para. 15, he quoted the following passage from P. D. Maddaugh and J. D. McCamus, The Law of Restitution, vol. 1, looseleaf (Aurora, Ont.: Canada Law Book, 2009) at para. 4:200.30 (recently referred to with approval in Kerr v. Baranow (2011), 328 D.L.R. (4th) 577 (S.C.C.) per Cromwell J. at para. 74, as to the various possible measures of relief available in a quantum meruit claim): Although the measure of relief in these claims, generally speaking, is the reasonable value of the benefit conferred in each case, it must be noted that this measure may vary from one context to the next. There are a number of possible measures, including the cost to the claimant of providing the benefit, the market value of the benefit bestowed, or, alternatively, the value placed on the benefit by the recipient, where this differs from either of the other two measures. Further, where the benefit has been conferred under an ineffective agreement, it may be asked whether the quantum of relief should be limited by the value ascribed to it by the contract price. As will be seen, the appropriateness of a particular measure will depend on the circumstances in which it is applied and it is, therefore, undesirable to articulate a general principle favouring the utilization of any one of these measures either presumptively or as a general rule. [Emphasis added.] [47] In oral argument, the appellants acknowledged that the trial judge instructed himself properly on the law, and that he fully appreciated that Consulate was to be compensated in accordance with the fair market value of the services provided by Mr. Sorokolit, not the amount by which those services enhanced the value of the project. [48] In my view, the argument put forward by the appellants rests essentially on the notion that there is only one way to remain faithful to the “value received” approach when calculating the fair market value of services like those provided by Mr. Sorokolit. That approach is a mechanical one in which the services are costed out on a piecemeal basis having regard to prevailing market rates and practices. The appellants do not accept as legitimate the more nuanced contextual approach advocated by Mr. Moore. Under that approach, the services in question are considered in the context of the facts and circumstances under which they are provided and valued accordingly. [49] With respect, I see no reason in principle or policy why the contextual approach taken by Mr. Moore should be eschewed in favour of the mechanistic approach urged by the appellants, in all cases, under all circumstances. [50] Although quantum meruit originated as a common law claim, it is now firmly entrenched as an equitable form of relief. In Kerr v. Baranow, at para. 74, Cromwell J. used the word “flexible” to describe the “measure” of a quantum meruit award. Flexibility is vital when considering restitutionary relief. As McLachlin J. noted in Soulos v. Korkontzilas, [1997] 2 S.C.R. 217 at para. 34: Equitable remedies are flexible; their award is based on what is just in all the circumstances of the case. [51] The trial judge in the instant case sought to place a fair and equitable value on the services provided by Mr. Sorokolit. In doing so, he preferred the evidence of Mr. Moore over that of the appellants’ experts, including the approach Mr. Moore chose in valuing Mr. Sorokolit’s services. That approach recognized the particular circumstances under which Mr. Sorokolit provided the services, the unique features of those services and the special expertise that Mr. Sorokolit brought to the table. To be sure, this was not a case of valuing Mr. Sorokolit’s services as though he were providing standard services readily available in the marketplace from a host of people, and the trial judge refused to treat it as such. [52] The appellants approached Mr. Sorokolit initially because of his experience and knowledge as a developer of shopping malls. At the time, they had been sitting on a piece of raw land for two years. Their plan to “flip” it had gone awry and they could not sell or lease the property. In short, they needed help. And they found it in the person of Mr. Sorokolit. In this regard, it is worth repeating the trial judge’s observations at para. 117 of his reasons: What Mr. Sorokolit brought to the table for the Windsor mall is an indication of his unique experience and expertise. It was instrumental in my view in the development proceeding as it did. It was also unique in the sense that Mr. Amicone or his employees did not possess the expertise that Mr. Sorokolit had and they had not brought anyone else on board who had that expertise. That is not surprising given the lack of persons in Canada experienced at the time in the outlet mall business. [53] Throughout most of the two-year period in which Mr. Sorokolit worked on the project, he did so under the honest but mistaken belief that Consulate was working with the appellants as joint venture partners. As such, he did not view his services as piecemeal in nature, nor was he docketing his time or quoting prices for particular services rendered. Rather, he was acting as a co-venturer whose primary goal was to turn a dormant piece of raw land into a successful manufacturers’ outlet mall. [54] To that end, Mr. Sorokolit worked hard during the initial stages of the development. Mr. Moore described the initial period as “the most important part of the development because the concept, site plan, design, target tenants and the initial key tenant introductions were fundamental to the development of the mall”. The trial judge accepted Mr. Moore’s assessment. [55] In these circumstances, the trial judge realized, correctly in my view, that any attempt to value Mr. Sorokolit’s contributions on an item by item basis would be artificial and not in keeping with the fundamental role he played in developing the project. [56] In short, I am satisfied that the trial judge was entitled to adopt Mr. Moore’s approach to the issue of valuation. In doing so, he did not engage in a “value added” approach but rather a “value received” approach which reflected the market value of Mr. Sorokolit’s contributions to the project and the services he provided bearing in mind his “unique expertise and experience”. [57] Accordingly, I would not give effect to this ground of appeal. Issue Two: Was the trial judge entitled to rely on the expert evidence called by Consulate to quantify Consulate’s damages? [58] The appellants submit that the trial judge erred in giving any credence or weight to the $20 per sq. ft. figure that Mr. Moore used in calculating the fair market value of Mr. Sorokolit’s contributions to the project. The argument of the appellants, in its simplest form, is that Mr. Moore effectively pulled that figure and its component parts - $8-$9 per sq. ft. for pre-development and leasing, and $11 per sq. ft. for providing the “fundamental blueprint for the development” – out of the air. And he did so to camouflage what in reality was a “value added” approach to the calculation of Consulate’s damages. [59] Proof of this, the appellants maintain, is evident in Mr. Moore’s own evidence. He provided no examples or comparatives in arriving at the $20 figure and he conceded that he had never purchased services like those provided by Mr. Sorokolit. [60] Unfortunately for the appellants, the trial judge saw the matter differently. Mr. Moore had been involved “in the development of shopping centres, including leasing and related financial matters, and in the quantification of the value of development services” for over 30 years and he had extensive experience “from the seller’s side of the market”. In the trial judge’s opinion, the breadth and extent of Mr. Moore’s experience enabled him to give opinion evidence as to the fee a purchaser would pay in the open market to obtain the type of services Mr. Sorokolit was able to, and did provide to the appellants. [61] As for the $20 per sq. ft. figure, Mr. Moore stated that from his experience, “a market rate paid for pre-development work and leasing of a conventional shopping centre, in which a developer already had the development plans for it, would generally be $8-$9 per sq. ft.” (emphasis added). The appellants did not lead evidence challenging that figure and the trial judge was entitled to act on it. [62] Notably, as Mr. Moore explained, the $8-$9 per sq. ft. figure applied in cases where “the developer already had the development plans”. That was not this case. Here, the project was unique in Canada; the City of Windsor did not need any more conventional shopping centres and Consulate provided “the key” to the “development [of the property] as an outlet mall”. In Mr. Moore’s opinion, those features served to take the case out of the ordinary and “entitled [Consulate] to an additional fee which took it up to $20 per sq. ft.” [63] In my view, the trial judge was entitled to act on Mr. Moore’s valuation evidence. In so concluding, I would emphasize two points which the trial judge clearly took into account. [64] First, Mr. Moore cannot be faulted for failing to provide comparables from the Canadian marketplace. As he observed, manufacturers’ outlet malls were virtually unheard of in Canada at the time. Moreover, as he noted, in deals of this nature, the normal situation would be for a company like Consulate to take an equity position in the project and put up some financing. That did not occur here, although Consulate viewed the situation as though it was engaged in a joint venture with the appellants. The trial judge was mindful of this in approaching the issue of damages. He recognized that in assessing damages on a quantum meruit basis, he was not bound by a single measure of relief. Rather, he was entitled to consider various measures of relief with a view to arriving at a fair and just award. [65] Second, the trial judge was keenly aware that Mr. Moore’s opinion as to the extra $11 per sq. ft. for “uniqueness” was just that – an opinion – and that it necessarily involved a certain amount of “speculation” or “intelligent guesswork” because there were few if any precedents as to “what would be paid in the [Canadian] marketplace for this unique concept… at that time”. That said, the trial judge recognized that Mr. Moore’s “opinion” was not just the opinion of anyone. It was the opinion of “an experienced and knowledgeable consultant in the development business as to what someone would have to pay for Mr. Sorokolit’s services”. Hence, it was not to be “completely disregarded”. [66] As indicated, I am satisfied that the trial judge was entitled to treat Mr. Moore’s evidence as credible and probative and give it the weight he felt it deserved. Accordingly, I would not give effect to this aspect of the appellants’ argument. Issue Three: Did the trial judge err in failing to limit Consulate’s damages to reflect the actual services provided by Consulate? [67] The appellants submit that the trial judge overcompensated Consulate for the services Mr. Sorokolit actually provided. In this regard, they point to the fact that Mr. Sorokolit’s involvement with the project ended in June 1999 at the end of the project’s first phase. That phase consisted of only 52,900 sq. ft. Hence, an award based on 225,000 sq. ft. (the entire rentable space in the mall), was unwarranted and provided Consulate with a windfall. Likewise, in awarding Consulate $900,000 ($4 per sq. ft. x 225,000 sq. ft.) for leasing compensation, the trial judge grossly over-compensated Consulate bearing in mind the actual work performed by Mr. Sorokolit and the success he had in securing tenants for the mall. The appellants point to the fact that by June 23, 1999, when he was terminated, Mr. Sorokolit had only secured one tenant, Adidas. He had also introduced Nike to the project but it was the appellants who secured the Nike lease. Finally, the appellants point to a letter, dated February 1, 1999, in which Consulate indicated that it would “fulfill [its] obligation to the joint venture by taking on the leasing responsibilities exclusively at a rate of Three Dollars [$3.00] per sq. ft.” (emphasis in original). As well, the leasing commission was to be paid in installments. No payment was to be made for simply introducing a tenant to the development. [68] I would not give effect to these arguments. In my view, they are largely a throwback to the appellant’s main contention that the trial judge should have used a mechanical approach as opposed to a contextual approach in assessing the fair market value of Mr. Sorokolit’s contributions and the services he provided. I have already explained why I reject that submission and see no need to repeat it. As for Consulate’s commitments in the February 1, 1999 letter, they were made in contemplation of a joint venture undertaking that did not materialize. Hence, in my view, they carry no more weight than the $2 million “break fee” which the parties had negotiated. [69] In short, the trial judge was entitled to use the approach advocated by Mr. Moore in assessing Consulate’s damages. Notably, however, he did not blindly accept Mr. Moore’s figures. Indeed, he cut the fee per sq. ft. suggested by Mr. Moore in half, from $20 to $10, in arriving at the $2.25 million award which he felt was fair and just. In doing so, he recognized that Mr. Sorokolit was “not involved through to the completion of the mall and in the leasing efforts that continued for the later phases of the mall”. He also recognized that the fee attributable to “uniqueness” was very much a matter of opinion, albeit an opinion of an experienced and knowledgeable consultant. As such, he was not prepared to “completely disregard” it. However, in the end, he chose discount it by approximately 60 percent from the $11 per sq. ft. suggested by Mr. Moore to $4 per sq. ft. [70] In reducing the fee per sq. ft. for leasing services and uniqueness, the trial judge was not merely picking numbers out of the air, as the appellants suggest. Rather, he was adjusting Mr. Moore’s numbers to arrive at an award that he believed was fair and just in the circumstances. In short, he was performing the role expected of him as a trial judge. [71] In my view, while the award of $2.25 million is perhaps generous, it is not so excessive as to warrant appellate intervention. I would accord it the deference it deserves and not interfere. Issue Four: Is Amico liable for the damages awarded? [72] Amico was involved in the construction management of the Windsor Mall. Amico submits that its role was limited to construction work and that it derived no direct benefit from the services provided by Consulate. Hence, it should not have been found liable for damages based on quantum meruit. A party sought to be held liable on that basis must receive a direct benefit from the services provided (see Peel (Regional Municipality) v. Canada, [1992] 3 S.C.R. 762 at p. 797 and Boulanger v. Johnson & Johnson Corp. (2003), 174 O.A.C. 44 (C.A.) at para. 20. [73] I would not give effect to Amico’s submission. The question of Amico’s liability is largely fact driven and it is fully answered by findings of fact made by the trial judge that are not challenged on appeal. [74] The trial judge found that Amico was involved in the development in more ways than simply construction management. Amico participated to some extent in planning and design issues, as well as leasing issues. Amico also commissioned a feasibility study for the development which it lodged with the bank for financing purposes. Notably, Amico was a party to the June Letter which provided that Outlet or Amico would form a joint venture with Consulate. [75] The trial judge rejected Mr. Amicone’s evidence that he did not request anything from Mr. Sorokolit on behalf of Amico. According to the trial judge, it was “not possible for Mr. Amicone to say with any degree of confidence that Mr. Sorokolit was dealing with him only in his capacity as President of [Outlet] and not as President of Amico”. Rather, he found that Consulate’s services were provided with “the knowledge and acquiescence, and in some cases at the request of Mr. Amicone acting on behalf of [Outlet] and Amico”. [76] In the end, the trial judge was satisfied that Outlet and Amico were acting hand-in-hand as co-venturers in the project. On the trial judge’s analysis, amply supported by the evidence, it would be totally artificial to regard Amico and Heritage as entirely separate entities for purposes of the development. They were fingers of the same hand and both stood to gain and did gain directly from the successful development of the property. [77] Accordingly, I would dismiss this ground of appeal and uphold the trial judge’s conclusion as to Amico’s liability. CONCLUSION [78] In the result, I would dismiss the appeal, both as it relates to Amico’s liability and the issue of damages. In the circumstances, with the concurrence of the appellants, Consulate is entitled to its costs of the appeal in the amount of $30,000 inclusive of disbursements and H.S.T. Signed: “M. J. Moldaver J.A.” “I agree Doherty J.A.” “I agree K. Feldman J.A.” RELEASED: “DD” June 2, 2011 [1] In his reasons, the trial judge refers to the appellant Windsor Factory Outlet Mall Ltd. As “Heritage”. I have referred to it as “Outlet”.