CITATION: Selladurai v. Aiello, 2018 ONSC 2253

NEWMARKET COURT FILE NO.: CV-17-131218-00

DATE: 20180409

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

BETWEEN:

INDRASENAN SELLADURAI

Defendant/Appellant

– and –

JOSEPH AIELLO

Plaintiff/Respondent

N. Sivakumaran, agent for the Defendant/Appellant

Self-represented

HEARD: January 31, 2018

REASONS FOR DECISION

On appeal from the decision of Deputy Judge B. Evans

Dated April 25, 2017

QUINLAN J.:

Introduction

[1] The defendant/appellant homeowner, Indrasenan Selladurai (the “Homeowner”) appeals from the judgment of Deputy Judge B. Evans dated April 25, 2017. The Deputy Judge granted judgment in favour of the plaintiff/respondent contractor, Joseph Aiello (the “Contractor”) in the amount of $12,528, plus prejudgment interest on this sum and $500 in costs.

[2] The appeal grounds include the Deputy Judge’s alleged failure to:

• adequately consider the documentary evidence produced by the Homeowner, including an engineer’s report;

• apply the proper burden of proof, and

• properly assess the credibility of the Contractor’s witness.

The Pleadings

[3] The Contractor claimed $16,100 was owed to him for labour and materials he supplied towards the renovation work completed at the Homeowner’s home located at 855 Mackenzie Drive, Richmond Hill, Ontario (the “Property”).

[4] The Homeowner disputed the claim; he pleaded that the Contractor had performed both defective and unauthorized work and had overcharged for materials. The Homeowner asked that the Contractor’s claim be dismissed or that he be granted a set off against any award in favour of the Contractor.

The Evidence

[5] At trial, it was common ground that:

• the Homeowner hired the Contractor to perform renovations at the Property;

• the Contractor performed certain work and rendered invoices;

• the Homeowner paid the Contractor $32,500, and

• the Contractor claimed that a further $16,100 was owing.

[6] No written contract existed between the parties. Much was in dispute at trial, including: (1) the extent of the work to be done, and (2) whether or not there were deficiencies in, and overcharging for, the work performed.

[7] The Contractor testified on his own behalf. He filed photographs of some of the renovation work and notes he had made about the work to be done. When asked in cross-examination about the expert report obtained by the Homeowner setting out numerous deficiencies in the Contractor’s work, the Contractor testified, presumably in an attempt to minimize the seriousness of the deficiency, that the total area of deficient tile was merely one square foot out of the eighty square feet of tile he installed, and further, that he had installed the deficient tiles behind the stove in a location where they would not be visible.

[8] The Contractor testified that he provided the Homeowner with receipts so that he could be reimbursed for his materials, but he did not retain copies.

[9] The Contractor called evidence from Naresh Bahri, whose home the Contractor had renovated. Mr. Bahri viewed the Contractor’s work at the Property at the Contractor’s request. Although Mr. Bahri was called by the Contractor, his evidence was unfavourable to the Contractor in two significant respects: first, Mr. Bahri testified that the Contractor’s work at the Homeowner’s home was sub-par and second, that the Contractor’s work at Mr. Bahri’s home had also been sub-par and would require Mr. Bahri to replace tile flooring at an anticipated cost of $10,000.

[10] The Contractor tendered into evidence a text message he received from the Homeowner dated February 22, 2016. By that date, the Contractor had completed his work and had demanded a further $16,100 payment. The Homeowner texted the Contractor in reply, stating that the “only problem” between them was approximately $15,000 and continued, in part, “I think you charged too much for each material and too much labour. Please reduce the balance a little. I want to settle down the payment.”

[11] The Contractor’s position at trial was that the text message amounted to an admission that the Homeowner had no complaint about the work quality until a dispute arose.

[12] In his defence, the Homeowner produced documents that he described as supporting his allegation that the Contractor had overcharged for certain materials. The Homeowner also testified that because the Contractor did not provide him with receipts for all of the supplied materials, he suspected but was unable to prove that the Contractor had overcharged him for other materials.

[13] The Homeowner filed a report from consulting engineer, Graham Clarke of Clarke Engineering. Mr. Clarke’s report described his inspection of the Property and his opinion that the kitchen cabinets, tile backsplash, tile floor in the kitchen and dining room, basement kitchen, exterior vent caps, and electrical work all fell short of the standard expected of a reasonable contractor and normal standards of workmanship. Mr. Clarke appended to his report photographs he took and which he described as being a representative sample of the conditions he found.

[14] The Homeowner also filed a quote from a contractor operating as MD Kitchen & Bath who estimated that it would cost the Homeowner $29,945 to remove the Contractor’s work and then completely renovate the kitchen.

[15] Despite having been served before trial with Mr. Clarke’s expert report, the Contractor did not adduce opinion or other evidence on the deficiencies described in this report, apart from the Contractor’s evidence about the “one square foot of tile” in the kitchen and that of the previously-mentioned Mr. Bahri, whose evidence, as noted, was not favourable to the Contractor.

The Reasons for Judgment

[16] The Deputy Judge summarized the issues as follows:

• Was there work that was unauthorized?

• Were there supplies that were overcharged?

• Was the work defective?

[17] The Deputy Judge commented in his reasons that he found it “very difficult” to determine if there were deficiencies in the Contractor’s work and, if so, the anticipated cost of remedial measures. He wrote:

I mean, you know, you can live in the Trump Tower, or you can live in a motel on Highway 2. Very different rates and very different products, so I can’t decide whether you were buying a Cadillac or a Volkswagen.

As a result, he said that he “had trouble dealing with the deficiencies”.

[18] Insofar as findings of credibility were concerned, the Deputy Judge found the Homeowner “somewhat evasive” but acknowledged that “it my [sic] very well be his language. I don’t know.” He found the Contractor “straightforward, blunt and of questionable skills”.

[19] The Deputy Judge accepted the Contractor’s evidence that:

• he had agreed to renovate the Homeowner’s kitchen for $10,000 plus materials;

• the parties had agreed that the Contractor perform “extras”, and

• the Contractor had provided receipts to the Homeowner in order to be reimbursed, without retaining copies, a practice which the Deputy Judge found made “total sense”.

[20] The Deputy Judge accepted the Homeowner’s evidence that the Contractor had overcharged him $2,000 for a countertop and $1,572 for other materials. The Deputy Judge was not prepared to infer that the Contractor had overcharged for additional items. He held that the Homeowner had the burden of proving he had been overcharged in order to have the right to an abatement.

[21] The Deputy Judge reduced the amount he found owing to the Contractor by $3,572, which consisted of the amount that he found the Contractor had overcharged for the countertop and other materials, and awarded the Contractor $12,528 of the $16,100 he had claimed, plus prejudgment interest on this sum and $500 in costs.

The Law

Standard of Review

[22] In Housen v. Nikolaisen, 2002 SCC 33, [2002] S.C.R. 235 at para. 10, the Supreme Court ruled: “[t]he standard of review for findings of fact is that such findings are not to be reversed unless it can be established that the trial judge made a ‘palpable and overriding error’”.

“Processing” Errors

[23] In Waxman v. Waxman (2004), 2004 39040 (ON CA), 186 O.A.C. 201 (C.A.), at paras. 334 and 343, the Court described those errors that may warrant appellate interference:

[334] … The phrase “processing errors” is borrowed from Keljanovic Estate v. Sanseverino, supra, at 489-90 where O’Connor J.A., for the majority, said:

The second kind of error that may warrant appellate interference is what might be called a “processing error”, that is an error in processing the evidence that leads to a finding of fact. This type of error arises when a trial judge fails to appreciate the evidence relevant to a factual issue, either by disregarding or misapprehending that evidence. When the appellate court finds such an error it must first determine the effect of that error on the trial judge’s reasoning. It may interfere with the trial judge’s finding if it concludes that the part of the trial judge’s reasoning process that was tainted by the error was essential to the challenged finding of fact.

[343] … The failure to consider relevant evidence can amount to a palpable error if the evidence was potentially significant to a material finding of fact. The appellants bear the onus of demonstrating a failure to consider such evidence. The mere absence of any reference to evidence in reasons for judgment does not establish that the trial judge failed to consider that evidence. The appellants must point to something in the trial record, usually in the reasons, which justifies the conclusion that the trial judge failed to consider certain evidence.

[24] The Small Claims Court shall hear and determine in a summary way all questions of law and fact and may make such order as is considered just and agreeable to good conscience: Courts of Justice Act, R.S.O. 1990, c. C.43, s. 25.

[25] However, this does not relieve a Deputy Judge from the obligation to appreciate the evidence relevant to a factual issue.

Analysis

[26] I have reframed the Homeowner’s appeal grounds to focus on what I consider to be the essential issue on this appeal.

Did the Deputy Judge fail to consider relevant evidence?

[27] The Homeowner has satisfied me that the Deputy Judge’s findings demonstrate that he failed to appreciate evidence relevant to the issue of the extent of the deficiencies and the cost to remedy them.

[28] The Deputy Judge made no reference in his reasons to Graham Clarke’s engineering report, in which Mr. Clarke opined that the Contractor’s workmanship fell short of the standard expected of a reasonable contractor and did not meet normal standards of workmanship.

[29] The Deputy Judge referred to having “seen photographs” and then concluded, without reference to Mr. Clarke’s report, that it was very difficult “(a) to determine if there’s a deficiency and (b) what it is going to cost to fix that”. I infer that the Deputy Judge was referring to photographs filed by the Contractor and not to those appended to Mr. Clarke’s engineering report. The latter photographs showed numerous obvious deficiencies that Mr. Clarke described as a “representative sample” of the conditions he found. The Deputy Judge did not refer to this evidence.

[30] The Deputy Judge also did not refer to Mr. Bahri’s evidence that it would cost Mr. Bahri $10,000 to replace defective tile work installed by the Contractor in his kitchen, which was of a similar size to the Homeowner’s kitchen. This evidence was significant to a material finding of fact, namely the anticipated cost of remedial measures and, as such, the quantum of any set off to the Homeowner.

[31] As noted, the Contractor adduced no contrary evidence to that of Mr. Clarke and Mr. Bahri. As such, the only evidence before the Deputy Judge on the issue of deficiencies and the cost to remedy, except the Contractor’s evidence of the “one square foot of tile”, was that adduced by the Homeowner and the evidence of Mr. Bahri.

[32] I conclude that the Deputy Judge failed to consider this relevant evidence. I cannot infer that the Deputy Judge considered and then rejected Mr. Clarke’s evidence or Mr. Bahri’s evidence. There is nothing in the Deputy Judge’s reasons to support such an inference. The evidence that the Deputy Judge failed to consider was, in my view, significant to his material findings of fact. In failing to consider this evidence, the Deputy Judge made a palpable and overriding error: Waxman, at paras. 334 and 343. The failure to consider this evidence constitutes a processing error of the type described in Waxman, supra, and undermines the Deputy Judge’s finding as to the amount owing to the Contractor net of any set off to which the Homeowner might be found entitled after consideration of all the relevant evidence.

[33] In light of my findings on this issue, there is no need to address the other grounds of appeal.

What is the Appropriate Relief?

[34] Section 134(1) of the Courts of Justice Act sets out the powers of the court on appeal. Those powers include substituting the court’s own decision or ordering a new trial where a substantial wrong or miscarriage of justice has occurred.

[35] In determining if the court should substitute its own decision, the guiding principle is if it would be in the interests of justice to do so: see Dasham Carriers Inc. v. Gerlach, 2013 ONCA 707, 313 O.A.C. 95, at para. 36. To substitute my own decision, I must be satisfied that the record before me is sufficient to determine the relevant issues: see Robertson v. Gilchrist, 2015 ONSC 4320, at para. 27; Seif v. Toronto (City), 2015 ONCA 321, 125 O.R. (3d) 481, at para. 53; Colautti Construction Ltd. v. Ottawa (City) (1984), 1984 1969 (ON CA), 46 O.R. (2d) 236 (C.A.).

[36] I find that the record before me is sufficient to determine the relevant issues and that it is in the interests of justice that I substitute my decision rather than order a new trial.

[37] The Homeowner claimed a set off “due to the breach of contract/negligence, on unauthorized work performed by the [Contractor] and the [Contractor’s] unjust enrichment”. The Homeowner did not seek damages if the amount of his set off exceeded the Contractor’s claim. Rather, he sought that the Contractor’s claim be dismissed.

[38] Set off is available to the Homeowner pursuant to s.111(1) of the Courts of Justice Act, which provides: “[i]n an action for payment of a debt, the defendant may, by way of defence, claim the right to set off against the plaintiff’s claim a debt owed by the plaintiff to the defendant.”

[39] At common law, there is an implied term that a contractor will perform his job in a good and workmanlike manner: see Spanos v. Dufferin Tile & Marble Inc., 2007 CarswellOnt 8625, at para. 27 (S.C.); Verly Construction Group Inc. v. Berdeklis, 2005 21110, at para. 9 (Ont. S.C.). The appropriate sum of damages is the amount that will place the innocent party in the same situation they would have been in if the contract had been performed: see Fidler v. Sun Life Assurance Co. of Canada, 2006 SCC 30, [2006] 2 S.C.R. 30, at para. 27.

[40] I find that the appropriate remedy is to set off against the Contractor’s claim, a sum representing the overcharged amount and the amount that the Homeowner will probably have to pay to remedy the deficiencies in the Contractor’s work.

[41] As noted, the Contractor sought payment of $16,100. The Deputy Judge found that the Contractor had overcharged the Homeowner $3,572, resulting in the award of $12,528. There was evidence to support the finding that the Contractor overcharged for materials.

[42] Mr. Clarke identified numerous deficiencies to the kitchen cabinets that were easily viewed from a normal viewing position, under normal lighting conditions. These included cabinet boxes and side panels that were not the same colour as the door and drawer fronts, roughly drilled holes in the cabinet doors, misaligned door fronts and inconsistent positioning of door handles. The consulting engineer found many tiles in the backsplash that were not installed in the same plane. Many floor tiles were not installed in the same plane, meaning that some edges sat higher than adjacent tiles. The floor moved visibly when walked on, which will eventually result in cracked tiles and/or grout. Exterior vent caps had been poorly sealed to the wall, which left gaps. Under-cabinet lighting had been poorly installed with wires hanging loose in some areas.

[43] As noted, the evidence of the Contractor’s own witness, Mr. Bahri, was that it would cost Mr. Bahri $10,000 just to replace the tile flooring installed by the Contractor in an area roughly the size of the Homeowner’s kitchen. The only reasonable conclusion is that the cost to the Homeowner of remedying the uncontested deficiencies in the Contractor’s workmanship will far exceed the anticipated cost for Mr. Bahri to replace his defective tile flooring.

[44] Although I am unable to precisely quantify the remedial cost, I am satisfied that the amount will exceed the amount the Deputy Judge found owing to the Contractor.

[45] Accordingly, the appeal is granted. The judgment in favour of the Contractor is set aside and the Contractor’s claim is dismissed.

Costs

[46] The Homeowner seeks costs in the amount of $350 plus disbursements consisting of $405 to perfect the appeal and $960 for the trial transcript. I am satisfied that the appellant is entitled to costs given his success on the appeal and that the amount sought is fair and reasonable.

[47] I order that the respondent Joseph Aiello pay the appellant Indrasenan Selladurai costs in the amount of $1,715 inclusive of HST.

QUINLAN J.

Released: April 9, 2018