ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO.: 3610/10
DATE: 2013-02-14

B E T W E E N:

INSIDE OUTSIDE HOME SERVICES INC.

F. Caplan, for the Plaintiff

Plaintiff

• and -

EINSTEIN DESIGN, JEAN PAUL FORIN (1997) INC. CANAPEN (HALTON) LIMITED, IVANHOE CAMBRIDGE INC., FRANCOIS MONAT, FRANCOIS MATTE, MARIO TOUPIN, LINA GILBERT

J. Desjardins, for the Defendant

Defendant

HEARD: January 12 & 13, 2012
Written submissions January 30, 2012

REASONS FOR JUDGMENT

Justice Thomas M. Dunn

Overview of Facts

[1] This is a construction lien action for the balance of monies due, inclusive of extras. There is a substantial counterclaim for work uncompleted and for delay in completion.

[2] The plaintiff agreed to construct a retail store for the defendant’s client situated within a retail shopping centre or mall.

[3] The agreement, such as it was, is evidenced in part by a quote of the plaintiff (accepted by the defendant) on February 8, 2010. I find this to be the basis of their agreement, although, as in many construction contracts, variations here abound.

[4] The plaintiff now seeks the following original agreed price:

$66,450.00 Main construction agreement plus GST

$16,100.00 Electrical work plus GST

Extras performed by the plaintiff are also in dispute in part.

[5] Things went awry from the start. The plaintiff required a deposit and certain materials to begin work, and additional materials to be supplied as the job progressed. These were often late.

[6] Nevertheless, the plaintiff began preliminary work by February 20, 2010. One key piece of evidence from the plaintiff was that six weeks were needed to complete the proposed construction.

[7] I find it significant that the defendant failed to pay the initial deposit of $20,000.00. As well, a second deposit of $30,000.00 was at least two weeks late. This seems to reflect a casual approach by the defendant, particularly when contrasted with the short timetable it was demanding.

[8] As work progressed, the defendant made clear to the plaintiff that its proposed end user was pressing for completion and that it expected a completion date of March 22, 2010. The plaintiff, albeit with some misgivings, agreed to attempt completion by that date.

[9] Unfortunately, circumstances conspired to derail the timetable structures imposed by the client. The nature of the delays resulted in the defendant providing its own experienced workers to help the plaintiff to complete the project on time. Still, the store opening was delayed until April 8, 2010. As a result, the client back-charged the defendant for some of the delay. The defendant seeks to recover this cost from the plaintiff.

[10] The remaining issues are as follows:

I. The balance due to the plaintiff under the agreement, plus extras;

II. The value of the uncompleted or improperly completed work, the corresponding costs of such completion to the defendant, as well as the back-charge for the delay; and

III. The issue of the timing and the validity of the lien.

I. Balance due under an agreement and extras

[11] On these issues, the evidence establishes the following:

Clearly, the plaintiff did not complete the agreed upon work on time. Some of the blame must be borne by the defendant for late supply of some materials, but these are minor matters.

[12] The plaintiff encountered unforeseen delays in manpower as the target date approached. One subcontractor refused to return to the job site after the client unlocked the wheels on scaffolding, which resulted in an incident and threatened his well-being.

[13] I find that the defendant was late or failed to supply the proper materials from time-to-time; however, the effect of this is almost impossible to estimate in context.

[14] I cannot conclude that the defendant acted unreasonably in obtaining outside assistance when the plaintiff encountered construction delays. At the same time, the defendant was under great pressure from for its longstanding customer for timely completion.

[15] The plaintiff submitted a final extras bill well after ceasing to participate in the construction. According to the plaintiff’s evidence, this occurred after the plaintiff learned of the amount of the back-charges being claimed by the defendant. While there is some support for this claim, the circumstances of its documentation and lack of timeliness do not allow for such a conclusion on a balance of probabilities.

[16] However, I am satisfied that the charge for bathroom changes was a proper one and is to be allowed to the plaintiff. As well, the extras delineated on the plaintiff’s invoice of March 30, 2010 have properly been completed, with the exception of the items for moving the cash desk and hoarding removal. Therefore, the reduced amount for extras is $8,408.00, plus GST.

[17] As to the extra claimed for moving the cash desk, the plaintiff’s claim is based on the defendant’s failure to respond to this error in a timely way, making the relocation of the desk more costly. However, the error in the first instance was the plaintiff’s and I am not convinced that the defendant added to the cost of this correction. As to the $750.00 charged as an extra for removal of hoarding, the evidence supports that defendant the defendant, not the plaintiff, did this work.

[18] Additionally, the plaintiff’s invoice dated May 6, 2010 has not met the required standard and is, therefore, not allowed.

II. Value of work uncompleted and/or completed by defendant

[19] The plaintiff ran into numerous difficulties in attempting to make the deadline. Promised support from the defendant was often late, if forthcoming at all.

[20] As the actual date neared, it was clear that the plaintiff could not complete on time. At that point, the defendant, by degrees, stepped in and took over most, if not all, aspects of construction through the use of its own crew of experienced trades people. As such, the defendant has back-charged for such services and costs.

[21] The defendant agreed to compensate its client for a one-day delay in opening, and for the cost to the client in having its employees complete the clean up. These charges, a figure apparently suggested by the defendant and accepted by the client, totalled $3,990.00.

[22] Frankly, I am not convinced that the defendant was obligated to pay this, except to foster or preserve its goodwill with the longstanding client. In any case, it should not, in the circumstances, be the plaintiff’s obligation.

[23] The defendant laid out in detail back-charges totalling $33,914.73 in an invoice to the plaintiffs, dated April 10, 2010. Of this, the client’s rebate amounted to $3,990.00.

[24] Of the other eight items in that invoice, I have made the following conclusions based on the evidence before the court:

(i) Relocating cash counter - $2,000.00

The defendant’s evidence confirmed that the cash counter had to be moved a second time after the initial construction by the plaintiff. The reasons for this as given were not convincing. It is more likely that this was originally intended to offset the plaintiff’s extra, which I have not allowed. This claim is disallowed.

(ii) Hoarding dismantle - $750.00

As indicated above, I find that this work was done by the defendant and is allowed.

(iii) Adjustment metal strips

The evidence for this back-charge does not allow for the conclusion that this was done by the defendant, as opposed by the plaintiff. This claim is disallowed.

(iv) Dean - $3,000.00 (three weeks of supervision at $1,000.00 per week)

I find this item to be exaggerated by the defendant, when considered against the proposal of the defendant to provide support to the plaintiff. Allowed $1,000.00.

(v) Round trip flight tickets for five workers - $1,810.50

The defendant brought in its own crew to finish the job as the target date neared. I am not convinced that the expensive option of flying in the defendant’s select crew from Montreal and Winnipeg and the related expenses were necessary. No effort was made to locate and hire local trades people. I find that the defendant’s evidence on this point was evasive and unconvincing. It was expedient and opportunistic to use these people, not necessary. This claim is disallowed.

(vi) M. Boulanger invoice for two workers’ travel, accommodation and work done - $7,765.00.

The defendant submitted two invoices for Boulanger, who also gave evidence in person. He attended the job site on March 24 and 25, 2010 (Invoice T5 $1,225.00). He also attended on April 12 to 14, 2010 (Exhibit 4, Invoice $7,765.00).

Both invoices fail to disclose important details, such as hourly rate and number of hours worked. The first invoice is undated and is not included in the defendant’s back-charge invoice to the plaintiff, dated May 10, 2010. However, the entries represent hours, accommodation and a late meal. Although with some reluctance, given Boulanger’s evidence, I would allow the claim for $1,225.00, since it appears to be largely for work done.

The second Boulanger invoice is dated but suffers from the same deficiencies. Boulanger’s testimony did little to elaborate on the basis of the charges, which include travel, accommodation and work done. The back-charge invoice indicates that it is for two guys, but neither Boulanger’s evidence nor his own invoice discloses sufficient detail to be convincing. Based on what appears to be the hourly rates charged, I would allow part of the back-charge in the amount of $3,000.00.

(vii) & (viii) Invoices from Darryl Burgess - $1,005.38 and $971.25

Based on the evidence, I am convinced that these two invoices are properly charged to the plaintiff. These claims are allowed.

(ix) Claims by F. Matte and Morid - $980.00

Paint, etc., two full days. This claim is allowed.

(x) Car rental and transportation, etc. - $2,254.63

This claim is disallowed.

(xi) Dean helper - $1,210.00 (22 hours @ $55.00 per hour)

This claim is allowed.

(xii) Delay in opening store - $3,990.00

This claim is disallowed.

(xiii) Client employee clean up

The charges for clean up are duplicated in the invoices of others. Both the charges for delay and clean up are not supported by the evidence in these circumstances. This claim is disallowed.

[25] In sum, I find that the defendant has established on a balance of probabilities that the plaintiff should be held responsible for back-charges in the amount of $10,141.63.

Summary

Contract

Electrical

Sub-total

Extras Allowed

Sub-total

(1) Less Back-Charges Allowed

(2) Less Paid by Defendant

Deposit #1

Deposit #2

Balance due Plaintiff

$ 66,450.00

16,100.00

8,408.00

-10,141.63

-20,000.00

-30,000.00

$ 82,550.00

$ 90,958.00

60,014.67

$ 30,816.37

[26]

III. Validity of Construction Lien

(a) Timing

[27] I am content on the evidence presented that the lien was filed and registered within the time limits set out under the Construction Lien Act. It is clear that the plaintiff made more than a minor contribution to the construction.

(b) Lienability

[28] The defendant challenged whether the Act can apply to leased premises, although they were unable to produce any convincing case law to that effect. I would distinguish Kennedy Electric Ltd. v. Rumble Automation Inc. and Dana Canada Inc. 2004 CanLit 447787 (ON S.C.). This case is a good review of the basic principles but dealt with equipment and removable machinery in large part unlike our situation.

[29] Instead they cited defendant Duncan W. Glaholt’s text entitled Conduct of a Lien Action, which states at p.110 that:

Not all work done for a tenant will be lienable in any event, against the tenant because it may not permanently benefit the land. Furniture fittings and equipment may not constitute a supply of services or materials to an improvement.

Further, at p. 112:

Some work performed for a tenant, such as cabinetry, millwork, kiosks, sales or ticket pavilions, refrigeration units, counter, bars, kitchen, serveries, specialized lighting, sound process, manufacturing and delivery systems and the like will not give rise to lien rights in any event, even against the tenant’s leasehold content because it is not an improvement within the meaning of the Act. The commercial tenant’s lease will usually require that the premises be returned to ‘base building’ standard at the end of the lease or upon forfeiture, etc.

[Duncan W. Glaholt, Conduct of a Lien Action 2009, 6th ed. (Toronto: Carswell, 2009].

[30] However, I have no evidence before me that the tenant will be required to return the premises to the landlord in a base building condition. As well, the scope of the work performed by the plaintiff appears to be an ‘improvement’ to the property within the meaning of the Act. Consequently, as far as I am concerned, the lien is a valid one.

[31] Even if I am mistaken about the validity of the lien, my decision on the evidence would stand.

[32] In the result, there will be judgment for the plaintiff as set out above.

IV. Costs

[33] Counsel may address me in writing as to costs within 30 days of the release of this decision. In my absence, costs may be considered and determined by any justice of the Ontario Superior Court of Justice.

Dunn J.

Released: February 14, 2013