CITATION: Zimon v. Turnbull, 2012 ONSC 6650

COURT FILE NO.: DC-10-241

DATE: 20121219

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

matlow, aston and SWINTON JJ.

B E T W E E N:

JAMES ZIMON

Plaintiff (Appellant)

• and -

SHARON LYNN TURNBULL, WILLIAM PETER ISHERWOOD, CANADIAN MORTGAGES INC. and CANADIAN IMPERIAL BANK OF COMMERCE

Defendants (Respondents on Appeal)

Marc A. Munro, for the Appellant

Dennis Touesnard, for the Respondents Sharon Lynn Turnbull and William Peter Isherwood

HEARD at Hamilton: October 31, 2012

Swinton J.:

Overview

1The appellant, James Zimon, appeals the judgment of Lafrenière J. dated August 27, 2010, in which she held that neither the appellant nor the respondents on appeal should receive compensation in this dispute concerning the renovation of a home. He also appeals her subsequent order that he pay costs of $30,401.69 on a substantial indemnity basis.

2For the reasons that follow, I would allow the appeal, set aside the judgment of the trial judge, and award damages to the appellant in the amount of $22,727.54 plus interest.

Factual Background

3In June 2007, the respondents, Sharon Lynn Turnbull and William Peter Isherwood, retained the appellant, the sole proprietor of an interior decorating and project management business, to design and oversee renovations to their Brantford home. The project involved the redesign of a second floor bathroom, the creation of a laundry area on the second floor, and the renovation of a main floor family room.

4The parties’ contract was partly in writing and partly the subject of verbal agreements. In the written documents, the appellant agreed to obtain the services of subcontractors and to purchase building supplies. The respondents agreed that the appellant “does not warrant products against defects and workmanship and is not responsible to warrant work as supplied by the subcontractors.” The documents signed made reference to estimated prices and quotes. Some documents expressly noted that the price could increase with extra work.

5The renovations were completed on August 31, 2007 when a custom-built armoire was installed to house the built-in washer and dryer. Over the course of the project, the appellant incurred expenses of $32,077.18, and he charged $7,635.43 for professional services, for a total billed amount of $39,712.61.

6Prior to the completion of the work, the respondents made payments of $16,985.07. However, on receiving the appellant’s final invoice, they refused to pay the balance because of dissatisfaction with some of the work done. In particular, they raised concerns because the armoire door did not close properly, the carpet had been inadequately patched after it was damaged by a subcontractor, grout was falling out in the bathroom, and a curtain rod had been damaged.

7As the dispute between the parties moved closer to litigation, the complaints were expanded. The appellant registered a lien under the Construction Lien Act, R.S.O. 1990, c. C.30 and commenced proceedings to obtain his unpaid fees in the amount of $22,727.54 plus interest. The respondents counterclaimed, seeking $50,000 for repairs plus punitive damages of $15,000.

8In May 2010, the respondents raised a further complaint about a flooring defect in the family room, although this had not been pleaded in their counterclaim. At trial, for the first time, they also raised an issue respecting a soap niche in the bathroom.

The Decision of the Trial Judge

9After a four and one half day trial, the trial judge gave oral reasons for her decision. She rejected the respondents’ allegation that the appellant had misrepresented his qualifications. She also found that the appellant’s lien had been registered outside the legislated timelines, as she found that the last work to the property that could be characterized as an improvement occurred August 3, 2007. She concluded that the armoire, installed on August 31 by affixing it to the wall, was not an improvement. Therefore, she discharged the lien.

10The trial judge found that the quotes given to the respondents did not establish a firm contract price. She noted that the respondents acknowledged that about $12,000 was owing to the appellant, but they claimed a setoff of $20,941.16, resulting in a claim for damages of $9,079.78.

11The trial judge held that the contract was clear: the appellant did not warrant the products or the subcontractors’ work. She also found that Ms. Turnbull understood that the appellant was not giving such a warranty (Transcript, p. 557). Nevertheless, the trial judge found a contractual obligation to provide warranties and information about the subcontractors, stating (Transcript at p. 558):

I would have found that the recourse available to the defendants was to the suppliers and the subcontractors with respect to the deficiencies they find in the work, except for one very important fact. I find that the plaintiff breached the contract he entered into with the defendants when he did not provide the warranties or the information with respect to the subcontractors to allow the defendants to seek the remedy that they had under the contract directly with the suppliers and the subcontractors. I find that the plaintiff cannot now say three years later, when the remedies available to the defendants pursuant to the warranties may no longer be available, that he has no responsibility.

12The trial judge stated that the appellant “essentially did not allow the defendants the recourse that was provided to them under the contract” (Transcript at p. 559). As a result, she found that the appellant was not entitled to any further compensation under the contract, because the respondents would be required to spend $10,000 to replace the bathroom, $1,130 to replace the armoire, and $1,125 to replace the carpet. This was based on her conclusion that there were problems with the grouting of the tile, the soap niche in the bathroom and the armoire door. As well, she concluded that the carpet in the hall and on the stairs had to be replaced because of damage caused by a subcontractor. She calculated that a total of $12,255 was needed for these repairs.

13The trial judge noted that the appellant still maintained that he was owed $10,000 after these adjustments. However, she stated (Transcript at pp. 561-2):

An appropriate result in this proceeding, in my view, is that the plaintiff receive no further money and that the defendants’ not be compensated in damages. I find that neither party has necessarily behaved in a reasonable way. The plaintiff should have provided the warranties to allow the defendants their recourse. The defendants should have honoured the contract by paying the amount was due and sought the remedies against the subcontractor and suppliers, because they knew that Mr. Zimon had already expended the monies by paying the subcontractors and suppliers.

14The trial judge dismissed both the appellant’s claim and the respondents’ counterclaim after concluding (Transcript at p. 562):

Any offsets I would allow [the respondents] would be to set off any monies owing under the contract. I find that the amount owing under the contract is likely closer to the defendants’ numbers than the plaintiff’s numbers due to the fact that the plaintiff is not in a position to point to a written contract with respect to the difference in what he says is owing and what the defendants’ say is owing.

15Initially the trial judge suggested that there should be no order as to costs. However, in a subsequent endorsement dated December 20, 2010, she ordered costs against the appellant. She noted that the respondents had made an offer to settle for $5,000 on February 17, 2009 in accordance with the Rules of Civil Procedure, entitling them to partial indemnity costs throughout. However, she also concluded that the appellant’s conduct was worthy of sanction because it was unreasonable for him to have registered a construction lien against the respondents’ property. Accordingly, she awarded costs on a substantial indemnity basis in the amount of $30,401.69.

The Issues

16The appellant raises a number of issues:

1. Did the trial judge err in failing to enforce the terms of the parties’ contract?

2. Did the trial judge err in failing to award compensation on the basis of quantum meruit?

3. Were the trial judge’s reasons inadequate to permit meaningful appellate review?

4. Did the trial judge err in making a punitive costs award?

The Standard of Review

17In an appeal from a decision of a trial judge, the standard of review is correctness with respect to questions of law. With respect to questions of fact, the standard of review is palpable and overriding error. Where the appeal raises issues of mixed fact and law, there should be deference unless there is an extricable legal principle, which is reviewable on a standard of correctness (Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235 at paras. 8, 10 and 36).

Analysis

18In my view, the trial judge erred in law by failing to give effect to the terms of the parties’ contract. For this reason, her decision must be set aside.

19The trial judge found that pursuant to the terms of the parties’ contract, the appellant provided no warranty respecting the products supplied or the work done. This finding is consistent with the written documents signed by the parties. For example, the agreement of June 3, 2007, signed by the respondents on June 4, states,

[James Zimon] does not warrant products against defects and workmanship and is not responsible to warrant work as supplied by the sub contractor’s. When items received have a warranty attached to them, the copy of the warranty will be given to the client along with an invoice supporting the charges from the quote page. The client agrees to be responsible for keeping the record of warranty and refer to it as needed. The Interior Designer does not keep warranty records whatsoever.

20The same wording is found in a June 11, 2007 document. In a June 19, 2007 document, the wording is slightly different:

The Interior designer does not provide a warranty on the product or labor. The supplier, Alexanian Flooring will supply the manufacturer’s limited warranty on the flooring and back and support issues pertaining to the rip our an installation [sic]. Warranty is supplied when the floor fails to perform during normal use. It excludes damage caused by FURNITURE LEGS, HIGH HEELS, SHOES WITH GRIT, and WHEELED RIDING TOYS.

21Thus, it is clear from the written documents signed by the respondents that the appellant was providing no warranty on the products or labour. At most, he was required to provide warranties that were attached to products.

22The trial judge appears to have implied a term into the contract requiring the appellant to provide information about the subcontractors. She then found a breach of the requirement to provide warranties and the information about the subcontractors.

23There are a number of problems with her analysis. First, I note that the respondents did not plead that there was such an implied term in the contract. It was an error in law to imply such a term in the absence of such a pleading by the respondents, as the appellant had no opportunity to meet this argument at trial.

24Second, it was an error to imply such a term in the face of the clear language in the parties’ contract that the appellant was not providing any warranty himself.

25Third, there was no evidence to support the finding of a breach of the obligation to provide warranties such as to result in liability for the appellant. While there is evidence that the appellant failed to provide the Alexanian warranty for the hardwood floor in the family room. nothing turns on this, as no defect in the flooring was established at trial. There is no evidence to support the trial judge’s finding that the appellant failed to provide other warranties in accordance with the terms of the written contract or the implied term.

26Fourth, the respondents are not entitled to allege breach of warranty with respect to the work for which they had not paid. They breached the contract with the appellant by failing to pay the amount owing under the contract which had been demanded. The appellant was entitled to take this as a repudiation of the contract. Therefore, he had no further obligations to the respondents under the contract.

27In sum, the trial judge erred in implying and enforcing a term that was not part of the parties’ contract. According to their agreement, the appellant did not warrant the quality of the work done. Therefore, he was entitled to be paid in accordance with the contract terms.

28The remaining issue on this appeal is the appropriate remedy. An appellate court may make an order or decision that ought to or could have been made by the court appealed from (Courts of Justice Act, R.S.O. 1990, c. C.43, s. 134 (1)(a), (4) and (6)). Given the amount in issue between the parties, it is appropriate and just to determine the amount of damages owing, rather than to send the case back for a new trial.

29The trial judge did not come to a clear conclusion as to what was owing to the appellant under the contract. He claimed $22,727.54 plus interest, based on the invoices he had submitted. The respondents admitted that at least $12,000 was owed, but they objected to paying more than the amounts set out in the written documents.

30The trial judge did not explain why she rejected the appellant’s calculations. She found that the amounts in the quotations did not constitute a fixed contract price. There was evidence of alterations to the work and extras authorized by the respondents that caused an increase in price. Indeed, the trial judge stated, “…I think it’s fair to say that no contract of this nature is firm” (Transcript at p. 555). However, she failed to explain why she concluded that the amount owing is “likely closer to the defendants’ numbers that the plaintiff’s numbers” (Transcript at p. 562).

31The best evidence of the quantum owing to the appellant is his invoices. The evidence that he spent $32,077.18 was not challenged. While the price charged was greater than the amount in the initial quotations, it is clear from those documents that the prices specified were an estimate and there were extras done. In addition, he reasonably claimed an amount for commission. While he testified that his usual commission was 30%, the amount claimed of $7,635.43 is at a lower rate than that.

32In accordance with the terms of the parties’ agreement, the appellant is entitled to judgment for $22,727.54 plus interest. Given my conclusion as to the terms of the agreement and the lack of warranty by the appellant, the respondents are not entitled to set off their damages for defects in the work or products against the appellant’s claim. Therefore, their counterclaim must be dismissed. As well, there is no need to discuss the remaining issues concerning quantum meruit, the adequacy of the reasons and the order of costs.

Conclusion

33Accordingly, the appeal is allowed and the judgment of the trial judge, including the order of costs, is set aside. The appellant shall have judgment in the amount of $22,727.54 plus pre- and post-judgment interest. The counterclaim is dismissed.

34If the parties cannot agree on the costs of the appeal and the trial, they may make brief written submissions through the Divisional Court office in Toronto within 30 days of the release of this decision.

Swinton J.

Matlow J.

Aston J.

Released: December 19, 2012

CITATION: Zimon v. Turnbull, 2012 ONSC 6650

COURT FILE NO.: DC-10-241

DATE: 20121219

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

matlow, aston and swinton jj.