The Lien Claim and Counterclaim

[1] The Plaintiff, Aacurate General Contracting Ltd. brings a claim under the Construction Lien Act, S.O. 1983, as amended (“the CLA”) for payment under a residential construction contract (“the contract”). Dwayne Sullivan, the owner and operator of the claimant company, is hereinafter referred to as the Plaintiff. The Plaintiff performed home renovations at the address of 3957 Concession 12, Sunnidale, Stayner (“the project”) for the benefit of Joseph Tarasco and Valerie Tarasco (the “Defendants”). The Plaintiff claims $48,141 plus interest. This amount includes an assigned lien claim from Rona Building Centre (“Rona”) for unpaid materials ($25,935 inclusive of contractual interest).

[2] The Defendants resist the claim on the basis that the contract was for a fixed price of $99,000 inclusive of all taxes. The majority of that contract price has been paid. The defendants claim that by abandoning the project in late August of 2011, the Plaintiff has breached the contract and forfeited his right to further payment. Moreover, the work performed by the Plaintiff was both sub-standard and incomplete. The project was not performed in accordance with the contract, the drawings or the Ontario Building Code (OBC). The Defendants advance a counterclaim for the correction of certain deficiencies remaining on the project after the Plaintiff’s abandonment of it.

[3] The Township of Clearview is hereinafter referred to as “the Township.”

The Contract

[4] The contract is a three page document dated October 6, 2010. The project envisaged three additions and a garage being added to the original structure, a home that was over a hundred years old. The Plaintiff agreed to carry out foundation and framing work, and to install “Typar” (a kind of building wrap), shingles, windows and doors. In addition, the contract called for the Plaintiff to supply two overhead garage doors and to remove five tree stumps from the site. The contract price was $99,000 inclusive of HST. It contained a payment schedule for a $4000 deposit followed by four equal installments of $23,750 upon completion of various stages of construction. The Plaintiff commenced work on the project in April 2011 and carried on through the spring and summer season until approximately August 30, 2011.

The Evidence

[5] The court received both documentary and oral evidence. There were four witnesses: the Plaintiff, the two Defendants and Dan Barill (“Barill”), a structural engineer.

[6] I find that the evidence established the following important facts:

The contract bears the signatures of the Plaintiff and both Defendants. The contract called for any charges on the “rear addition” to be on a time and material basis.
Prior to commencing the project, the Plaintiff prepared a set of rough drawings of the work that he was proposing.
The Defendants acted as their own general contractors. As such, they were responsible for decisions made on site and for other sub-trades.
Naming herself as the designer, Valerie Tarasco submitted the application for a building permit accompanied by the rough drawings to the Township on October 18, 2010.
The original structure was supported by a rubble foundation that the Plaintiff did not discover until after the excavation had commenced.
The discovery of the rubble foundation wall underneath the existing structure necessitated a limited change to the design specifications for the ground floor framing in the new front entrance addition. This resulted in the Plaintiff placing the floor joists in a different manner than what was originally intended. The supplier of the floor joists provided revised drawings for these changes.
Through on-going discussions and agreement, the parties contracted for certain extra work (“extras”) to be performed by the Plaintiff in addition to the work envisaged under the contract. These extras pertained mostly to the original structure and rear addition and were to proceed on a time and material basis.
The extras are detailed in the Plaintiff’s invoice dated September 2, 2011 (“the extras invoice”).
The extras included labour and materials for: a new beam in the existing basement; six additional windows; the lifting of the old structure; hand excavation underneath the old structure; new footings and block foundation; the rebuilding of the old laundry area; a new roof system; the removal of siding; soffit and facia; and new openings into the additions.
The foundations and footings work were passed by the Township after inspections conducted in May and July, 2011.
The Plaintiffs employed a backhoe to break up the concrete slab under the old garage. At the request of the Defendants, the Plaintiff buried the rubble around the existing foundation.
The Plaintiff asked the Defendants to call for the framing inspection in late August 2011. The Defendants refused to do so. The Plaintiff left the project on or about August 30, 2011. Before doing so, he took a series of photographs showing the state of the project on that day.
On September 2, 2011, the Plaintiff rendered an invoice to the Defendants for the extras in the amount of $37,425 plus HST of $4,865.25 for a total of $42,290.
The Defendants called for the framing inspection after the Plaintiff left the project. It took place on September 9, 2011. The Township noted some deficiencies. A framing re-inspection took place on October 7, 2011 at which time the framing was deemed to be acceptable. The project was authorized to continue.
The Defendants have made payments totalling $93,150 towards the combined total of the original contract and the extras invoice (total project total of $141,290.00). The shortfall represents the Plaintiff’s present claim for lien. The Plaintiff’s calculations are that there remains $15,250 owing on the original written contract. The amount of $32,890 remains owing for time and materials on the extras.
The payments made by the Defendants included one cash payment of $9,400 on July 1, 2011 and a final payment of $10,000 on August 30, 2011.
The Defendants constructed a new dormer on the roof above the upstairs bathroom. The Defendants installed the shingles and flashing secondary to that aspect of the project.
The Defendants performed all sheathing, strapping, board and batten, finishing flashings and stucco.
The Plaintiff did not receive the framing inspection report of September 9, 2011 until after the commencement of the litigation. The Plaintiff was afforded no opportunity to remedy the deficiencies in the report.
On November 28, 2011, at the request of the Defendants, structural engineer Barill reviewed the ground floor framing for the new front entry addition. He found it to be in accordance with the OBC.
The Rona lien was the subject of a valid assignment to the Plaintiff on December 12, 2012.
The burying of the broken up slab of the garage around the perimeter of the house made the area earmarked for the concrete patio unsuitable for that purpose.

Witness Dwayne Sullivan

[7] I found the Plaintiff to be a credible witness. I found his evidence to be entirely reliable. He gave his evidence in a straightforward manner; he did not hesitate or equivocate. He recalled the events pertaining to the project without undue prompting. He impressed me as possessing a profound knowledge of residential construction matters. He explained the work performed on the project in a general way but was also able to offer specific details as well. For example, he was able to account for all of the twenty-six windows supplied to the project including the ones which formed part of his extras invoice. The Plaintiff explained how the absence of a proper foundation or footing underneath the original structure made necessary the changes in the ground floor framing design, the lifting of the house, hand excavation and the laying of a new four foot high foundation.

[8] I accept that the Plaintiff prepared a quote for the Defendants that eventually made its way into the contract. I find that he wisely anticipated the potential problems and the additional expense that might arise given the scope of the proposed work and the age of the original structure. I find that this explains and places in context the wording at page 3 of the contract:

Please note any work on the two story (sic) existing home which is approximately 22 ft by 27 ft and is two story which consist of bedrooms, liveingroom (sic) and one and half baths, set of stair to second floor and 5’11” basement or the rear addition which is approximately 14 ft. by 22 ft which includes kitchen, laundry area and access to the basement one story attached at rear will be billed time and material only due to the fact that this existing dwelling is well over 100 years old and we can not (sic) see how this structure is put together and unforeseen things can happen.

[9] The contract also contained the following wording:

“THIS CONTRACT IS BASED ON AN EXISTING PLAN. ANY CHANGES MADE WILL BE BILLED BY TIME AND MATERIAL. Any changes in the work and the price to be charged for same shall be made in writing. This proposal is made on the basis of current material and labour costs.”

[10] I find that these clauses formed an integral part of the contract. The parties clearly turned their minds to the likelihood that a “time and materials” basis would apply to any extra work outside of the specific work set out in the contract.

[11] I accept that the Plaintiff prepared the drawings that became the working blueprint for the work performed. I accept that Valerie Tarasco decided to forego formal architectural drawings by simply submitting the drawings with the permit application in which she named herself as designer. I am unable to find that any deletions or additions made to those drawings by the Defendants would be binding upon the Plaintiff. I find that the extras performed were done at the behest of the Defendants. I find that the Defendants had full knowledge that the extras were outside the scope of the work detailed in the original contract. As such, the work to the existing structure and the extras performed did not serve to “change” the original contract. The mutual obligations of the parties and the price remained the same under the original contract. There is nothing unusual about parties to an existing contract reaching an agreement as to how any additional and uncontemplated work would be billed. This would appear to be common practice when such an extensive project is undertaken and where unknown issues may arise. The fact that the extras were additional to the original contract and that the parties declined to commit the details of the extras to writing, does not serve to relieve the parties from their respective obligations under the contract. Nor does it serve to nullify the nature and quality of the extras agreement itself

[12] I find that the photographs taken by the Plaintiff of the project serve to corroborate and enhance his evidence. The photographs depict a clean construction site, quality workmanship, and significant site enhancement. The photographs are entirely consistent with the drawings prepared by the Plaintiff and the work outlined in the contract. The photographs also depict some of the extras: the additional windows and the new roof on the rear addition. The photographs show the framing and house wrap to be in good condition. These photographs reveal no patent defects or deficiencies.

[13] I accept that the materials listed in the Rona invoices were all supplied to the project. The cost of those materials is subsumed in the Plaintiff’s present claim. At discoveries, the Defendants undertook to review the Rona invoices and were to advise if they took issue with any of them. They did not do so. I held that it was not open for them to do so at trial. Regardless, I am persuaded by the evidence of the Plaintiff that the materials set out in those invoices were used on the project thereby bestowing a benefit on the Defendants.

[14] Except as set out below, I find that the extras as outlined in the invoice dated September 2, 2011, were performed by the Plaintiff, for the benefit of the Defendants and with the Defendants’ knowledge and consent. I find that the Defendants accepted the original contract with the stipulation pertaining to the existing structure. I find that the Defendants agreed to the extras and provided instructions to the Plaintiff in that regard. I also find that they understood and agreed that the extras would be provided to the project on a time and material basis. The court received no compelling evidence that the Plaintiff failed to provide the labour and material necessary for those extras.

Dan Barill (“Barill”)

[15] Barill was qualified as an expert in structural engineering. He testified that the deficiencies identified in the Township inspection report of September 9, 2011 were entirely minor in nature; they were in fact typical of the kinds of deficiencies identified in many such inspection reports. Barill explained why the change in the design of the floor system for the front entry addition was necessary. He confirmed that the design change complied with the OBC. The implementation of that change served to offer better support for that part of the addition.

[16] I am prepared to accept the entirety of Barill’s evidence. I found him to be entirely impartial; he was originally retained and paid by the Defendants, not as a litigation expert, but in order to address the problems raised by the Township with respect to the ground floor framing. I accept that the deficiencies identified in the Township’s framing inspection report were minor and typical of many residential projects. I accept that the framing contractor on site would ordinarily employ his own time and materials to rectify such deficiencies after which a re-inspection would take place.

[17] Barill demonstrated a thorough knowledge of the construction industry and the OBC. He offered detailed explanations of the ways in which a rafter spacing deficiency could be remedied. He afforded the court an insight into the use of collar ties and how they could be used to provide both lateral restraint and to reduce the span for the rafters. I am satisfied that he offered both practical and cost efficient suggestions for the correction of the few deficiencies that were identified.

[18] Barill noted that the Township had already issued passes for both the foundation and the footings prior to the framing inspection. He could safely conclude, therefore, that there were no deficiencies in those aspects of the project.

[19] I accept the balance of Barill’s opinion as it relates to the other alleged deficiencies identified by the Defendants. He explained how a 2’ X 6’ header was adequate where a roof load was minimal; he confirmed the view of the Plaintiff that the pouring of a concrete pad in an area of un-compacted sub grade would result in a heightened risk of heaving, settling and cracking of the pad. Barill inspected the new roofs installed by the plaintiff and found that the step flashing was in compliance with the OBC. Barill explained how the water penetration found in the second floor washroom originated from the dormer added to the project by the Defendants. While for practical reasons he was unable to inspect all of the windows, the one window he did inspect had been installed to the sub-structure properly. The window had sufficient fasteners to the jam and there was no evidence of any screws fastened improperly to the head or sill.

The Defendants

[20] I found the Defendants sorely lacking in credibility. I am unable to afford any weight to their respective testimonies. I have allowed for the fact that they were both self-represented litigants faced with the unenviable task of mounting a defence and advancing a counterclaim. I have allowed for the fact that both underwent cross-examination by senior counsel. I have allowed for the fact that they were plainly inexperienced in the art of marshalling and presenting of evidence.

[21] I simply do not accept Joseph Tarasco’s evidence that he could not recall executing the contract proposal on October 6, 2010; nor can I accept Valerie Tarasco’s evidence that she did not see the third page of the contract until the discovery dates in 2013. The three pages of the contract bear their respective signatures. Those signatures appear to be identical. Moreover, Joseph Tarasco’s signature is identical to the signature approving the plans for the addition and garage which he admitted to signing. There was no explanation offered by either Defendant as to how their signatures would come to appear on documents that they had never seen before.

[22] Both Defendants gave their evidence as if they were following a prepared script. Both seemed unable or unwilling to answer the simplest or most obvious of questions. A transcribed record of a witness’s spoken word is a poor replacement for the first hand observation of that witness giving evidence. This trial was a case in point: long periods of silence after difficult questions, blank staring, searching and anxious glances one to the other, obvious prevarication and undue hesitation. All of these betrayed a manifest unwillingness on their part to candidly engage in what is, at its heart, the truth seeking exercise of giving evidence under oath. Both Defendants appeared to search for answers that would do the least amount of harm to their case. When faced with difficult and straightforward questions alike, they were both inclined to stare searchingly back at the other as if looking for a way to escape from the dilemma that a truthful answer to the question would bring. More than once, the court noticed Joseph Tarasco attempting to coax an answer from the mouth of Valerie Tarasco.

[23] Joseph Tarasco claimed that he did not know what a progress payment was; he stated that he left all financial matters to his spouse. Joseph Tarasco claimed that he never looked at himself and his spouse as the general contractors: this in spite of the fact that Valerie Tarasco applied for the building permit, named herself as the designer and that the Defendants hired their own sub-contractors to perform stucco, board and batten, and finishing flashings. Joseph Tarasco’s comment that, “I guess I am not that smart”, did not impress the court as genuine.

[24] I find that the Defendants knew exactly what they were doing at all times. I find that they signed the contract on October 6, 2010. I find that they agreed to and accepted both the scale and scope of the extras performed by the Plaintiff. I find that they knew and accepted that the extras would be provided by the Plaintiff on a time and materials basis. I do not accept that they first became aware of the Plaintiff’s claim for extras in late January 2012 when the lien was advanced. I find that they knew and appreciated that the Plaintiff was doing work additional in scope to the original contract.

[25] I find that the Defendants did receive the invoice for the extras on or about September 2, 2011 and from that point on, deliberately set out to raise an unmeritorious defence and counterclaim. I find as well that Joseph Tarasco improperly and purposely refused to allow the Plaintiff to call for the framing inspection knowing that another payment would become due to the Plaintiff after that inspection. Once the Plaintiff was away from the project, the Defendants then called for the framing inspection, thereby denying the Plaintiff his opportunity to rectify any deficiencies found by the inspector. This would have entitled the Plaintiff to the final installment under the contract. I accept that the Plaintiff did not receive a copy of the Township framing inspection reports until well into the litigation. I find that had he received the September 9, 2011 report and been offered the opportunity, he would have undertaken the relatively minor task of correcting those deficiencies. That opportunity was closed to him following the unilateral and unjustified decision taken by the Defendants to put off the framing inspection until the Plaintiff had left the project. I find that the Defendants then used the minor deficiencies set out in that report as the basis of their defence to the inevitable claim that was to follow.

Conclusion on the Contract and Extras

[26] I conclude that the Plaintiff satisfied his obligations under the contract and that he provided the project with the time and materials as set out in the extras invoice. The Plaintiff has satisfied me that the time and materials provided to the project and which remained unpaid are as set out in the invoice dated September 2, 2011. I find that his claim as set out in the Statement of Claim and the claim for lien have, subject to what is set out below, been proven. The value of the project is entirely in line with the time and materials contributed by the Plaintiff.

The Defence and Counterclaim

[27] On the other hand, both the defence and the counterclaim are almost entirely without merit. The Defendants failed to lead any meaningful evidence in respect of remedial work undertaken or the cost of that work. They failed to prove that the alleged deficiencies they now complain of were caused by the Plaintiff’s poor workmanship. The few undated, uncorroborated and unconvincing photographs of some minor defects on the premises are not sufficient to satisfy this court that the Plaintiff’s work was not performed competently. On the contrary, I find that both the work under the contract and the extras were performed in accordance with both the OBC and industry standards, and in compliance with both the contract and the agreement on extras. For example, I am unable to find that the water damage shown on the ceiling was in any way caused by work performed by the Plaintiff; given its location, it is more likely the result of poor workmanship by the person constructing the dormer. That person was not the Plaintiff. The missing shingles do not amount to evidence of any poor workmanship. The suggestion that the roof was defective is contradicted by the evidence of Barill, who found the roof to have been constructed competently and according to the OBC. I do not accept that the use of a 2’ X 6’ header in place of a 2’ X 10’ header was in any way a deficiency in light of the un-contradicted evidence that the header was not placed within a load bearing wall. I find that the windows were properly installed and acceptable. The Defendants have failed to satisfy me that there were any defects in the windows. The framing inspection was passed by the township. Barill confirmed that the window he inspected was properly installed. There is no evidence of any modifications, replacement or refitting of those windows. I reject the Defendants’ evidence as it pertains to the windows. I do not accept that they, together with family and friends, have had to re-fit the windows. There is not a shred of compelling evidence to support that contention. I find instead that any bowing problems pertaining to the windows have most likely resulted from the Defendants’ failure to properly reposition them in their saddles after cleaning.

[28] I find that the revised ground floor framing provided at the new front entry was constructed properly and was capable of supporting the design floor loads as specified in the OBC. That opinion was rendered to the Township by Barill on behalf of the Defendants back in late 2011. There is not a shred of evidence that anything learned or expressed since then would contradict that conclusion.

[29] I accept that the Defendants were unhappy with the original location of the attic hatch as determined by the Plaintiff. The evidence satisfies me that it was moved to its present location by the Defendants. However, I fail to see how this was anything more than a minor cosmetic matter: the framing re-inspection report by the Township dated October 7, 2011, does not make mention of it. Regardless, I accept the evidence offered by Barill that the cost of relocating the attic hatch might have been roughly $50.

[30] The Defendants added a 2’ X 6’ side bearing to the 6’ X 6’ post at the rear porch area in order to address a deficiency noted by the Township in the first framing inspection report. In the complete absence of any expense or cost to the Defendants for this item, I am left to accept Barill’s estimate that such remedial work would cost no more than $50.

[31] In respect to the rafters being “over span” by 12”, Barill estimated this would have cost the Defendants roughly $800 in remedial labour and materials to correct. I accept Barill’s estimate as reliable and accurate. Moreover, I have found that, had the Plaintiff been afforded a chance to address the problem, he could have quite easily and inexpensively brought the item into compliance with the OBC. He was not afforded that opportunity. The Defendants have not led any evidence to contradict Barill’s opinion. They have not provided the court with any evidence that their decision to install LVL roof support beams was a necessary or reasonable remedial step. In fact, there are no expenses before the court to consider relating to the cost of this remedial step. The design criteria sheets from Phoenix Building Components are nothing more than specifications. These cannot serve as invoices or evidence of any loss incurred by the Defendants.

[32] The photographs tendered by the Defendants show an unsightly patch in the ceiling where one of the Plaintiff’s workers stepped through the tile. The photographs taken by the Plaintiff of that same location indicate that the patch did not exist as of the date when he left the project. I am unable to account for its appearance in the Defendants’ photographs; the competing photographs are not reconcilable. Given that I have accepted that the Plaintiff’s photographs depict the project as it was on the day he left the premises, I am not satisfied that the patch shown in the Defendants’ photographs represents a deficiency caused by the Plaintiff. In any event, there is no loss or expense associated with that patch.

[33] In conclusion, the Defendants have utterly failed to prove that any of the identified deficiencies have caused them to incur any expense or to suffer any loss. There is nothing to contradict the evidence of either Barill or the Plaintiff that the deficiencies as identified by the Township in the September report could have been easily remedied by the Plaintiff had he been afforded an opportunity to view the report and address those deficiencies. There is nothing to contradict the evidence of Barill that the work done by the Plaintiff complied with the OBC. There is nothing to contradict Barill’s conclusion that his site inspection revealed no deficiencies. There is nothing to contradict either the Plaintiff’s or Barill’s evidence of the cost of the remedial work. There is insufficient evidence of the value of the broken curbs alleged to have been occasioned by the Plaintiff’s motorized equipment. There is no basis upon which to challenge the Plaintiff’s contention that the amount of the set off should be limited to only a few items.

[34] In respect of the balance of the alleged deficiencies, they are unproven. I reject the Defendants’ claim for set off apart from those amounts conceded by the Plaintiff as detailed below.

Set Off

[35] The following are items which the Plaintiff has conceded should serve as a credit against the amount claimed:

The estimated costs to remedy the legitimate minor deficiencies identified in the Township’s framing inspection report ($900);
The invoice for Barill’s inspection of the revised ground floor framing at the new front entry ($282.50); and
The contract value of the concrete pad, which was ultimately unsuitable given the disturbed fill material serving as a sub-grade ($805).
I accept that these items have been properly valued and/or estimated and that the Defendants should receive credit for them by way of set off in the amount of $1,987.50.

The Unperformed Labour

[36] I am not prepared to allow the “back” charge for the unperformed labour by Joseph Tarasco in the amount of $3,500. The evidence was skimpy as to what work he was expected to perform. The proposed contribution, such as it was, related to the original fixed price contract. In my view, it cannot serve to increase the price of the original contract nor can it form part of the otherwise proper charges for extras. To the extent that the Plaintiff would have a cause of action against Joseph Tarasco for his failure to provide the anticipated labour, it would lie in breach of contract. There is no claim for damages for breach of contract in the Statement of Claim. I conclude that the notional amount for replacement labour is not properly claimable in the present lien action nor can it serve to reduce the setoff. I find that the Plaintiff is left without a remedy in respect of that item in the present claim.

Disposition

[37] I am otherwise prepared to allow the entirety of the Plaintiff’s claim. When one subtracts the amount of $3,500 for the disallowed labour amount and the amount of $1,987.50 for set off from the stated claim of $48,140.00, the resulting sum is $42,652.50. The Plaintiff is entitled to recover that amount together with pre-judgment interest under the Courts of Justice Act. At a rate of 1.3% over the one thousand, three hundred and twenty days from November 24, 2011, to July 6, 2015, the per diem amount of interest is $1.52. The total amount of pre-judgment interest is $2,006.40. The Plaintiff shall therefore have judgment against the Defendants under s. 62 of the Construction Lien Act, S.O. 1983 in the amount of $44,658.90. That amount shall bear post-judgment interest at the rate of 2% per annum commencing on July 7, 2015. The Defendants’ counterclaim is dismissed.

Content and Form of Judgment

[38] Pursuant to s. 62 of the Construction Lien Act, the Plaintiff is entitled to a lien upon the interest of the owners Joseph and Valerie Tarasco in the premises described in paragraph 11 of the Statement of Claim dated November 24, 2011. In default of the payment of the amount of $44,658.90 plus applicable post-judgment interest by the Defendant owners to the Plaintiff or into court within 60 days, the owners’ interest in the above premises may be sold under the supervision of the court and the purchase money may be paid into court to the credit of this action. If the said purchase money is insufficient to pay in full the judgment amount above plus accumulated post-judgment interest and costs, the Defendants shall pay the amount remaining due to the Plaintiff after that amount has been ascertained by the court.

Costs

[39] The parties shall serve and file written submissions on costs according to the following timetable:

The Plaintiff shall serve and file submissions limited to three pages on or before July 27, 2015;
The Defendants shall serve and file responding submissions limited to two pages on or before August 17, 2015;
The Plaintiff shall serve and file reply submissions, if any, limited to one page, on or before August 31, 2015.

[40] In the event that, following the court’s disposition on the issue of costs, the parties are unable to agree on the form or content of the proposed judgment, either of the parties is free to take an appointment through the trial coordinator at Barrie for the settlement of that judgment.

J.R. McCarthy, J.

Released: July 6, 2015

Aacurate General Contracting Ltd. v. Tarasco, 2015 ONSC 4199

Case Summary

The Lien Claim and Counterclaim

The Contract

The Evidence

Witness Dwayne Sullivan

Dan Barill (“Barill”)

The Defendants

Conclusion on the Contract and Extras

The Defence and Counterclaim

Set Off

The Unperformed Labour

Disposition

Content and Form of Judgment

Costs

Counsel

Parties

Areas of Law

Fact Patterns

Expert Witnesses

Financial Outcomes

Issues