ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: CV-12-466399
DATE: December 8, 2015
BETWEEN:
FAIRVIEW HOME IMPROVEMENTS INC.
Plaintiff
Brian A. Diamond for Fairview Home Improvements Inc.,
Tel.: 416-363-3351,
Fax: 416-363-0252;
Email: bdiamond@gcylaw.com.
-and-
GEORGE ANTONOPOULOS, EDITH ANTONOPOULOS and ANNA ANTONOUPLOS
Anna Antonopoulos, acting for herself and her parents, George and Edith Antonopoulos,
Tel.: 416-895-2778;
Email: existentiale@hotmail.com.
Defendants
HEARD: July 14, 2015.
Master C. Wiebe
REASONS FOR JUDGMENT
I. INTRODUCTION
[1] Fairview Home Improvements Inc. (“Fairview”) is a contractor that performed home renovation work on a home located at 19 Shangarry Drive, Scarborough M1R 1A5 (“the Property”). The registered owners of the Property are George and Edith Antonopoulos (“the Owners”). George Antonopoulos will be called “George,” Edith Antonopoulos “Edith, and Anna Antonopoulos “Anna.” Anna is the adult daughter of the Owners and lives with them on the Property. She acted for herself and her parents throughout the proceeding that was before me.
[2] On September 18, 2012 Fairview registered a claim for lien in relation to its work in the amount of $20,000. The defendants deny the entirety of this claim, and counterclaim for $4,761.
[3] For the reasons that follow, I have decided that the Fairview claim fails in its entirety, and that the defendants counterclaim fails as well.
II. BACKGROUND
[4] On July 20, 2012, Fairview entered into a written contract (“the Contract”) with the Owners whereby it agreed to do specified kitchen renovation work on the Property for a fixed price of $22,261 (tax inclusive). There were 8 categories of work specified in the written contract. The Owners paid a “down payment” of $2,261. The remainder of $20,000 was described expressly as being, “Balance Due on Completion.”
[5] The work commenced. On August 30, 2012 Anna wrote the principal of Fairview, Jordan Gilary, an email stating that she was “disappointed” with Fairview’s “lack of professionalism” and the “unnecessary disruption and stress” that Fairview had caused the Owners. She identified one deficiency, namely the floor tiles being allegedly uneven, and two items of what she called “damage,” the glass panel on the stove and scratches in the hardwood hallway floor. She advised that Fairview was not complete and that, if these items were not fixed, Fairview would not be paid.
[6] On August 31, 2012, Mr. Gilary attended at the Property with his two workers to discuss the issues raised by Anna. Mr. Gilary entered the house. At that time, Anna handed him a letter that listed 11 items of deficiencies. In the letter, Anna described the kitchen renovation as “a disaster.” In the letter, Anna demanded that these items be corrected by September 8, 2012, failing which she would have someone else finish the work.
[7] The discussion moved outside. An argument broke out between Mr. Gilary and Anna that eventually included George. At one point George retrieved an axe and threatened Mr. Gilary. At that point, Mr. Gilary retreated to his vehicle on the curb and called the police. After the police arrived and prepared a report, the parties separated.
[8] Fairview was not called back. The Owners did not perform any further construction work. Anna stated that the Owners wanted to know the outcome of the case before making that decision.
[9] Fairview registered a $20,000 claim for lien on September 18, 2012. It commenced the within action on October 26, 2012 and registered a certificate of action on October 31, 2012. Anna and the Owners delivered their Statement of Defence and Counterclaim on or about November 22, 2012. Their counterclaim is for $4,761 in damages. At that time, they had a lawyer. They have subsequently served notices of intention to act in person.
[10] Fairview obtained a judgment of reference from Justice C.J. Brown on November 27, 2013 and an order for trial from me on January 24, 2014. The first trial management conference was held by me on March 31, 2014. Given the amounts in issue, the matter fell within the monetary jurisdiction of the Small Claims Court. To expedite matters, I suggested that this lien action be stayed while Fairview litigate the substance of the issues in the Small Claims Court, with the lien remedy to be determined by me once the Small Claims Court had ruled. The defendants were prepared to proceed this way. Fairview was not.
[11] I ordered productions amongst other things. I presented the option of having no discoveries given the small amounts in dispute. Fairview was the one again the one that demanded discoveries, not the defendants. Therefore, I authorized limited discoveries.
[12] At the next scheduled trial management conference of November 3, 2014, Mr. Diamond arrived 45 minutes late. I was advised that Fairview had not delivered a proper Scott Schedule, and that discoveries had not taken place as a result. I made a new set of interlocutory orders.
[13] At the next trial management conference of January 5, 2015, I learned that neither party had proceeded with the authorized discoveries given the small amounts at stake. I scheduled a one-day, summary trial to take place on September 10, 2015 and double-booked the trial over another trial for an earlier date, July 9, 2015. I made orders to insure that the case was ready for the earlier, double-booked date.
[14] On July 2, 2015, I ordered that the trial indeed proceed on the earlier, double-booked date of July 9, 2015. On July 6, 2015 Mr. Diamond wrote me a letter. It is not clear whether Anna was copied with it. Mr. Diamond advised that he had not filed the “materials” for this trial, which was in violation of my directions. He stated that he would be serving his “materials” that day, also a violation of my directions. Anna, on the other hand, had prepared and filed her affidavits for evidence in chief in accordance with my directions.
[15] In his letter of July 6, 2015, Mr. Diamond went on to ask for an adjournment of the trial as neither he nor his client would be ready for the July 9, 2015 trial date, a further violation of my directions. The reason given was that Mr. Diamond’s witnesses were “all engaged in work which has them on site,” and that he, Mr. Diamond, had booked a summary judgment motion in another matter on July 9, 2015.
[16] I convened a telephone conference call that took place on July 7, 2015. After the parties consulted their witnesses, I adjourned the trial to a one-day, summary trial to take place on July 14, 2015. The trial proceeded on that day.
[17] Fairview filed the affidavits for evidence in chief of Mr. Gilary, one Lall Harripersaud, an employee of Fairview, and one Pedro Cesarez, another employee of Fairview. The defendants filed the affidavits for evidence in chief of Anna, George, Edith, and one John Hughes, a contractor, and one Joanne McArthur, a neighbour. All of these persons were cross-examined at the trial.
[18] This history is important, as it shows that the defendants had to file their affidavits for evidence in chief before they received the Fairview affidavits for evidence in chief, which is in direct contravention of my directions and potentially prejudicial to the defendants.
III. ISSUES
[19] Having reviewed the evidence and heard the submissions of the parties, I have decided that the following are the issues to be determined:
- Was Fairview entitled to be paid under the Contract only on “completion”?
- If so, was Fairview “complete”?
- If not, did Fairview abandon and repudiate the Contract?
- If so, are the Owners entitled to their counterclaim?
[20] I will now deal with these issues in that order.
IV. ANALYSIS
1. Was Fairview entitled to be paid under the Contract only on “completion”?
[21] The Contract was in writing and specified that the $20,000 that is the subject matter of the Fairview claim for lien was to be paid only upon “completion.”
[22] Neither party produced legal authorities for my review on this point. Therefore, I did some of my own research. In Heyday Homes Ltd. v. Gunraj [2004] O.J. 429 (Ont. Master), Master Sandler described the established law in relation to fixed price construction contracts that do not specify instalment or other forms of interim payment of the contract price. At paragraph 338, he made it clear that, in the absence of an express provision to the contrary, the contractor on a fixed price contract is not entitled to payment until “substantial completion” of the work.
[23] In the Contract in this case, there is an express provision to the contrary, namely there is a clause stating that payment is due upon “completion,” not substantial completion. I find that Fairview would only be entitled to payment under the Contract upon completion of its work.
[24] What does “completion” in the Contract mean concretely? Requiring absolute 100% completion before payment would, in my view, be unreasonable. There are often minor deficiency issues that should not stand in the way of payment, particularly when the owner is using the project. A useful guide to the definition of “completion” in the Contract can be found in the definition the Construction Lien Act, R.S.O. 1990, c. C.30 (the “CLA”) section 2(3) gives to “completion” for the purpose of that statute. The CLA defines “contracts” to be contracts between owners and contractors, such as the Contract is question here. CLA section 2(3) goes on to deem a contract “complete” when the price of completion, correction of a known defect or last supply is not greater than the lesser of 1% of the contract price or $1,000. There was no evidence as to what the parties meant by the word “completion” in the Contract. However, as Fairview is a contractor by business and since this was a standard form Fairview contract form, it is not unreasonable to apply the CLA definition of “completion” to the Contract. I so do.
[25] 1% of the Contract price is $222.61 (tax inclusive). Since this is less than $1,000, I find that Fairview would be entitled to be paid its $20,000 if the price of the completion of its work or correction of a known defect was not greater than $222.61 (tax inclusive).
[26] If I am wrong in my interpretation of the Contract in this regard and if the standard to be applied is one of “substantial completion,” I note that the CLA’s definition of “substantial performance” for the purposes of that statute would amount to a high hurdle for Fairview in any event. CLA section 2(1) states that substantial performance is reached where the cost of the completion of the work or correction of a known defect is not greater than 3% of the contract price. 3% of the Contract price is $667.83 (tax inclusive).
2. Was Fairview “complete”?
[27] I have no doubt that Fairview was not “complete” based on the above described test for “completion.” Mr. Gilary in his own affidavit at paragraph 8 described Fairview’s work as only “substantially complete.” He acknowledged that there were issues of unevenness with the floor. The supply and installation of the backer board and tile on the kitchen floor was valued in the Scott Schedule at $2,050 plus HST. It seems obvious to me that just correcting the admitted deficiency in the floor would have elevated the cost of correcting deficiencies in Fairview’s work to an amount in excess of $222.61.
[28] There were other areas of work that had obvious issues as well, such as the installation of the glass tiles to the backsplash and the improper sizing of the cupboards. I do not have to go through an exhaustive review of each of the items that was brought up at the trial to conclude, as I do, that Fairview was not “complete,” based on my definition of the term.
[29] As an aside, I also have no difficulty concluding that the Contract was not “substantially complete” based on the above described definition of substantial performance.
3. Did Fairview abandon and repudiate the Contract?
[30] In Homewood Developments Inc. v. 2010999 Ontario Inc. [2013] O.J. No. 3018 (Ont. Master) Master Albert stated in paragraphs 73, 74 and 76 that we must go one step further. We must determine whether there was abandonment or repudiation of the Contract in order to determine whether Fairview is disentitled to any compensation, even on a quantum meruit basis. In Heyday at paragraph 353 Master Sandler stated that the demanding of payment by the contractor when not due could be a repudiation of an “entire contract” (such as the Contract). Did Fairview abandon or repudiate the Contract?
[31] The defendants allege that Fairview abandoned the Contract in a site meeting on August 31, 2012 when it refused to correct several significant defects in its work, and then repudiated the Contract by demanding payment on September 4, 2012. They allege that Fairview was responsible for the numerous deficiencies that were contained in Anna’s letter of August 31, 2012, refused to correct them, and later demanded payment. Fairview denies that it abandoned or repudiated the Contract. It maintains that the correction work was minor, that Fairview was prepared to make those minor corrections, that the owners denied Fairview the opportunity to correct the deficiencies and then refused to pay, and that the owners were therefore in breach of the Contract.
[32] The question of whether Fairview abandoned and repudiated the Contract turns, in my view, primarily on the question of whether the remaining deficiencies as itemized by Anna were minor, as Fairview claims. If they were, I am not prepared to find that Fairview is disentitled to quantum meruit recovery, even if the monetary standard for “completion” that I described earlier was not met. In that event, the blame will fall on the owners for not allowing Fairview to complete its work. On the other hand, if the deficiencies were significant, as the defendants maintain, Fairview can be found to have abandoned and repudiated the Contract by refusing to do the necessary work to complete and demanding payment.
[33] I, therefore, have to determine whether the 11 items of deficiency correction that Anna demanded on August 31, 2012 be done, were in fact minor. Having reviewed the evidence, I have concluded that some of items on that list were not minor at all. The following are four of these items.
3a. Uneven floor:
[34] Anna’s first item was the allegation that the kitchen floor was uneven. There is no doubt that the kitchen floor was uneven. In his evidence, Mr. Gilary described this deficiency as one of “slight imperfection.” He indicated that this problem could have been corrected with some minor work, namely by breaking the uneven tiles, evening out the mortar below and then re-grouting and replacing the tiles.
[35] I do not accept that evidence. Lal Harriperssaud, the Fairview installer of the floor, was taken aback when Anna showed him pictures of the uneven floor tiles. He acknowledged that the tiles were a significant problem as they were a tripping hazard. He tried to blame the Owners for this deficiency, claiming that they had caused it. He acknowledged that he had intended to correct only one tile when Fairview attended on the site on August 31, 2012.
[36] Mr. Hughes, the owners’ eventual contractor, commented that when he attended at the site and saw the floor in September, 2012, he noted that the problem with the floor was a significant one that required an entire new floor with a new plywood base, not wire mesh. He stated that, with old houses such as this one, there is always the need for a new sub-base, because the old floor is built on slats.
[37] Mr. Gilary’s response to this was that such a sub-base was not specified by the Contract. He is right about that. However, that is not the end of the matter. I view the Contract as being in the nature of a design-build contract. The Owners had not retained an architectural consultant to provide an independent design. They relied on Fairview for the design, and Fairview knew this. Therefore, I find that Fairview was responsible for the adequacy of their design and specifications, including the floor.
[38] I find that the uneven floor was a significant deficiency. I also find that the repair of this deficiency was a significant matter. Mr. Gilary repeatedly referred me to the item for the floor in the Scott Schedule, stating that it was shown there as representing only about 10% of the total Contract price. Mr. Diamond argued that this was not an amount that justified a finding that this was a significant deficiency. I disagree. Firstly, 10% of the Contract price is not insignificant. Secondly, the amount in the Scott Schedule does not reflect what the proper repair of the floor would cost.
[39] Finally, I find that Fairview was not prepared to repair the floor through the installation of a proper sub-base when it attended the site on August 31, 2012. Mr. Gilary stated in this affidavit that Fairview was generally prepared to rectify deficiencies, as evidenced by its attendance at the site on August 31, 2012; but he does not state that he would have been prepared to replace the floor sub-base.
3b. Improperly cut countertop:
[40] Anna raised the issue of the beveled edge to the quartz countertop in her August 30, 2012 letter to Fairview. In reviewing the photographs Anna took of this issue it is clear to me that an angle existed in the countertop edge. Anna stated in her evidence that this problem made it impossible for the fridge to fit flush with the countertop.
[41] Pedro Cesarz, the Fairview worker who worked on the countertop, did not deny the deficiency, but stated that the fridge could be adjusted to fit next to the countertop. I find this statement to be self-serving and lacking in credibility. Mr. Gilary denied this deficiency altogether, which I also find to be self-serving and without credibility. Mr. Hughes stated in his evidence that this deficiency, which did exist, rendered the countertop “useless,” therefore making it necessary to replace the countertop. I find Mr. Hughes’ evidence to be credible, as it fits with what I perceive to be the deficiency.
[42] The Scott Schedule indicates that the countertop cost to Fairview was $2,600 plus HST, namely over 10% of the contract price. Therefore, I do not find this deficiency, which required the replacement of the countertop, to be a minor one.
[43] Furthermore, I find that there is no credible evidence that Fairview was prepared on August 31, 2012 to replace the countertop. Mr. Gilary stated in this affidavit that Fairview was generally prepared to rectify deficiencies, as evidenced by its attendance at the site on August 31, 2012; but he does not state that he would have replaced the countertop.
3c. Damaged hardwood floor:
[44] It is undisputed that the hallway hardwood floor was damaged. It is undisputed that the fridge and stove were moved by Fairview’s installers over this area. Mr. Gilary stated in his evidence that the owners did not complain about the scratches immediately. He asserted that the scratches predated the project. The clear implication of this evidence is that Fairview was not prepared to correct this damage.
[45] Anna did raise the issue in her letter of August 30, 2011, which was timely. She stated in her affidavit that the Fairview workers admitted at the time this work was done to making this damage. This is hearsay. She did not address these alleged admissions with the Fairview installers in cross-examination. I will disregard that statement in her affidavit as a result.
[46] On balance, however, I agree with Anna here. I find her generally to have been a more credible witness than the Fairview witnesses. Her statements of what constituted deficiencies generally were born out by her photographs and Mr. Hughes. Her complaint was timely. I accept that Fairview caused the damage to the old hardwood floors.
[47] The Scott Schedule does not deal with this item. Neither did Mr. Hughes. Therefore, it is unclear whether this would have been a minor repair. Because Fairview clearly was not prepared to do this repair, I draw a negative inference against them on this issue. I conclude that this also was not a minor matter.
3d. Backsplash gap:
[48] Fairview replaced the cabinetry under the microwave with space and a countertop, namely the countertop mentioned above. The backsplash that was behind the stove was extended, but not to the edge of the countertop. As a result, an unsightly gap in the wall was created underneath the microwave and next to the fridge.
[49] There was no dispute that something had to be done about this gap. Fairview’ position was that this gap was the by-product of defective design, and that fixing it was outside of its scope. Mr. Gilary stated in his affidavit that Fairview would have dealt with this defect had it been paid extra, which the owners were not prepared to pay.
[50] Again, I view the Contract to be in the nature of a design-build contract, with Fairview responsible for the design. There was no independent designer. Therefore, a defect in the design such as this was the responsibility of Fairview, not the Owners.
[51] The Scott Schedule does not ascribe a value to this item. There was little evidence of what the repair of this deficiency will entail or cost. Mr. Gilary stated that an extension of the backsplash into a gable was a fire hazard. I am satisfied that the repair work will not be easy or at minimal expense. It was not a minor issue.
3e. Conclusion:
[52] Based on my review of these items, I have reached the conclusion that at least four of the items in Anna’s August 30, 2012 letter to Fairview were not minor. As indicated above, I have also reached the conclusion that Fairview was not prepared to complete its work by embarking on the not insignificant repair work that was required to correct these deficiencies. Therefore, I find that Fairview abandoned the Contract on August 31, 2012. Furthermore, when its agent demanded payment in a letter to the owners dated September 4, 2012, Fairview repudiated the Contract as well, as it was not at all entitled to be paid. Fairview is, therefore, not entitled to quantum meruit recovery.
[53] Much evidence was presented concerning a near altercation that happened at the premises on August 31, 2012 when Anna insisted that Mr. Gilary leave the house. There was evidence that Mr. Gilary moved to the front yard and came near to Anna, and that George retrieved an axe. The Fairview people retreated to their vehicles, the police were called, and the incident was over. Anna called the neighbour, Joanne McArthur, as a witness concerning this incident.
[54] In light of my ruling, I do not need to determine what happened here and who was at fault. I am satisfied, as stated above, that Fairview was not prepared to do the work needed to complete the Contract. That is the end of the matter.
4. Are the Owners entitled to their counterclaim?
[55] The Owners originally claimed a counterclaim of $4,761. This claim was composed of two parts: $2,500 for the cost of repairing the floor; the return of the $2,261 down payment.
[56] As to the return of the deposit, in argument Anna retracted this claim. I, therefore, will not consider it.
[57] Concerning the claim for the costs of the floor repair, Anna argued that this will be the cost the Owners will incur in having to replace the floor. Yet, it is clear from the evidence that the Owners have not incurred this cost. Their only loss at this point is the down payment, and they are not claiming that deposit.
[58] I, therefore, find that the Owners’ counterclaim must fail.
V. CONCLUSION AND COSTS:
[59] I, therefore, dismiss the entirety of the Fairview claim and the Owners’ counterclaim.
[60] At the conclusion of trial, I asked for cost outlines. Normally, I require further submissions on costs in light of the outcome of the case. However, I make an exception here as the costs submissions of the parties are sufficient for me to make a ruling on costs that is fair. I also believe that it is in the interest of the parties to bring this action to a conclusion.
[61] On July 15, 2015, I received a costs outline from Fairview showing a claim of $13,056.93.
[62] On July 17, 2015, I received a four page letter from Anna wherein she asserted a claim of “damages” of $35,000 for the costs the Owners will incur to repair the kitchen plus the down payment, $20,000 in unsubstantiated legal costs the Owners allegedly incurred for their litigation lawyer, Ian Johnstone, in 2012 and 2013, $5,000 for Anna’s own time and $1,000 for disbursements such as parking, phone calls, postage and photocopying.
[63] I find that the Owners were the successful party in this action. They succeeded in defeating the entirety of Fairview’s claim, which was 8 times the size of their final counterclaim.
[64] Concerning Anna’s argument about “damages,” I do not accept it. Damages are something that should have been raised at the trial of the matter, and it was not other than the floor repair, which has been disposed of. I do not accept this “back door” submission.
[65] Concerning the $20,000 for Mr. Johnstone, the only evidence of anything that Mr. Johnstone did in this case was the pleading for the Owners. I have no idea of what other work he did in this matter. He attended none of the trial management conferences. At most, the Owners claim for costs on account of Mr. Johnstone should be in the $1,000 range.
[66] I, therefore, will consider that the Owners’ claim to costs to be in the range of $7,000 plus HST, being the $1,000 for Mr. Johnstone, the $5,000 for Anna’s work, and the $1,000 for the disbursements. This is about 2/3 of what Fairview claims.
[67] I considered reducing this claim on account of the Owners’ failure to succeed in their counterclaim, and their lack of substantiation for this claim. However, I will not do so, as I have reached the conclusion that the conduct of Fairview in this reference deserves sanction.
[68] First, as noted in my review of the background of this case, Fairview refused to follow my suggestion at the first trial management conference to have this case heard by the Small Claims Court. The Owners were prepared to follow my suggestion, but not Fairview. In his letter to me of August 11, 2015, Mr. Diamond alleged that he was the first to raise this issue. That was not at all the case, and I find it offensive that Mr. Diamond would make such a groundless assertion. Having the case referred to Small Claims Court would have been less costly and time consuming, in my view.
[69] In addition, Fairview contravened my directions by not have its affidavits for evidence in chief prepared and served in accordance with my directions. They were sworn and served in early July, 2015, on the eve of trial. This was after Anna served her affidavits. Therefore, the defendants were at a disadvantage in the trial. This alone merits a sanction.
[70] Furthermore, Fairview was not ready for trial when I ordered that the trial proceed on the double-booked day of July 9, 2015. This double-booking had been in place since January 5, 2015. When I convened the telephone conference call at Mr. Diamond’s request, he advised me that he had scheduled a motion in another matter for July 9, 2015 and that his client’s witnesses had work to do that day. This was all in violation of my directions. Anna cooperated in agreeing to a short adjournment of the trial, but I was not impressed by Fairview’s conduct.
[71] There was other Fairview conduct that was not acceptable. Mr. Diamond arrived quite late to one trial management conference; Fairview insisted on discoveries that never took place in the end; and Fairview did not prepare a proper Scott Schedule. I take all this into consideration was well.
[72] Therefore, I rule that Fairview must pay the Owners costs in the amount of $7,000 plus HST for a total of $7,910.
[73] If the parties are unable to agree on the form of the final report, an attendance may be required to settle the report.
Released: December 8, 2015 ___________________________
Master C. Wiebe
COURT FILE NO.: CV-12-466399
DATE: December 8, 2015
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
FAIRVIEW HOMES IMPROVEMENTS INC.
Plaintiff
- and -
GEORGE ANTONOPOULOS, EDITH ANTONOPOULOS and ANNA ANTONOUPLOS
Defendants
REASONS FOR JUDGMENT
Master C. Wiebe
Released: December 8, 2015