CITATION: 1162417 Ontario Inc. v. Bernatt, 2018 ONSC 409
DIVISIONAL COURT FILE NO.: 344/15
DATE: 2018 01 16 Date of Corrected Decision: 2018 02 01
ONTARIO SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
BETWEEN:
1162417 ONTARIO INC. O/A ST. LAWRENCE RESIDENCES AND SUITES
Plaintiffs (Appellants)
– and –
STEPHEN BERNATT, BERNATT ARCHITECT LTD., PRESIDENT STEPHEN BERNATT AKA STEPHEN BERNATT
Defendants (Respondents)
Hossein Niroomand, for the Plaintiffs (Appellants)
Marcos Cervantes, for the Defendants (Respondents)
HEARD at Toronto: January 16, 2018
c. horkins J. (Orally)
[1] This is an appeal from the decision of Deputy Judge Paul J. Martial dated June 2, 2015.
[2] The dispute involves architectural work that was performed to allow a rooming house to be converted to a small hotel. It is helpful to start with a review of the evidence that was before the Deputy Judge.
[3] The appellant, 1162417 Ontario Inc. O/A St. Lawrence Residences and Suites, owns a three story building in downtown Toronto that is zoned as a rooming house. Several years ago the appellant renovated the first floor. In 2013, the appellant decided to renovate the second and third floors.
[4] Mohammad Aslam is the director of the appellant company and the only person involved in the events on behalf of the appellant. Therefore when I refer to the appellant I am referring to what Mr. Aslam said or did on behalf of the appellant.
[5] The appellant contacted the respondent Bernatt Architect Ltd. This is a one person company. The respondent Stephen Bernatt is the sole architect for the company and the professional that the appellant dealt with. The Deputy Judge found no liability on the part of Mr. Bernatt since the contract was between the appellant and the respondent company. This finding is not challenged on this appeal. Mr. Bernatt was the only person involved in the events on behalf of the respondent. When I refer to the respondent I am referring to what Mr. Bernatt said or did on behalf of the respondent.
[6] The respondent provided the appellant with a proposal dated March 11, 2013 that described the work to be done by the respondent. This proposal was accepted and became the contract between the parties.
[7] In summary, the proposal set out what the respondent agreed to do:
(1) Redesign the second and third floors to create as many bedrooms as possible. Each bedroom was to have a bathroom and a kitchenette. Provide a small lounge on the second floor and an elevator for all floors.
(2) Submit the proposal to the City of Toronto for a Preliminary Project Review.
(3) Revise plans as required by the City.
(4) Submit the revised plans to the Committee of Adjustments for a minor variation as required.
(5) Meet with City Planning Department and review the planning report before a hearing date.
(6) Attend Committee of Adjustment hearing and make a presentation as required.
(7) Prepare working drawings architectural, structural, mechanical, electrical for the building permit and for construction.
(8) Submit application for a building permit and follow up until obtained.
(9) Prepare tender package for contractors who would bid on the construction work.
[8] The appellant agreed to pay the respondent $17,100 plus tax for the work plus any third party fees that were owed such as permits fees.
[9] The contract did not indicate when the work was to be completed.
[10] Around the time that the contract was agreed to, the appellant asked the respondent for his “best guess” on how long it would take to complete the work. The respondent told the appellant that it would take approximately 8 months. As the respondent explained the 8 months was “not cast in stone”.
[11] The appellant testified that the “timeline was a verbal thing that [Mr. Bernatt] said he never wanted to commit to the time…because he said there are too many things that are out of his control but basically the timeline was that it would be eight to nine months that we should have permits.”
[12] The work was not completed within the estimated 8 months. The evidence showed that events intervened that delayed completion. In particular, the appellant requested additional work beyond the scope of the work in the contract.
[13] When the respondent sent the appellant the preliminary drawings, the appellant indicated to the respondent that there were not enough rooms. This required the respondent to do extra work. The respondent altered the room size and eliminated the kitchenettes that the contract included. The rooms could not be smaller than 75 sq feet to obtain city approval. The respondent was able to create 19 rooms without kitchenettes.
[14] The appellant also asked for a laundry room to be included in the basement and new drawings had to be prepared.
[15] When the drawings were submitted for approval, the city advised that the exit did not meet code requirements and this created further delay.
[16] The appellant wanted the building zoned as a hotel and so the minor variance application had to be revised.
[17] The lounge in the contract was deleted and replaced with an ice machine and lockers.
[18] All of this created extra work that had to be done aside from what the contract provided.
[19] The appellant became anxious about the delay. On August 20, 2013, the appellant sent the respondent an email asking about the progress of the work. In this email the appellant states that it was his plan to finalize the construction contract by January 2014 and complete the entire project by the end of April 2014. There is no evidence that he had ever communicated these deadlines to the respondent beforehand or that such deadlines were realistic.
[20] The appellant testified that it was his intention to have the construction work done in slow season. It became apparent that the appellant’s deadline was not going to be met.
[21] On June 20, 2014 the appellant issued his claim in the Small Claims Court (“the Claim”) seeking damages of $25,000 because the respondent failed to provide the building permits.
[22] The building permits were issued on August 27, 2014 after the issuance of the Claim.
[23] The appellant then amended his Claim reducing his damages to $17,085.92. As explained during the trial, the appellant was no longer claiming damages for failure to obtain the permits. Instead, the appellant claimed that he had incurred expenses to improve the second and third floors and was seeking an order that the respondent pay for the cost of these improvements.
[24] The appellant did not hire a contractor to do the work that the permits allowed. Instead the appellant decided to fix up the existing second and third floors rather than demolish them and rebuild as planned.
[25] The appellant testified that “when we were not going with the original renovation that we had planned for then I had to do some improvements that I thought were required…it’s just good management to have a good presentable property.”
[26] The appellant stated that many things had deteriorated and had to be taken care of. The appellant replaced kitchen and bathroom counters, drapes and plumbing fixtures. These improvements cost $17,485.92. The evidence showed that the appellant incurred these expenses from June 2014 through to October 2014.
[27] The appellant argued at trial that the respondent’s delay in obtaining the permits was responsible for his decision to embark on renovations.
[28] The appellant also sought return of $5,085 that he had paid in March 2014 to obtain an appraisal on the property. The appraisal was necessary to obtain financing for the construction that the permits allowed. According to the appellant, in his view the appraisal was no longer good because of the respondent’s delay. He did not produce the appraisal at the trial or explain why it was no longer of any use. There was no evidence from any lending institution to show that the appraisal could not be used.
[29] The appellant testified that the respondent’s “lax attitude caused me to spend all this money for which there will be no recovery, all these renovations will be of no use if we go ahead with the actual work that we started because it has to be demolished totally”.
[30] The issue at trial was whether there was a causal connection between the delay in obtaining the permits and the expenses incurred to renovate.
[31] On the evidence before the Deputy Judge, he found that the appellant failed to establish this causal connection. The Deputy Judge also found that the appellant failed to explain why the delay rendered the appraisal useless. There was simply no evidence. In fact, that appellant’s evidence was quite limited. In essence, in his mind the delay was unacceptable, so he had to go ahead and do the improvements and the building permit work would be done in the future.
[32] The appellant did not explain why it was too late to go ahead with the original construction work on the second and third floors. The appellant testified that this work would have to be done “in the future some time”.
[33] The Deputy Judge accepted the respondent’s evidence that the purpose of the renovation was to convert the second and third floors of a rooming house so that it would be suitable as a small hotel. The appellant required as many rooms as possible on the two floors.
[34] The Deputy Judge found that the March 11, 2013 proposal was “general in nature” in that the respondent was to provide as many rooms as possible. The Deputy Judge found that this was achieved by eliminating the kitchenettes. It also required the respondent to perform additional work. The Deputy Judge accepted that the respondent had to work through many design issues such as plan revisions and other construction, mechanical, plumbing, HVAC, electrical and other complex issues.
[35] The Deputy Judge found that the respondent completed the work in the initial contract as well as the additional work that was required. The respondent sent the appellant an invoice dated September 15, 2014 setting out the particulars of the extra work. This invoice explained that each item was undertaken because of changes that the appellant requested.
[36] The Deputy Judge found that the appellant did not act to mitigate his loss. The appellant assumed that the appraisal could not be used but there was no evidence of any attempts to obtain financing so the appellant could proceed with the construction project. There was also no evidence about when the demolition work could start.
[37] The Deputy Judge allowed the respondent’s claim for payment of the balance of his services under the contract ($1,163.90) and a further $10,170 for additional work based on the invoice dated September 15, 2014. The Deputy Judge accepted that the respondent performed additional work and the appellant received the benefit of same.
[38] The appellant appeals this decision and states that the Deputy Judge erred as follows:
• He misunderstood the evidence.
• He erred in finding that there was no evidence to support his conclusion that the causal connection was not established.
• He erred in awarding damages to the respondent because the respondent did not fulfill his obligations and was in breach of the contract. Further, it was an error to allow the damages because the extra work was included in the original contract.
[39] The standard of review on an appeal from a judge’s order is set out in Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235. On questions of law, the standard is correctness. On questions of fact, the standard is palpable and overriding error. On questions of mixed fact and law, the Court stated that there is a spectrum. Where there is an extricable legal principle, the standard of review is correctness. However, with respect to the application of the correct legal principles to the evidence, the standard is palpable and overriding error. No errors of law are alleged on this appeal.
[40] I find that it was open to the Deputy Judge to make the findings that he did given the evidence. There was simply no evidence to explain why the delay caused the appellant to abandon his original construction plans.
[41] Further, there was no evidence that the contract required the permits to be provided in eight months. The Deputy Judge considered the delay. He found that while there was delay it occurred because of the additional work that was required and the challenges that developed. This was a reasonable finding based on the evidence.
[42] On this appeal, the appellant argues that the Deputy Judge erred in allowing the respondent’s claim for the September 15, 2014 invoice. This argument has no merit. The Deputy Judge accepted that this was additional work beyond the scope of the original agreement. A comparison of the March 11, 2013 proposal that became the contract and the September 15, 2014 invoice clearly shows that the additional work was extra and not contemplated in the proposal.
[43] The extra work was done and the appellant received the benefit of this work.
[44] The Deputy Judge found that the respondent was entitled to be paid what was left owing from the March 11, 2013 contract and for the extra work billed on September 15, 2014.
[45] In summary the appellant has not shown that the Deputy Judge made any palpable and overriding errors. The appeal is dismissed.
[46] I have endorsed the Appeal Book and compendium as follows: “The appeal is dismissed. Costs are agreed at $3,900 all inclusive. The appellant shall pay the respondent costs of $3,900.”
Originally signed by “C. Horkins J.”
___________________________ C. Horkins J.
Date of Reasons for Judgment: January 16, 2018
Date of Release: January 17, 2018
CORRECTION NOTICE
Corrected decision: the text of the original judgment was corrected on February 1, 2018, and the description of the correction is as follows:
[1] This is an appeal from the decision of Deputy Judge Paul J. Martial dated June 2, 2015.
___________________________ C. Horkins J.
Release of Corrected Decision: February 1, 2018
CITATION: 1162417 Ontario Inc. v. Bernatt, 2018 ONSC 409
DIVISIONAL COURT FILE NO.: 344/15
DATE: 2018 01 16
Date of Corrected Decision: 2018 02 01
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
BETWEEN:
1162417 ONTARIO INC. O/A ST. LAWRENCE RESIDENCES AND SUITES
Plaintiffs (Appellants)
– and –
STEPHEN BERNATT, BERNATT ARCHITECT LTD., PRESIDENT STEPHEN BERNATT AKA STEPHEN BERNATT
Defendants (Respondents)
ORAL REASONS FOR JUDGMENT
C. Horkins J.
Date of Reasons for Judgment: January 16, 2018
Date of Release: January 17, 2018
Date of Corrected Decision: February 1, 2018