ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: CV-08-00362411
DATE: 20130618
BETWEEN:
MEN AT WORK GENERAL CONTRACTORS LTD.
Plaintiff/Defendant by Counterclaim
– and –
ROSS MACDONALD and JACQUELINE MARCIA PHILLIP
Defendants/Plaintiffs by Counterclaim
Michael J. Meredith, for the Plaintiff/Defendant by Counterclaim
Michelle R. Theberge, for the Defendants/Plaintiffs by Counterclaim
HEARD: November 22, 2012
Ellen Macdonald J.
REASONS FOR DECISION
[1] This is an appeal from a decision of Master Polika in this matter. The Defendants, Ross MacDonald and Jacqueline Marcia Phillip, collectively referred to as the “owners”, decided to convert a house that they owned into income property by renovating it into apartments. They sought bids from contractors. Men at Work General Contractors Ltd. (“Men at Work”) submitted a proposal in mid-October 2007. This proposal was based on conceptual drawings and a walkthrough of the premises that occurred at a very early stage in the owners’ process of considering the designs and options for their renovations.
[2] The owners requested and received several references, including customers who Men at Work had done costs plus fee projects for. The contract the parties entered into was signed at the end of October 2007.
[3] Men at Work submits that because the conceptual drawings provided to them were very preliminary, it was unable to provide a fixed bid. As a result, it claims that it provided a “costs plus fee” estimate. This meant that the fee and profit were fixed, but the cost of all materials and the work of the subcontractors were characterized as “allowances”. The owners submit that they believed the agreement reached between the parties was a fixed-price contract.
[4] Men at Work alleges that Mr. MacDonald initially acknowledged that the contract was a costs plus fee agreement, but then he abruptly changed his position, stating that he had a fixed-price agreement with Men at Work.
[5] The October 2007 contract stated that the actual cost of allowance items could be significantly higher than the amount specified in the contract. Mr. MacDonald admitted at trial that he read and understood what the allowances were.
[6] The contract also provided that Men at Work would provide an accounting of allowance items within 30 days of receiving all required cost information from its resources. The contract imposed no other reporting requirement on Men at Work.
[7] In February 2008, Men at Work provided a revised estimate as a result of the owners’ decision to add a basement renovation to the project. This decision added significantly to the controversy which now exists between the parties. At the time, Men at Work also reported on expenditures which showed that the cost of many allowance items had been increased in amounts ranging from 20% to 108%.
[8] Although the renovation project was initially supposed to be completed over an 18 week period, this did not happen. Starting in November 2007 and over the course of 30 weeks of work, Men at Work alleges that the owners made repeated changes to the designs, materials and general scope of the project. In June 2008, the project was still not complete. Men at Work delivered a report setting out existing expenses to date and provided an estimate of the costs necessary to complete the project. The estimate was 38% higher than the amount estimated in February 2008.
[9] The owners refused to pay. Men at Work placed a lien on the property and sued the owners in contract for its fees and profit of $26,932.50 plus $34,005.26 for a total of $60,937.76.
[10] The owners counterclaimed in contract alleging damages totaling $300,000 plus $100,000 for lost rental income.
[11] There was a two-day trial before Master Polika. He denied Men at Work any fee or profit for its 30 weeks on the project. He made what he described as a “Solomon decision” and ordered the owners to reimburse Men at Work for half of what it expended on the project. His calculations in respect of this amount were $15,002.50, which Men at Work claims to be erroneous. If he was awarding half of Men at Work spent on the project, the result would be $30,468.88.
[12] Master Polika found that Men at Work had breached its “timely reporting” obligation but he also found that the owners had waived it because they did not ask for a report on expenditures on any occasion. Despite the finding of waiver, the Master denied Men at Work its fees and profit on the basis of the purported breach. It is to be noted that Men at Work and the owners were communicating often either by way of e-mail or face to face conversations.
[13] Men at Work submitted that in reaching his decision, the Master erred in his interpretation of the contract. Men at Work submitted that he disregarded the plain language of the contract and imposed a “timely reporting” obligation on Men at Work. I agree that it appears from the Master’s disposition of the matter that he disregarded the plain language of the contract.
[14] Master Polika dismissed the claim for the lien on the basis that there was no evidence of the issue before him. The owners’ various counterclaims were also dismissed in their entirety. The Master denied Men at Work its costs without allowing the parties to make any submissions.
[15] For all of the above reasons, this appeal is allowed. Men at Work being the successful party on this appeal should have costs on a partial indemnity basis. The parties may make submissions on costs at a time convenient to counsel and The Court.
Ellen Macdonald J.
Released: June 18, 2013
COURT FILE NO.: CV-08-00362411
DATE: 20130618
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
MEN AT WORK GENERAL CONTRACTORS LTD.
Plaintiff/Defendant by Counterclaim
– and –
ROSS MACDONALD and JACQUELINE MARCIA PHILLIP
Defendants/Plaintiffs by Counterclaim
REASONS FOR DECISION
Ellen Macdonald J.