ONTARIO
SUPERIOR COURT OF JUSTICE
IN THE MATTER OF the Construction Lien Act, R.S.O. 1990, c.C.30
CITATION: Brock Doors & Windows Inc. v. Rosemary Klotz 2017 ONSC 6117
COURT FILE NO.: CV-15-542447
DATE: October 12, 2017
BETWEEN:
BROCK DOORS & WINDOWS INC.
Flavio Battiston, for the plaintiff,
Tel.: 416-630-7151,
Fax: 416-630-7472.
Plaintiff
- and -
ROSEMARY ANNE KLOTZ and
LIONEL DAVID KLOTZ
Jennifer Klotz, for the defendants,
Tel.: 416-243-2222,
Fax: 416-243-5730.
Defendants
HEARD: September 7 and 8, 2017.
Master C. Wiebe
REASONS FOR JUDGMENT
I. INTRODUCTION
[1] The plaintiff, Brock Doors & Windows Inc. (“Brock”) is a supplier of windows and doors. It registered a claim for lien on the title to property known municipally as 2430-2432 Kingston Road, Toronto (“the Property”) on November 13, 2015 in the amount of $11,770, and seeks judgment for that amount. The defendants, Rosemary Anne Klotz (“Ms. Klotz”) and Lionel David Klotz (“Mr. Klotz”) are the registered owners of the Property. Together they will be referred to as “the Owners.” They deny the claim and assert a counterclaim for damages totaling $21,238.89.
II. BACKGROUND
[2] I begin with a summary of the facts of this case that I understand to be undisputed.
[3] The Owners were renovating the Property, which is a two-story building with a commercial use on the main floor and a residential use on the second floor. Ms. Klotz managed the construction herself. As a part of this project, Brock entered into a written agreement with the Owners on May 14, 2015 whereby Brock was to deliver and install one triple pane picture window in the rear of the second floor of the Property, two sets of casement windows with laminated glass in the front of the same floor, one set of casement windows with triple-pane glass in the kitchen, and one patio door at the back of the same floor with two triple pane sidelites and one triple pane transom, as the Owners were planning to build a patio extension from the second floor at the back. This contract, which was on standard Brock form with terms and conditions on the back, will be called “the Contract.” Laminated glass has three panes with two that are fused.
[4] The patio door assembly was to replace an old horizontal window that stretched from side to side of the Property. Brock undertook implicitly to remove the old window to facilitate the installation of the patio door unit. The Contract stated expressly further that there was to be a “cut out below” the space left by the old window in order to facilitate the patio door unit. It is undisputed that the kitchen window was subsequently removed from the scope of work. The final contract price was $14,770. The Owners paid a deposit of $3,000.
[5] There are two areas of dispute concerning the Contract. First, the Owners allege that the Contract required that the patio door be triple paned. Brock disagrees, asserting that the Contract expressly stated that the patio door would be double paned. Second, the Owners allege that Brock undertook not only to cut the area below the old window opening to facilitate the patio door unit, but that it also undertook to brick-in the considerable openings on both sides of the patio unit that were left by old window opening. Brock disagrees, asserting that Ms. Klotz had assured them that she would get this work done by others.
[6] Brock ordered the windows from manufacturer, North Star Manufacturing (London) Ltd. (“North Star”). North Star shipped the windows to Brock on July 24, 2015. The shipping notice (dated July 17, 2015) prepared by North Star confirmed that the front windows were laminated, the picture window triple paned, the sidelites triple paned, and the patio door double paned. However, the notice indicated that the transom window was double paned, not triple paned.
[7] Ms. Klotz originally specified an August 1, 2015 installation date. However, this date was subsequently delayed by the Owners on several occasions due to issues with the building permit. Finally, the Owners agreed to have the windows installed on Saturday, October 3, 2015. The plan was to have the bulk work done by Sunday, October 4, 2015 with touch-ups on Monday, October 5, 2015, to minimize interference with the commercial use. Brock proceeded with the work on October 3 and 4, 2015.
[8] Brock did not do the masonry work for the two openings. Ms. Klotz stopped the work as a result. Brock installed plywood in the openings as a temporary measure. Ms. Klotz sent emails complaining about deficiencies, including alleged improper windows.
[9] Ms. Klotz arranged to have the masonry work done by a mason. This was done from October 19 to October 22, 2015. She created a new opening for a new door at the back, a part of which opening was surrounded and supported by the new masonry. Later in November, 2015, the owners installed a large steel canopy leading from the patio door at the back.
[10] On October 21, 2015 the Brock installation manager, Jim Weir, and the Brock sales associate, Sandy Berkeley, the one who negotiated the Contract with Ms. Klotz, had a meeting on site with Ms. Klotz. Several deficiencies were discussed. Mr. Weir promised to confirm that the windows supplied were the windows contracted for. He copied the window serial numbers to confirm the proper window delivery. Concerning the masonry issue, Mr. Berkeley denied promising to do the brick-in work. There was no resolution of the issues.
[11] On October 22, 2015, Mr. Weir emailed Ms. Klotz advising that Brock was prepared to complete six deficiency items as long as it got paid the balance of the Contract price on completion. On October 30, 2015 Graeme Knight of Brock emailed Ms. Klotz and enclosed a copy of the North Star shipping notice that contained Mr. Knight’s handwritten descriptions of the supplied windows. Mr. Knight noted the mistake about the transom window. He offered to install a triple paned transom window and complete the six deficiencies, as long as Brock was paid the balance of the Contract price at the end.
[12] On October 31, 2015 Ms. Klotz responded by email. She insisted that Brock had undertaken to do the masonry work. She presented a list of 21 alleged deficiencies which included a replacement of the windows and the patio door assembly. She then stated that all of the alleged deficiency correction work had to be done by November 15, 2015, failing which $2,000 would be deducted from the Contract price for every week’s delay thereafter, and that only when all of the 21 deficiencies were completed “to a high level of workmanship [will] we will discuss payment.”
[13] On November 13, 2015, Brock’s lawyer, Mr. Battiston, registered a claim for lien for Brock in the amount of the unpaid contract price, $11,770. He later perfected the lien.
[14] On December 1, 2015, lawyer Jennifer Klotz emailed Mr. Battiston advising that the Owners were proceeding with another window company, and demanding that Brock remove the windows by December 4, 2015, failing which the Owners would remove them at Brock’s expense. Brock did not remove the windows. The Owners removed the windows, and, when the windows were not picked up, deposited them on Brock’s premises in late December, 2015.
[15] Brock obtained a judgment of reference from Justice Himel on August 29, 2017. Given the amounts in issues, I scheduled the trial of this action immediately and as a summary trial at the first trial management conference on March 13, 2017. Brock filed affidavits for evidence in chief sworn by Messrs. Weir and Berkley, and a report signed by expert engineer, Nick Tassone. The Owners filed affidavits sworn by Ms. Klotz, her husband, Lionel Klotz, and home inspector, Brent Jeffreys. They also filed a form of an affidavit signed by one, Dave Boodram.
[16] The trial hearing proceeded on September 7 and 8, 2017. I excluded the evidence of Mr. Boodram because he admitted his affidavit was not sworn.
III. ISSUES
[17] This case, in my view, raises the following issues to be determined:
a) Was Brock obligated under the Contract to do the masonry work?
b) Did Brock supply the windows required by the Contract?
c) Was Brock’s installation work deficient?
d) Was the Owners’ Contract termination proper?
e) What are the consequences of same?
[18] I will comment on the credibility of the witnesses in my analysis of the issues.
IV. ANALYSIS
a) Was Brock obligated under the Contract to do the masonry work?
[19] Both sides admit the Contract document. It is a Brock order form that was filled out by Mr. Berkley when he met Ms. Klotz on site on May 14, 2015. The two discussed the work to be done. Mr. Berkley filled out the order form, and the two signed the document. Mr. Berkley’s handwriting explicitly states that Brock would “cut out below new concrete sill,” which both sides agree means that Brock would cut out below the area of the old window in order to allow for the patio door unit to be installed. There is no explicit reference in the document to Brock doing any masonry installation work.
[20] Here is the issue. Ms. Klotz alleged that Mr. Berkley made a verbal representation that Brock would install the masonry around the new patio door unit. She alleged that she relied on this representation in entering the Contract, and that it, therefore, forms a critical part of the Contract. Mr. Berkley strongly denied this assertion. He stated that Ms. Klotz assured him at the time that she would retain other forces to do this work.
[21] I do not find Ms. Klotz credible on this issue. Brock is a window supplier and installer, and it would be quite unusual for it to undertake masonry work. Mr. Berkley made it clear that Brock had no masons on its staff and did not usually do masonry work. This makes sense to me, as Brock is not in the business of masonry work.
[22] In my view, this means that the onus of proving this alleged representation rests on Ms. Klotz. She failed to do so. She stated that she has considerable experience in construction, as she managed the renovation of three properties owned by the Owners. With such experience, she should have known that the undertaking she alleged Brock made was unusual and should have been memorialized in writing. There is no such corroboration. Not only is there no written confirmation of this alleged undertaking in the Contract document, there is no such confirmation in the emails Ms. Klotz wrote to Mr. Berkley shortly after the Contract was signed. On May 15 and 16, 2015, Ms. Klotz sent emails to Mr. Berkley concerning the contents of the Contract document. There is no mention in these emails of the alleged masonry work undertaking. This is telling. Had there been such an undertaking, Ms. Klotz would have mentioned it in the emails.
[23] The most I will say here is that Ms. Klotz may have subsequently tried to get the work done by Brock. In her email of October 31, 2015 to Mr. Knight she states that she discussed this matter with Brock’s installer in June, 2015, and that the installer “had no objections or concerns” about doing this work. However, in the same email, Ms. Klotz stated that the same installer confirmed on the first day of the installation that his work order did not include the masonry work. The installer’s uninformed comments in June, 2015 are not enough to create a contract obligation for Brock.
[24] Furthermore, the defendants’ expert, Mr. Jeffreys, a building inspector, opined that in his experience an experienced window installer like Brock would have undertaken to do “a greater amount of foundation work” such as the subject masonry work. Mr. Jeffreys is not an engineer and has no experience as a contractor or window installer. Therefore, his opinion as to what a reasonable scope of work would be for a window installer carries little weight with me. Furthermore, I note that the masonry work Mr. Jeffreys talked about was not only “foundation work” for the patio door unit, but also for the new nearby door, which was clearly not in Brock’s scope. There is no rational reason for Brock, a window supplier, to do masonry work supporting a door it will not install. This further detracted from Mr. Jeffreys’ opinion. I do not accept Mr. Jeffrey’s opinion here.
[25] In closing argument, Sidney Klotz argued that in any event Brock implicitly undertook to do the masonry work by proceeding with the patio door installation before the supporting masonry was up. I do not accept that submission. The Brock work had been significantly delayed by the Owners, and the winter weather was looming, making the Brock work critical. Furthermore, there was no evidence from the Owners that the temporary plywood support Brock installed was insufficient for the patio unit pending the final masonry work. Finally, Messrs. Weir and Berkley made it clear in their evidence that they wanted to work with the Owners as much as possible. Therefore, I do not find that Brock’s installation of the patio unit without the masonry amounted to an implicit undertaking to do the masonry work.
[26] Therefore, I find that the Owners failed to prove that Brock was obligated in the Contract to do the masonry work. Brock did not have such a contract obligation.
b) Did Brock supply the windows required by the Contract?
[27] This issue was whether Brock supplied the laminated and triple pane glass required by the Contract. In my view, the onus to prove this point rested on the plaintiff.
[28] Unfortunately, none of the Brock windows were retained by Brock. They were destroyed almost immediately. Therefore, the parties had to deal with this issue through verbal and document evidence.
[29] The first sub-issue is whether Brock supplied the patio door required by the Contract. It is undisputed that the supplied patio door was double paned. Ms. Klotz insisted that the Contract required that the door be triple paned, and that it was not. Brock relied on the wording of the Contract document. In the top left hand corner of the Contract there are several boxes that were checked off by Mr. Berkley. Beside the word” patio door” there is a check beside “double.” Mr. Berkley stated that he verbally explained to Ms. Klotz at the time of the Contract formation that this meant a double paned patio door. Ms. Klotz insisted that this check referred to the existence of two separate panels, one in the door and the other the stationery portion of the unit, and that Mr. Berkley was lying. Ms. Klotz’s interpretation makes no sense to me. The reference in the Contract is clearly to the “patio door.” I do not find Ms. Klotz credible on this point. I find that the Contract required a double paned patio door, which was supplied.
[30] The next sub-issue is whether Brock supplied the laminated windows required by the Contract. It is undisputed that Brock did not supply the required triple paned transom window. The real issue is whether the front two casement windows were laminated as required, and whether the sidelites and picture windows were triple paned as required. The defendants relied primarily on Mr. Jeffreys on this issue. Mr. Jeffreys signed an undated report wherein he stated that the Klotzs had ordered these as triple paned windows and that none of them were triple paned. Ms. Klotz’s evidence was that Mr. Jeffreys had looked at the windows before they were removed.
[31] Again, I find Mr. Jeffreys not credible on this issue. In cross-examination, he recalled attending at the site in February, 2016, by which time the Brock windows had been removed and returned. If this statement is true, he could not have seen the Brock windows as he alleged. He stated that he took pictures, but did not produce them. He admitted that he examined neither the Contract nor the North Star shipping notice. He conceded that he did not recognize the industry acronym for laminated windows that appears in the North Star shipping notice, namely “STC.” This indicated that he has no sophisticated knowledge of the window industry. He also conceded that he was not told by the Koltzs to look for laminated windows, as he was told by them that they had “expected” triple paned windows. He conceded that his report and affidavit had been prepared by others and were not his words. In the end, I had I trouble accepting any of Mr. Jeffreys’ report and affidavit as being his evidence or credible.
[32] On the other hand, Brock relied primarily on the North Star shipping notice. The notice stated that the front casement windows were laminated and that the picture window and the two sidelites were triple paned. Ms. Klotz insisted that the Brock windows did not have these features. While Brock did not produce the author of the shipping notice, it is undisputed that the document was produced by North Star. I view the document to be in the nature of a business record produced in the ordinary course of business at the time of shipping, namely a process that in itself assures a level of credibility for the document. Furthermore, the document was produced by North Star on July 17, 2015, namely before any dispute existed between the parties. Furthermore, the document was produced by North Star, which has no apparent stake in the outcome of this case. Finally, the document clearly showed the wrong transom window, which adds to its credibility. For all of these reasons, I give the document credibility.
[33] In closing argument, Sidney Klotz argued that there is an issue of spoliation here, as, according to him, Brock destroyed material evidence, namely the windows, when it knew or should have known that it would be important to the outcome of this case. If applicable, the doctrine requires that I draw a negative inference against Brock on this issue, namely an inference that the windows would not have supported Brock’s position. Mr. Battiston responded that the doctrine does not apply, as Brock destroyed the windows as a part of its normal business process, not turning its mind to the impact on the litigation.
[34] I accept Brock’s explanation, as Mr. Weir stated in his affidavit that the windows that were deposited on Brock’s premises had “no residual value” to Brock. Obviously, Brock had not turned its mind to the utility the windows would have in this litigation. Furthermore, this explanation makes sense to me as Brock presented the North Star shipping notice to Ms. Klotz as the evidence she demanded of what was delivered. In any event, I have decided that the credibility of the North Star shipping notice outweighs any negative inference I may otherwise draw against Brock due to their destruction of the windows. The North Star shipping notice is sufficient evidence for Brock to meet its onus of proving what windows were delivered.
[35] I, therefore, find that Brock has succeeded in showing that it supplied the windows required by the Contract, with the exception of the transom window.
c) Was Brock’s installation work deficient?
[36] The Klotzs have numerous complaints about alleged deficiencies in Brock’s work other than the window issues already discussed: the front windows not being level or square; poorly applied caulking; windows held up with spray foam insulation only; absence of wood framing; the patio door being too low for the interior floor; no cement sill under picture window; no vapour barriers; gaps around the windows; and general untidiness. Many of these issues were identified by Mr. Jeffreys in his report that I referred to above. The Owners have the onus to prove these deficiencies.
[37] What is important is the fact that the Brock work was not completed. It could not complete because of the masonry issue. Therefore, it is a real question as to whether the Klotzs’ complaints concern true deficiencies or simply uncompleted work that Brock could not get to because of the Klotzs’ interference.
[38] In this regard, Brock called as an expert witness engineer, Nick Tassone, Mr. Tassone was qualified as an expert engineer to opine on issues of deficiencies in low and high-rise residential construction, particularly concerning windows. In March, 2017 Mr. Tassone reviewed the Contract, the shipping notice, the Jeffreys’ report and had a telephone conversation with Mr. Weir. He issued a report dated March 7, 2017.
[39] Mr. Tassone’s general comment in his report was that the complaints identified in the Jeffreys’ report concern uncompleted work, not deficiencies, and that Brock could not complete the work due to the masonry issue. He stated that “the issues identified by Classic [Mr. Jeffreys] can be easily remedied since it is work in progress and there should have been no need for the Defendants to remove the partially installed windows and doors.”
[40] I have already commented at some length about the Jeffreys report. I reiterate here some of my earlier comments about the report and Mr. Jeffreys’ affidavit. Given the uncertainty as to when Mr. Jeffreys attended at the site and the fact that someone else apparently prepared his report and affidavit, it is quite unclear as to the weight to be given to these documents. However, I did notice that in cross-examination Mr. Jeffreys, a home inspector, verbally conceded that nothing that he saw could not be fixed. He also conceded that there was no need for a vapor barrier with foam insulation. He reiterated that “all could be fixed.” This opinion generally accorded with that of Mr. Tassone.
[41] Therefore, I am driven to the conclusion, and I do conclude, that the Owners have failed to prove that their complaints are deficiencies. They are in the nature of uncompleted work that Brock would have done as a part of its finishing work. They are not deficiencies.
d) Was the Owners’ Contract termination proper?
[42] Following the site visit on October 21, 2015, Mr. Weir sent an email to Ms. Klotz on October 22, 2015 advising that Brock was prepared to complete its work with six identified tasks: raising the level of the patio door to tile level and sealing; securing the back window to the structure and foam insulate; securing the front right casement window; re-flashing front windows to allow proper caulking finish; cladding with aluminum the exterior of any exposed wood and seal; and providing a list of products and specs. He required assurance that Brock would be paid the remainder of the contract price upon completion. It is also undisputed that Brock was prepared all along to install the proper triple pane transom window. On October 30, 2015 Mr. Knight provided Ms. Klotz with the North Star shipping notice, thereby fulfilling the last of the six items.
[43] In response, Ms. Klotz sent her email of October 31, 2015 demanding that 21 items be done. These 21 items included, amongst other things, the removal and replacement of all windows and the patio door, and the removal and replacement of the cement sills. Essentially, Ms. Klotz demanded a redoing of the Brock scope of work. She ended the email by demanding that the work be done by November 15, 2015, failing which she would deduct $2,000 from the Contract price for every week of delay thereafter.
[44] When the demanded work was not done, the Owners’ lawyer sent Mr. Battiston a letter on December 1, 2015 advising that the Owners were proceeding with another window company and requiring that the windows be removed by December 4, 2015. When that was not done, the Owners removed the windows, and eventually returned them to Brock.
[45] There is no doubt that the Owners terminated the Contract. In light of my finding about the masonry, windows and alleged deficiencies, I am driven to the conclusion, and I do conclude, that the Owners breached the Contract and improperly terminated it. Their conduct amounted to a repudiation of the Contract, as they demanded a complete redoing of the Contract scope when that was not at all justified. At most, there was finishing work to be done, and an improper transom window to be replaced, all of which Brock was prepared to do and quickly.
[46] Furthermore, the unilateral imposition of a deadline of November 15, 2015 plus a penalty for any “late” performance was inconsistent with the Contract. While the Contract document was marked, “Rush,” it was the Owners who delayed the Contract work due to their difficulties with the building permit. Any “rush” in October and November, 2015 was created by the Owners’ delay concerning the permit and their improper insistence that Brock redo its work.
[47] I find that Brock’s work and conduct did not amount to Contract repudiation. Therefore, the Owners’ conduct itself in terminating the Contract and denying Brock access to complete its work (including correction work) amounted to an unjustified repudiation of the Contract; see C. S. Bachly Builders Ltd. v. Lajlo, 2008 (ONSC) at paragraph 86.
e) What are the consequences?
[48] By improperly terminating the Contract, the Owners are disentitled from recovering their $21,238.89 counterclaim. The counterclaim is composed of the following claims:
• the cost of the deposit: $3,000;
• the cost of the brickwork: $3,000;
• 4 months storage rental for the windows: $738.89;
• loss of rental income for five months: $4,500;
• general damages: $10,000.
[49] Based on the reasons stated above, this is my discussion about these items. The deposit was properly earned and paid, and should not be returned. The brickwork was not a part of the Contract, and therefore does not represent a valid back-charge. The four months of storage rental for the windows is also not a proper back-charge, as the installed windows (except the transom) were proper, and the transom would have been replaced by Brock at no charge and with minimal time. The loss of rent concerns an alleged five month delay in the rental of the basement apartment at $900 per month. Again, the Owners are at fault for the delay, not Brock. As to the general damages, Mr. Klotz in written submissions that were filed discussed “expectancy” damages (apparently costs to correct deficiencies) and mental distress damages. During the trial hearing there was limited evidence on these claims. In any event, the Owners’ improper termination of the Contract disentitles them to general damages.
[50] On the other hand, the Owners’ improper termination of the Contract entitles Brock to the full unpaid balance of the Contract, namely $11,770. While it did not complete its finishing work, it was stopped from doing so by the improper conduct of the Owners. Therefore, Brock is entitled to the full balance of its Contract price.
[51] In any event, term 15 of the Contract specifies that Brock is entitled to the full balance of the Contract price upon substantial completion of the delivery and installation of the ordered products. I am satisfied that the work had reached substantial completion, as all that remained was finishing work.
V. CONCLUSION
[52] I conclude that the Owners are personally, and jointly and severally, obligated to pay Brock the amount of $11,770. Furthermore, Brock is entitled to a lien in that amount on the premises.
[53] The Owners’ counterclaim is dismissed in its entirety.
[54] As to prejudgment interest, in its Statement of Claim Brock claims interest at the Contract rate of 2% per month. This rate does appear in clause 16 of the Contract. In his written submission dated September 8, 2017, Mr. Battiston calculates the 24% interest rate from October 4, 2015, the date of substantial completion of the Brock work, to September 8, 2017, producing a total of $5,382 to that date. The monthly rate is $234. Mr. Klotz did not address this issue in his submissions.
[55] I have the discretion to award a prejudgment interest rate other than as mandated by the Courts of Justice Act; see Courts of Justice Act, R.S.O. 1990, c. C. 43, section 130. The Contract entitlement to interest must be considered, as the Contract was accepted by both parties. However, I find that 24% is excessive in light of the low market lending rates that Brock would no doubt have had to pay to make up for the loss of this revenue. Nevertheless, a significant interest rate is warranted, as I find that the Owners acted unreasonably in terminating the Contract. I find that an appropriate rate is 10% per annum.
[56] Therefore, I find that the Owners are also personally, and jointly and severally, liable to pay prejudgment interest on the $11,770 at the rate of 10% per annum calculated from October 4, 2015 to the date of the report. There is no lien entitlement to this amount however.
[57] As to costs, at the conclusion of the argument on September 8, 2017, as ordered, the parties filed costs outlines for the reference. The Brock Costs Outline shows a partial indemnity amount of $20,989.41. The Owners’ Costs Outline shows two amounts, namely $19,415.10 full indemnity and $14,561.33 partial indemnity.
[58] Generally costs follow the event. In this case, Brock was the successful party on all issues in the dispute.
[59] If the parties are unable to agree on costs, the parties may deliver written submissions on costs. Each submission may not exceed two pages (typed, 8 ½” x 11” pages, single spaced, minimum font size 11). The submission of Brock must be delivered on or before October 19, 2017. The Owners’ submission must be delivered on or before October 26, 2017. The Brock reply submission, if any, must be delivered on or before October 30, 2017. These submissions must also address the issue of post-judgment interest.
[60] If the parties are unable to agree on the form of my final report, an attendance may be required to settle the report.
Released: October 12, 2017 ___________________________
MASTER C. WIEBE
COURT FILE NO.: CV-15-542447
DATE: October 12, 2017
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
Brock Doors & Windows Inc.
Plaintiff
- and –
Rosemary Anne Klotz and Lionel David Klotz
Defendants
REASONS FOR JUDGMENT
Master C. Wiebe
Released: October 12, 2017