Court File and Parties
COURT FILE NO.: C-334-18 DATE: 2019-12-17 ONTARIO SUPERIOR COURT OF JUSTICE
BETWEEN:
PARAMOUNT PAINTING & RENOVATIONS INC. and KYLE O’BRIEN Plaintiffs – and – SCOTT HARVEY DUNN Defendant
Counsel: Jarvis K. Postnikoff, Counsel for the Plaintiffs Cameron D. Trotter, Counsel for the Defendant
Heard: November 15, 18, 19 and 20, 2019
The HonouRABLe Mr. Justice d.j. gordon
REASONS FOR DECISION
[1] Four days of trial were required to address a construction dispute involving a claim for $36,188.79. The total litigation expense likely exceeds this amount.
Background
[2] Paramount Painting & Renovations Inc. (“Paramount”) was incorporated in 2011. It is the successor to a sole proprietorship of Kyle O’Brien, operating under the same name since 1999. The business activity is in painting and general renovation work, primarily in the residential sector. This action was commenced in the name of Paramount. Mr. O’Brien was added as a party plaintiff, on consent, by motion granted at the commencement of trial. The purpose of the amendment to the statement of claim was to address the reference in the contract documents to an unincorporated entity.
[3] Scott Harvey Dunn is the owner of a residential property in Kitchener. He inherited the property in 2017. Mr. Dunn was employed for many years at IBM as a technician and in sales. From 2010 to 2017, he worked at Home Depot as a kitchen and bathroom designer. Since 2017, Mr. Dunn has been employed at another business in the area known as KW Countertops.
[4] The residence was constructed in 1968, with an addition in or about 1985. Mr. Dunn wanted to “dress up” the home, particularly on the lower level and in the bathroom on the upper level. He had met Mr. O’Brien during his employment at Home Depot. In 2016, Mr. Dunn asked Mr. O’Brien to provide a quote regarding the bathrooms only. Such was provided. The work did not proceed at that time, Mr. Dunn explaining his mother had recently passed away and there was a delay in transferring ownership from her estate. Mr. Dunn requested a more expansive quote from Mr. O’Brien in 2017.
[5] On June 21, 2017, the parties entered into what is called a “general service agreement”, said to reflect the work addressed in an estimate by Mr. O’Brien. This was a fixed price contract for $55,129.61. Paramount, or Mr. O’Brien, were to provide certain renovation services, including material. Mr. Dunn was to obtain the fixtures for installation. There is some dispute regarding the contents of the contract document as later discussed. The contract price has been paid according to the terms in the document.
[6] The renovation work commenced on July 19, 2017. Within hours, Mr. O’Brien determined the scope of the work was more than expected. Mr. Dunn disagrees with that statement. Regardless, Mr. O’Brien presented a form to Susan Croteau, spouse of Mr. Dunn, called an “SAF”. Mr. O’Brien described the document as a “service adjustment form”, although those words are missing from it, to approve additional work at extra cost in multiples of $10,000.00. Ms. Croteau signed the form on Mr. O’Brien’s cell phone, understanding it to cover extras that had been discussed, up to the amount of $10,000.00. This amount has also been paid.
[7] The renovation work slowly proceeded. Problems arose in connection with the work and between the parties. A meeting occurred on November 17, 2017. An agreement was said to have resulted from their discussions, although there are different interpretations. This meeting is of critical importance to the case.
[8] The renovation work continued until January 17, 2018. Mr. Dunn delivered the final payment to Paramount, as provided in the original agreement. He refused to pay more. Paramount delivered an invoice, said to reflect the November 2017 meeting. The invoice dated January 18, 2018 was for the total amount of $101,318.39, less payment of $65,129.60, for a net owing of $36,188.79.
[9] Paramount subsequently caused a construction lien to be registered on title to the property on February 6, 2018. The statement of claim was issued on March 20, 2018. A certificate of action was registered on title on March 22, 2018. On October 21, 2019, Mr. Dunn made a payment into court of $45,235.99, resulting in an order vacating the lien and certificate of action from title. At trial, Mr. Dunn reported having recently entered into an agreement to sell the property.
Plaintiffs’ Case
[10] There are a multitude of problems with the plaintiffs’ case that likely would have been determinative, but for the meeting on November 17, 2017, briefly described as follows:
(i) Lack of Diligence in Preparing Estimate
[11] Given Mr. O’Brien’s assertion the scope of the work exceeded expectations, it is important to address his efforts leading to the estimate. Mr. O’Brien viewed part of the residence in 2016, perhaps for an hour, before preparing the initial quote. In June 2017, he inspected the home with Mr. Dunn for another hour, and then some additional time on his own when he videotaped the areas to be renovated. The video was no longer available, although hundreds of photographs were taken during the project.
[12] Yet on the very fist day on site, Mr. O’Brien determines extra work was required. Much of this, he said, was due to being unable to see the walls on his inspection before, due to the presence of furniture, as well as water lines and electrical wires in those walls. Mr. O’Brien had twenty years experience in renovations. He knew the approximate age of the house and that there would be items in the walls.
[13] If the work exceeded expectations, a claim not supported on the evidence, it resulted from the failure of Mr. O’Brien to diligently inspect the premises.
(ii) Contract Documents
[14] This was not a difficult renovation project. But problems in this case, as often occurs in construction disputes, result from the documentation. The contract documents, in general, are vague, lacking in detail. There are no construction drawings, nor even measurements provided.
[15] Paramount uses a contract form described as a “general service agreement”. Mr. O’Brien found the form on the internet and had it reviewed by a paralegal. The form is not suitable in the construction industry. Perhaps had Mr. O’Brien consulted a lawyer instead, a more appropriate contract document would have been used.
[16] The general service agreement provides little detail other than the contract price and payment terms. It does say additional work would be time and material with labour at $95.00 per hour. The agreement also says any amendment is only binding if in writing and signed by both parties and that it is the “entire agreement”. These latter two clauses became problematic at trial given the purported oral agreement in November 2017.
[17] The general service agreement attempts to define the services by reference to estimate #0001024. The estimate is attached to the agreement as tendered at trial. Mr. O’Brien concedes it was not so attached when the agreement was signed on June 21, 2017. I accept Mr. Dunn’s evidence that he never received a copy of the estimate, despite repeated requests. The scope of the work and the estimate would have been discussed on the signing date. However, the failure to deliver a copy lead to problems as the work proceeded.
[18] The estimate itself provides some detail but it too is vague, lacking detail or drawings or even measurements. The estimate also incorporates other material, said to be available by way of “links”. Without the estimate, Mr. Dunn was unable to access the links. Nevertheless, the links present little more than numbers, again no detail or drawings or measurements.
[19] Vagueness in contract documents is an invitation to problems in interpretation. Litigation far too frequently results when contractors put little detail in writing. Such is easily avoided by using proper and complete contracts.
(iii) The Extra Work
[20] It is simply not believable that a contractor within hours of starting the project work would determine the scope was much more than anticipated. If such were true, a credible contractor would immediately stop work, arrange a site meeting, address the purported extra work and reach an agreement before continuing.
[21] Blake Cooper, a former project manager at Paramount, testified there was a pattern of starting projects at one price and then going to another price. This, he said, happened on most projects. I accept his evidence in that regard.
(iv) SAF
[22] Intended to be a change work order, according to Mr. Cooper, this document does nothing more than add to the confusion. The document is vague, lacks details and was not signed by Mr. Dunn. The terms were not even followed by Mr. O’Brien as no further SAF’s were presented, as required, “each time we hit $10,000.00 in extras”.
[23] Mr. Dunn, and Ms. Croteau, knew there would be some extras, having approved, for example, a recommendation from Mr. O’Brien’s crew on the first day to extend certain painting.
[24] At its best, this document acknowledges extras by both parties of up to $10,000.00. Indeed, that amount was paid by Mr. Dunn.
(v) Untrained Crew
[25] Mr. O’Brien claims the docketed hours of the crew on site for this project was 1,333.65 hours. At $95.00 per hour, he says the value of labour was $126,696.00, plus HST. Both docketed time and stated value are a gross exaggeration. Neither are reasonable.
[26] Untrained general labourers with no renovation experience were hired by Paramount. Little direction was provided. Mr. O’Brien was rarely on site. There was no project manager until the crew quit in October 2017.
[27] Ryan Skigmore and Mark Stotesbury were two of the crew. They expected to receive guidance and training. Such did not occur. Rather, they were instructed to watch videos on site as their training for drywall installation and framing, two of the tasks they were expected to perform. Mr. Stotesbury designed the bathroom but had no experience and was not provided with any plans.
[28] Mr. Dunn correctly said he should not be paying for the training of Paramount’s crew.
[29] This project should have taken one month, two at most, with a qualified crew. Instead, six months were needed. The project proceeded slowly. Problems developed. With an inexperienced crew and little guidance provided, is it any wonder?
(vi) Extras
[30] There is little documentation to substantiate what Mr. O’Brien said was extra work. Details were not provided, only repeated assertions the scope of the project changed. Mr. Dunn acknowledged extras from the outset. He was able to define them and gratuitously paid the full $10,000.00 referenced in the only SAF delivered on the first day.
[31] I am not persuaded the scope of the work changed. Mr. O’Brien inspected the premises prior to delivery of the estimate. He had to know what was required. But I am unable to quantify the value of the extras on this evidentiary record.
(vii) Value of the Work
[32] The only credible evidence as to the project value came from Mr. Cooper, the project manager brought in by Paramount when the crew quit. He was called as a witness by Paramount.
[33] Mr. Cooper has worked in renovation construction for many years. He has experience in estimating. Mr. Cooper well understood the work required in this residence. In his experience, $65,000.00 was a reasonable amount for this project. I agree.
Paramount or Mr. O’Brien
[34] All of the contract documents are in the unincorporated business name. Similarly, project reports, additional quotes and invoices, all delivered in the latter few months of the project, are in the same name. Emails refer to the corporate name.
[35] In my view, nothing turns on whether the plaintiff ought be the company or the sole proprietorship. There is no counterclaim and Mr. Dunn did not pursue the issue of alleged deficiencies.
[36] I conclude the contract is determinative. Hence, Mr. O’Brien is the proper plaintiff.
November 2017 Meeting
[37] The direction of this case changed on the third day of trial. The problems with the plaintiffs, previously summarized, no longer had an impact on liability. I conclude an oral agreement was negotiated at this meeting, replacing the original general service agreement regarding the contract price. Despite the provisions in that document requiring changes to be in writing and signed by both parties, the law is clear such does not prevent a subsequent oral agreement. See: Shelan Inc. v. Print Three Financing Corporation (2003), 64 O.R. (3d) 533 (Ont. C.A.), at paras. 37-60. Simply put, the oral agreement reflected the intention of the parties.
[38] There are different presentations as to why the meeting was arranged, what was discussed and the ultimate agreement terms.
[39] By November 2017, there were significant problems with the project. There was also unreasonable delay. The Paramount crew quit in October. New workers were put on site and Mr. Cooper became extensively involved as the project manager. Mr. O’Brien quite correctly stated the parties were “entering an area of disharmony”. Mr. Dunn was concerned with the delay as only the lower level had been completed. There was still work to do on the upper level.
[40] At this meeting, Mr. Dunn wrote some numbers on the back of the general service agreement, as follows:
55 10 65 ______ 90.625 35 K 7 K 25 K
Mr. O’Brien took a photo of that note. It was tendered in evidence.
[41] Mr. O’Brien says the note reflects a new agreement to finish the project, $55,000.00 representing the original contract price, $10,000.00 the extras pursuant to the SAF, additional labour to complete of $25,000.00, plus $7,000.00 for material. The $35,000.00, he said, was the rough estimate for labour and material. HST would be on top, according to Mr. O’Brien. He went on to say he was agreeing to waive any expense for labour and material beyond the numbers specified. In cross-examination, Mr. O’Brien referred to the $90,000.00 as the new price, plus material and HST.
[42] Subsequently, Mr. O’Brien directed his office administrator, Lee Kapshey, to send a progress report and revised statement to Mr. Dunn. She did so by email, dated November 28, 2017, saying:
Original Scope $ 55,129.62 (HST included) SAF Allowance $ 10,000.00 (plus HST) Overages Agreed Upon $ 25,000.00 (plus HST) Materials $ 13,431.97 Sub Total $103,561.59 HST $ 4,550.00 Total $108,111.59
[43] On December 4, 2017, Mr. Dunn delivered a cheque to Paramount for $10,000.00 That same day, Ms. Kapshey sent another progress report to Mr. Dunn, correcting the materials to $6,638.78, accounting for the payment of $10,000.00 and showing a revised total of $91,318.40.
[44] On January 17, 2018, Mr. Dunn delivered a cheque to Paramount for $11,025.92 with the words “final reno payment”. On January 18, 2018, Paramount delivered its invoice to Mr. Dunn. It accounted for the prior payments totalling $65,129.60 and showed a balance owing of $36,188.79.
[45] Mr. Dunn was frustrated by the project delay, lack of information from Paramount, and what he perceived to be stalling by Mr. O’Brien in not responding to his requests. By October 2017, he had already paid over $44,000.00 to Paramount and was becoming concerned. He had still not received the initial estimate and became worried there would be a dispute as to what was included in the contract price. He had been requesting a meeting for some time.
[46] As to the note he recorded at the meeting, $90,000.00 is the amount Mr. O’Brien advised he had already in labour. Mr. Dunn responded such was not likely. According to Mr. Dunn, Mr. O’Brien said they needed a new agreement. Mr. Dunn asked Mr. O’Brien what he wanted.
[47] Mr. Dunn reported Mr. O’Brien to say $20,000.00 for labour from the outset. He responded saying that was too low, offering $25,000.00 for labour, plus $10,000.00 for extras, plus material of $7,000.00 and plumbing and electrical of $10,000.00. Mr. Dunn became worried when he saw Mr. O’Brien take a photo of the note, thinking he would now try to claim $55,000.00, plus $35,000.00 for a total of $90,000.00. Mr. Dunn told Mr. O’Brien to deliver an invoice.
[48] Mr. Dunn replied to Ms. Kapshey’s emails, simply saying the numbers were incorrect and requesting another meeting with Mr. O’Brien.
[49] Initially, Mr. Dunn appeared to be saying no agreement was reached at the November 2017 meeting. In cross-examination, he acknowledged a new agreement but later reported there was no agreement or that Mr. O’Brien was to prepare a new written agreement for review. Ultimately, Mr. Dunn indicated Mr. O’Brien requested $90,000.00 and that he responded “sure” and to prepare a new agreement. Mr. Dunn repeated “sure” as his response on several occasions.
[50] Neither counsel pursued that word used by Mr. Dunn. In result, I indicated to counsel the response was unclear and requested their submissions before I asked Mr. Dunn to clarify. Mr. Postnikoff opposed the question being put to Mr. Dunn. Mr. Trotter consented. The response from Mr. Dunn to my question about “sure”, was that he “reluctantly agreed” to the $90,000.00.
[51] Mr. Cooper was also present at this meeting. He recognized the numbers recorded on Mr. Dunn’s note and reported Mr. O’Brien and Mr. Dunn agreeing to the total amount of $90,000.00, all in. Mr. Cooper observed them to shake hands at that point.
[52] Of some interest, Mr. Dunn’s request for a further meeting was arranged by Ms. Kapshey. It was scheduled for December 1, 2017. Unfortunately, Mr. O’Brien did not attend. Ms. Kapshey reported Mr. Dunn to be most upset as the matters he wanted to address could only be dealt with by Mr. O’Brien.
New Agreement Price
[53] As previously discussed, based on all of the evidence regarding the November 2017 meeting, I conclude a new agreement was reached. The only real issue requiring determination is the contract price. There is conflict in the evidence.
[54] In my view, Mr. O’Brien was not a credible witness. Problems regarding his case were addressed earlier in these reasons. His comments regarding the scope of the work and, in particular, purported unforeseen matters, is simply not believable. Clearly, Mr. O’Brien was attempting to seek greater compensation from the outset of the project. Such even continued after this meeting. Despite the note making reference to $90,000.00, he tries to add more. It is obvious he avoided the meeting on December 1, 2017 and he knew Mr. Dunn had not agreed to the amounts beyond $90,000.00
[55] Mr. Cooper has no interest in this litigation. He was responsive to questions in both examination-in-chief and in cross-examination. There was no exaggeration. This evidence was clear. Mr. Cooper said the new price was $90,000.00 all in. The note of Mr. Dunn supports the evidence of Mr. Cooper.
[56] Mr. Dunn’s evidence was initially confusing. His numbers appear to be similar to the original agreement. However, as Mr. Dunn said, he “reluctantly agreed” to $90,000.00. It makes no difference whether he was enthusiastic or reluctant. He agreed to the price. There was no evidence of coercion or improper influence. This was a voluntary act by Mr. Dunn.
[57] In result, I find the contract price, as negotiation at this meeting, was $90,000.00, inclusive of labour, material and HST.
Summary
[58] Mr. Dunn has paid $65,129.60 to Paramount. As I have determined the contract price to be $90,000.00, Kyle O’Brien is entitled to judgment for $24,870.40. As there are funds paid into court, the judgment will direct payment out, subject to agreement or determination on pre-judgment interest and costs.
[59] I expect counsel to resolve those latter issues. Subject to any offers to settle, neither party should expect a significant cost award. This is a case that should have been resolved. Counsel shall deliver written submissions to my chambers in Kitchener within 30 days.
D.J. Gordon J.