COURT FILE NO.: 1623/07
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
B E T W E E N:
RICHARD WYLIE and JANET WYLIE
Plaintiffs (Respondents)
Lisa Kwasek, for the Plaintiffs (Respondents)
- and -
LARRY SHEA, c.o.b. DO-ALL MAINTENANCE AND RENOVATIONS and MARY NUXOLL, c.o.b HERITAGE HOME SERVICES ASSOCIATES
Defendants (Appellants)
Darcy Forbes, for the Defendants (Appellants)
HEARD: March 27, 2009
HOCKIN J.
[1] This is an appeal of a judgment of Deputy Judge Reeves, after a trial in London Small Claims court over three days, May 2, 2006, October 29, 2006 and December 5, 2006.
[2] The case dealt with a building contract for the renovation of a garage at the home of the respondents, Richard and Janet Wylie. The appellant Larry Shea was their contractor. The appellant Mary Nuxoll acted as an intermediary for the parties on the letting of the contract. After three days of evidence, the trial judge found the appellant Shea in breach of the contract and awarded the respondents the full amount claimed or $9,500, plus costs. The companion claims of Mr. Shea for his profit and Ms. Nuxoll for her commission were dismissed without costs.
[3] Regrettably, the appeal must be allowed. I say regrettably because the trial judge was diligent and patient in the face of too much evidence and a claim which was incorrectly plead. Two errors were made by the trial judge: the finding of a breach by the appellant Shea and the calculus applied to measure the appellant’s damages;
In finding a breach and calculating damages, the trial judge erred in law.
The Breach
[4] There was a stipulated price of $17,600 for performance of the contract. Shortly after the work began, the City of London, after an inspection for building code purposes, ordered a change in the footings for the foundation. This added $2,000 to the contract. It was not clear to the respondent that this should be added to the price, but for the purpose of this appeal, this extra is immaterial because the trial judge found that it would have been unreasonable of the respondents not to have agreed to adding it to the price. In any event, the relationship between the parties came to an end before the appellant could ask for payment of this added cost to him.
[5] The terms of the agreement were set out in a purchase order which described the nature of the work and the manner of payment for the work. The contract required the respondents to pay to the appellant Shea, at the start of his work, $8,600, and two weeks later, $7,000. They paid over two days, the first installment of $8,600 and about three weeks later, the further sum of $3,000. The balance on the second installment or $4,000 was never paid.
[6] Construction proceeded but it was spring and there were delays from the weather and the additional work ordered by the City of London. The relationship came to an end after a meeting between the parties at the respondents’ home. The appellant Shea had been promised payment in full of the second installment under the agreement but to the eye of the respondents, very little or not enough work had been done to justify full payment of the second installment. The respondents, therefore, refused to pay and retained a solicitor to write to the appellant Shea. In the correspondence, the solicitor for the Wylies set out four positions, as follows:
The respondents had been asked to pay the total or full payment of the contract price.
The contract was to have been performed in two weeks and was not.
The respondents accepted the appellants’ “anticipatory breach under the contract”.
The respondents intended to retain their own contractors “to mitigate their damages”.
[7] The trial judge held that the contractor could not, in law, ask for payment under the agreement of the second installment when he did because his performance under the agreement did not match the amounts already paid under the terms of the agreement and certainly not the further sum demanded under the agreement. There is this statement at pp. 132 and 133 of the transcript:
There is a strong inference that if people are going to pay $11,600 out in cash, they will expect to have $11,600 worth of work to see.
[8] The trial judge then arrived at the following conclusion at p. 133:
So that I find that the defendants had broken the contract in going back and asking for money before they were entitled to receive it, in law.
[9] In my view, what the trial judge did was to import to the contract a term that the contractor could only ask for payment as the work was performed or he had earned the payment. In that, he was in error. Such an implied term was contrary to the written terms of payment under the agreement. The contract required of the respondent payment by installments at specified times. The parties were free to include or not to include such terms. See Manos Foods International Inc. v. Coca Cola Ltd. (1999), 180 D.L.R. (4th) 309 (O.C.A.) and Goldsmith on Canadian Building Contracts, Carswell, para. 4.2. There was no condition precedent for the full payment of the second installment under the agreement. In this case, the installments were necessary; the evidence was that the appellant Shea paid out large sums to sub-contractors in advance of their work. In any event, the contract spelled out how payment was to be made. It was an error to imply a term which, as I say, was in direct contradiction to the written terms of the agreement.
Damages
[10] Beyond this, the damages awarded represent a windfall to the respondents. The cost of the renovation, net of the award, is approximately half of the contract price. The only amount recoverable in this case was the cost to the respondents to complete the work over and above the contract price. The respondents, in the event of a breach by their contractor, were entitled to be placed, by an award of damages, in the same position as if there had not been a breach. In the circumstances of this case, that could only be damages for the additional cost from the breach but not for the cost of the work to complete the project. The award in this case was a figure which the respondents had to pay in any event. As I say, this result to the respondents, amounts to a windfall.
[11] For these reasons, the appeal is allowed and the claim is dismissed. It follows that the dismissal of the appellants’ claim is set aside. The evidence does not allow for any other interpretation but that the plaintiffs’ were in breach of the agreement. Failure to pay when payment is due is a breach by the owners. The appellants ask that judgment be granted in their favour and damages awarded in the amount of $2,600. The difficulty is that the trial judge made no findings with respect to the claims of Mr. Shea and Ms. Nuxoll. The appellants’ claims were dismissed without reasons and without an assessment of their damages in the event of an appeal. A return to the Small Claims Court for an assessment of damages is therefore unavoidable. One would hope that the parties may now settle to avoid further costs.
[12] An order may, therefore, issue in the following terms:
The appeal is allowed; the claim of Wylie v. O’Shea is dismissed.
The dismissal of the O’Shea and Nuxoll v. Wylie claim is set aside. It will be returned to the list for an assessment of their damages.
Costs to be fixed.
[13] Costs of this appeal, absent agreement, will be fixed, after short written submissions. The appellants, please, to deliver their submissions by April 22, 2009 and the respondents by May 8, 2009.
“Justice P. B. Hockin”
Justice P.B. Hockin
Released: April 8, 2009