COURT FILE NO.: CV-14-509784 DATE: June 30, 2017

ONTARIO

SUPERIOR COURT OF JUSTICE

IN THE MATTER OF the Construction Lien Act, R.S.O. 1990, c.C.30

BETWEEN:

RPC CONSTRUCTION LTD.

Julian Binavince, for the plaintiff, Tel.: 416-777-2244 (ex. 750), Fax: 416-477-2847.

Plaintiff

• and -

ZHIYI ZHOU and LI NA WU

Self-represented, Tel.: 647-962-2822, Fax: None.

Defendant

HEARD: January 6, 10, 11, 12, 13 and February 2 and 7, 2017.

Master C. Wiebe

REASONS FOR JUDGMENT

I. INTRODUCTION

[1] The plaintiff, RPC Construction Ltd. (“RPC”), is the contractor and lien claimant. It claims a lien in the amount of $102,321.50 plus liquidated damages and damages for improper cancellation of the contract in the amount of $213,281.65, for a total claim of $315,603.15.

[2] The defendants, Zhiyi Zhou and Li Na Wu, are the owners of the subject land. They deny the claim and claim a set-off and damages by way of counterclaim in the total amount of $258,390.22.

II. BACKGROUND

[3] I begin with a summary of the facts of this case that I understand to be undisputed.

i. Case history

[4] The defendants are married to each other and are of Chinese origin. They have three grown children. Both defendants speak and read only Mandarin Chinese. This plus their decision not to have a lawyer were significant factors in the conduct of this reference and the trial.

[5] Mr. Zhou became a successful businessman in Shenzhen City, China. He owned a large factory there that makes and sells travel accessories. He employed as many as 300 people. The defendants moved to Toronto from China in 2010, and Mr. Zhou established a retail store selling travel accessories. Their two sons remain in China, and the one daughter now lives here. The defendants bought and lived in a 3,500 square foot bungalow house located at 2264A Brimley Road in Scarborough, Ontario (“the Brimley House”).

[6] In July, 2011 the defendants bought a house located at 190 Pitfield Road, Scarborough (“the Pitfield Property”). This property had two floors plus an unfinished basement. The first and second floors are 5,607 square feet in size. The basement is 2,454 square feet in size. Mr. Zhou had originally planned to resell the property. However, he discovered in November, 2011 that the house had been a grow-op, and he decided instead to refurbish the house for the purpose of having one of his sons live there after moving to Canada.

[7] By March 30, 2012 the defendants entered into a contract with a contractor named John Sun Renovation for the purpose of renovating the Pitfield Property. The Sun contract was not produced. Mr. Zhou stated that its price was based on a quote of $150/sq. ft. The Sun contract scope included the provision of the design drawings for the renovation. An architect named Henry W. Chiu produced five drawings to get the permit. They were in English. The first set of drawings were prepared on May 28, 2012. Mr. Chiu revised the drawings on three occasions, and made the final submission on August 31, 2012.

[8] In the meantime, Mr. Sun died in May, 2012. As a result, Mr. Zhou looked for another contractor to complete the construction work. He advertised in Mandarin. RPC responded to the advertisement. RPC’s principal is one Ku Han Kwok. Mr. Kwok was born in China. Mr. Kwok moved to Montreal in 1978, and then to Toronto in 1986, and then to Japan to study construction. He moved back to Toronto in 1995 where he began working in construction. He established RPC in 2001 and worked with that company doing general contracting. Mr. Kwok speaks Mandarin Chinese but does not read or write it. He speaks, reads and writes English.

[9] Mr. Kwok and Mr. Zhou met on three occasions in the Brimley House to negotiate a contract. The plans were not produced to Mr. Kwok at this time. The two used the Brimley House as the basis for discussing the work scope and price for the Pitfield Property renovation. The Pitfield renovation was more complicated than the Brimley House. For instance, the Pitfield renovation included the provision of turrets and valleys on the roof, and wood framed windows.

[10] At one point, Mr. Zhou asked Mr. Kwok to prepare a contract document in English and Chinese. Mr. Kwok has a friend named “Falong” who was with him at that time. Falong reads and writes Mandarin and English. Falong moved to China two years ago, and did not testify. Mr. Kwok prepared a contract document in English and had Falong insert a Mandarin translation of each clause on the face of the document. The document referred to a square footage of “approximately” 5000 square feet and applied a unit price of $138/sq.ft. to produce a “total price” of $690,000 plus tax. With tax, this contract price is $779,700. The document then specified a series of 15 milestones for the payment of that price. Mr. Kwok provided this document to Mr. Zhou about three weeks before the third meeting between the two.

[11] The third meeting between Mr. Kwok and Mr. Zhou happened on August 22, 2012. Falong and Ms. Wu were present. At this meeting, Mr. Zhou purported to produce the draft that Mr. Kwok had prepared. Mr. Kwok did not review it. The two signed it. It will be called the “Base Contract.”

[12] Mr. Zhou then produced another document written entirely in Mandarin containing a more detailed description of work to be done. Falong translated the document verbally to Mr. Kwok on the spot. The document was officially translated into written English later during the litigation. Amongst other things, this document stated that the “standard” for the work was generally that of the Brimley House, but not lower, that the $138/sq. ft. price covered “all pertinent content,” that the “footage” calculation did not include the basement, garage, storm door and balcony, and that work had to be done by June, 2013, namely in 10 months. Both Mr. Zhou and Mr. Kwok signed this document as well. It will be called “the Addendum.”

[13] Demolition work started in October, 2012 when Mr. Kwok first received the Chiu drawings. There are five drawings. The permit was delayed, which delayed the demolition. Demolition was completed in January, 2013. What followed was the excavation, and forming and pouring of the foundation and first floor, all of which was done in January and February, 2013. The second floor pour happened in March, 2013. The framing followed, which was completed by July, 2013. Taping and boarding followed, which was done by January, 2014.

[14] There were changes during the work. The basement height had to be increased by one foot over what was shown in the drawings. Of significance was the change from the Chinese tubs and vanities to Canadian ones, as the Chinese fixtures that the defendants had ordered did not connect to the Canadian plumbing. This change led to significant re-framing on the second floor. There was a change from two furnaces to one, which affected the ducting system. The manufacturing of the complicated roof trusses and frames took longer than expected. There was also significant repainting.

[15] The defendants made 27 payments to RPC from November 1, 2012 to May 21, 2014 totaling $773,027.50.

[16] In the meantime, the defendants purchased yet another property at 473 Guildwood Parkway, Scarborough (“the Guildwood Property”) for his daughter. In March, 2014, Mr. Zhou contracted with RPC to renovate that property as well. In return for this work, Mr. Kwok was prepared to give Mr. Zhou an accommodation on certain extras on the Pitfield project.

[17] By the end of April, 2014, the work on the Pitfield Property was nearing completion. On April 28, 2014 RPC rendered an invoice for 81 alleged items of extra work on that project. 17 of these items were shown to be “free of charge.” The total charged was $68,421.50 (tax included). Mr. Zhou hired a paralegal, Eric Chan, who then prepared and delivered a letter to RPC dated May 13, 2014 advising that payment was stopped and that RPC was evicted on account of an alleged year-long delay in the project and the lack of authorization of the “variation orders.”

[18] After a discussion, on May 20, 2014 RPC and the defendants entered into another agreement, one that was handwritten by Eric Chan (“the May Agreement”). In this agreement, RPC promised to complete the interior work by June 11, 2014 and the exterior work by June 25, 2014, failing which RPC would be “penalized” $30,000 plus HST. The May Agreement specified that Mr. Zhou would pay RPC $30,000 plus HST for RPC to restart working, which payment was made. The agreement also specified that any “future addition and/or variation orders/jobs” had to have Mr. Zhou’s prior approval.

[19] RPC recommenced work, but he did not complete the interior work by the June 11, 2014 deadline. Mr. Kwok admitted that by this date the interior still needed clean-up, touch-up paint, furnace gas connection, some kitchen molding, counter top openings and the installation of the air conditioner, sump pumps, fire extinguishers and some bathroom fixtures. He admitted that the exterior needed work on the wood fence, sod, concrete pad and the installation of the gas and water supply and drainage and the U-shaped driveway.

[20] Mr. Zhou hired a lawyer, Jayson W. Thomas, to write a letter to RPC, which he did on June 16, 2014, evicting RPC from the Pitfield Property. The reason given was the failure to complete the interior work by June 11, 2014 and the alleged lack of work on the site. The letter also terminated the RPC contract on the Guildwood Property on account of an alleged excessive invoice on that project and what had transpired on the Pitfield Property.

[21] The defendants hired certain contractors to work on the Pitfield Property. At the time of the trial hearing they alleged that further work remains to be done. To this day, the Pitfield Property remains unoccupied, as the defendants’ son has not succeeded in coming to Canada.

ii. Reference history

[22] On June 25, 2014 RPC registered a claim for lien on the title to the Pitfield Property in the amount of $102,321.50. It perfected its lien by commencing a lien action on August 6, 2014. The defendants delivered their Statement of Defence and Counterclaim (against both RPC and Mr. Kwok) on December 24, 2014. It came from the office of lawyer, Richard N. Brown. Other pleadings were exchanged, including amendments to both sets of pleadings.

[23] On April 30, 2015, RPC obtained a judgment of reference from Justice G. Dow. Almost eight months later, Master Albert issued an order for trial on December 2, 2015.

[24] The reference came before me for the first trial management conference on January 4, 2016. At this time, the defendants indicated that they had ended their retainer with Mr. Brown, and that they wanted to act on their own. I required that they file a Notice of Intention to Act in Person. I issued interlocutory orders including orders for production and discovery. I also ordered the production of a Scott Schedule, which became the central document in the case.

[25] I conducted a second trial management conference on September 12, 2016 and a third one on October 5, 2016. At the third trial management conference, I scheduled the trial hearing to take place over 7 days on January 6, 10, 11, 12, 13 and February 2 and 3, 2017.

[26] The trial hearing commenced on January 6, 2017. On the first day of the hearing, RPC moved for an order dismissing the counterclaim as against Mr. Kwok, which I granted as that was a violation of Construction Lien Act, R.S.O. 1990, c. C.30 (“CLA”), section 55(2)(a).

[27] RPC called three witnesses, namely Mr. Kwok and two experts, Joseph Emmons and Drago Banovic. The defendants called four witnesses, Mr. Zhou, Ms. Wu, Min Tao Xie (a contractor) and Lijun Jing (an expert). There was a voir dire challenge of Mr. Jing’s qualification to give the opinion evidence he gave. I ended up limiting the scope of his evidence. The defendants decided not to call two witnesses who had been on their witness list. I adjourned the last day of the hearing to February 7, 2017 to give both sides an opportunity to prepare closing argument.

III. ISSUES

[28] This case, in my view, raises the following issues to be determined:

a) Is the contract price to be calculated on 5,000 square feet or 5,607 square feet? b) Is the contract price to be deducted by the first three items of the Base Contract? c) Are the defendants entitled to withhold 10% of the contract price for quality assurance? d) Did the defendants agree to pay the April 28, 2014 invoice for extras? e) If not, which of those extras, if any, is RPC entitled to? f) Is RPC entitled to extras for the basement, window precast and the wooden edge? g) Was the RPC contract improperly terminated? h) If so, what damages can RPC claim, if any? i) Are the defendants entitled to back-charge for the items on Schedule A2? j) Are the defendants entitled to back-charge for the items on Schedule A3? k) What is the final accounting between the parties?

IV. WITNESSES

[29] Before I discuss the issues, I will comment on the credibility of the witnesses.

[30] I found the RPC witnesses to be credible. Mr. Kwok spoke in good English and was clear, calm, careful and unwavering in his evidence. He withstood cross-examination well. He addressed all of the necessary issues. His provided corroboration for his evidence, such as the extensive pictures he took of the site before RPC’s eviction. He made admissions against his interest such as several of the defendants’ back-charges, despite the clear question of whether the contract was properly terminated. For instance, he admitted the large back-charge of $12,541 for the floor tiles and bathroom fixtures. He conceded in cross-examination the one payment of $100 that he had overlooked. He readily conceded Mr. Zhou’s points about the claimed extra charges not being signed and about the need for compliance with government regulations. This all bolstered his credibility. I also found that Mr. Kwok’s evidence had a general air of reasonableness about it. For instance, his recollection of the signing of the Base Contract and the Addendum made sense. Having negotiated the Base Contract over several meetings, it would make sense that Mr. Kwok would not review the final draft in detail, and would accept just a verbal translation of the Addendum that Mr. Zhou suddenly sprang on him.

[31] Joseph Emmons was qualified to give expert opinion evidence on construction costs as a quantity surveyor and on construction practices as a project manager. He attended on a site visit and drafted his report (which was his evidence in chief) commenting on the cost of the alleged RPC extras and the defendants’ back-charges. He used the site visit, Base Contract and Addendum, Chiu drawings and the pleadings to perform a quantity survey and material take-off. He also signed a will-say statement, which was entered as an exhibit, wherein he asserted that the custom in the residential building industry in Toronto is to exclude the basement, garage, exterior and soft costs from per square foot tender pricing. Mr. Emmons’ experience as a quantity surveyor and project manager impressed me. His report described his take-offs in detail. He was cautious and well-spoken, and withstood cross-examination well. He was careful to limit his report and opinion to what he could corroborate. For instance, he commented on the validity of scope and deficiency issues only if those were obvious from the documents or the site visit. He admitted he was not made aware of the verbal arrangements between the parties, the Brimley House or the May Agreement. In cross-examination, he gave a useful comment about what he thought the construction costs should have been. To the extent he was used, I found Mr. Emmons credible.

[32] Drago Banovic was qualified to give expert opinion evidence on construction management, construction practice and residential construction costing. He also attended on the site visit, and drafted his report (which was his evidence in chief) commenting on the validity and, in some cases, quantum of the defendants’ set-off claims. He also signed a will-say statement, which was entered as an exhibit, wherein he reiterated the will-say statement of Mr. Emmons. Mr. Banovic’s experience and knowledge also impressed me. His report was careful to comment only on what was observed. In cross-examination, he was cautious and well-spoken, and admitted limitations, such as his reliance on Mr. Kwok’s evidence as to what he completed. To the extent he was used, I also found Mr. Banovic credible.

[33] The defendants’ witnesses, on the other hand, were much less credible. Mr. Zhou was the one who conducted the defendants’ case. Throughout the reference, and particularly at trial, he struck me as a profoundly self-assured, indeed arrogant and domineering, man. Despite having come to this country only 7 years ago, having no education or training in construction, including no education or training in Canadian construction practice and law, and knowing no English, Mr. Zhou decided to conduct the defence on his own without counsel. He had a lawyer early in the action, but discontinued the retainer. As a successful businessman, Mr. Zhou clearly had the means to hire counsel, but chose not to. He obviously decided that he did not need one, when he clearly did. This decision indicated to me that Mr. Zhou had a profound lack of appreciation for the complexities of the evidence and the law.

[34] My initial impression was born out through the conduct of the defence at trial. Mr. Zhou declared himself ready for trial. He was not. His document brief was not complete and was not properly organized and copied. This caused frustrating delays in the middle of the trial. His cross-examinations were disorganized and lacked direction. He constantly interrupted opposing counsel inappropriately with declarations of evidence. He had to be schooled on the use of discovery evidence at trial. He decided in the middle of trial suddenly not to call two witnesses that were on his witness list; but then asked me on occasion to call witnesses for him when that is not the court’s function in Canada. He had no case authorities in his closing argument. When the evidence was almost done, Mr. Zhou asked me whether it was still possible to hire counsel. I said yes, but noted that no counsel appeared.

[35] My initial impression of Mr. Zhou, namely his arrogance, was also born out in his evidence. He constantly declared that the contract documents were “self-evident” and needed no interpretation. It should have been clear to any person that the contract documents were anything but clear. The Base Contract was written in two languages that did not match. The Addendum was in a language that Mr. Kwok did not read. The drawings were in a language that Mr. Zhou did not understand. The clauses in these documents were not written by lawyers and left vagueness on the key issues. There were conflicts between the contract documents. For instance, the drawings did not specify a bathroom on the main floor, which the Addendum called for. Yet, Mr. Zhou trumpeted all along that his view of the contract was the only one that mattered. He could conceive of no other approach.

[36] Other aspects of Mr. Zhou’s evidence confirmed my impression. He was not careful to provide important corroboration on key points, such as the defendants’ many set-off claims, the quality “standard” set by the Brimley House, and the state of completion at the time of the contract termination. He insisted in cross-examination that he had done his own “investigation” of the proper contract price and determined that it was between $120 and $150 per square foot. Yet there was no corroboration of this “investigation.” He insisted that he had given Mr. Kwok “preliminary drawings” at the time of the contract, but produced no such preliminary drawings in this reference. His evidence in chief was exceedingly short, incomplete, without direction and overlooked many of the issues, such as the contract termination. As a result, in cross-examination, he ended up giving surprising admissions, such as the admission about the need to pay for the pot lights and the storage room in the basement, as the drawings indeed were not clear on all the issues. Finally, at one point, the evidence also showed, in my view, that Mr. Zhou had through subterfuge tried to obtain a reduction in the contract price at the time of the contract.

[37] This all diminished significantly my view of Mr. Zhou’s credibility. A person such as Mr. Zhou who has proven himself incapable of appreciating the complexities of the evidence and the applicable law and who does not understand due process of law, one who so readily overstates the truth to suit himself, and one who is capable of subterfuge, cannot be trusted on contentious issues without significant corroboration. This is the approach I have taken with Mr. Zhou. Unfortunately for him, such corroboration was sparse.

[38] Ms. Wu gave brief evidence. She addressed the issue of payment, which in the end was not contentious. I thought she would address what happened at the contract signing, as there was evidence that she was present. This did not happen. I found Ms. Wu’s evidence to be marginally credible but of little significance.

[39] Xie Min Tao was a contractor who allegedly billed the defendants for $8,220 worth of work over 37.5 days between June and October, 2014, and was paid accordingly. He stated that he was retained to correct deficiencies, and he commented on alleged deficiencies and incomplete work. He spent some time discussing windows and drywall. In the course of his evidence, however, he admitted that he did not read English and that Mr. Zhou had prepared the invoice that formed the basis for his evidence. I was, therefore, left wondering whose evidence this was, namely that of Mr. Xie or of Mr. Zhou. Mr. Xie’s credibility suffered as a result.

[40] The final witness was the defendant’s expert, Reagan Jing. In the voir dire hearing concerning Mr. Jing’s qualification, I allowed Mr. Jing to give opinion evidence as to Toronto residential construction practice and as to the cost of the alleged deficiencies. I noted, however, that I would examine Mr. Jing’s evidence “severely” as to weight given his limited experience in these fields. In the end, Mr. Jing’s evidence merited only limited credibility. For instance, he insisted that there was no common practice in the Toronto residential building industry as to what was typically included in square footage tender pricing, as it was, he said, “all subject to negotiation.” This denial made no sense. In a residential market as active as Toronto’s there will inevitably be practices such as the one described by Mr. Kwok to short-cut negotiation. I note that Mr. Jing gave no examples of his version of the practice. Furthermore, in cross-examination, Mr. Jing admitted that he found many of RPC’s claims for extras groundless despite the fact that the work was not shown on the drawings. He said that he did so because of his knowledge of industry practice, a knowledge which, as stated above, I found to be limited. In addition, concerning the defendants’ back-charges, he admitted that he uncritically accepted Mr. Zhou’s evidence of the need for and the costing of the work described in the defendants’ set-offs. He also asserted surprisingly that the claims for legal costs were legitimate costs of contract completion. Legal costs are almost always dealt with as a separate head of recovery. This all diminished Mr. Jing’s credibility in my eyes.

[41] Therefore, in the end, given my assessment of the credibility of the witnesses, I decided to accept the evidence of Messrs. Kwok, Emmons and Banovic over that of Messrs. Zhou, Xie and Jing whenever the two conflicted.

V. ANALYSIS

a) Is the contract price to be calculated on 5,000 square feet or 5,607 square feet?

[42] Despite the uncertainty in the translation between the two languages in the contract documents, particularly concerning price, and despite the fact that the drawings were only in English, which Mr. Zhou did not understand, neither side took the position that there was no contract between the parties. They both agreed that there was a contract, that the initial contract was embodied in the Base Contract, the Addendum and the Chiu drawings, and that the contract was amended by the May Agreement. They argued that the issues turned on the interpretation to be given to these documents.

[43] Based on the evidence, I have come to the same conclusion. Concerning the three requirements for a binding construction contract – scope, price and schedule – there was some uncertainty in the end concerning price and scope, and I will deal with those uncertainties in the sections below. The schedule was the one that the parties agreed to in the Addendum, namely a 10 month schedule. Therefore, I find that there was a binding contract, and that my focus should be on the interpretation to be given to the contract documents.

[44] The first issue that requires clarification concerns the calculation of the base contract price. The Base Contract states in its second paragraph that the “TOTAL PRICE” will be $690,000 plus tax. That price is expressly stated to be the result of the calculation of $138 per square foot x 5,000 square feet, which equals $690,000. There is no reference in the document to the price being changed to account for a larger footprint. Nevertheless, RPC calculates its claim based on the larger square footage calculation of 5,607. It is undisputed that this larger figure is an accurate calculation of the size of the main and second floors.

[45] This issue was resolved quickly for me when I re-read the defendants’ pleading entitled, “Reply to the Claim for Lien.” In the first three paragraphs of this document, the defendants concede that the base contract price should be calculated on 5,607 square feet, not 5,000 square feet. As stated in Marchand (Litigation Guardian of) v. Public General Hospital Society of Chatham, 2000 ONCA 110, 2000 CarswellOnt 4362 (Ont. C.A.) at paragraph 77, a pleading admission is conclusive as to the matter admitted. Given this admission, I find that the base contract price must indeed be so calculated, namely on the basis of 5,607 square feet.

b) Is the contract price to be deducted by the first three items of the Base Contract?

[46] In the course of the trial, it came out that the Mandarin version of the first three numbered paragraphs on the first page of the Base Contract did not correspond with the English version of those paragraphs. The English version of those paragraphs specified simply three different payment milestones. The three milestones are three stages prior to commencement of on-site construction work, namely meeting with the architect and engineer, completion of the drawings and submission of the work permit. The Mandarin translation, which was generated in the course of the litigation and which was accepted by both sides, adds the following to each of these three milestones: “Already includes 13% tax. The owner has already paid this amount of money. Be deducted from the construction cost.” There are no corresponding clauses in the English version of those milestones.

[47] There were two explanations for this addition. Mr. Binavince argued that Mr. Zhou unilaterally inserted the Mandarin clauses on August 22, 2012, the date the Base Contract was signed, without alerting Mr. Kwok to the change, and that Mr. Kwok did not agree to these changes. Mr. Zhou, on the other hand, argued initially that the Mandarin version was in the form of the contract that Falong had drafted. He argued that the changes were agreed to because the contract was a design-build contract with RPC agreeing to repay the “soft costs” incurred by the defendants in the first three milestones. Mr. Kwok denied this assertion.

[48] I reject Mr. Zhou’s argument. As stated earlier, I found Mr. Kwok generally more credible than Mr. Zhou. Furthermore, there was no other evidence that RPC took on the responsibility of design. The Chiu drawings were obtained by Mr. Zhou under the Sun contract, and there was no evidence that RPC agree to pay the “soft costs.” In addition, the contract wording does not support Mr. Zhou. If the parties had agreed to the change, it would have been reflected in the English version as well as the Mandarin version. It was not. The English version of the three clauses specifies only milestones for payment of the contract price. I find, therefore, that Falong did not insert the changes in the Mandarin version of the clauses, as those changes were not agreed to and he had no reason to make the changes. I find that Mr. Zhou inserted the changes unilaterally, as it was in his interest to do so.

[49] Mr. Zhou also argued in the alternative that Mr. Kwok was made aware of the changes by Falong who was present and read Mandarin. Mr. Kwok denied this as well. Again, given my view of Mr. Zhou’s credibility as discussed above, I accept Mr. Kwok’s evidence. Mr. Kwok’s evidence also strikes me as more reasonable in the circumstances. The meeting on August 22, 2012 was the third of three meetings between the two men. By that point the contract price had been agreed upon. That is clear from the fact that Mr. Zhou himself made no effort to change the Base Contract price on the first page, which price included the first three milestone payments. With the contract price agreed to and visibly unchanged, there was no reason for Mr. Kwok to have Falong re-read the Mandarin on the first page. Mr. Kwok stated that he briefly reviewed the English version of the Base Contract and moved on quickly to the new document that Mr. Zhou produced for the first time that day, namely the Addendum, which he had Falong translate for him. This evidence makes sense to me in the circumstances. I, therefore, find that Mr. Kwok was not made aware of this late change to the Base Contract and did not agree to it.

[50] This leads to the further question as to whether the parties agreed as to the contract price, thereby potentially introducing an uncertainty as to whether there is a binding contract. In my view, the parties did agree to a contract price. The evidence indicates that this happened before the third meeting. The evidence indicates that Mr. Zhou tried unilaterally to get a reduction in the contract price of $57,969 (the total of the first three milestones) on the date the contract was signed and that he did so, not in an open and honest way, such as by way of a clear announcement of the change, but instead by subterfuge through an unannounced change in the Mandarin version pertaining to three milestone payments of the contract price, which version of the milestones he knew Mr. Kwok could not read and had no incentive by that point to have Falong read. This subterfuge is a change in the agreed upon contract price that is not binding, as it was not agreed to.

[51] In making my analysis on this point, I am aware of the general law of contract interpretation as described by the Court of Appeal in Kentucky Fried Chicken Canada v. Scott’s Food Services Inc., 1998 CarswellOnt 4170 (Ont. C.A.). The Court stated at paragraph 25 that, while contract interpretation must always begin with the wording in the agreement, the general context that gave birth to the document must considered. The Court also stated in paragraph 27 that a court should apply sound commercial principles and good business sense as well. I believe I have done so here. The Mandarin clauses that Mr. Zhou inserted at the last minute in the document (a document that was agreed to) contradict their English counterpart, thereby creating an internal conflict in the document. This is a conflict that was entirely one-sided in favour of the defendants. It will not be countenanced.

c) Are the defendants entitled to withhold 10% of the contract price for quality assurance?

[52] In their pleading, the defendants allege that they are entitled under the contract documents to withhold 10% of the contract price as “the quality assurance deposit” until 45 days after the completion of the work. This point was not dealt with at length in argument. I will deal with it here.

[53] The Base Contract refers to the withholding of “10% deposit . . . until 45 days after the completion of all work.” There is no reference here to “quality assurance.” I interpret this portion of the Base Contract as an effort to conform to the holdback requirements of the Construction Lien Act, R.S.O. 1990, c.C.30 (“CLA”). These holdback requirements are security for unpaid accounts and claims, not for quality assurance. I, therefore, do not find that the defendants are entitled to withhold 10% of the contract price as a quality assurance deposit until 45 days after the completion of the work. The Base Contract contains a separate, one year, guarantee concerning “workmanship” and “material.”

d) Did the defendants agree to pay the April 28, 2014 invoice for extras?

[54] Items 3 to 67 of Scott Schedule A1 concern the claimed extras in the April 28, 2014 RPC invoice. In the Scott Schedule, the defendants deny these claims alleging that they form a part of the original contract scope and because they were not approved by Mr. Zhou in writing as required by paragraph 3 on page 2 of the Base Contract.

[55] Mr. Binavince’s primary argument was that in the May Agreement the defendants agreed to pay for the extras in the April 28, 2014 invoice. I am satisfied that the April 28, 2014 invoice was the main reason for the initial purported contract termination. Mr. Zhou purported to terminate the contract by the letter from his paralegal, Mr. Chan, dated May 13, 2014. Two reasons were given in the letter for the purported termination: project delay; and the absence of approval for the “variation orders.” There had been delays before the April 28, 2014 invoice, without consequence. It is clear to me, therefore, that it was the extra charges in the April 28, 2014 invoice that upset Mr. Zhou to the point of taking this serious step.

[56] Discussions between Messrs. Zhou and Kwok ensued, and the May Agreement was entered into on May 20, 2014. The May Agreement contained the following: deadlines for the remaining work; a penalty of $30,000 for failing to meet the deadlines; a deduction from the contract price for government and utility payments Mr. Zhou had made; a promise by Mr. Zhou to remove fixtures not approved by RPC; and a payment of $30,000 to RPC by May 21, 2014 to restart work. The last clause of the agreement required that all “future addition and/or variation orders/jobs” be approved by Mr. Zhous in writing before there would be an entitlement to payment.

[57] There was no express reference to the April 28, 2014 invoice in the May Agreement. However, Mr. Kwok’s evidence was that Mr. Zhou verbally promised to pay it when the May Agreement was signed. He said this was one of the reasons he returned to work. Mr. Zhou denied this verbal agreement. However, at his examination for discovery, when he was discussing the May Agreement, Mr. Zhou, through his interpreter, gave a clear “yes” to the question: “And any changes or additions up to May 20th, you were going to pay for, correct?” The only “changes or additions” charged prior to May 20, 2014 were those claimed in the April 28, 2014 invoice. This, therefore, amounted to an admission against the defendants’ interest, an admission that was never formally withdrawn. Therefore, it carries considerable weight.

[58] Other evidence bolstered the credibility of Mr. Zhou’s discovery admission. His answer was, in my view, consistent with the content of the May Agreement. A primary purpose of the May Agreement was to resolve the RPC claim for extras. As stated earlier, the RPC claimed extras had triggered Mr. Zhou’s purported contract termination that led to the May Agreement. The result of the May Agreement was that RPC returned to work. The only reference in the May Agreement to extras was to future extras and the requirement that they be approved in writing. The reasonable inference to be drawn from this evidence, and that I do draw, is that Mr. Zhou indeed agreed to pay for the past extras claimed in the April 28, 2014 invoice, as he said he did at his discovery.

[59] I note that in Scott Schedule A1 the defendants do not dispute that the alleged extra work was done. There was only one exception, namely the item for the mirror lights in the bathrooms ($1,620), but I note that this item was more than offset by the 16 extras RPC did not charge.

[60] I note as well that the defendants’ repeated response in Scott Schedule A1 to the RPC claimed extras was that Mr. Kwok had not obtained Mr. Zhou’s written approval in accordance with the Base Contract clause 3 on page 2. This is a procedural issue. The common law makes it clear that the parties can by their conduct amend the scope of a construction contract regardless of such a contractual requirement, particularly where the owner is or should be aware of the changes and acquiesces in the contractor performing them without written approval; see Colautti Construction Ltd. v. Ottawa (City), 1984 CarswellOnt 731 (Ont.C.A.) at paragraphs 29 and 30, and 2016637 Ontario Inc. v. Catan Canada Inc., 2013 ONSC 4727 at paragraphs 13 and 14. Mr. Kwok’s evidence was that Mr. Zhou attended at the site on a regular basis, was aware of the work that was going on as a result, was familiar with the Chiu drawings (regardless of the fact that they were in English) and, of course, knew of the “standard” that had been set by the Brimley House that both men had in mind when they signed the contract documents on August 22, 2012. Mr. Zhou did not disagree with these points. Therefore, Mr. Zhou would have or should have known of extra work when it happened and acquiesced in it, thereby making his agreement to pay for past extras in the May Agreement understandable and fair.

[61] I also note that the defendants have in several of their responses in Scott Schedule A1 referred to the Addendum, alleging that the claimed extras were outlined in the Addendum and, therefore, were a part of the contract scope. The following items include such responses: items 47, 48, 49, 51, 52, 33, 54, 55, 56, 57, 58, 59 and 60. This is an issue of scope.

[62] The Addendum scope of work must be viewed in its proper context. It was Mr. Kwok’s clear evidence that the scope of RPC’s contract work, agreed to by the parties, was what was included in the Chiu drawings for the main and second floors, with the quality of the work not to fall below the “standard” of the Brimley House. What was excluded, therefore, was the work in the basement, garage and exterior. He said that it was industry practice to exclude the basement, garage and exterior work from a residential contract price based on a per square footage rate, such as the $138 per square foot rate in the Base Contract. He said that he advised Mr. Zhou of this limitation. Mr. Kwok’s position about the tendering practice in the Toronto construction business was corroborated by the evidence of the two experts called by RPC, Messrs. Emmons and Banovic, who impressed me with their knowledge of industry practice.

[63] The defendants’ expert, Mr. Jing, on the other hand, stated that scope under a rate-based contract price like this in the Toronto residential industry was a “matter of negotiation.” In this regard, Mr. Zhou insisted that the parties negotiated to include the Addendum work in the $138 per square foot rate. This evidence was contradicted by Mr. Kwok. Mr. Kwok stated that he signed the Addendum as an extra to the scope as defined above. He said that the Addendum was introduced by Mr. Zhou on August 22, 2012 after the Base Contract was signed, and that, after Falon read it to him, he, Mr. Kwok, got Mr. Zhou to agree that work specified in the Addendum that was outside the scope as defined above would be done but charged as an extra. Mr. Zhou, of course, denied this, insisting that Mr. Kwok agreed to do all of the work in the Addendum as part of the contract scope. As stated earlier, I prefer the evidence of Mr. Kwok and the plaintiff’s experts to that of Mr. Zhou and the defendants’ expert whenever the two conflict.

[64] Other evidence supported Mr. Kwok’s position. Messrs. Emmons and Banovic both stated that the $138 per square foot rate in the Base Contract was quite low for the work specified in the contract documents. Therefore, it is unlikely that Mr. Kwok would have agreed to include other work in the base rate. Finally, I note that clause XI of the Addendum itself referred only to “pertinent content” in the house being included in the $138 per square foot rate, and that this content did not include the “basement, garage, storm door and balcony.” This clause is consistent with Mr. Kwok’ evidence.

[65] As a result, I find that the parties had a clear idea of the contract scope at the time of the contract, and that this scope was what Mr. Kwok said it was. Therefore, Mr. Zhou would have or should have known what was an extra to the contract work as it was being done, and that the inclusion of the work in the Addendum did not undercut RPC’s entitlement to being paid as an extra. This all, again, makes it reasonable that Mr. Zhou would have agreed to pay for the extras in the April 28, 2014 invoice, as he said he did at his discovery.

[66] I, therefore, find that the defendants agreed to pay the extras in the April 28, 2014 invoice as part of the May Agreement, as Mr. Zhou admitted at discovery. The defendants, therefore, must pay these extras.

e) If there was no agreement, which of those extras, if any, is RPC entitled to?

[67] As I have determined that the defendants must pay for the extras in the April 28, 2014 invoice, I do not have to determine this issue, and I do not do so.

f) Is RPC entitled to extras for the basement, window precast and the wooden edge?

[68] There are three alleged extras in Scott Schedule A1 that were not billed in the April 28, 2014 invoice. The first item is the work of finishing of the basement in the amount of $56,500; the next item is the installation of the exterior window precast in the amount of $9,605; the third item is the installation of the extra tall circular wooden edge for the interior circular staircase in the amount of $1,695. Mr. Kwok stated that he did not include these items in the April 28, 2014 invoice for essentially two reasons: the basement work was not done at that time; and the other two items he overlooked.

[69] I am satisfied that RPC is entitled to the claimed extra charge for the basement work. For the reasons already stated, I find that this work was not included in the original contract scope. I also find that Mr. Zhou required that this work be done, and acquiesced in it being done without written approval. The defendants did not deny that the work was done. As to the reasonableness of the quantum of the claim, I note that Mr. Emmons valued the work at almost twice the claimed amount. Therefore, the quantum is quite reasonable. I, therefore, grant this claim as well.

[70] I am also satisfied on balance that RPC is entitled to the claim for the exterior window precast. In his report Mr. Emmons gave that claim “no value” as the “drawings provided indicate precast cement trims.” He did not, however, identify this drawing reference, and I was not able to find it. Therefore, in the circumstances, I have no choice but to find that RPC is entitled to an extra for this item. There was no dispute as to its quantum. I find that RPC is entitled to an extra for the exterior window precast in the amount claimed.

[71] Concerning the wooden edge, Mr. Emmons did not assign a value to the claim as he described it as a “repeat item.” I do not accept that point. In cross-examination, Mr. Emmons acknowledged that the drawings did not include the edge, as Mr. Kwok stated in his evidence. The only other extra claim concerning the staircase is item 61 in Scott Schedule A1, but this item deals with the width and length of the stairway, not the edge. There was no dispute as to quantum of the claim. I, therefore, grant this extra claim as well.

g) Was the RPC contract improperly terminated?

[72] The May Agreement reinstated and amended the RPC contract. It imposed deadlines for the work and specified that RPC would be “penalized” by $30,000 “in case RPC could not complete all the works by the above mentioned dates.” There is no dispute that RPC did not complete the work by the specified deadlines.

[73] What was left to be done by June 11, 2014, the first deadline, was not clear. What is clear is that Mr. Zhou did not exercise his contractual right to a $30,000 penalty. Instead he had his lawyer, Jayson Thomas, write a letter to Mr. Kwok dated June 16, 2014 advising that Mr. Zhou had evicted RPC from the premises and changed the locks. The primary reason given was the failure to meet the first deadline. There was also reference to Mr. Kwok’s failure to contact Mr. Zhou about issues concerning the water and natural gas connection.

[74] In my view, this was an improper contract termination. The May Agreement expressly provided a remedy of damages for delay beyond the specified deadlines, namely $30,000. Mr. Zhou did not avail himself of this remedy, but went much further and terminated the contract. To justify contract termination, particularly in these circumstances, the defendants had to show that RPC had “repudiated” the contract, namely that its contract breach “struck at the heart of the transaction”; see Jorian Properties Ltd. v. Zellenrath, 1984 CarswellOnt 1376 (Ont. C.A.) at paragraph 22.

[75] This principle has been applied to construction contracts. In LDR Contracting Inc. v. Filion, 1996 CarswellOnt 2862 (Gen. Div.), the court found improper a purported contract termination by an owner due to the failure by the contractor to correct deficiencies when the evidence was that the deficiencies were minor and not a “repudiation” of the contract, and that the contractor continued to perform. The evidence in the case before me from Mr. Kwok was that he was working diligently on the project and that the end of the work was in sight. He referred me to several photographs of various aspects of the project that he took shortly before June 16, 2014, all of which showed that the project was close to completion. Mr. Kwok also stated that he was constantly being interrupted by Mr. Zhou, particularly after June 11, 2014, and that he, Mr. Kwok, would have continued to work but for the contract termination. Mr. Zhou of course denied this. Given my view of credibility as explained earlier, I accept Mr. Kwok’s evidence. There was no repudiation by RPC.

[76] Furthermore, and this is important, there was nothing of great note that turned on the specified deadlines. The defendants always intended to have one of their sons occupy the house. The sons at the time resided, and continue to reside, in China. The house stands empty. In short, nothing of great note turned on RPC’s failure to meet the deadlines. This lack of urgency was reflected in the May Agreement when the parties specified only a damage remedy for the failure to meet the deadlines. In the circumstances, the contract termination struck me as an unjustified and impulsive act by Mr. Zhou.

[77] Mr. Zhou mentioned at various times that the contract termination was justified due to the overall lengthy delay in RPC’s work. In my view, such larger issues of delay was resolved in the May Agreement when the parties agreed to the new deadlines. However, I note in any event that the original schedule in the Addendum of 10 months was substantially delayed for reasons beyond RPC’s control, such as the permit delay, the changes already discussed, roof complexities, the change in basement height, the change in fixtures, the furnace change, and the repainting. This was no doubt the reason the defendants entered into the May Agreement specifying new deadlines. I do not accept Mr. Zhou’s point.

h) What damages can RPC claim, if any?

[78] Improper contract termination by an owner disentitles the owner to damages, such as the $30,000 specified in the May Agreement in this case. It also entitles the innocent contractor, in this case RPC, to damages. What are these damages?

[79] The evidence was not clear as to whether RPC had finished the original contract scope. In any event, if it had not so finished, there was no dispute that, in these circumstances, RPC is entitled to the remainder of its contract price plus earned and unpaid extras. I so find.

[80] The only issue was whether RPC is entitled as well to the 10% of the contract price specified in clause 2 of page 2 of the Base Contract. This clause specified that, should the contract be cancelled 48 hours after “the Effective Date,” namely after August 22, 2012, RPC would be entitled to a “cancellation fee” of 10% of the contract price. This amount is $77,376.60 plus HST.

[81] Mr. Binavince conceded that at this late stage in the contract performance, this clause appeared to be an unenforceable penalty clause, and not a genuine pre-estimate of damages. He nevertheless argued that the amount does reflect a genuine RPC damage claim and therefore should be enforced; see Infinite Maintenance Systems Ltd. v. ORC Management Ltd., 2001 CarswellOnt 59 (Ont. C.A.) at paragraph 14.

[82] Mr. Binavince referred me to the evidence of Mr. Emmons, the quantity surveyor, who stated in re-examination that, in his view, the real cost of constructing the house would have been in the $150 to $200 per square foot range. The argument was that, taking the lowest number in that range, $150 per square foot, there was, therefore, a $12 per square foot “loss” that RPC suffered for having to perform this contract. $12 per square foot x 5,607 = $67,284 plus HST. This $67,284 roughly corresponds with the cancellation fee.

[83] I do not accept this argument. Damages are to put the innocent party in the same position as if the contract, namely the contract that was entered into, had been performed. Mr. Binavince’s argument essentially asserts that I should “correct” what is an inequitable contract price for RPC. Unfortunately, that is not the role of the courts. RPC must live with the contract it made, and its damages must be calculated accordingly.

[84] I do not find that RPC is entitled to the cancellation fee or damages equivalent to it.

i) Are the defendants entitled to back-charge for the items in Schedule A2?

[85] Scott Schedule A2 contains the back-charges that the defendants are asserting as against RPC for costs the defendants allege they have already incurred. The question is whether they can assert these back-charges.

[86] Having improperly terminated the RPC contract, the defendants cannot, in my view, back-charge RPC for uncompleted work in Schedule A2. RPC was wrongfully deprived of the opportunity to complete its work by the defendants’ improper contract termination.

[87] The question of the back-charges for deficiency correction costs is more nuanced. The defendants might argue that not allowing a back-charge for these costs would be a windfall to RPC, as it would have had to incur these costs to correct the deficiencies had the contract not been terminated. However, on the other hand, there is the view that the defendants are not in a position as a matter of equity to complain of this result when they have wrongfully deprived RPC of its right to correct its own deficiencies. Furthermore, it is well recognized that the original contractor can usually complete the correction work for less cost than can a third party. Therefore, having a third party do the correction is prejudicial to the original contractor.

[88] Mr. Binavince referred me to my decision in TIF Mechanical Ltd. v. Ortolli, 2016 ONSC 3172 at paragraph 73 where I referred to the general doctrine at common law that a contractor who is not in breach of contract and who is wrongfully deprived of its right to correct its own deficiency work, should not be back-charged for the cost of correcting those deficiencies. I referred to the decision of Master Albert in Grainger v. Flaska, 2013 ONSC 4863 at paragraph 45 and the decision in C.S.Bachly Builders Ltd. v. Lajlo, 2008 CarswellOnt 6542 (ONSC) at paragraph 87 in describing this doctrine.

[89] There are reasons for applying that doctrine to this case. In TIFF I did not apply the doctrine because there was no contract termination in that case, and therefore no evidence that the contractor had been deprived of an opportunity to correct its work. In the case before me, however, that is not the case. Here there was a contract termination and it was wrongful.

[90] There is also no evidence that RPC was given any opportunity to correct the alleged deficiencies. Mr. Kwok made it clear that he was not given a list of deficiencies or even verbal complaints about RPC’s work before the contract termination on June 16, 2014, or thereafter until the litigation. Mr. Kwok conceded that during a drive-by prior to June 16, 2014 he did become aware of dislodged shingles on the roof, but he stated that he did not consider these shingles to be deficiencies as they were the result of strong winds. He stated that Mr. Zhou raised no issues of work quality prior to the litigation. I find that the deficiencies listed in the Scott Schedules came out only during the litigation.

[91] In addition, the purported contract termination gave the defendants no good reason to deprive RPC of its right to correct its own deficiencies. The contract breach that was used to justify the contract termination had nothing to do with alleged deficient work. The June 16, 2014 letter from Mr. Thomas made reference to delay and to the veracity of the credentials of the RPC natural gas technician; but there was no complaint about the quality of the RPC work. Furthermore, there was no other evidence that the defendants quarreled with the quality of RPC’s work at that time. Also, that RPC was capable of correcting its deficiencies was not disputed. Indeed, the RPC pictures of the house at the time of the purported contract termination underscore the quality of the RPC work. Finally, and most importantly, the house was at the time, and remains, unoccupied. The contract termination was the result of Mr. Zhou’s frustration with the pace of construction; but there was no objective deadline that forced Mr. Zhou to deny RPC its right to correct its own deficiencies. I am compelled to apply the doctrine to this case as a result.

[92] There are other issues concerning the defendants’ alleged back-charges in Scott Schedule A2. There is the question of spoliation. Mr. Zhou had other contractors, such as Mr. Xie, complete deficiency work without giving RPC an opportunity to examine the alleged deficiencies. This amounted to a destruction of the evidence concerning the deficiencies, which prejudiced the RPC defences to these claims, thereby raising the tort claim of spoliation. There is now a recognized tort claim of spoliation where a party deliberately destroys evidence important to the other party’s case; see Spasic Estate v. Imperial Tobacco Ltd., 2000 ONCA 216, 2000 CarswellOnt 2522 (Ont. C.A.) at paragraph 22. I believe it applies to this case. There was no reason for the defendants to avoid providing RPC with an opportunity to at least examine the alleged deficiencies, particularly since the house stood empty.

[93] There is also the issue of the evidence of the deficiencies. Mr. Jing, the defendants’ expert, admitted that he could not assess the deficiency claims of the defendants in depth due to lack of direct evidence. He stated that he relied entirely on Mr. Zhou’s evidence and photographs. The onus of establishing the deficiency claim is on the defendants, and this evidence does not meet that onus.

[94] The following items of Scott Schedule A2 concern alleged uncompleted work: 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 12, 14, 17, 18, 19, 21, 24, 26, 27, 28, 29 and 30. For the reasons stated, I deny these back-charges. Item 20 is a back-charge for the defendants’ purchase of floor tiles and bathroom fixtures. RPC admits that this purchase in the amount of $12,541 is in RPC’s scope and should be deducted from the RPC claim. It will be so deducted. Item 22 is a back-charge for alleged legal services. Legal services are not required by the contract to complete the work. It is also denied.

[95] The following items of Scott Schedule A2 concern alleged deficient work: 11, 13, 15, 16, and 21. For the reasons stated above, I deny these back-charges. Item 23 was a repair to the neighbor’s basement that was already paid by RPC. It is denied. Item 25 is an alleged back-charge for a “penalty” for allegedly starting the demolition before the permit was issued. There was no evidence of this penalty, and this item is also denied.

[96] I, therefore, find that the defendants are entitled to a back-charge of no more than $12,541 for the items on Scott Schedule A2. The remaining back-charges are denied.

j) Are the Defendants entitled to back-charge for the items on Schedule A3?

[97] Scott Schedule A3 contains 15 back-charges that the defendants are asserting against RPC for costs they allege they have yet to incur. The work has allegedly not been done. Can the defendants assert these back-charges?

[98] In my view, the same analysis applies here. The following items concern alleged uncompleted work: 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 12, 13, 14 and 15. The following item concerns alleged deficient work: 11. Whether the work concerns uncompleted contract scope, extras or deficiency correction, the defendants are pre-empted from asserting these back-charges in light of their wrongful contract termination.

[99] For the reasons stated, I deny these back-charges.

l) What is the final accounting between the parties?

[100] It is undisputed that the defendants paid RPC a total of $773,027.50. The $138 per square foot rate is $155.94 per square foot when HST is included. The parties did not indicate that the other totals in the Scott Schedules are not HST inclusive. I, therefore, presume that they are.

[101] Therefore, the final accounting between the parties is as follows:

Claim	Basis and/or calculation	Total
RPC contract scope	5,607 x $155.94	$874,355.58
RPC April 28, 2014 invoice	Schedule A1, Items 3 to 67	$68,421.50
RPC extra (basement)	Schedule A1, Item 2	$56,500.00
RPC extra (precast windows)	Schedule A1, Item 68	$9,605.00
RPC extra (wooden edge)	Schedule A1, Item 69	$1,695.00
Defendants’ payments	Undisputed	($773,027.50)
SUBTOTAL:		$237,549.58
Defendants back-charges	Schedule A2, Item 20	($12,541.00)
GRAND TOTAL:	To be paid to RPC	$225,008.58 (inclusive HST)

[102] I, therefore, find that RPC is owed $225,008.58 (inclusive HST).

[103] On June 25, 2014 RPC registered a claim for lien on in the amount of $102,321.50 in a timely way. On August 6, 2014 RPC purported to perfect the lien by having a Statement of Claim issued and a Certificate of Action registered. The timing of the purported perfection was fine. However, the Statement of Claim sought a declaration for a lien in the amount of only $68,421.50. On November 21, 2014, the Statement of Claim was amended to refer to the proper amount of the claim for lien, namely $102,321.50.

[104] The point about lien perfection was not argued. I note that CLA section 36(3) specifies that a lien is perfected where the lien attaches to the premises, such as the one here, where the lien claimant commences an action “to enforce the lien” and registers a certificate of action. There is no doubt that this happened in this case in a timely way. Furthermore, the original Statement of Claim contains a contradiction, as the prayer for relief called for a declaration of a lien in the amount of $68,421.50 and then attached the registered claim for lien in the amount of $102,321.50. No doubt, the prayer for relief contained an error. I note that the courts have now generally called for a liberal and generous interpretation of pleadings. In my view, the defendants should have known by reading the original Statement of Claim that there was an error in the prayer for relief. I, therefore, also find that RPC preserved its lien in the amount of $102,321.50.

[105] I, therefore, also find that RPC is entitled to a lien on the premises in question plus a personal judgment for damages for breach of contract against the defendants in the amount $102,321.50, and is entitled to a further personal judgment against the defendants for the balance, namely $225,008.58 -$102,321.50 = $122,687.08.

VI. CONCLUSION

[106] In conclusion, I find that the defendants are personally obligated to pay RPC $225,008.58 (HST inclusive) and that RPC is also entitled to a lien on the Pitfield Property for part of this amount, namely $102,321.50. I allow the RPC action accordingly and dismiss the counterclaim.

[107] The issue of prejudgment interest was not addressed in argument. It will have to be addressed in the final written submissions on costs.

[108] At the conclusion of the argument on February 7, 2017, January 20, 2017, as ordered, the parties filed costs outlines for the reference. The RPC Costs Outline shows a partial indemnity amount of $73,307.24. The defendants’ costs outlines shows an amount of $28,201.43.

[109] Generally costs follow the event. In this case, RPC was the successful party on almost all of the issues in the dispute.

[110] If the parties are unable to agree on costs, the parties may deliver written submissions on costs. Submissions may not exceed three pages (typed, 8 ½” x 11” pages, double spaced, minimum font size 11). The submissions of RPC must be delivered on or before July 14, 2017. The defendants’ submissions must be delivered on or before July 28, 2017. The RPC reply submissions, if any, must be delivered on or before August 2, 2017.

[111] These submissions must address not only the issue of costs, but also the issue of what prejudgment and post-judgment interest must be included in my report.

[112] If the parties are unable to agree on the form of my final report, an attendance may be required to settle the report.

Released: June 30, 2017 MASTER C. WIEBE

COURT FILE NO.: CV-14-509784 DATE: June 30, 2017 ONTARIO SUPERIOR COURT OF JUSTICE BETWEEN: RPC Construction Ltd. Plaintiff

• and – Zhiyi Zhou and Li Na Wu Defendants REASONS FOR JUDGMENT Master C. Wiebe

Released: June 30, 2017