BARRIE COURT FILE NO.: 11-0151

DATE: 20130711

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

BRADHILL MASONRY INC.

Plaintiff

– and –

SIMCOE COUNTY DISTRICT SCHOOL BOARD and B.W.K. CONSTRUCTION COMPANY LIMITED

Defendants

C. Wagman, for the Plaintiff

B. Moldaver, for the Defendant, B.W.K. Construction Company Limited

HEARD: May 14, 15, 16, and 17, 2013

REASONS FOR DECISION

HOWDEN J.:

[1] This action arises from the second phase of renovations to Bradford District High School in the summer and fall of 2010. Bradhill Masonry Inc. (“Bradhill”) and the general contractor B.W.K. Construction Co. Ltd. (“BWK”) signed a written contract after Bradhill’s bid won out as the low bid for the brick work. The contract stated that the full price for the job was $184,900 plus HST.

[2] Certain facts were agreed by the parties. The claim for lien was registered by Bradhill on January 31, 2011. The registration was vacated by order of February 7 2011 on payment into court of the amount of the claim of $42,724.67 plus 25% on account of costs. The Simcoe County District School Board (the “School Board”), the owner of the site, was not let out of the action until minutes of settlement were signed by the parties dated January 7, 2013. The remaining issues are between BWK and Bradhill, but they include a lingering cost issue - BWK was invoiced $7,500 by the School Board, paid it and now claims that amount from Bradhill.

[3] The contract was not signed until July 2010. However bids were received prior to July 1, 2010 which became a significant date for tax and accounting purposes. On July 1, 2010, the provincial sales tax and the federal goods and service tax, the PST and the GST, were blended and the result came into force in Ontario as the HST on that day. The PST and GST were last in force on June 30, 2010. While the bids were priced and submitted before June 30, Bradhill’s work was done after that date.

[4] The issues include the following:

(i) whether there should be a credit for PST to BWK of $6,848.15 in that the contract stated that the price was inclusive of taxes except for value-added taxes (VAT); that term would appear to include the HST; however, the plaintiff’s bid stated on its face that the PST was not included in its price of $184,900;

(ii) certain work is claimed by the plaintiff as extra, not included in the contract price, for which a change order (CO) or purchase order PO)was required by the contract for the work to be considered as an extra to the contract’s scope of work; the plaintiff saw the work as outstripping the pace at which COs and POs were issued by the owner or BWK, therefore certain work directed to be done by the defendant’s site supervisor Ed Ross went ahead before a CO or PO was approved by the owner or without any documentation. Another partial explanation emerged when Mr. Korevaar, the principal of the plaintiff company, when asked about one of several memos to him from BWK as to why certain charges were made, said that he does not do paper. Disagreements arose over the price of extras or whether certain work was extra to the contract or not. These disagreements were not always resolved at the time;

(iii) BWK claims certain back-charges for work it claims was included in the contract price but was not completed, as well as for a credit for the PST and for the School Board’s legal fees paid by BWK;

(iv) throughout the case for BWK the theme of “pay only when paid” emerged as a policy which BWK’s principal saw as required by the contract and by the at times delayed payments to BWK by the School Board, citing Timbro Developments Ltd. v. Grimsby Diesel Motors Inc. [1988] O.J. No. 448 (O.C.A.).

A. The Contract Between the Parties

[5] The parties signed a written contract drawn by or to the satisfaction of the School Board; it certainly was not prepared by the plaintiff’s principal, Mr. Korevaar, who said that part of his contract proposal or bid that was accepted was not included in the contract. His proposal stated:

Price as per plans & specs (P.S.T. not included) $184,900

Air, vap. & insul. behind brick only

The only reference to taxes being excluded in the contract was in the second line of Article II:

The sum to be paid by B.W.K. to the subcontractor for the said work included in this contract shall be One Hundred and Eighty Four Thousand Nine Hundred Dollars ($184,900) in current funds, excludes all Value Added Taxes (VAT), but includes all other eligible taxes subject to additions or deductions herein provided.

Terms: Net 30 days) From End of

Option to Sub: ) Month Invoiced

[6] Other provisions in the Contract which were stressed by counsel in their submissions were Article II regarding “Monthly Estimate” and “Withholding Payments”, Article VII regarding “Change Orders Additions and Deductions”, and Article VIII “Inspection, Defective Work”.

Article II. Monthly Estimate. On or before the 25th day of each month the Subcontractor shall submit to BWK in the form required by BWK a written requisition for payment showing the proportionate value of the work performed to date from which shall be deducted a retention of Ten per cent (10%) all (sic) previous payments, and all other charges for material or service furnished by BWK to the subcontractor: and the balance of the amount of said requisition, as approved by BWK and the Architects and Engineers, shall be due to the subcontractor on or about the thirtieth day of the following month, and upon receipt by BWK of monthly payment by the owners. The subcontractor shall submit before this first estimate for payment a detailed schedule showing the breakdown of his Contract Price into its various parts, which breakdown is to be used in checking the Subcontractor’s monthly requisitions.

Article II. Withholding Payments. If at any time should a claim or lien exist for which BWK or Owner might become liable, and which is caused by the Subcontractor, BWK shall have the right to retain out of any payment then due or thereafter to become due, an amount sufficient to completely indemnify itself and the owner for any loss or the Subcontractor shall refund BWK all moneys paid in discharging such claim.

Article VI. Interpretation of Plans and Specifications. The work included in this contract is to be done under the direction and to the satisfaction of both the Architects and/or Engineers and BWK and the decision of the said Architects and/or Engineers as to the true interpretation and meaning of the Plans and specifications shall be final.

Article VII. Change Orders Additions and Deductions. No alteration except as provided in Articles V (the Plans, Specs, and General Conditions) and VI hereof shall be made in the Work except upon written order of BWK and, when made, the value to be added or omitted from the Contract Price. Should the parties fail to agree as to the value of such Work, the Subcontractor shall proceed with the order, and the determination of the value of the work shall be referred to the Architects and/or Engineers, and said determination will be considered final...

The Subcontractor shall not proceed with such additional work upon verbal request but must receive written authorization before proceeding. An invoice received by BWK for additional work not so authorized will not be honoured.

Article VIII. Inspection, Defective Work. ...The Subcontractor shall, within 24s (sic) after receiving written notice from BWK, proceed to take down all portions of the work and remove from premises all material which Architects...or BWK shall condemn as unsound or improper, or in any way failing to meet specifications, and the Subcontractor at his own expense shall make good all work damaged and replace all materials removed with materials meeting specifications.

[7] The contract between BWK and Bradhill is dated on the first page June 9, 2010. It recites the agreement between the School Board as owner of the site and BWK whereby BWK is to provide all materials and work on the plans, specs and addenda entitled Bradford District High School Building Envelope Reconstruction - Phase 2. On the signature page, p.3 of the contract, Bradhill executed the contract with one minor deletion initialled by its principal Peter Korevaar. Beside his signature on p.3 of the contact is the date July 20, 2010, the actual date of execution by Bradhill’s principal officer, Peter Korevaar.

[8] I will now proceed to deal with the various claims and back-charges alleged by the parties and I will make my findings as I deal with each one.

B. Validity of Bradhill’s Lien

[9] Mr. Moldaver argued against the validity of the plaintiff’s lien by using the particular accounting method used in the contract to demonstrate that as of January 31, 2011, the date of registration of the lien by Bradhill, there was no money due and owing to Bradhill. He submits that the contract established exactly when and what was due and payable and when it was not, that using Article II’s requirements for invoicing deadlines and payable dates for each invoice, the timing of invoices and payments must be used to establish when money was due and payable. Using this method and the contractual invoicing dates of the 25th of August, September, and October 25, 2010, and January 25, 2011, and using BWK’s determination of the Bradhill claims for extras, he submits that only $5,083.30 was owing to Bradhill, an amount that BWK claims its legal fees eclipse. But Bradhill had neglected to file its statutory declaration until after the payment due date for January of January 25, a requirement of the architect Mr. Latimer. Mr. Moldaver therefore submitted that, “Importantly at the time of the lien no moneys (were) due, owing or payable to Bradhill.”

[10] He cited in his opening Timbro Developments Ltd. v. Grimsby Diesel Motors Inc. [1988] O.J. No. 448 (O.C.A.) for the proposition that in view of the terms highlighted in Article II (Monthly Estimate) of the parties’ contract above, the view of BWK was that the subcontractor took the risk of not being paid until the contractor received payment from the owner, and perhaps of not being paid at all. The Ontario Court of Appeal held, affirmed by the Supreme Court, in the following terms:

Timbro relies on clause 8(a) of its purchase orders with the two appellants. The clause reads as follows:

8. a. When used for sub-contract work the following terms will apply: Payments will be made not more than thirty (30) days after the submission date or ten (10) days after certification or when we have been paid by the owner, whichever is the later. Holdback will be retained in accordance with Mechanics Lien Act in effect at the time, and when released by owner all payments will be made in Canadian Funds and will be payable at par in Welland. [Emphasis added.]

The court is divided on the interpretation of the highlighted words which were added to the standard form used by Ontario contractors several months before execution by the subcontractors. The appellants contended that the added clause was ambiguous but the majority (Blair and Cory J.J.A.) reject this submission. In their opinion the clause clearly specifies the condition governing the contractor's legal entitlement to payment and not merely the time of payment. Under the clause, the subcontractor clearly assumes the risk of non-payment by the owner to the contractor. Since Timbro was not paid, it is not obliged to pay the subcontractors and the appeal must fail.

[11] Mr. Moldaver argued that on his reading of the contract nothing was owing and payable to Bradhill as of the date the lien was registered. And once it was registered, by Article II. Withholding of Payments, BWK claims that it was entitled to withhold all payments to Bradhill to address the costs of completing the contract work. His argument also seems to presume that the same article entitles BWK to full costs of the action brought by Bradhill.

[12] I see this argument as antithetical to the law in the Construction Lien Act and in common terms, it amounts to a clever shell game. The Timbro decision was never mentioned again in the closing submissions, and rightly so because it has nothing to do with the real argument of BWK. In this case, full payment was made by the owner when BWK finally decided to put in its final invoice which it delayed. Its real argument was that the contract terms for when moneys became due and payable under the contract should govern and take precedence over the provisions of the Construction Lien Act, R.S.O. 1990, ch.C.30 (the “CLA”). In that case, as of January 25, 2011, nothing was due and owing to Bradhill on BWK’s reckoning, including its back-charges and costs and dismissal of much of the extras claimed.

[13] In my view, when the sub-trade has done work for which it had not been paid, it has a potential lien for “the price of those services or material” (s.14, CLA).But the contractor argues that it can claim nothing is due the sub-trade because of unilateral dismissal of part or all of the invoices from Bradhill for extra work, certain forms have not been completed, and the contractor says it is owed back-charges which, with its legal costs, outnumber the sub-trade’s claim. If the sub-trade claims a lien for its work, the contractor may hold back money sufficient to indemnify itself and the owner. Yet by statute, all moneys owing to the contractor for work and materials whether due and payable or not, or received by a contractor, form a trust fund for the sub-contractors from the time the work or materials are provided (s.8, CLA).

[14] The defendant’s argument would mean that if the general contractor’s lawyer is sharp enough in drafting the contract, the Act’s remedy for subcontractors who have not been paid for the fair value of their work would be rendered worthless as the owner and/or general contractor would become entitled to the costs of the lien action and could cut off all future payments to the plaintiff to reimburse itself when a lien claim was made. And if a sub-trade filed a claim for lien at the wrong time, its lien is worthless because money was not due and payable at that particular time even though the tradesperson has not been fully paid for their work and materials supplied to the job.

[15] Contrary to this argument, the Construction Lien Act R.S.O. 1990, c. C.30, s.5(1) provides that the provisions of the Act are incorporated into every contract that gives to those in the building trades the right to claim a lien on property improved by his/her services. Section 5(1) ensures that every building contract conforms to the Act:

Every contract or subcontract related to an improvement is deemed to be amended in so far as is necessary to be in conformity with this Act.

[16] Every payment on the main contract becomes a trust fund for the sub-contractors until they have been paid in full.

8. (1) All amounts,

(a) owing to a contractor or subcontractor, whether or not due or payable; or

(b) received by a contractor or subcontractor,

on account of the contract or subcontract price of an improvement constitute a trust fund for the benefit of the subcontractors and other persons who have supplied services or materials to the improvement who are owed amounts by the contractor or subcontractor.

14(1) A person who supplies services or materials to an improvement for an owner, contractor or subcontractor, has a lien upon the interest of the owner in the premises improved for the price of those services or materials. R.S.O. 1990, c. C.30, s.14 (1).

[17] A claim for lien arises when the person first supplies services or materials to the improvement.

15(1). A person’s lien arises and takes effect when the person first supplies services or materials to the improvement. R.S.O. 1990, c. C.30, s.15. [Emphasis added.]

[18] The claim for lien can be vacated and the owner’s title cleared by payment into court.

44(1). Upon the motion of any person, without notice to any other person, the court shall make an order vacating,

(a) where the lien attaches to the premises, the registration of a claim for lien and any certificate of action in respect of that lien; or

(b) where the lien does not attach to the premises, the claim for lien, where the person bringing the motion pays into court, or posts security in an amount equal to, the total of,

(c) the full amount claimed as owing in the claim for lien; and

(d) the lesser of $50,000 or 25 per cent of the amount described in clause (c), as security for costs. R.S.O. 1990, c. C.30, s.44 (1).

[19] By s.31(1) (b), the lien expires if the lien is not registered within “the forty-five-day period next following the occurrence of the earlier of (i) the date the contract is completed, and (ii) the date the contract is abandoned.”

[20] In this case, the plaintiff was told to complete the piers at the school’s front entrance as part of its contract by BWK’s memo of November 29, 2010. That memo stated:

(The architect) disagreed (with Bradhill’s claim that this was an extra), and said it was an existing condition that had to be re-installed after the demolition with the new bricks...

Peter, anyway you look at it, the work has to be done as soon as possible. and I understand the bricks are on site.

[21] The evidence from Korevaar’s daybook is that two of his men attended December 20 and 21 to complete the job. While I am aware of its weaknesses, on a balance of probabilities I am satisfied that this was the final work performed by the plaintiff on this job and that it was done on December 20 and 21, 2010. It appears that Bradhill’s lien was registered within the statutory 45-day period from completion or abandonment. I have found that some work still remained to be done under this contract as of October and until December 2010 on the front entrance, and the east wall brick work was never completed even after the contractor had installed the corrective material (steel angle and re-installation of the flashing) for the brick work to be completed. Therefore, as of October 25, 2010, the plaintiff was out of line in claiming it had completed 100% of the contract. The architect found that 95% was completed and that invoice was paid in December on that basis.

[22] But as to the argument of the defendant that there was no lienable amount owing unless and until an amount became due and payable under the contract’s accounting terms in the contract, I reject it. Contrary to the defendant’s submission, this contract, like all building contracts, is subject to The Construction Lien Act. It is not the reverse, as Mr. Moldaver would have it, that the Act be subject to the contract between the general contractor and the masonry sub-contractor Bradhill. When a sub-trade is owed money due to work that has improved the site, its claim is for the “price of those services or materials”, the value of the work and material supplied, not what is due and payable at any given time according to the contract. And money owed the contractor or received by BWK was trust money held for the sub-trades until they are paid. It is not for BWK to fail to pay money due the sub-trade just because that sub-trade filed a lien claim. This is a reading of the contract and the Act which would make the contract the superior instrument whereas, as I have shown, it is the law in Ontario that the contract is to conform to the Act. I reject the argument on behalf of BWK that would hold otherwise.

[23] As of the date that the lien was registered, the plaintiff asserts that he had not been fully paid for the price of his services, as meant by the Act. I will now deal with each claim and counterclaim in turn in order to find whether this is in fact the case on the merits.

C. The Plaintiff’s Claims

1. CO/PO 4303 for $500

[24] The parties differ only as to the amount of this extra claimed by the plaintiff. The plaintiff claims $500 in accordance with a hastily written PO by BWK’s site supervisor Ed Ross when he needed some emergency work done. He agreed that the work was not within the scope of the contract and I see no record of any ruling to the contrary by the architect. BWK’s Mr. Kubbinga says that the amount to be allowed on this account should be $350 because it paid about $150 for blocks which Ed Ross had ordered the plaintiff’s forces to pick up.

[25] Mr. Korevaar or Bradhill understood that the contract required a purchase order or a change order if work additional to what was called for in the contract was to be paid for. He said that the trouble was the paper work did not keep pace with the demands of the work. He recalled that at one point he was asked by the site superintendant Ed Ross to do some extra work picking up blocks. Ed Ross was called as a witness. He said that because some material that had been installed was below grade and the work had to be done right away, he directed Korevaar’s forces to pick it up. Mr. Ross said he called in the purchase order to BWK to cover the extra labour for $500 because this was not within Bradhill’s scope of work. Ross wrote on the back of one of his business cards “BWK P.O.4303 $500” and gave it to Korevaar so that he would receive a credit. The $500 was the amount he called in to BWK.

[26] Bruce Kubbinga, the principal of BWK, testified that material for a frost slab was purchased from Simcoe Block by BWK. He pointed to an invoice showing that certain material was purchased by BWK as footings for the frost slab. The invoice (no number, dated 9/17/10) is in the amount of $156.20 plus HST for the material. He said he agreed to the total of $500 but that amount was to cover labour and material and so the net owing to Bradhill should be $350 (rounded) for labour. He believed that the contract required work and material cost to be divided on each PO or CO. The contract actually called only for a purchase order to include “a description of the work to be done and state the terms under which it is to be executed”. As the material was an expense of about $150 to BWK, he saw the labour owing to Bradhill as the net amount of $350, not $500.There was no indication that Ross, BWK’s representative on the site, was aware that BWK’s material cost was included as a set-off in the CO he hastily drew up; to him, it was the extra labour he required of Bradhill in a rush situation and that was the deal made at the time for which a PO was submitted as the contract called for, though not with the detail the contract assumed.

[27] I find that BWK’s site supervisor directed that Bradhill do the work for $500 and if there was a deficiency in the description that lay at BWK’s door, not Bradhill’s. The purchase order calls for $500 to be credited to Bradhill, Bradhill did the extra work required of it for the amount set out by Mr. Ross, and therefore the full amount is owing to Bradhill. It is not for BWK after the event to change what its own official on site had offered to Bradhill and authorized in writing as required by the contract, for which it did as asked. Mr Kubbinga seemed to blame the added expense on Bradhill because, he said, it failed to have the required block on site. If that were so, then why was this conceded to be an extra? The answer is that Bradhill was not required by the contract to do this particular hauling work. Mr. Ross did not see any money as being set off against the $500 he represented to Bradhill. He said under cross-examination that it was labour to be supplied in an emergency. This evidence makes sense. I do not accept Mr. Kubbinga’s evidence upon this minor point.

[28] The full amount of $500 on P.O. 4303 is to be paid to Bradhill. BWK has not paid any of this PO despite admitting that $350 was owing.

2. Clean-Up - $500

[29] This is another $500 item claimed as an extra by Bradhill. Each subcontractor was responsible for cleanup of their own waste material, not another subcontractor’s. Mr. Korevaar stated that another masonry company hired by BWK to do additional work outside Bradhill’s contract had failed to clean up their mess. Korevaar’s company did so instead, as it was directed to do by Ed Ross, still the site superintendant. Ed Ross stated in his evidence that Bradhill did remove the other company’s material as requested but no PO or CO was provided to Bradhill. Ross explained frankly that this was not a job he enjoyed working on. Decisions were made too slowly by the owner and he admitted that he went beyond his authority in telling some trades to do work where he had no PO or CO approved by the owner. This was one of those instances. Ross was very clear however that this clean-up work was in no way part of Bradhill’s scope of work and was necessitated because the other company, Burling and Ranger, failed to do its own clean-up.

[30] Mr. Kubbinga agreed that Burling and Ranger had been on site in September and October 2010. He identified a copy of Bradhill’s invoice of October 25, 2010 for the final or third draw by Bradhill. On it is listed among some seven items the entry: “Clean up rubble for BWK & Burling as requested by Ed $500”. This copy, produced by BWK, showed two charges by Bradhill marked out and a note beside the final draw amount claiming the job to be 100% done. The note beside the final draw claim for $39,950 says “25% of contract approved Oct.31/10”. Kubbinga said that this and the two deletions were made by his wife who acted as the company’s accountant. The claim for the $500 for cleanup is not crossed out. All that Mr. Kubbinga said was that it was disputed but gave no reason. I can understand fully why Ed Ross did not like being on this job where his own boss would not accept his judgment on this and the first item I have dealt with, which were exceedingly minor items at best.

[31] The architect Greg Latimer said only that Bradhill did the additional work and it is entitled to be paid for it.

[32] It is true that the contract directed (in Article VII) that the subcontractor was not to do additional work on verbal request and that BWK would not honour any invoice without written authorization. However I find that in this case, Bradhill was faced with a direct order by BWK’s representative on site to do this work as an extra. By Article IX of the same contract, Bradhill was bound not to refuse to supply sufficient labour and was not to cause stoppage or delay on pain of termination. Where BWK’s own person in charge decides to alter the contract and require such extra work to be done verbally, there is a power imbalance which the subcontractor cannot ignore without dire consequences. In this situation, BWK’s site supervisor altered the term of the contract to require a rather minor amount of extra work to be done by verbal rather than written order. In these limited circumstances, and in view of the ambiguity in Bradhill’s duty under the contract in face of BWK’s work requirement, I find in the plaintiff’s favour for the $500 clean-up bill as an extra. I accept Mr. Ross’s explanation for it as work that he directed as BWK’s site supervisor and that could not await the paper process. For both this and the previous extra issue, it is hard to understand BWK’s decision to fight on such pathetically minor matters where their own site supervisor admittedly directed the additional work to be done.

[33] The clean-up charge of $500 on Bradhill’s invoice no. 2510 shall be paid by BWK.

3. PO 4278 Blueskin Application Issue

[34] Blueskin is an air and vapour barrier that is applied before the brick is laid. On August 4, Mr. Kubbinga sent a fax memo to Bradhill expressing concern that the start date for the brick installation in the construction schedule was July 26 and as of August 4, Bradhill had not started. The memo confirmed that by August 9, the brick was to be on site. Then the memo advised Bradhill that: “Blueskin installation must start immediately as discussed”. Korevaar confirmed in his testimony that he probably received this and another fax memo from BWK also dated August 4, 2010. The second August 4th memo reads, “Peter, we have to have the blue skin and insulation started... The window installation has started.”

[35] On the same date, BWK sent CO 4278 to Bradhill. (Ex. 1, Bradhill documents, Tab 7). There is no question that it was sent by BWK, authorized by Mr. Kubbinga as his signature attests. The work description states, “To install and stick vapour barrier retarder as per section 07265 in additional areas as requested”. Under this description is the figure “$1.85ft²” (square feet). Below, at the bottom of a column headed “AMOUNT”, where it says “Total Lump Sum Price”, there is nothing entered. The document is signed with the total price blank by Mr. Kubbinga for extra work to be charged at $1.85 per sq. ft.

[36] Strangely, on the copy of this same Change Order produced by BWK, the line “Total Lump Sum Price” contains next to those words in handwriting the figure “$3,231.95”. I do not see that this document was ever testified to by either principal. Both versions of CO 4278 are signed or authorized by Mr. Kubbinga. I find that the CO 4278 was proven to have been the one received by Bradhill, not the version with the total price written in.

[37] CO 4278 (produced by Bradhill) confirms that this work installing the blueskin was to be treated as an extra to Bradhill’s contract. Bradhill did the work as requested using the factor/sq. ft. of $1.85. The difference between them on this account arose later. BWK relies on two invoices from glass installers showing the area where blueskin was to be applied as adding up to 1,747 sq. ft., whereas Bradhill’s larger figure of blueskin application includes a factor for wastage. Bradhill invoiced BWK for this same extra showing an area of installation as 2,767 sq. ft. Bradhill sent BWK its invoice 2510 which was its third draw invoice on October 25. Added to the final contract draw of $39,950 were several items including “Install blueskin PO 4278 (2767 sq. ft. @1.85)” for $5,118.95. On November 8, 2010, well after the work was done, BWK for the first time objected to the price for the additional blueskin installation. It read:

The following are the square footages of blueskin that was required behind the Cladco panels and Barrie Metro Glass back pans (quantities given by sub-trades).

Cladco Panels 705 sq. ft.

Barrie Metro Glass 1,042 sq. ft.

Total 1,747 sq. ft. = $3,231.95

Please correct your invoicing to suit.

[38] Mr. Korevaar was cross-examined on the difference in the area figures. He stated that only 16” of an 18” roll of blueskin is useable. Also there is overlapping where the blueskin must be fitted around the windows. He said his area measurement was taken from the original plans, that he was pressured to do it as an extra and a total price was never agreed to, though he agreed to the multiplier of $1.85/sq. ft. in CO 4278. Mr. Korevaar in chief said he measured the area off the plans and deducted the window areas, arriving at 2,767 sq. ft. Under cross-examination, he agreed that he replied to the November 8 memo from BWK above by adding after “$3,231.95 “ +13% 3,652.1” Under that, he wrote the added words “4” around perimeter”. He said he neglected to add that the “4 inches around perimeter” should have been preceded by “plus” but that is what he meant to take it to his price of $5,118. He did not change his evidence that the appropriate charge had been made for what he did. Ed Ross, the site supervisor, agreed with Mr. Korevaar that with blueskin there is a 10-15 % degree of wastage so you must add on to the wall area something on this account but he could not speak beyond this to the difference in the area factor used.

[39] Mr. Latimer, the architect, gave no evidence regarding his having accepted or rejected either figure. His only evidence relevant to this point is that unit pricing would normally have built into it such a factor and that generally it is not a valid factor to add in and apply to the square footage. However, he said this kind of disagreement should have been part of the negotiation between the contractor and a sub-trade. I take his evidence to mean that at no time did he have to make a call on this dispute and he had no knowledge as to a wastage factor being included in the unit price of $1.85 for blueskin.

[40] I prefer Mr. Korevaar’s evidence. He is the one who had to do the work and he is the one who would best know if and to what degree certain material is overlapped and is not totally useable. He said he used the plans as his base measure for the area and took into account that more area of blueskin had to be applied than the bare measurement off the plan of wall area less window areas and after adding 13% for wastage plus an allowance for the “4 inches around perimeter”, his price remained at 5, 118.95.

[41] In my view, BWK put Bradhill in the position of having to do this extra work. Then after it was done, and not before, BWK refused to accept Bradhill’s price of $5,118.95. If BWK had wanted to negotiate a total price based on area of blueskin used, the time to do it was at the time of the Change Order. BWK left the total price blank. Bradhill used the only figure put to them, the unit price of $1.85. Mr. Korevaar was not shown to have been wrong in adding to his area figure for wastage and the 4 inch perimeter factor. Mr. Korevaar is not an articulate man and often he would make statements without fully explaining what he meant. All I can say is that I have no reason to find that he was wrong in the factors he gave. The cross-examination never closed off the probability that his total figure was correct. Mr. Korevaar’s own evidence in chief should have been more complete but I find that his figure is more reliable than that of Mr. Kubbinga who has no experience as a mason and in pricing masonry jobs. That is as far as I can go on the evidence.

[42] I find for Bradhill on this issue in the amount of $5,118.95.

4. PO 4341 (South wall Piers) and PO 4415 (Tuck Tape, etc.)

[43] These are both agreed as owing to Bradhill but were never paid by BWK on the basis that it would not pay without being paid by the owner. See Article II. Bradhill’s contract is with BWK for the contract price plus the price of additional work and the additional work in these cases was dealt with by PO 4341 for $850 and tuck tape installation for $2,730 (billed as one of the extras in addition to the claim for 100% of the contract work and the company’s final draw in Invoice 2510 dated October 25, 2010).

[44] BWK will pay the total of these orders in that amount ($850 + 2,730 = $3,580).

5. Invoice 25111 of Bradhill - Piers Front Entrance

[45] Bradhill’s position on this work was that its workers had to return to the site after the masonry contract had been completed to complete the front entrance. Invoice 25111 is dated January 25, 2011 and reads:

Supply Lab & Mat. to Build Piers on Front Entrance. As Requested.

(Not on Plans.) $1,250 plus HST

[46] Mr. Korevaar testified that this work was required because the piers at the front entrance were to have been aluminum and that part of the plans changed to use brick instead. Greg Latimer, the architect on this project, recalled this invoice and his decision. The invoice of Bradhill of October 25, 2010 claimed that Bradhill had completed its work under the contract and invoiced BWK for $39,950 as the final payment for 100% of the contract plus the extras noted above. Mr. Latimer was of the opinion that Bradhill had not completed its contract. The front entrance piers and the east wall where the gap in the brick work at the top of the wall remained unfinished (Item 7 below). He found that as of October 25, the contract was 95% complete. Later, after Bradhill worked on the front entrance piers, it delivered to BWK the invoice dated January 25, 2011 above for that work, charging $1,250 as an extra. He said that BWK submitted this invoice as an extra. Latimer said he rejected it, that the area of work was within the scope of work contracted for and it was only a slight change to add a small corner to brick work that was part of the job. Mr. Korevaar maintained that the brick work at the front entrance was not on the plans. Latimer conceded that this corner of brick work was not shown on the plans but it was a very minor item in the general area of Bradhill’s contract and in his opinion, it was nitpicking to charge as an extra.

[47] Despite the architect’s own decision that the front entrance piers were not to be brick according to the plans, Mr, Kubbinga swore in his affidavit of June 23, 2011 that

As for the claim ... for $1250 BWK states as follows. This work is part of Bradhill’s scope of work. It is set out in the drawings that form a part of the contract. In any event this work was not approved by the owner and BWK has not been paid for it and as such BWK is not liable to Bradhill for same.

[48] Mr. Kubbinga swore to the truth of what was not so in the highlighted portion above. Neither Latimer nor anyone else at trial could tell me that the plans called for brick on the front entrance piers.

[49] By Article VI and VII, all decisions regarding the meaning and interpretation of the plans and value of work by the architect are final. Mr. Latimer saw the contract as including the area in Invoice 25111, but the plans did not require a brick finish for this area, Latimer conceded. The piers in question, given their full storey height, are not insignificant. It appears Mr. Latimer was bound and determined to disallow this claim though Ross had directed the work to be done as an extra and Bradhill’s people came back in December for two days to do it. It was an addition to the plans.

[50] The contract authorizes the architect to interpret the contract and plan and to determine value of the work. In this case I find that Latimer paid no attention to the plans and determined that because the work was minor to him, though it was a brick corner column going up a full story in height, it did not merit being charged as an extra not covered by the contract. He pointed to no evidence bringing this work within the plans annexed to the contract and therefore it is an addition and the charge is an extra. I find that Latimer acted beyond the scope of his duties under Article VI and VII Invoice 25111 in ruling as he did and his ruling is annulled as being made without authority.

[51] Accordingly, Bradhill’s charge for the front entrance “pier” is allowed in the sum of $1,250.

D. Claims by BWK against Bradhill

1. PO 4416 - PST Credit Claimed by BWK

[52] BWK submits that it is entitled to a credit on account of PST in the sum of $6,848.15. It relies on the words in the contract, Article II, defining the lump sum contract price of $184,900as being in “current funds, excludes all Value-added Taxes (VAT), but includes all other eligible taxes subject to additions or deductions herein provided”. The date on the front of the contract was June 9, 2010. At that time, there was a Provincial Sales Tax (PST) on material only. It was not a VAT. It was a tax naming a percentage applied to the price of the item, not on the value added at each stage of production as a VAT does. The PST ended on June 30, 2010 and the Harmonized Sales Tax (HST) came into force, blending the former PST and the GST into one tax payable on all goods and services unless specifically exempted.

[53] The problem here is that the plaintiff did not include the PST on his material estimate when he bid on the job, despite instructions to the contrary and despite the PST being in force at the time. As well, the contract was not signed until July 20, 2010, according to the signature page. There are in evidence its pricing sheet and its $184,900 bid. Regarding the price quoted on the contract proposal, in capital letters, are the words “PRICE AS PER PLANS & SPECS. (PST NOT INCLUDED)”. The plaintiff’s pricing sheet shows no addition to material cost due to the PST.

[54] BWK nevertheless relies on the strict terms of the contract in saying that it is owed a credit for PST. There are two problems, however, with BWK’s position. First, as Mr. Wagman suggests, there is no amount for material proven as a distinct amount from the overall contract price. The contract price itself is expressed as a lump sum without any breakdown between labour and material obviously because there was no issue requiring it. BWK assumed an arbitrary amount for material in order to apply the PST percentage only to material.

[55] I appreciate Mr. Kubbinga’s annoyance to find that the low bid may have been low because no PST is in it. He said he simply missed the words in Bradhill’s contract proposal or bid announcing no PST was included and if he had known, Bradhill would not have gotten the job as the bid would have not complied with the bidding rules of which bidders were made aware at a pre-tender meeting. Whether this particular term was stressed or even mentioned at that meeting, I have no evidence on that. I am not dealing with this issue as a judge in a criminal case, where deterrence is one of the primary considerations and punishment for a past wrong is the raison d’être for the proceeding.

[56] We are well past the bidding stage in this case and I have to deal with the issues at the end of contract performance. As between the formalistic reliance on the strict words of the contract and the admission of Bradhill’s principal that he had excluded PST from his bid and thus in fact no reason existed for a credit to BWK on the basis of restitution, I prefer to act with justice than to enrich one party simply because a unilateral mistake was made. In doing so, I am following established principles of equity.

[57] In the recognized authoritative text entitled The Law of Contract in Canada, 6th Edition, by G.H.L. Fridman, Carswell: 2011, there appears the following explanation of the relationship between the common law and equity in respect of mistake.

As a general rule, equity follows the law in its attitude towards contracts which are void by reason of mistake... Equity, however will intervene in certain cases to relieve against the rigours of the common law, even though the mistake would not be operative at law... In equity, to admit of correction, mistake need not relate to the essential substance of the contract, and provided that there is mistake as to the promise or as to some material terms of the contract, if the Court finds that there has been honest, even though inadvertent, mistake, it will afford relief in any case where it considers that it would be unfair not to correct it.

McMaster University v. Wilchar Construction Ltd., (1971), 22 DLR (3d) 9 (Ont. H.C.J.), aff’d, 69 DLR (3d) 400n (C.A.)

[58] Another authority on contract law makes a similar point, citing the McMaster University case as one authority:

The court is often in the position of concluding that the person seeking to enforce the writing (B) probably knew - certainly B ought to have known - but that perhaps B may have persuaded himself that the document was right, to use the words of one judge. It would seem that enforcement should be refused in such a case, for there is no reasonable expectation.

The Law of Contracts, 5th ed., by S.M. Waddams, Canada Law Book Inc., Toronto: 2005.

[59] In this case, the exclusion of PST by Mr. Korevaar was obvious from his contract proposal which BWK’s officials saw. BWK accepted it and did not, as it could have, ruled out the bid as non-complying with the rules.

[60] I find that that the plaintiff’s exclusion of any PST from his bid ought to have been known to BWK and it is verifiable from Korevaar’s pricing sheet. (Ex.1, Tabs 2 and 3). In these circumstances, it would be unjust in my view to charge back a credit for PST to BWK and deduct it from Bradhill’s bill. It would unjustly enrich BWK and deprive Bradhill where in actuality Bradhill had not included PST in the contract price of $184,900. According to the terms of the contract, it should have. But it had not, and it had so notified BWK before entering the contract.

[61] I will not order the plaintiff to pay a PST credit where the amount has no foundation in the evidence and it would be unfair to deprive the plaintiff of the amount sought for it of 6, 848.15. The claimed back-charge by BWK on this account is denied.

2. BR 549 Supply and Install bricks to Underside of Parapet, East Wall; BC 555 Cost to Cut Brick

[62] These two back-charges for $13,018.50 and $975 relate to the same issue. Bradhill was to brick the east wall of the school and BWK claimed that along about three-quarters of the wall, one to two courses of brick were not installed. They were irregular courses requiring cutting of brick which the plaintiff did in other circumstances. A fax memo dated March 4, 2011 was sent by BWK to Bradhill stating that completion of these brick courses was part of what was required of the company in the contract and the plans. Mr. Korevaar wrote on the memo of March 4 that the problem was that the window installation and the parapet that were installed were not true. Mr. Kubbinga disagreed and wrote on the same memo:

Changes in design are not made by you on site without paperwork from architect and going through the proper channels.

[63] Mr. Korevaar said that by March 2011 his company had finished their work. He said they last attended to work on the front entrance way in January 2011. (Actually, it was later discovered to be December 2010 when Korevaar said he found his 2010 day book.) Korevaar said first that he could not put another course of brick on this east wall and the above charges to him for completion of work were not proper back-charges. Under cross-examination, Korevaar agreed that it was his job to cover the entire wall with brick. He conceded that this wall was not covered. About the gap shown at the top, Korevaar said he did what he could. To him, the flashing had been poorly installed and the parapet was wood which was unsupported. He said his job was not to change the parapet and he had completed all the work he could do on this wall without certain changes to the metal and wood work. Korevaar under cross-examination said that he was determined not to return to this site.

[64] Ed Ross, the former site supervisor, also saw the flashing as incompetently done and one solution discussed with BWK was to have a roofer take out and re-install the flashing and hide the problem of an uneven height of the east wall. In chief, Mr. Ross said that there was nothing else for Bradhill to do on the east wall. Ross later agreed that the steel work was eventually fixed but a gap was left that required filling by a part course of brick. Mr. Korevaar had cut brick on the site in other circumstances so that was no problem.

[65] Mr. Kubbinga stated that he first knew about the east wall not being complete on March 4, 2011. He paid for the removal and re-installation of metal flashing and installation of a steel angle under the bricks which apparently corrected the problem but for the installation of the part courses of brick to cover the gap. The cost of the supply and installation of the steel angle and supply and installation of bricks up to the wood parapet, including meetings with the bricklayer about this same problem was $8,220 plus the cutting of the brick for $975. The figure of $13,018.50 included window work caused by Bradhill and work on the flashing which could not have been part of this plaintiff’s contracted scope of work.

[66] The architect Mr. Latimer had little to say about the east wall other than to say he saw the filling of the gap at the top in the spring of 2011 as a very small problem. He had no recollection of the re-installation of the flashing. As to the delayed remedial work needed before the final courses of brick could be run, the contract signed by Mr. Korevaar requires Bradhill to return to complete its work and if it did, Article IV provides a procedure for the extension of the time of completion which Korevaar did not proceed with. Articles III and IX oblige the sub-trade to complete the whole of the work “consistent with the progress of other portions of the work...” and if the subcontractor refuses or neglects to complete the work, BWK had three days to hire others to complete the work at the expense of Bradhill.

[67] In my view, the brick work on the east wall was not completed by Bradhill and its principal refused to return to the site for that purpose in March 2011. Its refusal had nothing to do with whether the metal work had been redone. Korevaar simply said no, he was not returning to the site.

[68] Accordingly, BWK will be credited with the sum of $9,858.50 being the cost of completing the steel angle installation and the brick work on that east wall and the cost of cutting the brick and the window cleaning. The replacement of the metal flashing was never part of Bradhill’s work.

[69] BWK is credited with the sum of $9,858.50, the amount owing by Bradhill as a result of its failure to complete the contract.

3. The School Board’s Legal Fees

[70] Bradhill registered its lien for the sum of $42,159.67 on January 31, 2011. This action was commenced against the general contractor and the School Board as owner of the land and buildings. The owner was made a party in the beginning because the claim is for security against the land and buildings which the subcontractor’s work has improved. The action was brought pursuant to provisions of the CLA. On February 7, 2011, the lien registration was vacated pursuant to s.44(1) (a) by BWK’s payment into court of the full amount claimed plus 25% thereof for security for costs. By s.44(6), when the registration was vacated, the lien became a charge not on the site but on the amount paid into court. Yet the School Board was kept in this action until, by Minutes of Settlement of January 4, 2013, the action was dismissed against it. Mr. Wagman states that he was obliged to keep the owner in the action because BWK was relying on the no payment until paid provision in Article II of the contract.

[71] Mr. Moldaver described this claim as “legal fees charged to BWK by the School Board in the amount of $7,500 (by way of deducting this amount from BWK’s final payment),” Written Submissions for the defendant BWK, p.2. BWK appears to rely on Article II (Withholding of Payments) of the contract to recover these costs as well as full costs of the action from Bradhill as the claimant.

[72] I told counsel during final argument during the trial that I would deal at this time with the liability aspect only of this claim for indemnity for the Board’s fees. My thinking was that if I find that Bradhill is liable for this claim, I will deal with the quantum during the final costs phase of the trial when I have a chance to consider submissions on costs of the entire action. At this point I only have Mr. Kubbinga’s evidence that his company paid $4-5,000 (strangely not $7,500) to have the lien vacated. No bill was entered into evidence to prove the amount and what it was for.

[73] In my view, given s.46 of the CLA by which the owner’s land and building is replaced as the target of the action by the money paid into court which include the full claim, BWK is entitled to be indemnified by Bradhill for the reasonable amount of costs for the services actually rendered usefully to the Board. The fact that no assessment was requested by BWK, does not alter the fact that Bradhill should only be charged for the proper and reasonable amount of costs, not necessarily whatever the Board’s solicitors decided to charge. At the moment, the only costs that Bradhill might expect to pay are BWK’s for vacating the lien claim and those actually caused by the plaintiff refusing to let the Board out once the money was paid into court, but I will await further argument on the quantum of those costs. Rest assured that no amount will be awarded without the actual bill from the School Board being filed showing the services provided.

[74] In this case, the plaintiff is entitled to the following for its services:

Contract price $184,900.00

Extras 500.00

500.00

5,118.95

3,580.00

1,250.00

Total $195,848.95

Less Payments $158,539.50

Completion cost owed BWK 9,858.50

$168,398.00

Owing to Bradhill $27, 450.95

[75] I therefore find for the plaintiff in the sum of $27,450.95 plus HST. Judgment will issue accordingly plus pre-judgment and post-judgment interest according to the rules of court.

[76] Cost submissions in writing may be forwarded to me within 30 days if the parties cannot agree on costs. The plaintiff’s submissions are to be received within 15 days. Where a party claims costs, the submission must be accompanied by a draft bill of costs. In the case of BWK’s disbursement of $7,500 on account of the School Board’s costs, the account must be provided showing what services were rendered for that amount.

HOWDEN J.

Released: July 11, 2013