CITATION: Lakehead Aluminum v. Mauno Parkkari, 2014 ONSC 4167 DIVISIONAL COURT FILE NO.: DC-13-008 DATE: 2014-07-16

SUPERIOR COURT OF JUSTICE – ONTARIO

DIVISIONAL COURT

RE: Mauno Parkkari, Defendant (Appellant) AND: Lakehead Aluminum Ltd., Plaintiff (Respondent)

BEFORE: Harvison Young J.

COUNSEL: K. Evans, for the Defendant (Appellant) B. Hardick, for the Plaintiff (Respondent)

HEARD: June 25, 2014, Thunder Bay

ENDORSEMENT

[1] The appellant defendant, Mauno Parkkari, appeals from a decision of Deputy Judge David Nattress of the Small Claims Court arising from a claim for payment for renovations carried out on the appellant’s home. The judgment awarded the respondent plaintiff Lakehead Aluminum Ltd. (“Lakehead”) the sum of $18,161.00 along with prejudgment interest and costs. Lakehead’s claim arose out of renovations carried out on the appellant’s home.

[2] The appeal concerns the terms of the contractual relationship between the parties and, specifically, the scope of the contracted work. The scope of the work is set out in the Residential Rehabilitation Assistance Program (“RRAP”) – Work Description Report (the “RRAP Report”) that founded the contract and identified the renovations that needed to be done to the defendant’s home. Lakehead, in claiming that it had substantially completed the work contracted for, asserted that the scope of the contract covered only Mr. Parkkari’s actual residence and not an attached structure that had been previously used as a restaurant. The appellant defendant claimed that the scope of the contract covered both structures and that Lakehead had thus not substantially completed the work. The trial judge concluded that the scope of the contract covered only the actual residential building and not the former restaurant. It is that conclusion that forms the core of this appeal.

[3] For the reasons that follow, I conclude that the appeal must be dismissed.

The Factual Background

[4] Lakehead is a registered Ontario corporation that was formerly owned and controlled by Mr. Ari Pietila. It has since incorporated under the name Arimax Transportation Ltd., and is controlled and directed by Mr. Pietila. A second company named Lakehead Aluminum Inc. was incorporated by Mr. Pietila’s children shortly thereafter and is controlled and directed by Alex William Pietila, Janna Kristiina Pietila and John Christian Pietila.

[5] The appellant Mr. Parkkari is the registered owner of RR #2, Fire #7649, Kaministiquia, Ontario, where the property in issue is located. Both parties were unrepresented at trial, although both had been represented by counsel for a period of time beforehand.

[6] Mr. Parkkari applied to RRAP, which provides financial assistance to low-income homeowners who are in need of home repairs. He apparently qualified for financial assistance from RRAP in the amount of $16,000.00 based on an assessment by a RRAP official. The RRAP official prepared the RRAP Report that was earlier referred to.

[7] Based on the RRAP Report, the parties entered into a contract under which Lakehead would provide the repairs. It is common ground that both parties expected that Mr. Parkkari would in fact receive the $16,000 from RRAP. The parties had also agreed that Mr. Parkkari would pay Lakehead directly for any work done over the $16,000 amount.

[8] The work was carried out over several months. When Lakehead was approximately 90% finished the renovations, Mr. Parkkari was advised in correspondence from RRAP that the funding would not, in fact, be forthcoming, apparently because the renovations commenced before final approval was granted by the Canada Mortgage and Housing Corporation.

[9] After the renovations were completed, Mr. Parkkari had numerous and significant complaints regarding the quality of the work. In addition, he complained that certain portions of the work for which Lakehead was charging had not, in fact, been completed. Most of these complaints were directed at the work carried out by the plaintiff on the former restaurant portion of the structure.

[10] Lakehead, in suing for payment pursuant to the contract, took the position that its estimates, and the scope of work pursuant to the RRAP Report and the contract between the parties, were based upon work to be carried out on the residence portion of the dwelling and did not include work on the former restaurant. The trial judge did permit some set offs from the contract amounts claimed by the respondent at trial, but found for Lakehead on the central issue of the scope of work under the contract and the meaning of “dwelling” in that contract.

The Issues

[11] In submitting that the trial judgment should be set aside and that Lakehead’s claim should be dismissed in its entirety, the appellant Mr. Parkkari raises two issues. First, he submits that the trial judge erred in law in admitting a particular document into evidence that the defendant testified he had not seen prior to trial. This document, as I will discuss further below, was a copy of the RRAP Report with Mr. Pietila’s handwritten annotations on it. It should be noted at the outset that there is no dispute about the admissibility of the RRAP Report itself, which both parties relied on at trial.

[12] Second, Mr. Parkkari submits that the trial judge committed a palpable and overriding error in interpreting the RRAP Report to cover only the residence portion of the appellant’s property, and not the attached portion that had previously been used as a restaurant.

[13] I will discuss these issues in turn.

Did the trial judge err in admitting the annotated RRAP report?

[14] In the course of his evidence, Mr. Pietila, the principal of Lakehead, sought to introduce into evidence a copy of the annotated RRAP Report. For ease of reference, this is attached to these reasons as “Appendix A”. The annotations consist of dollar amounts in Mr. Pietila’s handwriting beside the scope of work described in each paragraph. The trial judge asked Mr. Parkkari if he had a copy of it, and Mr. Parkkari indicated that while he had a copy of the RRAP Report, and the contract with the total amount, he had not previously seen a copy of the RRAP Report with the handwritten annotations. This was disputed by Mr. Pietila, who testified that he had given it to Mr. Parkkari and his mother at their kitchen table.

[15] The trial judge did not expressly indicate whether he accepted Mr. Parkkari’s evidence on this point, but he did admit the annotated RRAP Report, stating the following:

Whether or not the Defendant got a copy is moot as the parties entered into a contract…to do the work for $22,575.00 with the cost of electrical work to be added (Reasons for Judgment, page 2).

[16] The appellant submits that the trial judge erred in admitting this document in light of rule 18.02(1) of the Rules of the Small Claims Court, O.Reg 258/98, which states as follows:

A document or written statement or an audio or visual record that has been served, at least 30 days before the trial date, on all parties who were served with the notice of trial, shall be received in evidence, unless the trial judge orders otherwise. O. Reg. 78/06, s. 36 (1).

[17] In addition, the appellant submits that the trial judge erred in failing to apply the rule “universally” throughout this case because he declined to admit photographs that Mr. Pietila had taken of Mr. Parkkari’s home on the basis that they had not been shown to the appellant. The trial judge also refused to allow Mr. Parkkari to introduce inspection reports prepared by a Larry Hoggard, who was not available to testify at trial.

[18] The parties agree that, as this issue is a question of law, the standard of review to be applied is correctness: Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235.

[19] Mr. Parkkari’s submission that the trial judge erred in admitting the handwritten report rests on the premise that rule 18.02(1) requires the exclusion of any document, written statement and audio or visual record that has not been served at least 30 days in advance of the trial. I do not agree for a number of reasons.

[20] The strict construction propounded by the appellant is not supported by the wording of s. 27 of the Courts of Justice Act, R.S.O. 1990, c. C.43, which sets out the jurisdiction of the Small Claims Court to hear evidence as follows:

27.(1) Subject to subsections (3) and (4), the Small Claims Court may admit as evidence at a hearing and act upon any oral testimony and any document or other thing so long as the evidence is relevant to the subject-matter of the proceeding, but the court may exclude anything unduly repetitious.

(2) Subsection (1) applies whether or not the evidence is given or proven under oath or affirmation or admissible as evidence in any other court.

(3) Nothing is admissible in evidence at a hearing,

(a) that would be inadmissible by reason of any privilege under the law of evidence; or

(b) that is inadmissible by any Act.

(4) Nothing in subsection (1) overrides the provisions of any Act expressly limiting the extent to or purposes for which any oral testimony, documents or things may be admitted or used in evidence in any proceeding.

(5) A copy of a document or any other thing may be admitted as evidence at a hearing if the presiding judge is satisfied as to its authenticity.

[21] Thus, provided that the evidence is not subject to privilege or rendered inadmissible by any Act, the Small Claims Court has the discretion to admit any oral or documentary evidence, whether or not sworn, affirmed or admissible in any other court, and a copy of a document may be admitted provided the court is satisfied as to its authenticity. While rule 18.02 expressly mandates the admission of documents that fall within its terms, it does not require the exclusion of documents that do not fall within its terms as set out in Ontario Small Claims Court Practice 2014:

Rule 18.02 is often misinterpreted. The rule provides a procedure for the admission of documents which have been served on the other parties at least 30 days before trial, without the need for in-person witness. It does not say that no document can be admitted at trial unless it was disclosed at least 30 days before trial: see O’Connell v. Custom Kitchen & Vanity, 1986 2650 (ON SC), 1986 CarswellOnt 414, 56 O.R. (2d) 57, 11 C.P.C. (2d) 295, 17 O.A.C. 157 (Ont. Div. Ct.). Rule 18.02 is an enabling provision and not a prohibition. It enables the admission of documents which might otherwise be excluded as hearsay. Documents not admitted under rule 18.02 may be admitted through other means such as through an in-person witness (M.A. Zuker and J.S. Winny, Ontario Small Claims Court Practice, 2014 (Toronto: Thomson Reuters, 2013) at p. 206).

[22] Here, the document was admitted through an in-person witness, Mr. Pietila. He was cross-examined by Mr. Parkkari, though apart from asserting to the judge that he had not seen the annotated version, he did not cross-examine the witness on that issue. The central purpose of the 30-day rule is to allow the opposing party the opportunity to challenge the authenticity of the document as it can be introduced into evidence as a standalone document without the evidence of a witness. In admitting the annotated report, the trial judge did have the chance to consider the competing evidence as to whether Mr. Parkkari had actually seen it, although he did not specifically indicate whose evidence he accepted on that point.

[23] The author of the handwritten quotes was Mr. Pietila, who gave evidence at trial and was available for and was in fact cross-examined. Moreover, as I will discuss further below, there was other evidence in addition to the contract itself that supported the trial judge’s conclusion that the scope of the contract covered the actual residence and not the former restaurant portion of the structure.

[24] A final consideration is the fact that the appellant did not object to the admission of the document at trial. The reason for the rule requiring such an objection is articulated in the following quotation from D.M. Paciocco & L. Stuesser, The Law of Evidence 5th ed. (Toronto: Irwin Law Inc., 2008) at pp. 23-24:

The second basis for holding a failure to object to be fatal to an appeal rests on “immateriality” reasoning. If the error is minor and a party does not object, or if the party rests content to challenge the credibility or reliability of the evidence “it...can be assumed that he did not think [the error] was important.” Where the error is a material one that raises issues of fairness or presents a risk of a miscarriage of justice, the failure to object is not apt to be problematic.

[25] I do not accept the submission by appellant’s counsel that this consideration should not be applied because the defendant was unrepresented and thus not able to cross-examine effectively. First, taken to its conclusion, this submission would undermine the efficacy of trial procedure and have serious effects on the finality and certainty of the process. Second, in this case, although the appellant was not sophisticated and did require some assistance from the trial judge in framing questions, he did focus on areas that he identified as important to him, such as alleged inadequacies in the work performed by the respondent.

[26] In summary, I do not accept the submission that the trial judge erred in law in admitting the annotations into evidence.

Did the trial judge err in interpreting the contract to include only the residence portion of the appellant’s building?

[27] The parties agree that this ground of appeal, as a question of mixed fact and law, cannot succeed unless the appellant establishes that the trial judge committed a palpable and overriding error: Housen v. Nikolaisen.

[28] The appellant’s position is that the trial judge committed a palpable and overriding error in concluding that the contract’s scope was restricted to the actual residence and did not include the restaurant portion. His argument is that the evidence did not support this conclusion, particularly given his submission that the annotations on the report giving the breakdown of the prices in relation to the work to be performed should not have been admitted. The appellant emphasizes that the RRAP Report refers to the “entire dwelling”, and that this clearly referred to the entire structure.

[29] The trial judge clearly considered this argument. In his reasons he notes that the RRAP program offers assistance only in respect of one’s residence. He expressly found that the former restaurant did not form part of the residence. In so finding, he specifically referred to evidence adduced by a defendant witness that removing all of the siding, insulating where necessary and installing new siding for the entire structure would cost approximately $30,000, while the annotations beside the parallel description of work on the RRAP Report estimated a cost of $11,200.00

[30] In my view, given my conclusion with respect the admissibility of the RRAP Report with the handwritten annotations, there was ample evidence on the record to ground the trial judge’s conclusion that the former restaurant was not to be included in the scope of the contract.

[31] However, I note that there was, in any event, evidentiary foundation on the record before the trial judge apart from this which was sufficient to ground the trial judge’s conclusion on this point. The actual contract price itself was significantly less (at $22,575.00) than the approximately $30,000 quoted by the defendant witness for the siding portion of the work. This supports Lakehead’s position that the significantly lower contract price did not contemplate the former restaurant, even when considered without reference to the annotations on the RRAP Report.

[32] In interpreting the scope of work, the trial judge also considered the RRAP Report. Although it did refer to the “entire dwelling”, the trial judge took into account the fact that RRAP assistance was only available for one’s residence in support of the inference that the parties were contemplating only the residence portion in negotiating the contract. The combination of these factors, in my view, in the circumstances of this case, supports the trial judge’s interpretation of the contract as covering only the residence portion of the house and not the former restaurant. The appellant has not established that the trial judge committed any palpable and overriding error that would justify the intervention of this court.

Disposition and Costs

[33] Accordingly, the appeal is dismissed.

[34] At the end of the hearing, I sought the submissions of the parties as to an appropriate quantum of costs to be awarded to the successful party. The appellant advised that if successful, he would seek $4,500 in costs on a partial indemnity basis. The respondent indicated that if successful he would seek $5,255. Costs are ordered payable by the appellant to the respondent in the amount of $4,500 inclusive of HST, costs and disbursements.

Harvison Young J.

Date: July 16, 2014