CITATION: Espartel Investments v. MTCC No. 993, 2022 ONSC 4315  
COURT FILE NO.: CV-18-00609321-0000  
DATE: 20220819  
ONTARIO  
SUPERIOR COURT OF JUSTICE  
)
)
BETWEEN:  
ESPARTEL INVESTMENTS LIMITED  
) Jonathan Kulathungam and Nipuni  
) Panamaldeniya, for the Plaintiff  
Plaintiff )  
)
)
and –  
)
METROPOLITAN TORONTO  
CONDOMINIUM CORPORATION NO.  
993  
) Megan Mackey, for the Defendant  
)
)
)
Defendant )  
)
)
)
) HEARD: SEPTEMBER 13, 14, 15, 16, 17,  
December 3, 2021, by Zoom  
A.P. RAMSAY J.  
I.  
OVERVIEW  
The trial in this matter took place virtually, judge alone, over the course of six days. The  
[1]  
plaintiff, Espartel Investments Ltd. (“the plaintiff”) brings this action for damages for  
overpayments made to the defendant, Metropolitan Condominium No. 993 (“the defendant”), and  
also seeks interest under a Reciprocal Agreement between the parties. Alternatively, the plaintiff  
seeks damages for breach of contract and unjust enrichment.  
[2]  
The plaintiff owns a hotel and commercial complex in Toronto. The defendant owns a  
larger complex adjoining a condominium registered as Metropolitan Toronto Condominium  
Corporation No. 993 (“the defendant”). The parties share certain facilities and in accordance with  
a Reciprocal Agreement, the parties are each responsible for paying their proportionate share of  
the costs associated with the maintenance, repair and service of the shared facilities. The parties  
share a health club and underground garage. Banquet facilities for the plaintiff’s hotel are located  
in the defendant condominium building. The defendant pays the bills for the electricity consumed  
Page: 2  
in these areas then bills the plaintiff at the end of the year, sending the plaintiff an invoice, which  
is the end result of information inputted at year end in an Excel spreadsheet by which it calculated  
the amount owed by the plaintiff. The parties have used this system for years.  
[3]  
After a retrofit in 2015, the plaintiff requested changes to the 2016 invoice. In 2017, the  
defendant retained a consultant who identified several errors, including a conversion error from  
watts to kilowatts on the spreadsheet and an error with respect to the garage. The errors, if  
corrected, resulted in a significant reduction in the amount owed by the plaintiff to the defendant.  
By virtue of the process agreed to by the parties to determine the charge back for electricity to the  
plaintiff, the errors are longstanding.  
[4]  
The plaintiff seeks to recover overpayments made to the defendant from 2006 to 2015. The  
plaintiff commenced this action by way of statement of claim issued on November 21, 2018. The  
plaintiff submits that it was not until August 22, 2017, when the plaintiff was advised of the errors  
discovered by the defendant’s consultant, that the plaintiff discovered that it had been overpaying  
for hydroelectricity. The plaintiff relies on the ten-year limitation period under the Real Property  
Limitations Act, R.S.O. 1990, c. L.15 or, alternatively, the two-year limitation period under the  
Limitations Act, 2002, S.O. 2002, c. 24, Sched. B.  
[5]  
The defendant submits that the claims are barred by the two-year limitation period under  
the Limitations Act, 2002, and argues that the ten-year limitation period under the Real Property  
Limitations Act does not apply. The defendant pleads, as a defence, a right to set off amounts for  
alleged underpayment in electricity and water costs by the plaintiff for the same period of time,  
and, in support of its claim for set off, relies primarily on a report it commissioned from an  
electrical engineer prior to the litigation.  
II.  
THE PARTIES AND THEIR POSITIONS  
i. The Plaintiff  
[6]  
The plaintiff is the owner and operator of Ramada Hotel on Jarvis Street in Toronto, as  
well as a commercial retail condominium which is part of the same complex.  
[7] The plaintiff contends that the sole dispute is the historical errors in calculating the  
electricity and the allocation of the hydroelectricity costs between the plaintiff and the defendant.  
It submits that the parties have operated for over 20 years utilizing an agreed upon Utility  
Agreement. In or around 2015, the plaintiff performed an electrical retrofit, installing lower  
wattages energy efficient bulbs in certain areas. The plaintiff submits that it was not until the  
report of the defendant’s consultant in 2017 that the plaintiff discovered the errors in the Utility  
Agreement which has existed for years and resulted in the plaintiff overpaying for hydroelectricity.  
[8]  
The plaintiff submits that it is the defendant who is asking the court to re-interpret the  
Utility Agreement and to rewrite the Utility Agreement between the parties. The plaintiff argues  
that there is no error in the Utility Agreement which requires any “rectification.” The errors were  
Page: 3  
in the implementation or the accounting of the terms of the Utility Agreement. The plaintiff argues  
that the Excel spreadsheet is not the Utility Agreement in and of itself, but rather a mechanism to  
implement the Utility Agreement. All that is required, argues the plaintiff, is a correction of a  
calculation which implemented the terms of the contract.  
[9]  
The plaintiff maintains that the calculations were done by the defendant, and the errors  
were only discovered by the plaintiff in 2017. The plaintiff points to the fact that after the errors  
were discovered, the defendant corrected the errors retroactively for a two-year period (2016 and  
2017) and corrected the errors moving forward. The plaintiff argues that the defendant has had the  
benefit of the overpayments, and it disputes the defendant’s defence for a claim for set off.  
[10]  
The plaintiff questioned the necessity of the defendant’s expert electrical engineer.  
ii. The Defendant  
[11] The defendant condominium corporation, which adjoins the plaintiff’s property, is situated  
at 300 Jarvis Street, and is a residential condominium ("residential condominium") within the same  
complex. The residential condominium was created on November 1, 1991, by registration of its  
Declaration, and contains 124 residential units, 76 locker units and 87 parking units.  
[12] The defendant argues that the hydroelectricity payments are not part of the Reciprocal  
Agreement. Although the defendant agrees that the electricity payments were made pursuant to  
the Utility Agreement, it argues that the Utility Agreement is nothing more than excel spreadsheets  
and was a crude calculation and not meant to accurately quantify the electricity usage by the  
parties. It argues that the Utility Agreement was essentially a spreadsheet used by the property  
manager of the condominium to input information harvested from the Toronto Hydro bills, and  
the spreadsheets and the bills are sent to the hotel which then pays the amount due for the period  
(year) in question. The defendant submits that the court must decide whether and under what  
circumstances the plaintiff can amend the Excel Spreadsheets from 2005 to 2015. It argues that  
the plaintiff’s attempt to “correct errors” is tantamount to asking the court for rectification.  
[13] The defendant submits that the limitation period runs from the date of the payment.  
[14] The defendant further argues that if the court were to find that the defendant breached the  
Utility Agreement, then it is entitled to set-off estimated underpayments for electricity use between  
2005 and 2015 against any underpayments by the plaintiff in other areas as established by its  
electrical engineer in the amount of $322,372.95.  
III.  
ISSUES  
[15] Based on the pleadings, and the evidence at trial, the following issues are to be decided in  
this action:  
i. Is the plaintiff entitled to damages for breach of the Reciprocal Agreement by the  
defendant, or, alternatively, for breach of contract or unjust enrichment?  
Page: 4  
ii. What is the applicable limitation period? And is the action statute barred?  
iii. Is the defendant entitled to set off any award recovered by the plaintiff for damages for  
underpayment by the plaintiff in other areas?  
IV.  
NATURE OF THE CLAIM  
[16] In their closing submissions, the parties raised issues that were not pleaded. Though the  
defendant raised issues of rectification and mistake, none of these have been pleaded and therefore  
have not been considered by me.  
[17] The plaintiff’s claim, as framed by the pleadings, is for a declaration that the defendant is  
in breach of the Reciprocal Agreement, and alternatively damages for breach of contract and unjust  
enrichment. The plaintiff claims damages in the amount of $882,043.35 plus interest at a rate of  
30% annually and compounded monthly, calculated from the date of over-payments, for amounts  
allegedly owing by the defendant pursuant to a Reciprocal Agreement. In addition to the claim for  
damages, the plaintiff seeks an order declaring that it is entitled to a lien for the amount owing  
against the defendant's lands and interest, and a declaration that the lien is enforceable in the same  
manner as a mortgage under the Mortgages Act, R.S.O. 1990, c. M.40.  
[18] The plaintiff maintains that pursuant to section XIII (1) of the Reciprocal Agreement, and  
until amounts owing are paid in full, the plaintiff is entitled to a lien in priority to other liens and  
charges, and claims interest at the rate of thirty percent (30%) per annum and compounded  
monthly.  
V.  
THE EVIDENCE  
i. Is the plaintiff entitled to damages for breach of the Reciprocal Agreement,  
breach of contract or unjust enrichment?  
Pleadings, Admissions and Agreements  
[19] In addition to the testimony of witnesses, the parties filed an Agreed Statement of Facts, a  
Joint Document Brief, with an accompanying agreement on each of the documents in the JDB, and  
a Joint Chronology, making effective use of these documents, and, without a doubt, reducing the  
number of witnesses called at the trial and, in the result, shortening the trial.  
[20] The court also heard the evidence of Scott Thompson and Mustafa Younis on behalf of the  
plaintiff, and Robert Horwood and Andre Lebedev on behalf of the defendant. Overall, I found  
each witness to be credible. While I also found Mr. Lebedev to be a credible witness, he was called  
to provide opinion evidence to the court because of his pre-litigation report (“the Lebedev report”),  
commissioned by the defendant. I have made further comments below regarding the necessity of  
his evidence as the plaintiff raised this issue at trial.  
Page: 5  
[21] There is no dispute that Polygrand Developments Inc. (“Polygrand”) built the three-part  
development in the early 1990s.  
[22] The defendant admits paragraph two of the statement of claim which pleads that the  
plaintiff owns and operates a hotel under the banner name of Ramada Plaza at 300 Jarvis Street as  
well as a commercial condominium at 298 Jarvis Street ("commercial condominium").  
[23] The defendant condominium corporation was created on November 1, 1991, with the  
registration of its Declaration. The parties are not clear on when the turnover meeting occurred  
and Polygrand turned over control to the purchasers. Nothing in this trial however turns on that  
date.  
[24] The parties entered into a Reciprocal Agreement dated November 25, 1991i, which was  
amended on September 20, 1995ii.  
[25] The parties do not dispute that in 1997, a receiver was appointed by the Hong Kong Bank  
of Canada and the property, then owned by Polygrand, was sold to the plaintiff on August 30,  
1998, under power of sale.  
[26] There is no dispute that the current process by which the defendant charges back, or more  
specifically invoice the plaintiff for hydroelectricity usage consumed over the fiscal year, has  
existed for over a decade. There is no direct evidence as to when the process was implemented.  
The parties agree however that the process of using the Excel spreadsheet started before 1998. The  
Excel spreadsheet has been called, interchangeably, the Utility Agreement, and an invoice. Based  
on the evidence of both Thompson and to some extent Horwood, I find that the Excel spreadsheet  
was in existence since at least 1998.  
[27] And, based on the evidence and the admissions in the pleadings, I agree with the plaintiff  
that the Excel spreadsheet itself was the implementation of the terms of the Utility Agreement.  
The defendant was required to input information from the hydro bills in the Excel spreadsheet,  
making use of the built-in formulas to arrive at the plaintiff’s share of the expenses.  
Representatives of the parties themselves called the document what it was, ignoring the labels  
attached to it by counsel. Thompson, who testified on behalf of the plaintiff called it an invoice.  
Horwood, who testified on behalf of the defendant, called it a contractiii. Thompson’s  
uncontradicted and unchallenged evidence is that the plaintiff only received a PDF “invoice”, and  
the plaintiff never received a Word document.  
[28] I accept that once generated from the inputted data and sent to the plaintiff, the Utility  
Agreement or invoice was a contract between the parties.  
[29] There were two Excel spreadsheets used annually to determine any charge back to the  
plaintiff for water and hydroelectricity. The party’s issue before me is with respect to the  
consumption of hydroelectricity and not water, and to the extent that the defendant is seeking a set  
off, the consumption of hydroelectricity by the plaintiff in the areas identified by the Lebedev  
report. To be clear, though water is mentioned by the defence as a basis for set off, no such  
evidence was tendered at trial with respect to water usage by the parties.  
Page: 6  
[30] Counsel for the plaintiff submits that the plaintiff is not challenging the terms of the Utility  
Agreement, but rather seeks repayment for the amounts the plaintiff was overcharged for the period  
in question.  
[31] In its statement of defence, the defendant admits paragraph five of the statement of claim.  
At paragraph five of the claim, the plaintiff pleads that the Hotel and commercial condominium  
share a number of facilities and services with the defendant which are set out in the Reciprocal  
Agreement dated November 25, 1991 and amended on September 29, 1995. The claim pleads that  
the November Reciprocal Agreement was registered on title to the plaintiff's property and the  
defendant's residential condominium as Instrument No. D293197 in November 1991 and July 30,  
1998.  
[32] Based on the admissions, the Reciprocal Agreement is registered on title to both the  
plaintiff’s and defendant’s property.  
[33] The parties do not dispute that the defendant shares certain services and facilities with the  
plaintiff’s Hotel and commercial condominium corporation set out in the Reciprocal Agreement.  
When the plaintiff, Espartel, purchased the Hotel, it assumed the benefits, burdens, and obligations  
on behalf of Polygrand and the commercial condominium corporation as set out in the Reciprocal  
Agreement. The defendant also admits in its statement of defence that the parties share some  
facilities such as the underground parking garage and health club.  
[34] Pursuant to the terms of the Reciprocal Agreement, the parties agreed to share certain  
facilities and services. The shared facilities as set out in Section VI(I) of the Reciprocal Agreement  
include, inter alia:  
(a) Those parts of the HVAC, electrical and mechanical systems, energy  
management system, water main service and pumps, sanitary drainage system,  
storm drainage system, water service, fire line, sprinkler system and Bell Canada  
service situate in the Buildings as set out in Schedule A, excluding any equipment,  
including connecting cables, conduits, pipes, benefiting solely the Lands and/or  
Building or only one Owner and particularly distinguishable from common  
facilities as set out in Schedule A;  
(b) The Road and ramp designated as Par 2, 5 and 6;  
(c) Landscaped areas;  
(d) The Health Club;  
(e) The underground garage.  
The Reciprocal Agreement provides that the parties share services that are defined in  
Section (VI)(2) as inter alia: Without restricting the generality of the foregoing  
a) Maintenance and repair, including renovation or reconstruction as necessary, of the  
Shared Facilities to ensure that same are and will operate in accordance with Acceptable  
Standards;  
Page: 7  
b) Preparation and setting of annual budgets by the Owner of the Polygrand Lands with  
respect to all Shared Services and Shared Facilities and all matters related thereto;  
c) Obtaining of any professional services, consultants, opinions, reports and advice with  
respect to the Shared Facilities; d) Snow removal of Parts 2, 5 and 6;  
e) Landscaping.  
[35] Paragraphs 6 and 7 of the statement of claim, which are admitted by the defendant, plead  
as follows:  
6. Pursuant to the terms of the Reciprocal Agreement, the parties agreed to share certain  
facilities and services. The shared facilities as set out in Section VI(1) included, inter alia:  
(a)  
Those parts of the HVAC, electrical and mechanical systems, energy  
management system, water main service and pumps, sanitary drainage  
system, storm drainage system, water service, fire line, sprinkler system and  
Bell Canada service situate in the Buildings as set out in Schedule A,  
excluding any equipment, including connecting cables, conduit pipes,  
benefiting solely the Lands and/or Building or only one Owner and  
particularly distinguishable from common facilities as set out in Schedule  
A;  
7. The shared services were set out in Section VI(2)to include:  
"Without restricting the generality of the foregoing:  
a. Maintenance repair including renovation or reconstruction as necessary, of the  
Shared Facilities to ensure that some are and will operate in accordance with  
Acceptable Standards;  
b. Preparation and settling of annual budgets by the Owner of the Polygrand Lands  
with respect to all Shared Services and Shared Facilities and all matters related  
thereto;  
c. Obtaining of any professional services, consultant, opinions, reports and advice  
with respect to the Shared facilities;  
d. Snow removal of Parts 2, 5 and 6;  
e. Landscaping  
[36] The parties do not dispute that each of them is separately metered for any consumption of  
electricity and water within their respective buildings, nor that each of them is responsible for  
paying the utility for invoices they receive.  
[37] The parties agree that the plaintiff’s Hotel and the defendant residential condominium share  
utilities with respect to the health club (“Health Club”) and parking garage (“Parking Garage”).  
They do not dispute that all utilities consumed by the Health Club and Parking Garage are billed  
Page: 8  
to and paid for by the defendant condominium. There is no dispute that there is no submetering for  
shared facilities.  
[38] The parties do not dispute that there are also meeting rooms, a banquet hall and a kitchen  
(collectively the “Banquet Hall”) which are located on the second floor of the defendant  
condominium but are owned exclusively by the plaintiff. The Banquet Hall is not part of the shared  
facility. The utilities consumed by the Hotel on the Second Floor are billed to and paid for by the  
defendant condominium. There was some dispute, at the trial, as to whether a bridge to the Banquet  
Hall is part of the Banquet Hall, and this is dealt with more fully below.  
[39] Since there are no submeters within the development to measure electricity consumption  
for the Health Club, and Parking Garage, which are shared, or of the Banquet Hall, the defendant  
Condominium is billed for the usage of utilities in those areas.  
[40]  
[41]  
The Reciprocal Agreement does not deal with the Banquet Hall facility.  
The parties do not dispute that the Reciprocal Agreement did not specifically set out how  
hydroelectricity was to be dealt with. They do not dispute that since at least 1998, they have  
operated under the Utility Agreement under which the cost for hydroelectricity and other costs  
were allocated as between the parties for the Health Club, the Parking Garage and the Banquet  
Hall. They inherited the formula by which the respective allocation of costs associated with hydro  
and the shared costs of the Health Club, and the underground Parking Garage were determined, as  
well as the electricity consumed by the defendant Hotel as part of the Banquet Hall.  
[42] At paragraph 13 of its statement of defence, the defendant admits that the parties had  
negotiated a Utility Agreement pursuant to which the plaintiff paid for electricity based upon a  
formula inputted in a spreadsheet, and data inputted by the defendant from utility invoices to  
calculate the amount the plaintiff was required to pay. The defendant pleads as follows:  
The parties therefore negotiated a Utility Agreement pursuant to which Espartel  
agreed to pay a portion of the Condominium’s invoices for electricity and water  
(the “Utility Agreement”). The terms of the Utility Agreement are:  
(a) The amount Espartel is to pay for electricity and water is calculated pursuant to a  
formula (the “Formula”). Espartel devised the Formula or, in the alternative,  
accepted the Formula. Two excel spreadsheets, with built-in formulas, were  
created to calculate the amount that Espartel will pay for both electricity and water.  
The calculations contained in the excel spreadsheets were explicitly agreed to by  
both parties and used for many years.  
(b) The Condominium pays all of its electricity and water bills throughout the year,  
including for utilities consumed by Espartel. At the conclusion of each fiscal year,  
the Condominium:  
i. inputs data from all of the utility invoices it paid into two spreadsheets which  
calculate the amount Espartel is required to pay for utilities; and  
Page: 9  
ii. Provides the spreadsheets, and supporting invoices, to Espartel.  
[43] There is no dispute that it was the defendant’s Condominium management company that  
inputted the information from the electricity bills into the Excel spreadsheet.  
[44] Based on the admissions made by the defendant in its statement of defence, there was a  
negotiated agreement in place used by the parties for years and it was the defendant who was  
responsible for inputting the data in a spreadsheet, with built-in formulas, which would then  
calculate the amount owed by the plaintiff for electricity each year. At paragraph 13 of the  
statement of defence, the defendant admits that the spreadsheets “were explicitly agreed to by both  
parties”. The defendant pleads at paragraph 13 as follows:  
The parties therefore negotiated a utility agreement pursuant to which Espartel  
agreed to pay a portion of the Condominium’s invoices for electricity and water  
(“the Utility Agreement”). The terms of the Utility Agreement are:  
(a) The amount Espartel is to pay for electricity and water is calculated pursuant to a  
formula (the “Formula”). Espartel devised the Formula or, in the alternative,  
accepted the Formula. Two excel spreadsheets, with built-in formulas, were  
created to calculate the amount that Espartel will pay for both electricity and water.  
The calculations contained in the excel spreadsheets were explicitly agreed to by  
both parties and used for many years;  
(b) The Condominium pays all of its electricity and water bills throughout the year,  
including for utilities consumed by Espartel. At the conclusion of each fiscal year,  
the Condominium:  
(i)  
inputs data from all of the utility invoices it paid into two spreadsheets  
which calculate the amount Espartel is required to pay for utilities; and  
(ii)  
Provides the spreadsheets, and supporting invoices, to Espartel.  
Evidence of Scott Thompson  
[45] Scott Thompson, the general manager of the plaintiff, Espartel, has been with the Hotel  
since 1991, when it was branded as Ramada Inn, and being operated by Polygrand. He started out  
as the catering manager and was promoted along. When the Hotel went into receivership in late  
1997, the general manager left, and for a time he reported to Ernest and Young until the hotel was  
purchased in late August 1998 by Espartel Investments. He became the General Manager in 2015.  
He became involved with the Reciprocal Agreement or Shared Facilities Agreement in 2015. He  
may have gone over some of the expenses in 2014 but did not really look after much of the shared  
facilities.  
Page: 10  
[46] The Reciprocal Agreement (which he called the Shared Facility Agreement) sets out the  
cost sharing with a percentage for each of the different areas. His unchallenged and uncontradicted  
evidence was that, with respect to the Health Club, the residential condominium (the defendant)  
was responsible for 41%, the commercial condominium was responsible for 3%, and the Polygrand  
hotel (the plaintiff) was responsible for 56% of the expenses. He indicated that the same  
percentages applied to the underground parking, road, and ramp area. Thompson testified that the  
percentages are applied to repairs and items of the shared facilities. He testified that at year end,  
the plaintiff forwards its Excel spreadsheet to the defendant and in turn, the defendant forwards its  
Excel spreadsheet to the plaintiff, and the parties paid in accordance with the percentages  
established in the Reciprocal Agreement.  
[47] A site plan dated May 2004 was entered into evidence, and the parties agreed on the truth  
of the content of the document. Thompson testified that the banquet area, which is located on the  
second floor of the defendant condominium, includes all areas highlighted by light pink, which  
would include the banquet hall kitchen, the bridge to the hotel, and cloakroom, public washrooms,  
courtyard meeting room, and Essex lounge function room. He indicated that the heating would be  
all of the heating for the area as well as the air conditioning.  
[48] The legend on the site map identifies the Banquet Hall and related facilities including the  
bridge in pink, and the legend on the site map identifies this pink highlighted area as “Hotel  
Facilities”. I accept Thompson’s evidence, which is unchallenged and uncontradicted by any  
countervailing witnesses, and supported by the site map, that the bridge to the hotel is included in  
the Banquet Hall. I find therefore that the bridge was part of the Banquet Hall category on the  
Utility Agreement.  
[49] He testified that the Health Club area is the yellow area which includes the swimming pool,  
change area and terrace. His evidence that that the bridge is included in the Banquet (Hall) is  
uncontradicted and unchallenged and supported by the evidence.  
[50] As for the pool, Thompson’s evidence that the pool is part of the Heath Club is also  
supported by the evidence. I therefore accept that the pool was part of the Health Club category on  
the Utility Agreement.  
[51] As for the Parking Garage areas, he testified that though it was not shown on the site plan,  
the parties shared the costs associated with the lights, doors, plumbing, snow melting and the fans  
for the shared parking levels. Again, his evidence is uncontradicted and I find the plumbing, snow  
melting and fans, part of the shared costs in connection with the Parking Garage identified on the  
Utility Agreement.  
Page: 11  
[52] There is no dispute that in or around 2016, the plaintiff carried out an electrical retrofit to  
install energy efficient lighting and fans in the Banquet Hall, Health Club and Parking Garage,  
which resulted in a change in the wattage. The parties do not dispute that in or around March 24,  
2017, Thompson reached out to Jason Marcus, the Condominium’s building manager to inform  
him of the change in wattage to be inserted into the Algorithm and forwarded a revised Excel  
Spreadsheet (“Revised Spreadsheet”).  
Page: 12  
Report of Julian Segal  
[53] Robert Horwood testified that it was his own personal experience that a change to lower  
wattage light bulbs would not result in much saving. The defendant therefore hired Julian Segal  
Inc., an independent consultant (the “Consultant”), to review the Revised Spreadsheet and provide  
advice. A report was prepared by Julian Segal Inc., dated February 14, 2017, and revised May 8,  
2017.  
[54] The parties filed the Segal report which was admitted for the truth of its contents. Segal did  
a site inspection, reviewed the spreadsheet for the November 1, 2015, to October 31, 2016, fiscal  
year, and provided a revised spreadsheet, which reflected his findings on the ground.  
[55] The parties filed the Report at trial which was admitted for the truth of its contents.  
[56] There is no evidence that the plaintiff received a copy of the Segal report.  
[57] Segal identified errors in the Report and, in particular, identified in Appendix A to the  
Report the original calculations on the left-hand side and the corrected calculations (“Corrected  
Figures”) on the right-hand side. Both the parties accept the Corrected Figures.  
[58] The Report identified that:  
(a) for the years 2006 through to 2014, kilowatts (i.e. 0.75) was incorrectly inserted into the  
Algorithm contained in the Excel spreadsheets rather than watts (0.075).  
(b) With respect to the Parking Garage “the actual total wattage including ballast is 150 watts  
(i.e. 0.150)” was not included previously in the formula.  
[59] Segal concluded that for the period of January 1, 2016, to December 31, 2016, the incorrect  
calculations had charged back 437,492.74 units (kWh) to the Hotel when in fact, it should have  
only been 254,949 units.  
[60] The parties have accepted Segal’s conclusions.  
[61] There is no dispute that the defendant agreed to revise the spreadsheets for electricity  
payments from 2016 going forward. There is no dispute that the correction was based on the  
corrections suggested by Segal in his report.  
[62] The defendant ultimately accepted the Revised Excel Spreadsheet and the amount of  
$142,785.34 initially claimed by the defendant from the plaintiff was reduced to $28,022.50. This  
amount was paid by the plaintiff for 2016 and accepted by the defendant.  
[63] Based on Segal’s findings, which are accepted by the parties, I accept that the conversion  
of the bulbs from watts to kilowatts, was not done and there is no evidence that it was ever done  
in the past. In the result, when the plaintiff carried out the retrofit in 2015, the wattage in the  
banquet hall for a 14-watt lamp, which was indicated to be 0.14 in the spreadsheet, should have  
Page: 13  
been 0.014 kilowatts, and similarly, in the area of the Health Club, the lamps indicated to be 0.25  
kilowatts ought to have been 0.025 kilowatts.  
[64] In addition, Segal identified what he called a “major discrepancy” in the Parking Garage  
area. He queried whether the lamps were possibly indicted as 24 watts and identified that they  
were actually 150 watts, or 0.150 kW. While, at the trial, Horwood questioned the inclusion of the  
wattage, the parties in fact agreed that the content of the report was true. Moreover, Thompson  
testified that the defendant did in fact provide a Revised Spreadsheet based on the information  
provided by their engineering study with the correct wattage of the bulbs for hydro cost for the  
November 1, 2015, to October 31, 2016, year, and the amount that the plaintiff owed for hydro  
was $28,022.50 as opposed to $142,785.34. He testified that the wattage was missing in the  
original calculation for the Parking Garage from the year before which meant a significant  
difference in wattage used in the garage from 560,640.00 KWH in the original as compared to  
57,816.00 in the revised version. The hotel paid the $28,022, which was accepted by the  
condominium for 2016. Horwood agreed that in 2017, the plaintiff paid 24,728.23 for hydro based  
on the on the corrected calculations. He admitted that the hotel paid $20,484.57 in 2018,  
$20,701.33 in 2019, and $24,340.20 for 2020, all based on the corrected calculations.  
[65]  
The inclusion of the wattage for the lightbulbs in the Parking Garage areas is also  
consistent with the purpose of the spreadsheet which is headed: “Hydro costs for the period  
November 1, 2015, to October 31, 2016/Calculation of hydro cost recovery from Espartel”. There  
is no other reasonable inference to be drawn from the evidence, and Segal was in the best position,  
having done a site inspection, to make a determination of the wattage of any lamps used, which he  
did, and, on the evidence, his conclusion was accepted by the parties.  
[66] I therefore accept, on the evidence, as accepted by the parties by the concessions made and  
their conduct following receipt of the Segal report, that the spreadsheets used to determine the  
amount that the plaintiff was to pay incorrectly noted the wattage for the lamps in the Parking  
Garage areas as 24 watts when it ought to have been 150 watts (0.150 kW).  
[67] Based on the report of Segal who actually conducted a site inspection, I make the following  
findings of fact, which affect the information in the second half of the Utility Agreement:  
i. The Banquet Hall has 14-watt LED screw-in lamps installed in the old parr 75-watt  
fixtures.  
ii. The (banquet) function rooms have 16-watt LED lamps installed in the old parr 75-watt  
fixtures.  
iii. The Health Club has 33 fixtures with a total of 131 lamps of 25 watts, and after adjustments  
for the T8 fixtures, results in 29 watts which includes the electronic ballast current.  
iv.  
With respect to the Parking Garage, the total number of fixtures on P1 and P2 is 64. Light  
fixtures installed the garage areas are 150-watt HPS (High Pressure Sodium).  
Page: 14  
Evidence of Mustafa Younis  
[68] Mr. Younis holds a BA and MBA and has been the financial comptroller with Espartel  
since 2017. He has a thirty-year career in the hotel industry. He was a financial comptroller at  
another hotel before that for 11 years, and before that at a Ramada Hotel in Toronto, for 5 years.  
[69] When he looked at the Excel spreadsheet for the year ending October 31, 2016, his main  
concern was to make sure that Espartel’s share, which was a percentage, was properly allocated to  
the right category. He also checked to ensure the amount of the invoice and the dates matched on  
the Hydro sheet. Thompson had advised him that they should be receiving a saving advised from  
the lighting retrofit but there was no change. The invoice was consistent with the previous years.  
There were no issues or concerns raised by the former controller regarding the wattage or the Excel  
spreadsheet. He did not notice any errors.  
[70] In August 2017, he attended a meeting with Thompson. Prior to the meeting they had  
requested a revision of the wattage and when they received that invoice, the defendant requested  
the meeting. They were informed that there was a mistake in the hydro consumption calculation  
and that it was in favour of the hotel. They were told that should have been 0.075 instead of 0.75.  
and that the condominium would only go back two years because of statutory period. They  
requested a revised spreadsheet showing the corrections. The condominium prepared the revised  
spreadsheets. They did not make any changes to prior to 2015.  
[71] The plaintiff has quantified the amount of overpayments made for each year from 2006 to  
2015 with one or both errors corrected as follows:  
TOTAL PAID  
ERROR 1  
Errors 1 & 2  
2006  
2007  
2008  
2009  
2010  
2011  
2012  
2013  
2014  
2015  
$ 78,561.16  
$ 86,621.18  
$ 81,940.72  
$ 87,124.67  
$ 94,072.99  
$ 95,444.39  
$ 101,436.59  
$ 105,178.83  
$ 115,403.86  
$ 121,300.88  
14,473.37  
22,452.67  
21,194.06  
22,534.89  
24,388.01  
24,743.54  
26,296.99  
27,267.15  
29,869.48  
23,806.12  
$27,766.53  
$35,762.57  
$33,811.64  
$35,950.72  
$38,837.54  
$39,403.71  
$41,877.56  
$43,422.52  
$47,644.33  
$50,078.42  
$967,085.27  
Total owing  
$394,555.54  
$572,529.73  
$237,026.28  
$730,058.99  
Page: 15  
[72] Horwood’s discovery evidence read in at trial included an admission that the errors are  
contained in all of the calculations for the period claimed by the plaintiff. By their conduct and the  
acceptance of the conclusion in the Segal report, there were two errors in the Excel spreadsheets,  
or Utility Agreement, which resulted in the plaintiff overpaying for hydroelectricity. At trial,  
Horwood testified that the sole reason that the defendant has not reimbursed the plaintiff for any  
amounts earlier than 2016 is due to the statute of limitation. He admitted that the defendant has  
benefitted from the overpayment.  
[73] I do not accept counsel for the defendant’s argument that the defendant does not admit  
there were errors in the spreadsheet from 2005 to 2015. Counsel for the defendant takes the  
position that the agreement was the spreadsheet and that the parties looked at it every year, and  
then they moved on to the following year. Counsel for the defendant argued that while the  
consultant retained by the defendant pointed out what he called, mistakes in the algorithm, and  
that the defendant accepted his report and going forward would deal with the spreadsheet in a  
different manner, the defendant has put forward no good reason, save for possible limitation  
argument, why the overpayments should not be recovered by the plaintiff. I have dealt with the  
claim for set off, below.  
[74] The defendant argues that there are no mistakes in the spreadsheet because there is nothing  
to compare it to. The defendant argues that the court can only rectify the Utility Agreement only  
after determining what the original agreement was. I disagree. I accept the unchallenged and  
uncontradicted evidence of Thompson that the PDF spreadsheet that what he received was an  
invoice. On discovery, Horwood himself referred to it as a “contract” as evidenced from the read  
ins. At trial, he admitted that the Utility Agreement is what is contained in the excel spreadsheet.  
At trial, Horwood in fact admitted that on the bottom half of the document, the numbers did not  
change year after year. Additionally, the defendant has already admitted in its pleadings that that  
was the agreement between the parties. It cannot now resile from that admission. I also find that  
there was no negotiation once this invoice was forwarded from the defendant to the plaintiff with  
the hydro bills. On the evidence, the only time that the plaintiff asked that the invoice/Utility  
Agreement be amended was after the 2016 retrofit to reflect the lower wattage bulbs.  
[75] There was no “negotiation” of the shared services or the percentage allocation. What was  
“negotiated” was any item that should not be included or what required an explanation as to how  
it relate to shared. I accept that there are instances where expenses are alleged to be shared costs  
and the parties required clarification to determine whether the item was authorized, or whether it  
relates to the shared facilities. The Reciprocal Agreement refers to a basket of repair, maintenance  
and professional services expenses that the parties were obliged to share, however those items are  
not before me for determination.  
[76] Horwood himself made a number of admissions with respect to the Utility Agreement, or  
spreadsheet. With respect to the Banquet Hall, he did not dispute that the calculation included the  
number of light bulbs, times the wattage of the light bulbs, times the number of hours per day,  
times the number of days in the year. He agreed the same would be for the Health Club. He  
admitted on cross examination that the wattage should have been 0.075 and not 0.75, based on the  
Segal report. He indicated that there had been an improper conversion from watts to kilowatts  
Page: 16  
[77] With respect to the Revised Spreadsheet, Horwood admitted that corrections were made to  
the Banquet Hall calculation to take into account the change by the Hotel (plaintiff) to the 16-watt  
lightbulbs as well as a change from to watts to kilowatts as per Segal’s report. He admitted that  
the defendant made the corrections identified in the Segal Report. With respect to the Parking  
Garage, the correction of “44 x 15” was made. He admitted that the defendant also made the condo  
changes for the fans indicated by Segal, who queried the 24 watts stood for wattage and changed  
it to 150 watts. Horwood conceded that the condominium did make the changes identified by Segal  
who assumed 24 stood for wattage and changed it to 15. He conceded that in the earlier version  
the wattage had not been converted to kilowatts.  
[78] Horwood agreed that the plaintiff was initially asked to pay $142,784.34 for 2016, which  
was reduced to $28,022.50, and which was accepted by the defendant. He agreed that the defendant  
is not disputing the amount paid. Horwood admitted that the parties have used the same formula  
for 2017, 2018, and 2019, and the amounts were accepted. The parties have not yet finalized 2020.  
[79] With respect to the original Excel spreadsheets for the period 2006 to 2015 (Tab 16 of  
Exhibit 1), Horwood admitted that the figures for the Banquet Hall and Health Club should be  
corrected to reflect the wattage as 0.075.  
[80] Given the manifest conversion errors in the spreadsheets for the period in issue, surely the  
original agreement, whatever it was, did not contemplate that the plaintiff would pay at least two  
to three times as much a year for the hydroelectricity. There is no dispute that the parties do not  
know the basis upon which the Excel spreadsheet was created. The court cannot speculate either.  
[81] The conversion error identified by Segal appears on all the Excel spreadsheets for the years  
2006 to 2016, before the last mentioned was revised.  
[82] The defendant has admitted that there was a conversion from 2006 to 2015 in the failure  
of converting from watts to kilowatts.  
[83] In its statement of defence, the defendant admitted at paragraph 13.a of its defence that the  
parties negotiated a Utility Agreement and the amount the plaintiff is to pay for electricity and  
water is calculated pursuant to a formulaand that the (t)wo excel spreadsheets, with built-in  
formulas, were created to calculate the amount that Espartel will pay for both electricity and  
water. There is no evidence before the court that this “built-in” formula changed at any time. In  
Minutes dated August 29, 2017iv, of one of the defendant’s board meetings, the defendant  
acknowledged the error with the formula disclosed by Segal. The Minutes indicate: The Board of  
the Condominium engaged an engineering consultant to review the formula. He uncovered an  
error in the formula which incorrectly converted the wattage of the bulbs used into kilowatts.”  
[84] The defendant has corrected the errors in the Excel spreadsheets based on the corrections  
identified in the Segal report.  
[85] Both Horwood and Thompson testified that aside from the average costs per kWH,  
everything on the bottom of the spreadsheets remained the same, which is evident from the  
spreadsheets at tab 16 of Exhibit 1.  
Page: 17  
[86] On the evidence, the spreadsheets for 2006 to 2015 contain the same errors with respect to  
the conversion and the Parking Garage. There is no dispute that between 2006 to 2015, the plaintiff  
paid $967,085.27 to the defendant for its share of electricity.  
[87] The plaintiff pleads breach of the Reciprocal Agreement, breach of contract, and unjust  
enrichment. There is no dispute that the Reciprocal Agreement deals with the Health Club and the  
Parking Garage, Road and Ramp, which are shared facilities. Horwood admitted as much at trial.  
However, on the evidence before me, the Reciprocal Agreement does not deal with the Banquet  
Hall or services exclusively to the retail component. The parties also dispute whether the  
Reciprocal Agreement governs electricity in the shared facilities. Regardless, I do not accept that  
the errors in the Utility Agreement which resulted in an overpayment by the plaintiff for electricity,  
resulted in a breach of the Reciprocal Agreement. In any event, neither party made any submissions  
to the court on the interpretation to be given to the Reciprocal Agreement with respect to the  
sharing of costs for electricity in the shared facilities or for the Banquet Hall, retail (commercial)  
component.  
[88] The Reciprocal Agreement governs how the parties would deal with shared facilities,  
services to be provided to the shared facilities, professionals to be engaged for the benefit of shared  
the shared facilities, among other things, and the allocation of costs sharing between the plaintiff  
Hotel (and retail) and the defendant Condominium.  
[89] The only evidence before me of a request to correct information in the invoice/Utility  
Agreement was the request made by Thompson in 2017 to ask the defendant to include the lower  
wattage bulbs after the 2016 retrofit.  
[90] The genesis of the Excel spreadsheet/Utility Agreement cannot be determined from the  
evidence.  
[91] The plaintiff alleges that the Utility Agreements were separate contracts and alleges that  
the defendant breached the Utility Agreement. The defendant admits in its pleading that there was  
a “utility agreement” between the parties with a built-in formula to calculate the amount that the  
plaintiff would pay for electricity. The defendant admitted at paragraph 13.b. ii. of its defence that  
it was the defendant who was responsible for inputting the data from all utility invoices. Horwood,  
who testified on behalf of the defendant also made this admission at trial.  
[92] I accept, on the evidence that there was, annually, an agreement between the parties, that  
the plaintiff would pay what amounted to an invoice presented by the defendant for hydro  
consumed in the areas of the Health Club, Parking Garage and Banquet Hall. Scott Thompson,  
who testified on behalf of the plaintiff, indicated that the plaintiff only received a PDF document  
(the Utility Agreement). The plaintiff did not receive a Word version of the Excel spreadsheet.  
Thompson called the PDF document an invoice. I accept the unchallenged evidence of Thompson  
that there was no negotiation of the invoice (Utility Agreement). Regardless of how the Utility  
Agreement came into place, the plaintiff was obliged to pay this invoice. It was valid and binding  
on the parties.  
Page: 18  
[93] The admissions made by the defendant in the pleadings and the Agreed Statement of Facts,  
as well as Thompson’s evidence that the PDF Excel spreadsheet was an invoice, do support the  
argument that each Utility Agreement was a contract. Annually, the plaintiff agreed to pay the  
amount indicated for its consumption of electricity. Based on the evidence at trial, the amount  
owed to the defendant would be reconciled with any amounts that the defendant owed the plaintiff,  
but that does not take away from the fact that it was an invoice which was expected to be paid. I  
accept counsel for the defendant’s argument that each Utility Agreement was established each year  
and the parties would move forward to the next year.  
[94] There is no evidence before the court that, apart from the request to correct the errors after  
the retrofit, there had been any “negotiations” by the parties about the numbers in the spreadsheets.  
Indeed, Horwood himself admitted that the defendant condominium inputted the data from the  
invoices at the top, and the bottom of the spreadsheet has remained the same, aside from a variation  
for the average cost per kWh arrived at annually.  
[95] However, given the unique process adopted by the parties in billing the plaintiff for  
electricity consumption, it is not surprising that the error that existed in the excel spreadsheet, for  
an unknown period of time, was replicated year after year until Segal pointed it out in 2017. I find  
that the defendant only discovered the error as a result of Segal’s report. There being no evidence  
before the court on the origin of the errors, I cannot find that the defendant is in breach of contract.  
[96] I do find however that, on the evidence, the elements of unjust enrichment are established.  
The three elements necessary to establish a claim for unjust enrichment are an enrichment, a  
corresponding deprivation, and the absence of any juristic reason for the enrichment: Pettkus v.  
Becker, [1980] 2 S.C.R. 834.  
[97] With respect to the first two elements, the plaintiff has demonstrated the existence of an  
enrichment or benefit in the defendant’s hands, and a corresponding deprivation or expense on the  
part of the plaintiff. The comptroller for the plaintiff, Mr. Younis, testified he inputted the correct  
wattage into the spreadsheets for the period 2005 to 2015 (tab 16 of Exhibit 1), which were  
provided to him from the defendant condominium. The parties tendered the spreadsheet as  
evidence at the trial and agreed on the truth of the content. I accept that the amount that was  
supposed to have been paid by the plaintiff between 2006 to 2015 is as represented in in the revised  
spreadsheets and summarized in the plaintiff’s chart, below.v The parties also agree on amounts as  
calculated, using the corrected information provided by Segal in the spreadsheets revised by the  
plaintiff.vi I find that the plaintiff overpaid the defendant for the period 2006 to 2015. Horwood  
testified that the defendant did not make the corrections for 2015 because they understood the  
limitation to be two years and they corrected it two years. He admitted that that was the only reason  
why they did not correct beyond two years.  
[98] The parties do not dispute that by virtue of the Utility Agreement, between 2006 and 2015,  
the plaintiff paid a total of $967,085.27 towards the shared expenses for hydroelectricity. On the  
evidence, including the revised calculations in the Excel spreadsheets included in the Joint  
Document Brief, for the same period of time, the plaintiff should only have paid 237,026.28. The  
plaintiff therefore overpaid $730,058 for its share of the electricity costs.  
Page: 19  
[99] The defendant has held the monies paid in error in deprivation of the plaintiff. Although  
not conclusive, Horwood admitted that the defendant received a benefit as a result of the errors.  
The benefit to the defendant is apparent from the Minutes of the defendant’s board meeting. As  
noted in the defendant’s Board minutes from February 27, 2018, tendered as evidence at the trial,  
“MTCC 993 will not consider reimbursing any omissions older than two years” which, in my view,  
is also an acknowledgement by the defendant that the omissions extended beyond two years.  
[100] I find that it was the plaintiff’s concern regarding the high electricity cost, and the available  
government incentive, which prompted Thompson to carry out the retrofit in 2015. The plaintiff  
has therefore demonstrated an enrichment or benefit in the defendant’s hands, and a corresponding  
deprivation or expense on the part of the plaintiff. The first two elements of the test are therefore  
easily met.  
[101] As for the third element of the test, the absence of any juristic reason for the enrichment,  
or, put another way, “there is no reason in law or justice for the defendant’s retention of the benefit  
conferred by the plaintiff, making its retention “unjust” in the circumstances of the case”: Pettkus,  
at p. 848; and Kerr v. Baranow, 2011 SCC 10, [2011] 1 S.C.R. 269, at para. 40 [Kerr]. In Kerr, at  
para. 43, Cromwell J. noted the court had adopted a two-step analysis for the absence of juristic  
reason:  
The first step of the juristic reason analysis applies the established categories of  
juristic reasons; in their absence, the second step permits consideration of the  
reasonable expectations of the parties and public policy considerations to assess  
whether recovery should be denied:  
First, the plaintiff must show that no juristic reason from an established category  
exists to deny recovery. . . . The established categories that can constitute juristic  
reasons include a contract (Pettkus, supra), a disposition of law (Pettkus, supra),  
a donative intent (Peter, supra), and other valid common law, equitable or  
statutory obligations (Peter, supra). If there is no juristic reason from an  
established category, then the plaintiff has made out a prima facie case under the  
juristic reason component of the analysis.  
The prima facie case is rebuttable, however, where the defendant can show that  
there is another reason to deny recovery. As a result, there is a de facto burden of  
proof placed on the defendant to show the reason why the enrichment should be  
retained. This stage of the analysis thus provides for a category of residual defence  
in which courts can look to all of the circumstances of the transaction in order to  
determine whether there is another reason to deny recovery.  
As part of the defendant’s attempt to rebut, courts should have regard to two  
factors: the reasonable expectations of the parties, and public policy  
considerations. [paras. 44-46]  
Page: 20  
[102] On the evidence before me, the plaintiff has established a prima facie case that there was  
no basis in law, either contract, common law, or statutory obligation to deny recovery. There is  
no reason in law or justice for the defendant's retention of the benefit conferred by the plaintiff.  
The onus shifts to the defendant to show that there is another reason to deny recovery. The  
defendant’s claim for set off based on the recommendations in the defendant’s consultant electrical  
engineering report, has been considered in the circumstances, and rejected, for the reasons  
discussed below. With respect to the second stage of the analysis, at para. 44 of Kerr, Cromwell J.  
noted:  
Thus, at the juristic reason stage of the analysis, if the case falls outside the existing  
categories, the court may take into account the legitimate expectations of the  
parties (Pettkus, at p. 849) and moral and policy-based arguments about whether  
particular enrichments are unjust (Peter, at p. 990).  
[103] Having concluded at the first step that the there is no established juristic reasons for the  
defendant to retain the overpayment, I note that with respect to the second step the court, it is  
important to consider the reasonable expectations of the parties and public policy considerations  
to assess whether recovery should be denied: Kerr, at para. 43. From the evidence, the reasonable  
expectation of the parties was that each party would pay their share of the electricity bill based on  
the percentage allocation from the Reciprocal Agreement and a longstanding agreement.  
[104] I disagree with the defendant that the plaintiff is attempting to “retroactively amend” the  
Utility Agreement to recover the overpayment. This is not correct. The plaintiff is merely  
attempting to enforce the agreement that existed between the parties, one that has been admitted  
in the defendant’s own pleadings.  
ii.  
What is the applicable limitation period? And is the action statute barred?  
[105] In their Agreed Statement of Facts, the parties indicate: “Neither party was aware of the  
alleged errors until the Report was prepared by the Consultant. The Errors came as a surprise to  
MTCC 993.” The parties agree that the alleged errors were made known to the plaintiff by the  
defendant during a meeting that took place on August 22, 2017.  
Minutes of a board meeting held by the defendant on February 27, 2018, noted that  
it was the defendant that discovered the error in the formula and brought it to the  
plaintiff’s attention. The minutes note, in part: It was also noted it was MTCC 993  
who discovered the error in the formula for calculating Espartel's share of the  
hydro billing (an error which favours Espartel-Ramada) and brought it to their  
attention.  
[106] There was no evidence, at the trial, to contradict the agreed statement by the parties.  
Evidence of Thompson  
Page: 21  
[107] Thompson testified that he had had some dealings with the Utility Agreement before  
becoming general manager. In 2014, he was asked by his then manager to review expenses and to  
make sure that the correct amounts were inputted. Before becoming general manager, he had been  
asked by his former manager to ensure that the individual bills sent as back up were inputted in  
the spreadsheet properly and that the dates were correct. He understood that the charge for the  
kilowatt per hour was based on the average of the individual bills. He always received a PDF  
spreadsheet, which he testified was an invoice. He understood that the invoice indicated the  
number of light bulbs, times wattage of the bulbs, times the number of number of days in the year.  
[108] When he took over as general manager, the hydro bill seemed a little high. On discovery  
he indicated it was outrageously high. At trial, he indicated that his concern with respect to the  
electricity went hand in hand with the program offered by the government.  
[109] He received spreadsheets, in a PDF format, with attached bills for hydro and electricity,  
which was essentially an invoice from the defendant. The plaintiff did not fill anything in. There  
were no negotiations for hydro and water. He would merely go through to ensure that the proper  
amount was inputted as well as the proper average for the area. He was involved in 2015 with the  
spreadsheets and Excel spreadsheets. When the hotel was in receivership, he reported to Ernest &  
Young. Ernest & Young did not raise any concerns regarding the Utility Agreement, the  
spreadsheet, the wattage calculation, nor did they identify any errors. The defendant was  
responsible for providing information to the auditor for the joint auditor’s report. Neither he nor  
the Hotel had any dealings with the auditors. The shared facilities auditors never raised any issues  
with the hotel. They never raised any questions or concerns regarding errors in the calculations nor  
did they at any time raise any issue with respect to the wattage.  
[110] He testified that the Reciprocal Agreement stipulated that there would be an “Owners’  
Liaison Committee” and set out the composition with representatives from the hotel, residential  
condominium, and commercial condominium, however, to his knowledge, there had never been  
such a committee since he has been there. There were no annual budgets for the shared facilities.  
The practice of the parties in dealing with these types of expenses is that the plaintiff would deal  
with expenses associated with day-to-day operation and would charge back to the defendant, but  
they would discuss any large capital expenses, and come to an agreement. At the end of the year,  
he receives the hydro receipts, the Condominium expenses as well as an Excel spreadsheet of all  
the expenses for the year, with the percentage breakdown from the Reciprocal Agreement. Only  
hydro and water expenses were included in the Excel spreadsheet. As for other items, he would  
review them to ensure that they were properly related to the shared facilities and that the correct  
percentage was being charged and field any questions to the condominium’s accountant. It was the  
general manager and the accountant who would work on the shared facilities. He did not question  
the wattage in the Excel spreadsheets nor was he aware of anyone questioning it prior to 2017.  
[111] Neither the plaintiff’s comptroller, nor KPMG who carried out audits, identified the error.  
He always went back to the previous years and the numbers were always similar. When he became  
the general manager, he noticed the cost of hydro was “quite high”, and he had a study done to see  
how much money would be saved if they took advantage of the government’s incentive for LED  
lightbulbs. The study indicated that they would save “a substantial amount of money”. He looked  
Page: 22  
at ways internally to lower the hydro costs by changing the light bulbs to LEDs. The following  
year, he noted there was no change in the calculations for the wattage for the light. He sent an  
email to the condominium asking them to adjust the wattage from .75 to .14 in the banquet area,  
and to adjust the health club area. He also mentioned that the fan should be adjusted as the condo  
had done a retrofit in the garage area for three hours per day, which they had agreed on, as opposed  
to 24 hours a day.  
[112] On March 24, 2017, Thompson sent an email to the accountant James Marcus indicating,  
in part:  
Hi Jason,  
The Electrical usage has to be adjusted which is simple, just change the existing excel  
formula from 75 watts to 14 Watts in the Banquet Hall and in the Health Club from 75  
watts to 25 watts  
Banquet Hall old 161 x .75 x 5 x 365 New 161 x .14 x 365  
Health Club old 133 x .75 x 16 x 365 New 133 x .25 x 365  
Garage Fans need to be adjusted based on the new system implemented with the fans only  
run a couple of hours per day versus 24 hours  
Garage old 15 x .25 x 24 x 366 New should be 15 x .25 x 2 x 366  
[113] The condominium’s response was that they did not believe this was how the wattage is  
calculated and that they would have an electrical engineer review the calculations. He and others  
were invited to a meeting in August 2017 by the defendant board. He was told that they had the  
study done, and the calculation for hydro was incorrect, but in their favour, and that the calculations  
were being redone and they would go back two years. He did not receive a copy of the report at  
the time.  
Evidence of Horwood  
[114] I found Horwood to be a candid and credible witness. He was elected to the Board of  
Directors in 2000 and became president of the board in 2004 or 2005 and has been the president  
of the board since that time. Horwood has a university degree in Mathematics and Physics. His  
past employment includes being the Chief Systems Programmer at the University of Montreal and  
working with the National Energy Board doing operations research. He has created several  
companies, some listed on the Toronto Stock Exchange.  
[115] He testified that on November 9, 2006, the defendant terminated the management contract  
with Polygrand Management Services. They had been dealing with Lalach Management Inc. and  
he later learned that were related. The new management company was hired in January 2007. The  
auditor would receive the hydro bills from the condominium. Information was sent as well as any  
back up documents.  
[116] He has no idea where the spreadsheets came from, but testified it appeared to be a crude  
way of indicating how the electricity costs would be shared between the hotel and the  
Page: 23  
condominium. The board normally did not see the document. It has been used since he has been  
on the board. The property manager prepared the spreadsheets and he presumed it was Polygrand  
Property Management Services before their current property management company, TSE. On  
cross examination, he admitted that the Hotel (plaintiff) did not have anything to do with inputting  
the hydro bills. The Excel spreadsheet first came to his attention when the property manager  
notified him that the Hotel was planning to change the lightbulbs in the banquet area, and they  
wished to change the arrangement for electricity costs. They were going to lower the electricity  
costs and wanted the formula adjusted. On cross examination, he admitted that the condominium  
enters the information on the spreadsheet.  
[117] The board hired Segal, and after Segal’s report, which indicated that there were numerous  
inconsistencies in the manner in which electricity was being calculated, errors in the calculation  
done for lightbulbs, a major discrepancy in the garage, and a credit that he did not know where it  
originated, the board determined to hire an electrical engineer to look at the consumption of  
electricity, and to balance the electricity as a whole between the buildings. The board organized a  
meeting with the Hotel, and he believes present were Thompson, Younis, the defendant’s property  
Manager, and the accountant. He testified that the condominium recalculated the amounts and  
informed the Hotel that they had had the study done. They adjusted 2016, which had not been  
finalized and adjusted 2017.  
[118] A portion of his evidence at discovery was read in at trial. Horwood admitted that a zero  
should be added to the calculation of the wattage of the bulbs. In response to the question regarding  
what the decision of the board was to the Segal report, he stated that: “As I recall, we informed the  
hotel of the error in the original contract. We recalculated it. We called a meeting of the hotel staff  
and informed them.” He did not know whether the report was provided to Espartel. He was  
involved in the meeting with Espartel which he believed took place on August 22, 2017. The  
property manager, Malcolm Marcus attended the meeting as did Scott Thompson and Mustafa  
Younis, for the hotel Espartel. Horwood testified that they informed Thompson of the error in the  
wattage being out by a factor of ten, which resulted in in the amount to be reconciled being  
incorrect. He discussed at the meeting the general amounts for 2016 and 2017. There was no  
discussion about previous years. The condo first learned of the error with the Segal report, and it  
was a surprise to the condo and the condo board.  
[119] Horwood admitted that the defendant did not know about the error until Segals report in  
May or June of 2017. He admitted that for the past 20 years no one picked up on the two errors  
identified by the Segal report. He testified that the two errors did not start 20 years ago and  
presumably were there longer than that.  
[120] Horwood, who testified on behalf of the defendant, denied that any of the auditors ever told  
him there was an error in the spreadsheet. He indicated that that none of the accountants ever told  
him that there was an error in the calculations. On cross examination, he indicated that he told  
Younis and Thompson that there had been an improper conversion from watts to kilowatts. He  
assumed the Excel spreadsheet was sent to the auditors. He admitted on cross examination that no  
one at TSE Management ever told the board that there was an error in the spreadsheets. He agreed  
that that no one from TSE Management or the auditors caught the error.