CITATION: BWK Construction v. Bradhill Masonry, 2015 ONSC 2963

Divisional Court File No. 585

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

B E T W E E N

B.W.K. CONSTRUCTION COMPANY LTD.

Appellant

• and –

BRADHILL MASONRY INC.

Respondent

PRESIDING JUSTICES

THE HONOURABLE JUSTICE CORBETT

THE HONOURABLE JUSTICE HARVISON YOUNG

THE HONOURABLE JUSTICE O'MARRA

AT THE DURHAM REGION COURTHOUSE,

150 BOND ST. E., OSHAWA, ONTARIO,

ON MARCH 3, 2015

REASONS FOR JUDGMENT

APPEARANCES:

B. Moldaver Counsel for the Appellant

S. Zakaryan Counsel for the Respondent

MARCH 3, 2015

Neutral Case Citation Number

REASONS FOR JUDGMENT

HARVISON YOUNG, J. (Orally)

The Appellant, B.W.K. Construction Company Limited, appeals from the judgment of Howden, J. dated July 11, 2013, which allowed part of the Respondent plaintiff Bradhill Masonry Inc.’s construction lien claim for payment from B.W.K.

B.W.K. is a general contractor under a direct contract with Simcoe County School Board, the owner, for renovations to Bradford District High School in the summer and fall of 2010.

B.W.K. contracted brick work portions of the contract to Bradhill. B.W.K. and Bradhill had a written contract for this work entered into in July, 2010. The contract price was $184,900.

Bradhill registered a claim for a lien against B.W.K. on January 31^st, 2011, and perfected its lien by issuing a statement of claim on February 15, 2011, for $42,159.67 inclusive of tax.

B.W.K. bonded the lien off title and vacated the registration of the lien but Bradhill continued its action against the owner until January 7, 2013.

Because B.W.K. felt that Bradhill did not complete the work, B.W.K. withheld final payment from Bradhill until they could determine what was owed to Bradhill under the contract. This included the PST credit/correction/completion costs and certain extras.

The owner also withheld payments to B.W.K. until the costs of defending the Bradhill action were crystallized.

In his reasons, the trial Judge found that;

a) the lien registered by the respondent was valid; see reasons for decision paragraphs nine following and particularly 13 to 15;

b) the contract signed by the parties was subject to the Construction Lien Act and to the extent that the contract contradicted the Act, the Act prevailed; see reasons paragraphs 13 to 15;

c) a sub-trade that has done work for which it has not been paid has a potential lien for the price of the services and materials provided regardless of whether money was due and payable at the time of the lien; see reasons paragraph 22;

d) the Respondent was entitled to the full amount of the extra reflected in purchase order 4303 for $500; see reasons paragraph 23 and following;

e) the Respondent was entitled to the full amount of the extra for clean up of $500; see reasons paragraphs 29 and following which is not appealed;

f) the Respondent was entitled to the full amount of the extra reflected in purchase order 4278 for the amount of $5,118.95; see reasons paragraph 34 and 41;

g) the Respondent was entitled to the full amount of the extra reflected in purchase order 4341 and purchase order 4415 $3,580; see reasons paragraphs 43 to 44, which was not appealed;

h) the Respondent was entitled to the full amount of the extra for the front entrance pier $1,250;

i) the Appellant was not entitled to a PST credit; see reasons paragraphs 57 to 61;

j) the Appellant was entitled to the sum of $9,858.50 for the cost of completing the respondent’s work; see reasons paragraphs 62 and following;

k ) the total amount owed by the Appellant to the Respondent was $27,450.95 plus HST;

l) the Defendant School Board’s costs were fixed at $3,250 payable by the Respondent to the Appellant; see the endorsement on costs at paragraph 37;

m) the Respondent was entitled to its costs of the action in the amount of $28,550.70 plus HST; see the endorsement on costs at paragraph 37.

In this appeal, the Appellant takes issue with the findings in paragraphs a, b, c, d, f, h, i, j, k, and l as set out above. The central issues in the appeal are whether the trial Judge erred in denying the Appellant credit for PST; whether the trial Judge erred with respect to the extras; whether the trial Judge erred with respect to the back charges; whether the trial Judge erred in treating the School Board’s costs of $7,500 paid by the appellant as a cost issue rather than a charge back under the contract.

Standard of Review

The Supreme Court of Canada addressed the standard of review available on an appeal from a judge’s decision in Housen vs. Nikolaisen, 2002 SCC 33, 2002, S.C.C. 33.

In summary, on a pure question of law the basic rule with respect to the review of a trial Judge’s findings is that an appellate court is free to replace the opinion of the Judge with its own. Thus the standard of review on a question of law is that of correctness. See paragraph eight.

The standard of review for findings of fact is such that findings are not to be reversed unless it can be established that the trial Judge made a “palpable and overriding error.” See paragraph ten of Housen.

Questions of mixed fact and law are subject to the palpable and overriding error standard unless it is clear that the trial Judge made some error of law or principle that can be identified independent of the Judge’s application of the law to the facts of the case.

In these circumstances, the error of law is extricable from the questions of mixed fact and law in issue and must be separated out and reviewed on a standard of correctness. Paragraphs 36 to 37 of Howson vs. Nicholson.

Analysis

The Applicant’s main submission is that the trial Judge rewrote the contract rather than applying or appropriately interpreting it. This submission underpins many of the issues raised on appeal. We disagree.

Rather the trial Judge was called upon to apply the terms of the contract and to address the claims made by the parties. In our view, he did so, and we are not persuaded that he re-wrote the contract in any respect.

The grounds of appeal raised by the Appellant (with a couple of exceptions which will be addressed below) are based not on errors of law but mixed fact and law or findings of fact. As such, they are reviewable only on a standard of palpable and overriding error.

Mr. Moldaver, in his able and forceful submissions, argued that the trial Judge erred in his treatment of the PST issue. In its contract proposal, Bradhill quoted a price of $184,900 exclusive of PST.

The contract stipulates a price of $184,900 inclusive of all taxes other than value added taxes. The contract was concluded right around the time that Ontario transitioned from the old Provincial Sales Tax to the current Harmonized Sales Tax. The trial Judge concluded that Bradhill had understood that the price excluded PST even though in law, PST is not a “value added tax.”

Mr. Moldaver argued that the trial Judge erred in using parole evidence, the contract proposal, to change the plain meaning of the contract.

In our view, that is not what the trial Judge did. Rather, he determined that Bradhill understood the contract price to not include PST and that in the circumstances, equity estopps B.W.K. from recovering the PST. While the trial Judge did not recite the caselaw respecting equitable estoppel, we are satisfied that on the facts as found by the trial Judge, it could apply in these circumstances.

We see no error in principle and there is no palpable and overriding error of fact. This ground of appeal must fail.

Mr. Moldaver also argued that B.W.K. was entitled to a charge back for the Board’s legal costs in this proceeding both because of the “pay when paid” provision of the subcontract and the indemnity for legal proceedings in the subcontract. We do not agree.

The “pay when paid” clause provides that B.W.K.’s monthly payment obligation to Bradhill did not have to be paid until it received its monthly payment from the School Board. A charge back for a particular item does not mean that B.W.K. has not been “paid” for a particular month within the meaning of the “pay when paid” provision of the contract.

The Board’s hold back for legal costs is not part of the statutory lien hold back. It is nothing more nor less than an amount held back by the school board under a provision of its contract with B.W.K.

The provision for indemnity for legal fees in the subcontract, by its wording, does not apply to legal proceedings commenced by Bradhill under the subcontract. It applies to costs of claims asserted by persons other than Bradhill in connection with the Bradhill subcontract. That is, Bradhill’s subcontractors and suppliers.

We conclude that the trial Judge was correct in law in treating the Board’s legal costs paid by B.W.K. as a matter of costs, not as a charge back against the contract price. The quantum of costs is highly discretionary and we see no basis to interfere with it. This ground of appeal must also fail.

The other grounds of appeal are all questions of fact or at most, mixed fact and law. We see no palpable and overriding errors in the trial Judge’s findings. These grounds of appeal must also fail.

This lien action was for a total in dispute of less than $50,000. The trial judgment was about $27,000. We echo the trial Judge’s concern about the disproportionate legal costs here relative to the amounts in issue. The appeal is dismissed. Thank you.

FORM 2

Certificate of Transcript

Evidence Act, subsection 5(2)

I, Deborah Tinmouth, certify that this document is a true and accurate transcript of the recordings of B.W.K. vs. Bradhill in the Superior Court of Justice held at 150 Bond St. E., Oshawa, Ontario, taken from Recording number 2812-201-20150302-, which has been certified in Form 1.

April 7, 2015 _______________________________

Deborah Tinmouth, C.C.R.