ONTARIO

SUPERIOR COURT OF JUSTICE

COURT FILE NO.: 12-048
DATE: 20130327

BETWEEN:

CONNECT ELECTRIC INC.

John D. Middlebro’, for the Plaintiff

Plaintiff

• and -

ROBERT PULLEN and HEATHER GREENSIDES

Allen Wilford, for the Defendants

Defendants

HEARD: March 26, 2013

REASONS FOR JUDGMENT

Conlan J.

Introduction

1This is yet another case which pits a contractor against a homeowner for non-payment of labour and materials supplied.

2The Plaintiff, Connect Electric Inc. (hereinafter referred to by the name of the Corporation’s controlling hand, “Ronald Cook” or “Mr. Cook”), sues the Defendants homeowners, Robert Pullen (“Mr. Pullen”) and Heather Greensides (“Ms. Greensides”) for $7589.45 plus interest and costs. This is a construction lien matter, however, there is no dispute about either the propriety or timeliness of the Lien; the only issue is quantum.

3The substance of the action is non-payment of three invoices rendered by Mr. Cook to the homeowners in January 2012 for labour and materials supplied during the course of Mr. Cook’s electrical work at the new log home being built for the Defendants in Dundalk, Ontario.

4In a nutshell, Mr. Pullen and Ms. Greensides, common law spouses and joint owners of the home in question, admit non-payment of the said invoices but plead that Mr. Cook was a substandard contractor who did bad work.

5The homeowners delivered a Counterclaim for $4,675.00 (the alleged cost to fix the problems caused by Mr. Cook), plus $2,000.00 for general damages, plus $5,000.00 for emotional stress, plus interest and costs.

6Mr. Cook has, not surprisingly, defended the Counterclaim.

7One would think that, given the amounts involved, the parties could have settled this matter and avoided a two-day trial in Owen Sound in March 2013, but here we are.

8The Plaintiff has the burden of proving its Claim against the Defendants on a balance of probabilities, both liability and damages. The Defendants have the burden of proving their Counterclaim against the Plaintiff on a balance of probabilities, both liability and damages.

9The civil standard of proof on balance means, in essence, more likely than not.

The Evidence at Trial

10This was a relatively brief trial with just three witnesses in total – the parties. The evidence is very fresh in my mind as these Reasons for Judgment are being delivered within days of the conclusion of the trial, and thus, I will summarize only the most essential evidence adduced at trial which an appreciation of is necessary to know why the decision is what it is.

11As can be seen from the positions of the parties discussed below, I have used the issues as framed by counsel to focus my summary of the key evidence at trial.

Ronald Cook, on behalf of the Plaintiff

12Mr. Cook is the controlling hand of the Plaintiff Corporation. He has been a master electrician for four years.

13He had an oral agreement with Mr. Pullen to do electrical work at Mr. Pullen’s new log home that was being constructed in Dundalk, Ontario. There was no written contract. There was no fixed price – the agreement was based on time spent and the cost of materials. There was no completion date agreed upon. There was no agreement as to start and finish times for the work at the job site each day. There was no agreement or discussion between Mr. Cook and either Defendant about interest to be charged by the Plaintiff on unpaid invoices.

14With regard to both the garage and the home itself, the Plaintiff charged the Defendants for travel time to the job site each day (about 45 minutes from the Plaintiff’s shop) but not for return travel away from the job site at the end of each day. According to Mr. Cook, such practice is standard in the industry.

15With regard to both the garage and the home itself, Mr. Cook charged the Defendants a 25-30% “mark-up” on materials. That premium is not disclosed on the invoices, nor was it discussed with either Defendant. Mr. Cook denies that he told Mr. Pullen that all materials would be billed at Mr. Cook’s own cost.

16The first phase of the work was in the garage or workshop. That work, including both labour and materials, was paid for in full by the Defendants.

17Mr. Cook, having had experience wiring seven or eight log homes before this job, told Mr. Pullen that log homes require three times the amount of wire and cost three times the amount of labour expense as compared to a regular, non-log home. The extra “looped” wire shown in some of the photographs of the interior of the log home was required to account for the expansion and contraction that can occur in a log home.

18With regard to the interior of the log home, three invoices rendered by Mr. Cook to the homeowners remain unpaid: $6,441.03 (January 9, 2012), $844.91 (January 13, 2012) and $303.51 (January 31, 2012), for a total principal amount of $7,589.45.

19The final invoice ($303.51) was rendered because Mr. Cook did not want to go back to the job site to collect some of his equipment due to the deterioration of the relationship and growing animosity between him and the homeowners. Thus, he purchased new equipment and billed the Defendants accordingly. The heater referred to in that final invoice was installed by Mr. Cook as a favour to the Defendants to prevent the floor from heaving and cracking during a cold weather snap when Mr. Pullen was out of the Province to obtain some cabinets for the log home. Mr. Cook denies that the heater was for his own comfort and that of his apprentice while working or having lunch.

20Mr. Cook states that he never saw any plans or electrical drawings for the log home during the currency of his work at the job site, nor did he ever draw or sketch anything regarding his work that was approved by the Defendants or either of them in advance.

21Essentially, Mr. Cook went around the interior of the log home with Mr. Pullen and marked where Mr. Pullen told Mr. Cook to install certain items, such as an electrical outlet. And Mr. Cook followed those instructions in terms of the work performed.

22Mr. Cook never received any complaint from either homeowner before the conclusion of his work at the job site.

23Mr. Pullen was at the job site virtually throughout the Plaintiff’s work inside the log home.

24Mr. Cook denies all of the complaints of the homeowners about the quality of his work and regarding his work ethic. He denies any shortcomings in the quality of the work performed by his apprentice. He denies that he installed anything contrary to the wishes of the homeowners. He denies that there were any defects in his work as identified by the Electrical Safety Authority inspections which he did not remedy. He denies that he and his worker broke in to the garage and damaged the window area.

Heather Greensides, Defendant

25Ms. Greensides is the spouse of Mr. Pullen. She was at the job site seldom during the work by the Plaintiff.

26She testified that the agreement was that Mr. Cook would supply all materials for both the garage and the home itself at Mr. Cook’s own cost.

27According to Ms. Greensides, Mr. Cook and his apprentice broke in to the garage without permission and damaged the window area.

28She states that there were all kinds of blueprints all over the house including those for the kitchen.

29She advances numerous complaints about the Plaintiff’s work including: unnecessary and unwanted items such as a plug at the landing of a staircase, lights not working such as those on the living room ceiling and in the rear bathroom, useless switches that do not appear to turn anything on or off, receptacles that do not work, a bill for a heater that was for the benefit of Mr. Cook and his worker only, and an inflated number of hours charged for labour.

Robert Pullen, Defendant

30Mr. Pullen is a carpenter by trade (not licensed) with 32 years of experience in the business.

31Mr. Pullen agrees with Ms. Greensides that the agreement was that all materials for the garage and the home itself would be charged at Mr. Cook’s own cost. The first that Mr. Pullen learned of any premium charged on materials was at trial. Mr. Pullen acknowledged that some contractors charge a premium on materials.

32Mr. Pullen states that there was no agreement that he would pay for travel time to the job site and no agreement regarding interest to be charged on unpaid invoices. Mr. Pullen acknowledged that some contractors charge for their travel time.

33Mr. Pullen agrees with Ms. Greensides that Mr. Cook and his worker damaged the window in the garage.

34According to Mr. Pullen, before Mr. Cook did any work at the job site, Mr. Cook had copies of complete plans for the log home and was aware specifically of the kitchen plans and those for the entire main floor. In fact, regarding the latter, Mr. Cook was with Mr. Pullen when Mr. Pullen put marks on the main floor plans to indicate where electrical items were to be placed.

35As alleged proof that Mr. Cook knew about the kitchen plans, a photograph was entered as an Exhibit at trial (number 7) which supposedly shows Mr. Cook’s equipment in plain view nearby the said kitchen documents. That photograph was objected to by counsel for the Plaintiff, however, I allowed its admission into evidence with the caveat that its non-disclosure in advance of the trial would be taken in to account in terms of any weight to be attached to it, which I have, and on condition that Mr. Cook be permitted to be examined in Reply evidence on that point, which he was.

36Mr. Pullen testified that very little extra wire was required for this log home because (i) shrinkage would be minimal and no more than two inches and (ii) “looped” wire is standard whether in a log home or not, as evident from the fact that Mr. Cook installed the same style of looped wire in the garage.

37Mr. Pullen agrees with Mr. Cook that the two of them walked through the interior of the log home while Mr. Cook made marks where Mr. Pullen told him to place electrical items.

38Mr. Pullen concurs with Mr. Cook that no start or finish times for each day of work at the job site were agreed to between them.

39Mr. Pullen advances numerous complaints about the Plaintiff’s work including: unnecessary, useless and unwanted electrical outlets, switches and cover plates which are contrary to what the homeowners wanted as an antique look, things that are not working such as a fan and light in the laundry room and lights on the cathedral ceiling, Mr. Cook’s poor work ethic in, for example, spending a lot of time talking on his cell phone while at the job site, an inflated number of hours (14 to be specific) charged by the Plaintiff as labour on its invoices, being billed for a heater that was for the benefit of Mr. Cook and his worker only, being charged for about $3,000.00 more than what he could have paid to a company called True North, and paying for the work of an apprentice who was slow and incompetent (my word).

40On the issue of inflated timesheets submitted by the Plaintiff as part of a trial Exhibit, Mr. Pullen claims that he has at home daily records of what hours the Plaintiff actually worked at the job site, although those records are not in evidence at trial and were not disclosed to the Plaintiff’s counsel.

41Mr. Pullen estimates that it would take another 20 hours or so to finish the electrical work inside the log home and about $2,500.00 to $4,000.00 to fix all of the problems caused by the Plaintiff’s shoddy work.

The Positions of the Parties

The Plaintiff

42Mr. Cook urges the Court to accept his evidence over that of the Defendants on the key disputed issues: whether Mr. Cook is entitled to the premium charged for materials (he says yes), whether the Defendants were over-charged for either labour or materials (he says no and that he is entitled to payment for travel time charged as well), and whether the Plaintiff’s work was deficient in any way (he says no).

43Mr. Cook submits that he should be paid what is claimed except that he concedes no entitlement to interest above that provided by the Courts of Justice Act.

44Mr. Cook rests his claim on contract law and resists the argument that it be dismissed for illegality as per the Ontario Consumer Protection Act, 2002 (“CPA”).

45Alternatively, Mr. Cook relies upon the doctrines of unjust enrichment and/or quantum meruit.

The Defendants

46Mr. Pullen and Ms. Greensides ask that the Plaintiff’s claim be dismissed for non-compliance with the CPA and its requirement that the contract between the parties be in writing.

47The Defendants urge the Court to accept their evidence over that of Mr. Cook on the issues of whether the Plaintiff is entitled to the premium charged for materials (they say no) and to payment for the travel time charged (they say no).

48Finally, the homeowners submit that Mr. Cook has “dirty hands” and thus is not entitled to rely upon any equitable bases for relief including unjust enrichment.

Analysis

49After considering all of the evidence, testimonial and the Exhibits, as well as the submissions made by counsel and the materials filed including the jurisprudence and the legislation, I make the following findings.

The Consumer Protection Act, 2002

50I reject the argument by the Defendants that Mr. Cook’s claim ought to be dismissed for non-compliance with the CPA.

51There was unquestionably an oral agreement or contract between the parties for Mr. Cook to do electrical work at the job site – garage and the interior of the log home. That is not in dispute.

52It is equally clear and undisputed that the oral agreement or contract was illegal as it was not in writing in whole or in part and, thus, not in compliance with section 22 of the CPA: “Every future performance agreement shall be in writing…” The Plaintiff made no argument that this oral agreement between the parties was not a “future performance agreement” and, consequently and on the evidence, I so find.

53Similarly, it is clear and undisputed that, generally, a consumer agreement which was not made in accordance with the CPA and its regulations is not binding on the consumer: subsection 93(1) CPA. The Plaintiff made no argument that this oral agreement between the parties was not a “consumer agreement” and, consequently and on the evidence, I so find.

54And it is clear and undisputed that a consumer may demand a refund from any supplier who has received a payment in contravention of the CPA: subsection 98 (1).

55But not every illegal contract that fails to comply with the CPA is unenforceable against the consumer. The Court may order that the consumer is bound by the agreement where it would be inequitable to hold otherwise: subsection 93(2).

56This is merely a recognition of the distinction between illegality as to contractual formation and illegality as to contractual performance: Beer v. Townsgate I Ltd., 1997 CarswellOnt 3753 (Court of Appeal for Ontario), at paragraph 12.

57In deciding whether to apply subsection 93(2) of the CPA, a Court ought to consider the serious consequences of invalidating the contract, the social utility of those consequences and the class of persons for whom the prohibition was enacted: Morrell v. Cserzy, 2002 CarswellOnt 658 (Ontario Superior Court of Justice, Templeton J.), at page 11, in turn citing High Court Justice Krever, as His Honour then was, in Royal Bank of Canada v. Grobman et al (1977), 1977 1113 (ON SC), 18 O.R. (2d) 636 at pages 652-653.

58A Court may also consider whether the contract was bargained for at arm’s length, whether the consumer was unfairly taken advantage of, whether the agreement was wholly or substantially completed, the degree of benefit derived by the consumer and whether it would be inherently wrong or contrary to public policy to enforce the contract: Morrell, supra at page 14, in turn citing General Division Justice Sharpe, as His Honour then was, in Johnson v. Lazzarino (1998), 1998 14835 (ON SC), 39 O.R. (3d) 724 at page 728. See also Agasi v. Wai, 2000 CarswellOnt 2903 (Ontario Superior Court of Justice, Boyko J.), at paragraphs 46 and 47.

59Having considered all of these factors, I conclude that it would be inequitable to not hold the Defendants bound by the oral agreement with the Plaintiff. I therefore apply subsection 93(2) of the CPA.

60The consequences of invalidating the contract would be serious as it would result in a dismissal of the Plaintiff’s claim and materials and labour for the log home itself having been supplied by the Plaintiff for the benefit of the homeowners at no cost. In this case, those serious consequences outweigh their social utility and any consideration of the class of persons protected by the statute (here, homeowners who engage the services of contractors). Further, this agreement was bargained for at arm’s length. The Defendants were not unfairly taken advantage of. The agreement was significantly completed which provided at least some measurable benefit to the homeowners. And finally, I am not able to conclude that it would be inherently wrong or contrary to public policy to enforce the contract in these circumstances.

The Disputed Issues Regarding What the Plaintiff is Entitled to

61I find that Mr. Cook is not entitled to payment of any premium on the materials. The Plaintiff has failed to prove on balance that the agreement between the parties included such a premium on materials, expressly or impliedly and even accounting for the fact that many contractors in the industry charge a premium on materials.

62I find that Mr. Cook is not entitled to payment of any travel time. The Plaintiff has failed to prove on balance that the agreement between the parties included such an entitlement, expressly or impliedly and even accounting for the fact that many contractors in the industry charge for travel time.

63I find that Mr. Cook is not entitled to any prejudgment interest except that provided for under subsection 128(1) of the Courts of Justice Act (Ontario). The Plaintiff has failed to prove on balance that the agreement between the parties included such an entitlement, expressly or impliedly. The starting date shall be March 1, 2012, which date is a little later than the date the cause of action arose (when the outstanding invoices became due and payable by the Defendants).

64I find that Mr. Cook is not entitled to payment of the final invoice in the amount of $303.51. Absent any evidence that Mr. Cook attempted in any way to retrieve his belongings from the job site (personally or through an agent or by asking the Defendants to arrange for their delivery to the Plaintiff), there is no legal obligation on the part of the Defendants to pay for brand new equipment that was purchased by Mr. Cook.

65Otherwise, the Claim by the Plaintiff has been proven on a balance of probabilities and is allowed. I accept the evidence of Mr. Cook over that of the Defendants on the remaining issues raised by the homeowners in defence of the claim including the allegation that they were over-charged generally and specifically regarding allegedly inflated labour hours (I dismiss that assertion) and the complaint that they are entitled to some discount because of alleged deficiencies in the Plaintiff’s work (I make no such finding because (i) I accept the evidence of Mr. Cook and (ii) in light of the acknowledgement of Ms. Greensides that the alleged defects could be because the work was unfinished as opposed to being faulty).

66The Counterclaim of the Defendants is dismissed. It has not been proven on balance. The evidence of Mr. Pullen that it would require 20 more hours to finish the work is not relevant to any claim against the Plaintiff. Once the last three invoices were unpaid, Mr. Cook had no legal obligation to complete the work. The evidence of Mr. Pullen that it would cost $2,500.00 to $4,000.00 to remedy Mr. Cook’s deficient work is an estimate without anything to support it and, besides, I have found no deficiencies that are actionable. The remaining items requested such as aggravated damages for mental distress have no merit. I find that it is unnecessary in the circumstances to deal with the Plaintiff's alternative arguments based on unjust enrichment and/or quantum meruit.

Conclusion

67Although I appreciate counsel for the Plaintiff having provided to the Court at the conclusion of closing oral submissions a draft Judgment as per the provisions of the Ontario Construction Lien Act, I cannot rely upon it because of the calculations that are required to be done by counsel in accordance with these Reasons for Judgment. Counsel shall perform the calculations and submit a draft Judgment to the Court for review.

68Judgment for the Plaintiff granted, in part. The Claim is allowed subject to deductions for:

1. -30% of the amount charged for materials on each and every invoice rendered by the Plaintiff to the Defendants;

2. -all travel time charged on each and every invoice;

3. -the full amount of the final invoice; and

4. -all interest on unpaid invoices except as per the Courts of Justice Act commencing March 1, 2012 to the date of these Reasons for Judgment.

69The Judgment shall also include an Order that the Defendants provide forthwith to the Plaintiff, through either Mr. Wilford’s office or Mr. Middlebro’s office, the heater that Mr. Cook installed at the log home and which Mr. Pullen testified remains in his possession.

70The Judgment shall also provide for post-judgment interest as per the Courts of Justice Act.

71The declarations sought by the Plaintiff in its Statement of Claim with regard to the validity of the Claim for Lien are granted.

72The Counterclaim is dismissed in its entirety.

73If the parties are unable to settle the issue of costs, counsel may contact the Trial Coordinator in Owen Sound to schedule a further court attendance of thirty minutes in length to hear submissions and consider filings in that regard. I shall consider the matter of costs resolved between the parties if the Trial Coordinator is not contacted by counsel within one week of the release of these Reasons for Judgment.

Conlan J.