CITATION: 2225415 Ontario Inc. v. Dyson, 2015 ONSC 4056
BARRIE COURT FILE NO.: 12-661
DATE: 20150623
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
2225415 ONTARIO INC. O/A MACMILLAN HOMES
Plaintiff
– and –
KATHLEEN DYSON, HANNAH JANE DYSON and THE TORONTO-DOMINION BANK
Defendants
E.O. Gionet, for the Plaintiff
M.E. Craig, for the Defendants
HEARD: May 20, 21, 22, 25, 26, 27, 2015
REASONS FOR DECISION
MULLIGAN J.:
[1] The plaintiff 2225415 Ontario Inc., operating as MacMillan Homes (MacMillan Homes) claims against the defendants for $63,000 for the balance owing on a “cost plus” contract. The plaintiff acknowledges that the defendants are entitled to certain credits reducing the claim to $59,933.77.
[2] The defendants, Hannah Jane Dyson (Hannah) and Kathleen Dyson (Kathleen) deny that this was a cost plus contract and deny that there are any further funds owing to the plaintiff. The defendants counterclaim for the amount of $7,514 for costs incurred by them due to the plaintiff’s breach of contract. Although the Toronto-Dominion Bank was named as a defendant in this action, the parties acknowledge that there is no issue with respect to the bank or its priority on the subject lands to the extent of $75,000.
[3] The subject of this legal action is a house in Penetanguishene known as 243 Church Street. In November of 2011, Hannah Dyson hired MacMillan Homes to do an addition to the property. At that time, it was occupied by Hannah Dyson and her husband, together with Kathleen Dyson, Hannah’s mother. Hannah and her husband moved back to Canada from the Bahamas to live with Kathleen, who was elderly and experiencing mobility issues.
[4] The property was described as a century home and had been owned by the Dysons for many years. Initially, it was owned by Hannah’s grandmother, then it was owned by Hannah’s grandmother and her mother, Kathleen. The house was originally constructed from materials taken from an old church. It was a small dwelling built under balloon construction methods – there were no interior walls. In the 1970s, Kathleen and her mother did a substantial renovation to the house, adding on a kitchen and half bath to the structure, as well as adding new windows, upgrading insulation, adding new drywall and floor coverings.
[5] The property is now owned by Kathleen and her daughter, Hannah. The family began discussing an addition to the unit to provide a “granny flat” for Kathleen. The granny flat would contain a bed-sitting room, a bathroom with walk-in shower, a closet, and an exterior door leading to the backyard garden. The unit would accommodate Kathleen’s mobility issues and provide a ground floor connection to the existing house and the backyard garden.
[6] After making inquiries of local contractors, Hannah and her husband, James Moree, settled on MacMillan Homes. They met with the principal of the company, Kevin MacMillan. His evidence was that he had forty years of experience in the construction business, including work on century homes. His son, Garrett, had been working for him for ten years. He also had available to him a labourer and a carpenter. After some initial meetings, Mr. MacMillan was given a set of plans to consider.
[7] The focus of the plans was the addition to the structure and not additional work to the kitchen, living room and stairs subsequently discussed.
[8] It is clear that Mr. Kevin MacMillan provided a verbal estimate of $75,000 to $80,000 to complete the addition. Mr. MacMillan’s evidence was that this did not include HST or unforeseen work that may have been encountered during the addition. Unfortunately, the parties did not reduce this understanding to a written contract. The ultimate issue for the court to determine is whether or not this verbal estimate meant that the contract between the parties was a fixed price contract, or a “cost plus” contract. Before making that decision, it is helpful to review the course of the work done by MacMillan Homes and its subcontractors, the invoices supplied by it, as well as the costs incurred by the defendants when they terminated the contract.
Background of Hannah Dyson
[9] Hannah Dyson was very familiar with the subject property, having spent summers there as a youngster. As an adult, she lived in New Orleans with her first husband, selling real estate. He was involved in construction. She was trained as an interior designer. Together they bought and sold many houses in the New Orleans area. She said that her experience there was with fixed price contracts.
[10] Prior to moving back to Penetang, she lived with her second husband, Mr. Moree in the Bahamas. He described himself as a retired project manager of construction contracts in the Bahamas. He acknowledged he had experience with fixed and cost plus contracts. He expressed no understanding of the term “allowance” in a fixed price contract, but acknowledged that from the verbal estimate of $75,000 to $80,000 would be deducted any items purchased by Hannah. It was anticipated that she would purchase the tile, electrical and plumbing fixtures, bathroom vanity, and the material and labour would be supplied by MacMillan Homes.
[11] Prior to entering into agreement with MacMillan Homes, Mr. Moree had done a “take-off” on the price. He calculated that the addition would cost about $30,000 in materials, and labour would be about another $30,000, so his view was that the total contract would be around $60,000. Mr. Moree gave no evidence about the effect of a contractor’s markup or HST on his calculations.
[12] Work commenced on the project in November of 2011. Hannah obtained a building permit from the town. Kathleen moved out during the construction period to a retirement home. It was anticipated that she would return to the home when the project was completed. Although nothing was reduced to writing, the target for completion was the end of March 2012.
[13] Hannah Dyson and her husband, Mr. Moree, continued to live in the house during the construction phase until the end of January, except for a ten-day holiday period in November. It was always anticipated that they would be on an extended trip overseas during much of February and March.
[14] By all accounts, they were very pleased with the progress of the work and the quality of the work with MacMillan Homes. They were able to observe the work daily during this period of time.
Scope of Work Expands
[15] As construction progressed, Hannah expanded the scope of the work and similar verbal estimates were provided with respect to replacing the stairs to the second floor, renovating the kitchen, and renovating the living room.
[16] The addition was to be completed by using 1” x 6” pine on the walls and ceiling, together wood flooring. Hannah decided that this look and feel could be brought through the existing dwelling by removing the drywall from walls and ceilings, and replacing it with the same pine look.
The Existing Stairs
[17] Mr. MacMillan gave an estimate of $5,000 or less to replace the existing stairs. He gave a verbal estimate of $30,000 to renovate the living room. He gave a verbal estimate of $15,000 to renovate the kitchen. This kitchen price did not include cabinets which would be supplied by Hannah, and did not include a countertop which would be done under the supervision of Mr. Moree. Mr. MacMillan’s evidence was that these quotes did not include HST or unforeseen problems that he may encounter while renovating this century home.
[18] MacMillan Homes proceeded with all necessary work with respect to the expanded scope of work. Problems were encountered by MacMillan Homes and observed by Hannah. This included galvanized plumbing in the existing structure, which had to be replaced as non-compliant with the building code, as well as bare wire in the walls, necessitating substantial re-wiring of the home. Hannah arranged for the service panel to be increased from 120-amp to 200-amp service, at her expense.
[19] At the point where MacMillan Homes needed to replace the stairs to the second floor, Hannah and her husband moved out toward the end of January and lived with friends for a week before beginning their two-month overseas vacation.
Progress Payments
[20] During the period of construction while Hannah and her husband were at the house, relations between the parties were excellent. Hannah provided a $30,000 advance at the beginning of construction. She provided another $30,000 when she received the first invoice from MacMillan Homes in early January 2012. Prior to her leaving on the overseas vacation, she provided another $20,000 to keep the work going in her absence. In addition, she made arrangements so that a further cheque could be picked up from her mother while they were away, if she authorized it. MacMillan Homes received $80,000 in total during the course of construction. In late February of 2012, MacMillan Homes e-mailed an invoice to Hannah for $93,554.25. She had previously received an invoice dated December 30, 2011 for $34,458. These two invoices totalled about $128,000. The original verbal estimates totalled $130,000. There was still a substantial amount of work to be done by MacMillan Homes before the renovations were completed. On receipt of the bill and some photographs, she phoned MacMillan Homes and told them to stop work, and that she would meet with them when she returned home. Much to her surprise, she learned that Mr. MacMillan went to Kathleen’s nursing home and obtained a cheque from her for $73,012, being the balance owing on this account, less credits for deposits. Hannah had not authorized this cheque. She spoke to Mr. MacMillan requesting he not cash the cheque. Mr. MacMillan honoured that request, but not before going to the bank to learn that there were not sufficient funds in this particular account.
The First Account
[21] MacMillan Homes prepared an account dated December 30, 2011, and Kevin MacMillan presented this to Hannah early in the New Year. This account was made an exhibit and bears scrutiny. The account is for $34,458.30. The account lists the material suppliers and the amount charged by each subcontractor and sub-trades, including MacMillan Homes’ own total for hours spent by its forces. Rental charges are also added. Kevin MacMillan backed out HST from each of these sub-trades, applied ten percent to the total as contractor’s profit, then added HST for a total of $34,458.30. Mr. MacMillan’s evidence was that when he met with Hannah, he provided her with all the related invoices and went through these items line by line. There was no objection or dispute. Because Hannah had already paid $30,000, there was a balance owing on this account of $4,458.30. The parties acknowledged that Hannah began to write a cheque for this amount, but instead tore it up and provided another cheque for an additional $30,000. Kevin MacMillan acknowledged that he made a mistake in this contract. He underestimated the hours needed to be billed by MacMillan Homes by $5,000. He made this up by adding it to the February 29, 2012 invoice without explanation to Hannah.
The February 29, 2012 Invoice
[22] The next invoice prepared by MacMillan Homes was February 29, 2012. This was e-mailed a few days later to Hannah overseas. When she received it, she ordered a stop-work. Once again, this invoice listed the material suppliers. For example, Midland Timber Mart, $24,382. It also listed the sub-trades used and their costs, including a plumber and an electrician. The total of these costs was $75,264.88, and the most significant of these costs was the MacMillan Homes’ labour bill of $41,450. According to Mr. MacMillan’s evidence, this included the hours spent by his forces through January and February, and included the $5,000 which he failed to include in the earlier invoice. After applying the credits to the amounts received, this invoice showed a balance owing of $48,012.55.
The March 16, 2012 Invoice
[23] MacMillan Homes issued another invoice dated March 16, 2012, for $15,779.64. Once again, consistent with the previous invoices, this listed the material suppliers, the sub-trades, the contractor’s profit and HST. This invoice indicated a balance owing from the previous contract of $48,012.55, showing a total owing of $63,619.24.
[24] MacMillan Homes now seeks $59,933.77 after deducting certain credits he acknowledges for work done by Hannah Dyson.
[25] Garrett MacMillan gave evidence about the work he did at the home, together with his father and others. He was not involved in any pricing discussions with the defendants. His evidence was that the original concept of simply replacing the stairs to the second floor was considerably expanded by a request by Hannah to make the stairs longer and wider. Hannah acknowledged in her evidence that she agreed to make the stairs longer, but disputed that they were made wider. I prefer the evidence of Garrett MacMillan with respect to this point, which was supported by the defence expert, Joe Pendlebury. Mr. Pendlebury gave evidence as a quantity surveyor. He had an opportunity to look at the original construction drawings and visit the home. His evidence was that the stairs were made longer and wider.
[26] Garrett MacMillan’s evidence was that the extension of the stairs added considerable work to the project. The upper floor had to be opened and widened to accommodate the longer stairs, and a wall at the side of the stairs had to be moved out to accommodate the wider stairs. Much of the preliminary work was known by Hannah because it had commenced before she left on her overseas vacation. When Hannah Dyson saw the results of the stairs and photographs sent to her by Garrett, she responded by e-mail, “Wow. Looks amazing. The stairs are fantastic. We both love the colour. How very exciting.”
The Living Room and Kitchen Renovations
[27] These renovations, when commenced, uncovered a number of problems that had to be resolved by MacMillan Homes. There was bare, exposed electrical wiring, which necessitated a substantial amount of re-wiring. There was galvanized plumbing, necessitating upgrades to the plumbing. These problems were known to Hannah and her husband, and observed by them before they went away. There was a load-bearing wall that had to be moved with temporary supports put in place. The defendants’ expert, Joe Pendlebury, confirmed that a load-bearing wall was moved.
The Evidence of Derrick McGuire
[28] Mr. McGuire is a neighbour of the Dysons, who was entrusted with a key to the property when they were away. He would enter the home on Saturday or Sunday to keep an eye on the place. He also had an opportunity to see what was going on because he would drive by the house a couple of times a day. His opinion was that there was not much work going on when they were away. As requested, he took several photographs when requested by Hannah. She called him to take photographs when she told MacMillan Homes to stop work. The photographs showed some of the areas being worked on. The walls and ceiling were complete with pine and ready for paint. Receptacle boxes were in place to receive switches and lights. The walk-in shower had been tiled. The wall beside the stairs was complete.
[29] I do not accept the evidence from Mr. McGuire that nothing was done. The photographs show that the renovated area was ready for paint, ready for trim, and ready to receive switches and lights. My view is supported by the invoices provided by MacMillan which show numerous pick-ups or deliveries from suppliers or work done by sub-trades during the February and March period when the Dysons were still away.
Completion of the Work by Hannah Dyson
[30] After terminating her relationship with MacMillan Homes, Hannah Dyson and her husband arranged for subcontractors and materials to finish the work. While they were away, they hired a friend of the family, Bob Busch, to complete the sanding and staining of the floors, and painting of the walls and ceiling. He told the court he spent one weekend sanding and staining, and about four days painting. He was paid for his work at the rate of $30 per hour. When Hannah Dyson returned from her overseas vacation, he continued to work at the premises. Work still to be done included all necessary trim work, the installation of a bathroom vanity, and the installation of kitchen cupboards. Necessary electrical work was done by the same contractor that Mr. MacMillan had employed. Mr. MacMillan’s plumber was unavailable, so Hannah Dyson employed a different plumber. Exterior work was also incomplete, including siding, soffits and facia.
[31] The issue of siding is significant. Kevin MacMillan said that the siding had not been selected by Hannah Dyson before she went away. Her evidence was that he should install aluminum siding similar to existing. Significantly, when she returned, she picked out wood siding and had that installed. Her evidence was that she ultimately changed the siding of the whole house to wood siding.
[32] Hannah Dyson said that she moved back in in the first or second week of June. However, that was contradicted in cross-examination. The invoice from Kathleen Dyson’s retirement home indicates that her stay there was completed on May 11, 2012. Because she could not return to the house until Hannah was there, it is plain and obvious that they were able to resume occupancy on or about May 11, 2012. Hannah Dyson and her husband returned from their overseas trip about April 4, 2012. Therefore, the work was completed within five or six weeks, using one labourer, Mr. Busch, together with the necessary sub-trades, including an electrician and a plumber.
[33] Hanna Dyson’s evidence was that in all, she incurred about $16,383 in materials, and about $18,472 on labour and additional materials to complete the work.
Date of Completion
[34] It was Hannah Dyson’s evidence that it was always important to have the project finished by the end of March, so they could move in at the end of their trip and have Kathleen move back with them at the same time, reducing the expense that she was incurring at the retirement home.
[35] Kevin MacMillan’s evidence was that he was using his best efforts to complete the addition by the end of March, but never promised that he could finish the additional scope of work completely by that date.
Could the Renovations Have Been Completed?
[36] Mr. Moree’s evidence was that he would show the MacMillans how to fabricate and install a concrete countertop for the kitchen. It is clear that this work would not have been done until his return which occurred around April 4. Until that work was done, the kitchen was not functional. Because there was no countertop, there was no sink. Because there was no sink, there were no hot and cold water lines. Without a functioning kitchen and without Hannah Dyson being home, it is hard to imagine how Kathleen Dyson could live in the home by herself.
[37] Garrett MacMillan’s evidence was that he could have finished the renovations and the addition in the time available between the termination of the contract and the end of March. He said that there was about two weeks of work left. MacMillan Homes had four people available to work on the project: Kevin MacMillan, Garrett MacMillan, their carpenter and their occasional labourer. Therefore, I am satisfied that all of the necessary work could have been done to achieve occupancy, save and except for the kitchen countertop which required Mr. Moree’s assistance.
Why was the Contract Terminated?
[38] I am satisfied on all of the evidence before me that the contract was terminated based on the work in progress invoice dated February 29, 2012. Cost was the issue. It was clear that the price was coming close to, if not exceeding the original estimate, with substantial amounts of work still required to be done. All indications were that Hannah Dyson and her husband were very satisfied with the work, work which they observed personally while they were in the house, and work which they saw by way of photographs while they were overseas.
Fixed Price or Cost Plus Contract
[39] Much of the dispute between the parties can be resolved upon a determination of whether the oral agreements they reached constituted a fixed price contract or cost plus contract. Kevin MacMillan gave evidence about the contract discussions, as did Hannah Dyson with some evidence from her husband, who was involved in some portions of the discussions. In addition, the court heard evidence from Joe Pendlebury, an expert called upon by the defence.
[40] Mr. Pendlebury is a quantity surveyor, who had the opportunity to review pictures of the work taken by Garrett MacMillan, showing the progress of the work about one week before MacMillan Homes stopped work. He also had the benefit of a visit to the home, a meeting with Ms. Dyson, and as well as review of the plans and the examination for discovery of Mr. MacMillan.
[41] He provided some evidence about fixed price contracts and cost plus contracts in general. In addition, he made reference to Article A-4 of the CCDC2 Cost Plus Contract.
[42] He told the court a fixed price contract would set out the scope of the work, the materials to be used, decisions to be made by the owner or the contractor, a price and a payment schedule based on milestones or dates. Further, a fixed price contract often contained an allowance for certain finishes. For example, a homeowner would be allowed a certain amount for tile. It the homeowners chose a cheaper price for tile, they would get a credit. If they chose a more expensive tile, it would be added to the contract. In cross-examination, he said it would be very unusual, if not risky for a contractor to proceed with a fixed price contract without defining allowances.
[43] With respect to cost plus contracts, such contracts would include invoices from trades, rental costs, material costs, labour, time and rates, with a markup for the contractor’s profit, and payments based on milestones such as monthly billing or percentage of work done.
[44] The CCDC Cost Plus Contract Suggested Guideline filed as an exhibit, provides a menu selection of three pages of clauses that a contractor may wish to include in such a contract. Many of these clauses may have application to more sophisticated contracts involving various inspections for quality assurance and testing. However, several key pieces of that precedent are instructive. The following are some of the key points that a contractor should include:
• Wages and benefits paid for labour.
• Cost of material/supplies/equipment.
• Temporary services and facilities, and hand tools not owned by the workers.
• The amounts of all contracts or written agreements with subcontractors and suppliers, and the cost of the contractor.
• The contractor’s fee, which includes value added taxes as either a percentage fee or a fixed dollar fee.
• The contract price excludes value added taxes, is the cost of the work and the contractor’s fee.
• Progress payments of the contractor’s fee, together with such value added taxes as may be applicable to such payment.
[45] Kevin MacMillan’s evidence was that this was not a fixed price contract. The verbal estimate he gave for the initial addition was an estimate only. It did not include HST. It did not include problems that may be encountered during the work. In fact, problems were encountered. Mr. MacMillan could not affix the addition to the original stone wall foundation of the existing structure without an engineering report, additional work flowing from this report, and an inspection by the Town was needed. It was clear from Hannah Dyson’s evidence that she was aware of this engineering requirement and the additional work. She was living in the home during this phase.
[46] Mr. MacMillan’s evidence was that his verbal estimates with respect to the stairs, the living room, and the kitchen were also just estimates, which did not include HST. Based on his experience in dealing with century homes, he anticipated that there would be unforeseen problems that may have to be dealt with and made that clear to Ms. Dyson. In fact, he did encounter problems or changes. The stairs were made longer and wider, at the request of Ms. Dyson. This required additional work to the second story, and a wall removal, all of which took considerably more time of MacMillan Homes’ forces. The living room and kitchen also required additional work. The walls, once removed of drywall, were improperly studded and had to be reworked. There was bare wiring. The wiring had to be replaced. There was galvanized plumbing and this plumbing had to be replaced. A load-bearing wall had to be supported and moved.
[47] Hannah Dyson indicated that she felt that this was a fixed price contact entitling her to deduct for any choices she made for materials. However, I do not accept her evidence on this point. She was well aware of the problems that Mr. MacMillan encountered as construction progressed. Because she was living in the house, she could see the extra labour costs that were going into the project. She was there every day of the work from November to the end of January. She had a substantial level of sophistication with respect to construction issues, as did her spouse. I find that the invoice delivered to her dated December 30, 2011, was the most significant feature in reaching a conclusion that this was a cost plus contract. The invoice contained figures under the following headings:
• Material
• Sub-trades
• Rental
• Contractor’s Profit
• HST
[48] Hannah Dyson clearly reviewed the invoice because she prepared to write a cheque for the balance due, $4,458.30. But as they got talking, she decided to give him another deposit of $30,000 and tore up the cheque for $4,458.30. I accept Mr. MacMillan’s evidence that he did a line-by-line analysis of this invoice and provided her with the backup invoices supporting his expenses for materials, sub-trades, and rental. I accept that Ms. Dyson did not question the invoice. In fact, she was prepared to pay an invoice which had many of the hallmarks of a cost plus contract.
[49] MacMillan Homes is not blameless in the position they are now in having to sue for the balance of their invoices. First of all, Kevin MacMillan acknowledges that he undervalued labour in his December 30th invoice by 100 hours. He did not call this to the attention of Ms. Dyson. It appears he simply rolled it into his labour cost in the next invoice, which was not sent until two months later. He did not reduce the agreement to writing and proceeded, as he stated, “on trust”, having evaluated Hannah Dyson’s knowledge about construction. He gave them guidance with respect to an estimate of costs, but did not alert them to the potential for rising costs when problems were discovered. He did not revise his estimates when problems cropped up or changes were requested.
February 29 Invoice
[50] MacMillan Homes worked on the project during January and had a meeting with Hanna Dyson and her spouse before they went overseas at the end of January. He received another deposit from her of $20,000 which he did not request. Significantly, he did not provide another cost plus invoice to her at that time. Had he done so, she would have been aware of the rising costs relative to the verbal estimate, while understanding the state of work when she left.
[51] Instead, he e-mailed an invoice February 29, 2012, while she was overseas. She was not able to open it and review it for several days after that because she was not in e-mail contact. When she did, she was shocked and immediately terminated the work. That invoice was for $93,554. That invoice covered all of his materials for two months, including over $24,000 to Midland Timber Mart, as well as payments to sub-trades such as a plumber and an electrician. The largest sub-trade was MacMillan Homes own labour forces charge of $41,450. Presumably, this included the unbilled labour charges missed from the previous invoice. Kevin MacMillan did not provide the back-up invoices, but they were available for inspection as they had been with the previous invoice.
[52] Garrett MacMillan’s evidence was that the contract was 89% complete and could easily have been finished by the end of March, save and except for the kitchen counter installation. That work was to be left until Hannah Dyson’s husband returned to oversee it. The defence expert, Mr. Pendlebury felt that the work was 67% complete. He felt that it would take two or three months to complete the work. In my view, the expert’s evidence was based on an incomplete understanding of what had been done by the time MacMillan Homes stopped work. First of all, he reviewed photographs taken by MacMillan Homes about a week before work stopped. Clearly, work continued for a week, which he had not accounted for. The pictures showed, for example, that painting had started in the bathroom addition. The ceiling had been painted. In addition, Mr. Pendlebury acknowledged that he was not told about the bare wiring problems, the galvanized plumbing problems, or the difficulties with the imperfect original stud walls. He was not aware of the replacement beam in the living room area.
[53] The work was completed by one skilled labourer, Mr. Busch, within six weeks of Ms. Dyson returning home. By contrast, MacMillan Homes had four people within their labour force to conduct the work. Therefore I accept Kevin MacMillan’s evidence that the work could have been completed by the end of March, as to the addition. The timing of when Ms. Dyson moved back in was very much under the control of her spouse, who was going to assist with the countertop. If that was done on a timely basis, I see no reason why the project could not have been completed within a week of their returning home.
[54] The siding issue also remained to be done. I am satisfied that on all the evidence I heard that Hannah Dyson had not picked out the applicable siding, and not instructed MacMillan Homes to use vinyl siding. I note, for example, that she picked out the vanity before she went away, and told the court that she had also purchased and put in storage an Ikea kitchen. Within a few weeks of returning home, she purchased wood siding because she wanted to change the entire siding of the house. In any event, there was no evidence that the lack of exterior siding would have any effect on the ability of Hannah Dyson and her family to occupy the house.
MacMillan Homes’ Claim
[55] MacMillan Homes therefore claims $59,933.77 comprised of the following, less agreed credits:
Balance from Invoice No. 1 $4,458.30
Invoice No. 2 $43, 554.00
Invoice No. 3 $15,779.64
In determining a final figure, MacMillan Homes has credited the defendants with items supplied or paid for by the defendant, and reduced his contractor’s percentage and consequent HST on this figure, resulting in this balance.
[56] In my view, MacMillan Homes’ claim ought to be reduced by $5,000. There are three bases for this reduction:
(i) Mr. MacMillan under-billed his labour forces by $5,000 on his December 30 invoice. Had the full amount been shown, the defendants would have had the opportunity to reconfigure the work or stop the work and continue with other contractors. They lost this opportunity;
(ii) MacMillan Homes did not send a second bill on a timely basis for work done and materials purchased in January. There was an excellent opportunity to do so when Mr. MacMillan met with Hannah Dyson before she left for her overseas vacation at the end of January. He could have reconciled with her the additional labour charges unbilled from the previous account. She would have seen the extent of the charges to-date, relative to the state of the work. Once again, she could have modified the contract or stopped work and continued with other forces;
(iii) Mr. MacMillan was clear that this was a cost plus contract. I accept that he would not have used a fixed price contract because there was a potential for unforeseen expenses. The unforeseen costs became a reality, but at no time did he discuss with her how this might affect the ultimate cost relative to his estimate.
[57] Under the circumstances, judgment should be granted to the plaintiff in the amount of $54,933.77.
Counterclaim
[58] The defendants brought a counterclaim against the plaintiff for costs incurred, based on breach of contract. The contract is alleged to have been breached because the work was not completed on time and did not come within the price estimate which the defendant felt was a fixed price contract. The amount claimed by way of counterclaim is $7,514 made up as follows:
(i) additional occupancy costs for Kathleen Dyson at Bayfield Retirement Home, from April 1 to May 11 of $5,327;
(ii) additional storage costs of $387;
(iii) miscellaneous costs incurred by James Moree for travel to the property, meals and gas during the continuation of construction from April to May 11 of $1,800.
[59] Kathleen Dyson stayed in the retirement until May 12. It is clear on the evidence that she could not move in by the end of March. James Moree had not returned to supervise the countertop in the kitchen, therefore the kitchen was not functional. It is reasonable to assume therefore that she could have moved out of the retirement residence sometime in April, so further costs would have occurred in any event. If MacMillan Homes had been allowed to continue with the work in March to the extent that they were able to do so, I am satisfied that the residence would have been ready for occupancy before May.
[60] I am further satisfied that the storage costs and additional extra costs incurred by Mr. Moree could have been avoided if MacMillan Homes had continued the work using their forces. Hannah Dyson made a choice to use a single skilled labourer who charged $30 per hour without HST working for five or six weeks, through April. Storage costs could have been avoided if MacMillan Homes continued with their work.
[61] I therefore dismiss the counterclaim of the defendants.
[62] The contract of MacMillan Homes was with Hannah Dyson, judgment against Hannah Dyson is the result. Kathleen Dyson is a co-owner of the property. She was not involved in the contract but has certain obligations under the Construction Lien Act. The plaintiff will have a further fifteen days after the release of this judgment to make such further submissions as may be necessary with respect to the form of the judgment, pursuant to the Construction Lien Act. If the parties have not reached an agreement as to the form of judgment, the defendants will have a further ten days to respond.
Costs
[63] The parties are encouraged to reach an agreement with respect to costs. If no agreement is reached, the plaintiff will have twenty days after the construction lien judgment issue has been resolved to make costs submissions. The defendants will then have a further ten days to reply. All submissions not to exceed three pages plus a Costs Outline.
MULLIGAN J.
Released: June 23, 2015