Court File and Parties

CITATION: Webster v. B.C.R. Construction Incorporated, 2014 ONSC 5657

COURT FILE NO.: DC-12-408

DATE: 20140930

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

BETWEEN:

Alan Webster Plaintiff/Respondent

– and –

B.C.R. Construction Incorporated Defendant/Appellant

BETWEEN:

B.C.R. Construction Incorporated Plaintiff by Counterclaim

AND

Alan Webster, Anne Marie McIntyre and Thomas Mark Ollerenshaw Defendants by Counterclaim

COUNSEL:

Adam Wainstock, for the Respondent

Joseph Villeneuve, for the Appellant Joshua Henderson, for the Appellant

HEARD AT OSHAWA: March 3, 2014

REASONS FOR DECISION

[1] B.C.R. Construction Incorporated (B.C.R.) appeals from the trial judgment of J.E. Ferguson J. dated April 12, 2012[^1] and the costs judgment dated October 11, 2012[^2]. Ferguson J. granted judgment to Webster for damages in the amount of $30,405.76 together with pre-judgment interest; dismissed B.C.R.’s counterclaim; and awarded costs to Webster in the amount of $100,000. For reasons that follow, the appeal is dismissed.

Background

[2] Webster purchased a house with the aim of installing it on Lot 6 located on the Westlake Estate development which was owned and developed by B.C.R. Bruce Rondeau was the officer and director of B.C.R. He lived in Westlake Estates. Webster made an offer to B.C.R. to purchase lot 6. He paid a deposit of $10,000. That deal did not close.

[3] Lot 8 was originally purchased by Robert and Rhonda Dobranic who subsequently sold to Anne McIntyre and Thomas Ollerenshaw. Webster purchased lot 8 from McIntyre and Ollerenshaw. Webster moved the house to lot 8 and undertook the construction necessary to complete the installation.

[4] Webster issued a statement of claim in which he sought, amongst other things, a declaration that the agreement of purchase and sale for lot 6 was a binding contract of sale; specific performance of the agreement; damages for breach of contract; a certificate of pending litigation; and costs. The certificate of pending litigation was registered against title to lot 6 on June 5, 2006.

[5] In April 2008 B.C.R. responded with a statement of defence and a counterclaim against Webster, and against his vendors McIntyre and Ollerenshaw.

Reasons for decision

[6] The defendants by counterclaim McIntyre and Ollerenshaw did not participate in the trial and no order was made that affected them. At the outset of the trial, the plaintiff abandoned the claim for specific performance.

[7] The trial judge dealt with the issues as follows:

Was there a binding agreement of purchase and sale of lot 6?

Answer: Yes.

Were the restrictive covenants in the deed to McIntyre and Ollerenshaw on Lot 8 enforceable by B.C.R. by either contract or real estate law?

Answer: No by contract. Yes by real estate law.

Can Webster rely on the release given by B.C.R. to Webster’s predecessors in title in respect of lot 8 to prevent enforcement of the restrictive covenants?

Answer: No.

If a breach of contract is made out with respect to the agreement of purchase and sale of lot 6, what is Webster’s entitlement to damages?

Answer: Not entitled to loss of bargain damages. Entitled to the cost differential between lots 6 and 8 ($16,900), the cost of the second move of the house ($10,700), and miscellaneous other expenses totaling $2,805.76 for a grand total of $30,405.76.

Should B.C.R. receive injunctive relief to remove the “installed house” from lot 8?

Answer: No. Even though the covenant was breached, B.C.R. was not entitled to injunctive relief due to its acquiescence and delay in enforcing the breach.

If injunctive relief is not appropriate with respect to lot 8, should a modification order for damages be granted to B.C.R.?

Answer: No, as a result of laches and because proper evidence not provided.

Is Webster’s registration of a CPL on lot 6 an abuse of process?

Answer: No.

[8] After receiving written submissions, the Trial Judge awarded costs to Webster in the amount of $100,000.

Issues in this appeal

[9] We note that counsel for the respondent does not necessarily agree with the characterization of the issues raised by the appellants, but we adopt the organization of the issues contained in his factum, namely:

Issue #1 Did the Trial Judge err in respect of her finding on the issues surrounding Lot 6:

(a) Did the trial judge err in law or fact by finding that there was a binding contract for the sale of lot 6?

(b) Did the trial judge err in finding waiver?

(c) Did the trial judge err in finding that the parties were ad idem?

Issue #2 Did the Trial Judge err in law or fact by dismissing the counterclaim vis-à-vis lot 6 and lot 8?

A. Lot 6

(a) Is B.C.R. entitled to damages for Webster’s registration of the CPL?

B. Lot 8

(b) Did the Trial Judge err in law by considering laches where the limitation period was met?

(c) Did the Trial Judge err in law by considering an equitable defence not pleaded?

(d) Did the Trial Judge err in fact and law by misapplying the test for “clean hands”?

(e) Did the Trial Judge err in finding acquiescence?

(f) Did the Trial Judge err in law in finding that the restrictive covenant is not binding in contract?

Issue #3 Did the Trial Judge err in law by awarding damages to the Plaintiff in connection with the Defendant’s breach of contract on lot 6?

(a) Did the Trial Judge award damages in excess of the damages pleaded?

(b) Did the Trial Judge err by not considering mitigation?

Issue #4 Did the Trial Judge err by preferring the testimony of the Plaintiff’s expert?

Issue #5 Did the Trial Judge err in law in awarding costs to the Plaintiff?

Standard of Review

[10] The standard of review on a question of law is correctness and the standard of review on a question of fact is whether the judge made a palpable and overriding error. On issues of mixed law and fact, the standard of review is dependent on where the issue falls on the spectrum between being a factual and legal issue.[^3] Where the question involves how the trial judge applied the law to the facts, that finding of mixed fact and law falls towards the factual end of the spectrum and should be accorded significant deference.[^4]

Analysis

[11] As a preliminary matter, we observe that in the appellant’s factum, the review of pleadings in paragraphs 3 – 6 and the factual overview of the litigation contained in paragraphs 7 to 62 cannot be relied upon. As the detailed review in the respondent’s factum demonstrates, many of those paragraphs contain assertions that consist of argument, not facts; or are in error; or are inconsistent with the evidence. Furthermore, the written and oral submissions lacked the appropriate focus. The consequence of that is that we have not addressed every single issue raised by counsel for the appellant but have addressed those necessary to dispose of the appeal.

Issue #1 Did the Trial Judge err in respect of her finding on the issues surrounding lot 6?

[12] The Trial Judge found that there was an express agreement in a written memorandum between the lawyers for the purchaser and the vendor to extend the closing date and that that memorandum made no reference to the restrictive covenants. It is an inference easily drawn from her reasons that she accepted Webster’s evidence on the issue because his evidence was consistent with that written memorandum while Rondeau’s evidence was not consistent with it.

[13] That was a key factual finding on which the Trial Judge relied to continue her legal analysis.

[14] The Trial Judge found that Webster had missed the initial deadline for payment of the deposit but went on to find that B.C.R. had waived the contractual provision for timeliness of the payment. We agree that the issue of waiver had not been pleaded. However, Rondeau admitted that the deadline for payment had been waived. The Trial Judge could not ignore such an admission, whether pleaded or not.

[15] The appellant submits that the parties were never in agreement as to the price of the transaction in that its counteroffer was for $175,000 plus $20,000 for supervision fee for a total of $195,000. The Trial Judge held that the parties entered into a written agreement for the purpose of property at a certain price and that all of the terms and conditions were included in the written agreement. We agree with counsel for the respondent that the $20,000 supervision fee was contained in a clause that was appended as Schedule A to the agreement which addressed conditions after the land was conveyed. The $20,000 was a “no-build fee” that was payable if the respondent elected not to use the appellant to build the lot. That had no impact on whether the parties were ad idem vis-à-vis the agreement of purchase and sale.

[16] We are not persuaded that the Trial Judge made any palpable and overriding errors in relation to any aspect of issue #1.

Issue #2 Did the Trial Judge err in law or fact by dismissing the counterclaim?

[17] In the counterclaim, B.C.R. sought as against Webster a declaration that the agreement of purchase and sale with respect to lot 6 was not a binding contract of sale. As against all of the defendants by counterclaim, B.C.R. asked for an order that the residence that had been wrongfully situated on lot 8 be removed at the sole expense of the defendants by counterclaim. B.C.R. made further claims as against all defendants by counterclaim for general damages ($150,000); special damages ($1 million); punitive and aggravated damages $500,000); and a certificate of pending litigation in respect of lot 8. The counterclaim against Webster was based on deceit, conspiracy and wrongful interference with contract relating to his attempt to purchase lot 6 and for his subsequent purchase of lot 8. B.C.R. also claimed as against Webster for loss of profits related to his breach of restrictive covenants, failure to pay the $20,000 fee for not building with B.C.R. and for disruption to its business including loss of sales, loss of customers, loss of goodwill, interference with relationships of purchasers within Westlake Estates, and delayed or lost financing. B.C.R. claimed against all defendants by counterclaim for conspiracy to cause economic loss to B.C.R., for loss of value of the Westlake Estate lots, and for unjust enrichment. B.C.R. claimed against McIntyre and Ollerenshaw for breach of contract by selling lot 8 to Webster in breach of their contractual obligations to B.C.R. Finally B.C.R. claimed against McIntyre and Ollerenshaw for their breach of contract and/or negligence in failing to inform Webster in respect of the restrictive covenants running with lot 8 and/or for their failure to ensure the survival of those restrictive covenants as required by contract with B.C.R.

[18] In summary, the counterclaim sought damages against Webster with respect to the agreement of purchase and sale on lot 6 and against all defendants by counterclaim with respect to lot 8.

[19] On June 5, 2006, Webster’s counsel registered a CPL against title to lot 6. The appellant claimed that it was entitled to special damages on account of that “spurious” registration.

[20] The claim for damages on account of the registration of the CPL was considered by the Trial Judge on the basis of whether the registration of the CPL constituted an abuse of process. According to the Trial Judge, on the eve of the first scheduled trial in October, 2010 Webster abandoned his claim for specific performance and, while he refused to withdraw the CPL, he did provide his consent to an order discharging the CPL. She noted that B.C.R. took no steps to take out the consent order and that it remained registered as of the trial in 2011. The legal conclusions she reached at paragraph 100 are correct. In any event, as she pointed out in paragraph 101, B.C.R. led no evidence with respect to damages sustained as a consequence of the registration of the CPL.

[21] The issue of laches was considered by the Trial Judge in the context of B.C.R.’s counterclaim for injunctive relief directing Webster to remove the installed house on lot 8. The Trial Judge correctly considered whether the breaches of the restrictive covenants were minor; whether B.C.R. had acquiesced in the installation; and whether B.C.R.’s delay in asserting that claim meant that injunctive relief was not appropriate. At paragraph 94, the Trial Judge held that B.C.R. had acquiesced in the construction on lot 8 and had delayed in asserting its claim. At paragraph 95 she also held that the considerable expense to Webster to remove the residence along with a lack of evidence from B.C.R. in terms of its actual damages meant it would be inequitable to impose such a large loss on Webster.

[22] It is the case that in the context of the claim for an injunction, the Trial Judge considered the equitable defences that had not been specifically pleaded. However, the burden of proof is on the claimant to establish entitlement to the equitable relief of an injunction. B.C.R. failed to do so.

[23] The issue of “unclean hands” was raised by B.C.R. in the context that Webster was not entitled to damages because he knew he could not take the steps he took with respect to the renovation/rebuild of the house on lot 8 in a way that B.C.R. alleged was very different from the other houses in Westlake. The Trial Judge correctly identified the principle that a party seeking equitable relief must come to court with clean hands. At paragraph 88, she concluded that she was not persuaded by B.C.R.’s argument that Webster had “unclean hands”.

[24] The appellant argues that the Trial Judge erred in law in finding that the restrictive covenant on Lot 8 was not binding in contract. Her analysis is found at paragraphs 62 to 69. She held that Webster had actual notice of the restrictive covenant. But she also found at paragraph 68 that there was no privity of contract because he was not a party to the Dobranic or Ollerenshaw agreements that preceded his agreement of purchase and sale. The finding of lack of privity of contract is unassailable.

[25] Counsel for the appellant has not persuaded us that there is any basis to challenge any of the findings of fact, findings of fact and law or conclusions of law in relation to issue #2.

Issue #3 Did the Trial Judge err in law by awarding damages to the Plaintiff arising from the Defendant’s breach of contract on lot 6?

[26] In paragraph 1 of the Statement of Claim, the plaintiff asked for damages for breach of contract. No amount was specified. In paragraph 10 of the Amended Statement of Claim, the plaintiff asked for special damages in the amount of $13,005.76 and general damages, the particulars of which were not then known. In paragraph 3 of the reasons for decision, the Trial Judge listed the 5 heads of damages. We agree with counsel for the respondent that all material facts had been pleaded in the Statement of Claim and the evidence at trial dealt with those damages. We are not persuaded that the Trial Judge erred in law in awarding those damages even though the specific heads of damages and an amount in excess of $13,005.76 had not been pleaded.

[27] The appellant also takes the position that the respondent had failed to mitigate his damages and the Trial Judge failed to make findings in respect of the evidence of mitigation. We agree with counsel for the respondent that the issue of the $20,000 no build fee is irrelevant to the calculation of damages. Furthermore, the appellant has not provided references to evidence or to authorities to support its contention that the respondent failed to mitigate.

[28] Counsel for the appellant has not persuaded us that the Trial Judge made palpable and overriding errors or errors of law in relation to issue #3.

Issue #4 Did the Trial Judge err by preferring the testimony of the Plaintiff’s expert?

[29] Peter Barton was qualified as an expert in the area of architectural technology. He was called as a witness by Webster in relation to B.C.R.’s claim that Webster was in breach of Covenant 1 because he did not submit the grading plan and Covenant 3 because he did not submit the site and architectural plans. According to paragraph 26 of the Statement of Defence, the home installed on lot 8 “simply does not fit in with the other homes in this subdivision”. The thrust of his evidence was the extent to which the house installed by Webster on lot 8 differed from other houses. He gave technical evidence about the residence on lot 8 and he compared it with other homes in the subdivision. The Trial Judge accepted his expertise as an architectural technologist but rejected his evidence on property valuation (as not being within his expertise) and on breaches of restrictive covenants by other owners in the subdivision and whether plans for other residences had been submitted to B.C.R. (as not being within his knowledge). It was in the context of his technical evidence that the Trial Judge made a finding that she accepted his evidence over that of Rondeau. Her reasons for decision amply justify the ruling. To the extent that her acceptance of his evidence on a key point is a question of mixed fact and law, we are not persuaded that there is a palpable and overriding error.

Issue #5 Did the Trial Judge err in law in awarding costs to the Plaintiff?

[30] The appellant takes the position that the award of costs is disproportionate to the damages awarded in the amount of $30,405.76 as well as the amount of damages claimed, namely $13,005.76. He also points out that the trial judge indicated that it had been a 10 day trial but he asserts that it was only 5.5 days. He submits that since the trial dates were missing from the decision, the Trial Judge erred in remembering how long the trial lasted and that it is therefore reasonable to doubt the calculation of costs. The appellant also argued that the Trial Judge failed to consider the novelty of the counterclaim and she put undue emphasis on the appellant’s refusal to consent to an adjournment of the trial without a right to seek costs.

[31] In the written submissions, Webster asked for costs in the amount of $132,980 and B.C.R. sought costs totaling $65,790.

[32] The Trial Judge began her costs endorsement by reference to “a ten day trial with voluminous written submissions and an attendance for oral submissions (which turned out to be short because of the comprehensiveness of the written submissions)”. In the concluding paragraphs she again referred to the trial having been scheduled for 10 days and taking 10 days with an extra attendance for submissions.

[33] Her reasons for decision arising from the trial do not include the dates of the trial. However, the bill of costs of the plaintiff listed the same 8 dates in May and June as are contained in the signed and entered judgment. The bill of costs indicates 4 of those days at $3,000 per day and 3 at $1,500 per day and 1 at $1,400 per day, suggesting 4 full days and 4 partial days. It may be that the Trial Judge was in error as to the number of days but based on the bill of costs which correctly identifies the attendances, that error did not impact the outcome.

[34] The reasons for decision address all of the appropriate factors including Webster’s unique offer to settle. The Trial Judge considered the issue of recovery below the limits for an action under the simplified rules and observed that it was the issues arising from the counterclaim which exceeded the simplified rules jurisdiction, that took up the bulk of the trial and the time she had expended in preparing her decision. She accepted the submission by counsel on behalf of the plaintiff that the consequences of success on the counterclaim would be so severe to Webster that it justified considerable expenditure of time by his counsel on the “various complex issues” which arose from the counterclaim. She held that the issues in the counterclaim were important to Webster. She was critical of the conduct of B.C.R.’s counsel by refusing a request to adjourn the trial by counsel for the plaintiff because of health reasons and observed that that may have been one reason behind the “mood” which existed throughout the entirety of the trial. The Trial Judge addressed the question of reasonable expectations of the parties and pointed out that B.C.R. had asked for almost $67,000 without reference to any offer to settle. The Trial Judge specifically considered proportionality and concluded that it was not a routine case but was very complex. She observed that the written submissions alone must have taken dozens of hours of counsels’ time as the research was considerable. Taking all those factors into account, she fixed costs at $100,000.

[35] Costs must be awarded in a principled fashion. The Trial Judge identified the correct legal principles and she applied those principles in the context with which she was familiar after an extensive trial followed by significant written submissions. As only a Trial Judge could, she brought to bear the “mood” which affected the proceeding and she identified that the complexity of the trial was related to the counterclaim, on which the defendant was wholly unsuccessful.

[36] A court should set aside a costs award only if the trial judge has made an error in principle or if the costs award is plainly wrong.[^5] We recognize that the amount of costs ordered is over 3 times the amount of damages recovered on the claim. However, in the circumstances of this case, the appellant has not established any error in principle or other error in the award of costs of the proceeding including claim and counterclaim.

Costs of the Appeal

[37] At the conclusion of submissions, counsel for the appellant advised that his bill of costs totaled $25,000 and counsel for the respondent advised that his bill of costs totaled $20,000, the difference largely attributed to the disbursement for transcripts. We accept those submissions and do not require further written submissions as to costs.

ORDER TO GO AS FOLLOWS:

[38] The appeal is dismissed. The appellant shall pay to the respondent costs in the amount of $20,000.

Czutrin S.J.F.

Kiteley J.

Whitaker J.

Released: September 30, 2014

CITATION: Webster v. B.C.R. Construction Incorporated, 2014 ONSC 5657

COURT FILE NO.: DC-12-408

DATE: 20140930

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Alan Webster Plaintiff/Respondent

– and –

B.C.R. Construction Incorporated Defendant/Appellant

BETWEEN:

B.C.R. Construction Incorporated Plaintiff by Counterclaim

AND

Alan Webster, Anne Marie McIntyre and Thomas Mark Ollerenshaw Defendants by Counterclaim

REASONS FOR JUDGMENT

Czutrin S.F.J. S.C. Kiteley J. Whitaker J.

Released: September 30, 2014

[^1]: 2012 ONSC 2217 [^2]: 2012 ONSC 5775 [^3]: Housen v. Nikolaisen 2002 SCC 33, [2002] 2 S.C.R. 235 [^4]: Combined Air Mechanical Services In. v. Flesch 2011 ONCA 764, 2011 CarswellOnt 13515 (OCA) [^5]: Hamilton v. Open Window Bakery Ltd., 2004 SCC 9, [2003] S.C.J. No. 72