Citation and Court Information
DIVISIONAL COURT FILE NO.: 213/15
ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT
SACHS, STEWART AND PATTILLO JJ.
BETWEEN:
TRS COMPONENTS LTD. Appellant
– and –
DEVLAN CONSTRUCTION LTD., THE TRUSTEES OF KNOX PRESBYTERIAN CHURCH, WATERLOO, PACE SAVINGS & CREDIT UNION LIMITED and EDUCATION CREDIT UNION LIMITED Respondents
COUNSEL:
Wade W. Sarasin, for the Appellant
Robert J. Kennaley, for the Respondents
HEARD at Toronto: January 18, 2016
Oral Reasons for Judgment
STEWART J. (ORALLY)
Overview
1This is a statutory appeal under the Construction Lien Act, R.S.O. 1990, c. 30 (the "Act") from the decisions of Flynn J. dated July 30, 2014 (the "trial decision") and December 18, 2014 (the "costs decision") whereby he ordered the appellant to pay the respondent Devlan Construction Ltd. $69,432 for damages arising out of a construction contract and $82,600 for costs, which represented the midway point between the appellant's partial and substantial indemnity costs.
2There were four issues raised on this appeal, issues that the parties characterized as the "Soffit Issue", the "Dropped Ceiling Issue", the "Roof Drainage Issue" and the "Costs Issue." We will deal with each of these issues in turn.
The Soffit Issue
3The appellant appeals from the decision of the trial judge that the soffit work fell within its scope of work and the cost of completion should therefore be recovered by the respondent.
4In support of this position, the appellant argues that the respondent failed to prove on a balance of probabilities that the soffit work fell within the appellant's scope of work. It argues that the trial judge found the evidence on this issue to be unclear, which should have led him to the conclusion that the respondent's claim for costs of performing the soffit work must fail.
5The appellant also argues that the trial judge incorrectly found that it bore the onus to call an expert on job specifications or customs of the trade to provide evidence to assist the Court in determining this issue.
6It is conceded by the appellant that the standard of review from the trial judge's conclusion in this regard, being a matter of mixed fact and law, is one that requires it to show that the trial judge made a palpable and overriding error.
7In our view, the appellant has failed to demonstrate that the trial judge made any palpable and overriding error in his conclusion that the soffit work was part of the appellant's contracted obligation. There was evidence adduced at trial upon which it was open to him to arrive at that conclusion, including that of the respondent's project manager, Anderson, and its estimator, Durizon, who testified that soffits were always done by framers and considered to be part of the "roof system." The trial judge relied on the broad wording of the Purchase Order as requiring the appellant to perform and provide the "full package including roof system, floor system, loose lumber, all wood and related items … .", which he concluded included the soffit work.
8The appellant submits that the trial judge failed to interpret the Purchase Order in light of the principle of contra proferentem, because it was the respondent's document. Conversely, the respondent argued that the relevant language in the Purchase Order should be interpreted in accordance with the same principle, but in favour of the respondent, as the language in it was supplied by the appellant. Given the fact that both parties had a hand in the wording of the contract, we do not think that contra proferentem applies.
9When the trial judge's statement that the onus to call an expert fell on the appellant is read in context, it can be readily seen that he is referring to the strength of the respondent's interpretation of the broad terms of the Purchase Order, in light of the nature of the project and the drawings and specifications which, in his view, would have required expert evidence to rebut.
10In the absence of such evidence, the trial judge considered that he was "left with the unqualified wording of the P. O. where TRS was to supply and install "all wood." The soffits are wood and, in my view, part of the roof system."
11As no palpable and overriding error has been shown, we would not give effect to this ground of appeal.
The Dropped Ceiling Issue
12On this issue the trial judge found as follows (at para. 39 of his trial decision):
That leaves the biggest of the discrepancies between the parties for determination. I realize that this conclusion ignores any consideration of drop ceiling work. But neither the evidence on that issue, nor the argument was helpful enough for me to make any clear assessment. As far as I am concerned, the only significant differences between the two sides deal with the soffits and the roof problems.
13In the result, the trial judge found in favour of the respondent on this issue. According to the appellant, if the trial judge was unable to make "any clear assessment" of the issue, then he should have found for the appellant, since the onus was on the respondent to prove its counterclaim.
14In making this submission the appellant agreed with the respondent both that there was clear evidence upon which the trial judge could have found that installing the dropped ceilings was the responsibility of the appellant (this is what the drawings specified) and that, when counsel made their oral submissions to the trial judge after having provided him with written submissions, the trial judge made it clear to appellant's counsel that he had made up his mind on the dropped ceiling issue and that he was persuaded by the evidence that it was the responsibility of the appellant.
15In the face of these submissions, it is clear that the trial judge's reasons on this issue were perhaps badly phrased. However, taken as a whole and in the context of what everyone agrees the trial judge actually said during oral submissions, it is clear that what the trial judge was conveying in his reasons is that, unlike either the Soffit Issue and the Roof Drainage Issue, there could be no significant dispute about the Dropped Ceiling Issue. That is why he stated that the "only significant differences between the two sides deal with the soffits and the roof problem." That is also why he made no deduction for dropped ceilings in his calculation of damages at para. 62.
Roof Drainage Issue
16The roof drainage issue involves correcting the slope of the roof to ensure that water drains properly and does not pond or collect on the roof.
17The appellant submits that the trial judge's factual findings on the issue of the roof repairs do not support his conclusion that the appellant should share the cost of the roof repairs by 50%. Rather, it submits based on the trial judge's findings the respondent has failed to prove that it was responsible for the roof repairs.
18The respondent, on the other hand, submits there was evidence to support the judge's conclusion. Specifically, it points to the evidence of the architect in reply who testified, based on the drawings for the project, that the slope of the roof was the responsibility of the appellant as framer.
19The trial judge's findings concerning the roof repair issue are at paras. 40 to 61. After referring to the evidence, he found:
(a) The low spot on the roof was not where the drains were (para. 53);
(b) Roofing insulation was not part of the appellant's work (para. 55);
(c) There was no evidence that the framers framed the roof incorrectly (para. 58); and
(d) The framers (the appellant) are most likely not responsible for the sloped insulation (para. 59).
20There was evidence to support these findings.
21Having concluded that the appellant was not responsible for the placement of the drains or the slope of the insulation and that there was no evidence that the roof was framed incorrectly, the trial judge nevertheless concluded that the appellant should be 50% responsible for the costs of repairing the roof.
22In our view, the trial judge's factual findings do not support the conclusion that the appellant was responsible for the drainage issue on the roof, in whole or in part. The onus was on the respondent to establish that the appellant was responsible for the roof drainage issue. Based on the trial judge's factual findings, it did not do so. Accordingly, the conclusion that the appellant should pay 50% of the costs of the roof drainage repair ($24,535.00) cannot stand.
Conclusion re Damages
23For these reasons, we would allow the appeal and vary paragraph 1 of the Judgment dated July 30, 2014 by reducing the amount of $69,432.00 by $24,535.00, resulting in a damage award to the respondent of $44,997.00 plus applicable interest.
Costs of the Trial
24With respect to costs, the respondent was still successful at trial. Therefore, it is entitled to its costs of the trial.
25The trial judge awarded costs to the respondent in the amount of $82,600 which was based on the respondent's partial indemnity costs of $75,235.98 and a "premium" based on costs thrown away in relation to an adjournment of the trial requested by the appellant's counsel after two days of trial. The reason for the adjournment was to obtain settlement instructions but there was no settlement. The adjournment ended up being seven months and the trial, when resumed, took another four days to complete.
26The appellant submits that the costs awarded are out of proportion to the amount recovered. It further submits that there was no basis in fact to award a cost premium for failure to settle.
27The parties agree that a cost award should only be set aside if the trial judge made an error in principle or the costs award is plainly wrong.
28In our view, while we consider the trial judge was correct in awarding costs to the respondent, he erred in principle in awarding a premium over partial indemnity costs. The respondent's counsel confirmed that any of the respondent's costs thrown away arising from the adjournment were included in its partial indemnity costs. To award a "premium" on account of those costs is essentially a duplication of costs. Nor can the premium be justified on the basis of a failure to settle. There were no offers to settle by either party during the period.
29Accordingly, we reduce the cost award at trial to the respondent's partial indemnity costs which are $75,235.98.
30While we recognize that amount is high, particularly in relation to the amount in issue and the amount recovered, it reflects the additional costs incurred arising from the adjournment which the appellant's counsel concedes was at its request. In the circumstances, therefore, we cannot say that they are not proportional.
Disposition and Costs of the Appeal
SACHS J. (ORALLY)
31I have endorsed the Appeal Book, "For reasons delivered orally by Stewart J., this appeal is allowed and the damages portion of the judgment dated July 30, 2014 (para. 1) is varied to substitute the figure of $44,997.00 for $69,432.00. The costs of the trial are reduced to $75,235.98, payable by the appellant to the respondent. With respect to the costs of the appeal, since success was divided, there will be no order as to costs."
STEWART J.
SACHS J.
PATTILLO J.
Date of Reasons for Judgment: January 18, 2016
Date of Release: January 25, 2016
CITATION: TRS Components Ltd. v. Devlan Construction Ltd., 2016 ONSC 466
DIVISIONAL COURT FILE NO.: 213/15
DATE: 20160118
ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT
SACHS, STEWART AND PATTILLO JJ.
BETWEEN:
TRS COMPONENTS LTD. Appellant
– and –
DEVLAN CONSTRUCTION LTD., THE TRUSTEES OF KNOX PRESBYTERIAN CHURCH, WATERLOO, PACE SAVINGS & CREDIT UNION LIMITED and EDUCATION CREDIT UNION LIMITED Respondents
ORAL REASONS FOR JUDGMENT
STEWART J.
Date of Reasons for Judgment: January 18, 2016
Date of Release: January 25, 2016