COURT FILE NO.: CV-15-00003887-0000
SUPERIOR COURT OF JUSTICE – ONTARIO
IN THE MATTER OF the Construction Act, R.S.O. 1990, C.30 as amended
RE: IDH BUILD GROUP LTD., Plaintiff
AND:
NOEL FITZSIMMONS and DAVID FITZSIMMONS, Defendants
BEFORE: Kurz J.
COUNSEL: Alan J. Butcher, for the Plaintiff Orie Niedzviecki, for the Defendants
HEARD: March 30, April 1 and 6, 2021
ENDORSEMENT
Introduction
1The plaintiff, IDH Build Group Ltd. (“IDH”) sues its former clients, Noel Fitzsimmons (“Noel”) and David Fitzsimmons (“David”) (collectively “the Fitzsimmons”), for $268,547.37. It claims that this is the amount owed to it under a contract for the construction of a new custom home as well as certain “extras” requested by the Fitzsimmons (“the Contract”).
2IDH claims that it constructed a custom home for the Fitzsimmons in accord with the Contract but that they refused to pay the amounts owing or allow IDH to complete its work. IDH also asserts that the Fitzsimmons failed to mitigate any alleged damages arising from any deficiencies that existed when they took possession of the home by refusing to allow IDH onsite to remediate those deficiencies. While IDH registered a construction lien against the defendant’s home, located at 235 Jennings Crescent, Oakville, Ontario (“the Property”), it maintains that at all material times, even after that registration, it remained ready and willing to remediate any deficiencies in its construction and complete the job. However the Fitzsimmons refused to allow them to do so.
3The Fitzsimmons deny that they owe any money to IDH. They assert that it was IDH who breached the Contract by shoddy workmanship, delays and misrepresentations. They say that IDH repudiated the Contract or in the alternative, that they mutually repudiated it, or in the further alternative that IDH accepted their repudiation of the Contract. As a result, they claim that they had the right to treat the Contract between the parties as ended and seek the assistance of another contractor to complete the work on the Property. They counterclaim for the costs of that contractor’s work.
4On January 28, 2021, the parties consented to the order of Fitzpatrick J. that the trial of this action be bifurcated between the issues of liability and damages. This trial is the liability portion. Fitzpatrick J. also ordered that the affidavits already prepared for an earlier summary judgment trial may form part of the evidence for this trial, to be supplemented by oral evidence at trial.
Issues
5This portion of the trial raises the following, related issues:
Which party, if any, breached or repudiated the Contract?
If IDH breached or repudiated the Contract, did the Fitzsimmons fail to mitigate their damages by refusing to allow IDH to remediate any deficiencies?
6For the reasons that follow, I find that the Fitzsimmons repudiated the Contract and breached their obligations to pay IDH and allow it to fix any deficiencies under the Contract. However, IDH neither breached nor repudiated the Contract and did not accept the Fitzsimmons’ repudiation.
Background
7Most of the salient facts of this case are agreed upon by parties, including the terms of the Contract. At my request, at the commencement of trial, counsel cooperated to jointly prepare a table of admitted facts from their responses to the requests to admit that they had exchanged.
8The Fitzsimmons were introduced to IDH by Marnie Warman (“Marnie”), who ran a design store in Oakville. Marnie is the wife of Scott Robinson (“Robinson”), the principal of IDH. The Fitzsimmons wanted a new, custom built home, to be constructed at 235 Jennings Crescent, Oakville, Ontario. While the Fitzsimmons’ original budget was under $600,000, the parties negotiated for some time regarding the features of the home that was to be built and the cost of that construction.
9On or about December 3, 2014, the parties entered into the Contract. It calls for the construction of a three-bedroom bungalow of approximately 2,440 square feet for a total fixed cost of $829,719.45, inclusive of taxes, plus any allowances or extras as described below. The Contract set out that the standard of delivery of IDH’s services on the project was to “work diligently and in a good, workmanlike manner”. The Fitzsimmons signed the Contract on December 12, 2014.
10Also included in the Contract is a list of budget allowances “for specific items to be selected by the Fitzsimmons” (“the allowances”). The Contract calls for the Fitzsimmons to select finishes as the construction progresses. It provides that the Contract price will be adjusted up or down, depending on whether the Fitzsimmons’ selections are higher or lower than the budgeted amounts for the allowances. In addition, Fitzsimmons would pay IDH the agreed upon cost of any extras that they requested.
11The Contract called for a payment schedule that was intended to coincide with a work schedule that also formed part of the Contract. The payment schedule was:
$290,000 already paid as of date of signing;
$50,000 payable on December 5, 2014;
$50,000 payable on December 12, 2014;
$50,000 payable on December 19, 2014;
$75,000 payable on January 9, 2015;
$75,000 payable on January 23, 2015;
$75,000 payable on February 6, 2015;
$75,000 payable on February 20, 2015;
$40,000 payable on March 4, 2015;
Total: $780,000
12The balance of $49,719.45, not excluding extras, was to be paid when the sod was installed, the driveway completed, all exterior finishes including painting have been completed, and any other items as noted within the Scope of the Contract had been completed. All payments, other than the initial one, were due within three days of invoicing. As the Fitzsimmons’ counsel has pointed out, this payment schedule made no allowance for a 10% construction lien holdback.
13Throughout the course of the construction, the Fitzsimmons made payments to the Plaintiff totalling $612,933. Of that amount, $590,000 was paid toward the Contract price and $22,933 was paid toward extras. The Fitzsimmons also agreed to pay IDH $12,800 plus HST as an extra for finishing the basement of the Property. They never paid that amount.
Issue No. 1: Which party, if any, breached the Contract?
Positions and Arguments of the Parties Regarding who, if Anyone, Breached the Contract
14IDH argues that the issue of who breached the contract is a simple one. The parties contracted for the construction of a custom-built home for a fixed price plus extras and allowances. IDH constructed that home through occupancy. It did so despite the fact that the Fitzsimmons were increasingly in arrears of the progress payments due under the Contract. After they moved into the home, the Fitzsimmons refused to either pay IDH any further installments owing under the Contract or to allow it access to the Property to address any deficiencies. The amount that the Fitzsimmons owe to IDH is set by the Contract. They cannot choose to evade that liability by refusing to allow IDH to remediate any deficiencies unless there has been a fundamental breach of the Contract; something that has not occurred here.
15The Fitzsimmons argue that it was IDH that breached the Contract. They argue that IDH’s breaches justified their refusal to make any more payments, including demanding payments they were not entitled to and being responsible for significant deficiencies found throughout the house. They say that they had to hire an independent inspector to tell them the extent of the deficiencies and then a second contractor to complete the work on their home. When the extent of those deficiencies is added to a construction history that including overcharging them, a series of errors, construction delays and misrepresentations, they were entitled to treat the Contract as having been breached or repudiated by IDH.
Problems During the Course of Construction
16A number of problems arose during the course of the construction. The Fitzsimmons closely monitored IDH’s work, regularly attending at the jobsite, sometimes daily or almost daily. They complained to IDH of alleged errors, deficiencies, and inattention to the construction. At other times, they complimented IDH for its work. Numerous emails between the parties have been placed into evidence.
17The roof on the Property began to leak in or about December 2014. Robinson acknowledged the leak on December 16, 2014. He arranged for IDH’s subcontracting roofer to put up more flashing to try and remediate the leak. That was not successful. The Fitzsimmons were unhappy and concerned about the leak. They sought the assistance of an independent roofer, Keating Roofing (“Keating”), first to inspect and then to replace the roof. Keating found a number of defects and Building Code violations in the existing roof. Based on Keating’s recommendations and following numerous complaints by the Fitzsimmons, IDH agreed to pay Keating to replace the entire roof on the Property in January 2015.
18Another problem arose in December 2014, after IDH arranged to have gravel delivered to the Property and placed in the basement of the home in order to lay a floor there. However, way too much gravel was delivered. Had the volume of gravel not been reduced, the basement floor would have been two feet too high. The excess gravel was not removed until late January or early February 2015.
19The Fitzsimmons were concerned with delays in the home’s construction. They pointed to a number of delays, including the one caused by the basement gravel. They blamed those delays on a lack of attention and regular attendance at the job site.
20The Fitzsimmons were living in rented accommodations during the build. Although they did not sign the Contract until December 12, 2014, they expected the home to be completed by the end of February or early March 2015. Nothing in the Contract, which had been negotiated over a number of months, set out either a completion or a move-in date. The Fitzsimmons argue that the date is implied by the Contract’s payment schedule and its related work schedule. That schedule began on December 1-5, 2014 and ended on February 23, 2015, with a last scheduled installment payment of March 4, 2015. That appears to have been a very aggressive schedule in light of the timing of the signing of the Contract. The Fitzsimmons state that IDH was already behind schedule at the time that the Contract was signed. Even if that is the case, it is questionable whether it is reasonable to expect a home to be fully built in less than three months during the middle of the winter.
21Robinson testified that one of the reasons for the delay in the completion of the home was the weather. The winter of 2014-15 was the season in which Ontario was subjected to a “Polar Vortex” of extremely cold weather. This chill delayed a number of stages of the building process. For example, Dig-It, a subcontractor, was unable to perform its excavation work due to the state of the ground. The cold weather also prevented IDH from bringing water into the Property. In her cross-examination, Noel conceded that there were some building delays caused by extreme weather.
22By late winter/early spring 2015, work on the Property had accelerated and progress was being made. Between March and June 2015, the parties exchanged a number of emails regarding design issues and changes. The subject of those emails included door sizes (March 28), the master bedroom wall and closet in the office (April 16), finishing details on the window trim and siding (April 28), laundry room design (May 5), getting a quote for instant hot water (May 14-20), selection of light switches (May 25-26), consulting on the appearance of the fireplace mantle (May 26), trim on the house and decorative window (June 17). During the same period there were also exchanges between the parties about the progress of the work and payments.
23The following exchange of emails, relied upon by IDH, illustrates both the amicable exchanges regarding the progress of the work and the parties’ disagreement regarding the schedule of payments:
March 7, 2015 – Noel to Robinson (in response to a quote for an “additional cost”): “That is great! We are good with the extra, about what I figured it would be. I am also happy with the choice of spray foam…”
March 19, 2015 – Robinson to Noel: “As you are aware, things are progressing nicely on the project…We would appreciate a cheque in the next day or so.”
March 20, 2015 – Noel to Robinson: “Yes, we are happy to see things moving along now. I have been calculating the numbers you provided us with and we feel that we are paid up to date. If you feel otherwise, can you provide us with a breakdown of the actual costs to date? Can you also provide us with an updated schedule with completion dates?”
24This appears to be the first time that the Fitzsimmons requested a breakdown of IDH’s costs. As set out above, the contract called for a fixed price; one not dependant on IDH’s expenses. Robinson provided some cost information to the Fitzsimmons in his email of March 28, 2015, cited below. The parties then discussed the payment schedule as follows:
March 28, 2015, Robinson to Noel “…Our records indicate that you have paid $440,000 in progress payments to date. We are requesting a cheque of $200,000 at this time.”
March 31, 2015, Noel to Robinson: “We are only going by the progress schedule set up with the payment schedule in your contract.”
25Because the Fitzsimmons took the position that IDH was late in meeting the construction schedule set out in the Contract, they stopped paying installments after their April 23, 2015 payments of a $50,000 installment and $22,933 for extras. With those payments, they had paid $590,000 towards the $780,000 set out in the payment schedule.
26The April 23, 2015 extra cheque was intended to cover the following extras:
a. IDH Invoice #203 for new 200 amp underground electrical service in the amount of $6,513.36 plus HST;
b. IDH Invoice #204 for 4 power roof vents in the amount of $700 plus HST;
c. IDH Invoice #205 for hybrid insulation on the main floor in the amount of $2,782 plus HST;
d. IDH Invoice #219 for stone skirt around the entire house in the amount of $10,300 plus HST.
27That is the only payment that the Fitzsimmons made towards the extras that they had requested. The Fitzsimmons have not made any payments toward the $12,800 plus HST for finishing the basement.
28Robinson continued to make a number of requests for further payments but the Fitzsimmons refused to pay any further money to IDH. They took the position that they had already overpaid on installments. Nonetheless, IDH never refused to complete the work set out in the Contract.
29IDH hired 1462556 Ontario Inc. o/a Dig-It Excavating (“Dig-It”) as subcontractor, to dig and bring in water and sewer lines from the Property line to the house. Because of the Polar Vortex delay, it did so between March 8 and April 2015. IDH felt that it had been overcharged by Dig-It and did not immediately pay its bill. On May 8, 2015, Dig-It registered a $16,385 lien against the Property. That registration greatly concerned the Fitzsimmons. On June 22, 2015, IDH and Dig-It reached an agreement for the payment of $15,000 and the removal of the lien. While the Fitzsimmons were immediately notified of the settlement, it took close to two years to have Dig-It actually remove the registration of the lien. The reason for this delay is not clear. This episode contributed to a deterioration of the relationship between the parties.
30Another subcontractor who was tardily paid by IDH was a land surveyor, Cunningham McConnell Ltd. (“CML”). CML was hired in or about October 2014 but not paid until April 24, 2015.
31Among the Fitzsimmons’ other concerns with IDH was a failure to register with the Ontario government’s Tarion new home warranty programme. In her April 27, 2015 email to Marnie and Robinson, Noel requested details of the Tarion registration. But IDH had not informed the Fitzsimmons that it had yet to register the new home that it was building for them with Tarion. That is because IDH was not, itself, registered as a builder with Tarion. Robinson never told the Fitzsimmons that IDH was not registered with Tarion at the time that the Contract was signed. Inasmuch as they were promised that their new home would be registered for a Tarion warranty, the Fitzsimmons feared that they were being lied to.
32Robinson testified that IDH’s previous Tarion warranties came through Rubycrest, a company operated by his former partner in IDH, Tony Collela. Mr. Collela was a respected builder who had to leave IDH for health reasons in mid-2014. That was before the construction of the Fitzsimmons’ home began. That meant that Robinson had to register IDH with Tarion. That registration took some time. Tarion finally registered IDH in August 2015 and the build of the Fitzsimmons’ home was registered thereafter, effective July 2015. By the time of those registrations, the Fitzsimmons were already occupying the Property. However, as set out below, in 2016 the Fitzsimmons refused to cooperate with Tarion’s independent one-year reconciliation inspection process and as a result, the Tarion warranty lapsed.
33On May 26, 2015, Noel’s husband, David, emailed to Robinson, indicating the Fitzsimmons’ displeasure with the Dig-It lien being applied to the Property. David also raised issues with the build. He stated that he and Noel had consulted with legal counsel. He conceded that “there are many quality materials being used in our house” but stated that they were comparable to other comparatively priced bungalows. He added that after speaking to people with recent custom builds in his neighbourhood he and Noel had a pretty good sense of what furnishings are standard. That statement appears to have been intended to explain his ultimatum that the Fitzsimmons would make no further payments until they received proof of payment/and or resolution of the Dig-It lien. David then went further, to demand that IDH supply “[d]etailed statements/receipts (indicating proof of payment) for services completed and material acquired for our build, to date”.
34David did not say why he was demanding those statements/receipts, although that appeared to be related to the issue of non-payment of subcontractors like Dig-It. But the Fitzsimmons were not entitled to demand such statements and receipts under the Contract. Nonetheless, Robinson agreed.
35In cross-examination, Noel admitted, after some hesitation, that the reference to other comparable properties reflected the fact that she felt that she had received a worse deal than the other homeowners. IDH asserts that much of the conflict between the parties arose because the Fitzsimmons suffered from buyer’s remorse over the cost of their new home build.
36Despite the Fitzsimmons’ demands of IDH, they also offered indications of their satisfaction with IDH’s work in the days leading to occupancy. On May 26, 2015 Noel emailed Marnie about her discussion with the person who installed her fireplace. She stated:
Also the place is looking great, exterior trim work is progressing and we have lights! I love the detail above the garage.
37On June 17, 2015, nine days before she moved in, Noel sent an email to Marnie and Robinson, along with a photo, writing:
Hi Marnie
I am sending you this picture, not sure if you saw it yesterday. The trim on the house is Mdf and it looks great. They have used wood trim on the entrance and had to piece it together. Can they match the mdf trim?
Problems Following the Fitzsimmons’ Occupation of the Property
38The Fitzsimmons moved into their new home on June 26, 2015, a day after receiving an occupancy permit. Prior to occupation, the parties did a walk through of the Property, verbally noting items to be attended to. On July 2, 2015 Robinson emailed Noel to follow up about deficiencies. He requested that the Fitzsimmons place their list of deficiencies in writing and appoint one spokesperson, so that “everyone [is] on the same page”. He stated that he had been dealing with Fitzsimmons’ son, Scott Fitzsimmons (“Scott”).
39Robinson explained his request for a list as follows:
This gives us a list to compare with our own to ensure that we get as many items resolved on the first pass as possible. It expedites things and will keep progress moving. We certainly have a list but you are in the home and may note other items for the list. Most are simple fixes/touch ups as all new builds have. That said, we are serious about taking care of them.
40On July 3, 2015 Scott sent an email to Robinson on behalf of his parents, whom he copied. He provided the Plaintiff with a two-page list of deficiencies. Regarding the exterior items on the list, he stated that he recognized that the exterior had not yet been completed. He also stated that the paint and trim is “more than just touch ups” but that he recognizes “that it will never be perfect”. He stated that the Fitzsimmons are willing to wait on the completion of the driveway because of work on the roads being done by the region.
41Scott also raised the issue of IDH supplying copies of all of their receipts for the work done under the Contract. Until then, the Fitzsimmons stated that the spreadsheets and receipts are for the purpose of an HST refund. But Scott stated that they were for their lawyer. He added that Noel had spoken to the lawyer about the items to be completed in the house. However he did not disabuse Robinson of the notion that the invoices were requested for HST rebate purposes only.
42Before getting to his list of deficiencies, Scott wrote:
I know that you’re not done, and I’m confident that you can get it there, but I just wanted to be upfront about our expectation.
43Scott then turned to his list of the following deficiencies:
a. Door jam/trim cut short on many locations (front office, kitchen, basement);
b. Trim repairs/finishing – rough finishing in many areas;
c. Drywall repair – overcut holes around vents and switches, dents, chips etc.;
d. Paint touch up & cutting in many areas, textured paint on some walls;
e. Overspray on many hinges, door bottom seals, basement tub, floor areas;
f. Paint on light switches and outlets;
g. Ensuite shower drain;
h. Ensuite heated floor does not function;
i. Living room vent needs to be relocated;
j. Kitchen island not square to room (just needs to be moved slightly);
k. Floor repairs (chips, scratches, boards cut short by many doors, etc.);
l. Back doors and door to garage do not close properly;
m. Mismatched door hinges;
n. Damage on bottom of front closet door;
o. Large gaps between tiles and garage door;
p. Powder room completion (vanity, fixtures, etc.);
q. Move lights in basement ensuite (not aligned with vanity);
r. Drywall repair – hole in ceiling in front bedroom;
s. Supply room drywall completion;
t. Basement floor is not acceptable, foundation floor noticeably wavy as you walk on it. Floor pops as a result of this;
u. Water pools inside garage door as it rains;
v. Drywall completion (we’re fine if this waits till the end);
w. Garage door buttons should be located by back door (given we have keypad at the front);
x. Eavestroughs leak, bent in areas;
y. Back pillars – too close to wall, stone cuts into pillar, unevenly spaced; and
z. Exterior Paint – paint spilled on shingles over garage.
44While Scott never testified and thus that email is hearsay, he was writing as the designated spokesperson for his parents. That is the only list of deficiencies that the Fitzsimmons ever provided to IDH. At no time, even at trial, did either of the Fitzsimmons disavow that list. The evidence shows that Robinson treated Scott’s correspondence as representing the views and wishes of his parents.
45Robinson accepted the list of deficiencies in Scott’s email. He also testified that he considered them all to be minor in nature. With some exceptions described below, that seems to generally be the case, Robinson was always willing to remedy those items.
46On July 8, 2015 the Fitzsimmons obtained a professional inspection from Marco Ganassini of Frontline Inspections (“the Frontline report”). That report contained a list of 79 deficiencies. But the Fitzsimmons never gave a copy of the Frontline report to Robinson until this litigation began. That fact would be surprising if the Fitzsimmons intended to have IDH complete the remediation of the deficiencies. Nonetheless, in her affidavit of January 14, 2020, Noel commented, after reference to the Frontline report (without mentioning that she hadn’t provided it to IDH), “IDH did not sent any trades-workers to address the deficiencies.” Even so, as set out below, that statement is not true.
47In his supplementary affidavit of March 24, 2020, Robinson deposed that “[t]here is nothing particularly surprising or overwhelming in the Frontline report. Everything in it would have been addressed in the normal course, had IDH been permitted to do so.”
48Robinson later testified that he agreed with “many” of the deficiencies set out in the Frontline report. The Fitzsimmons ask me to infer that Robinson agreed with all of the deficiencies set out in the report. But the term that Robinson used was “many” and not “all”.
49Mr. Ganassini was not called to testify at this trial, making his report hearsay. There are other concerns with its use as evidence, let alone an expert report. As set out below, I find that the Frontline report is of very little evidentiary value.
The Fitzsimmons’ Refusal to Allow IDH to Resolve Deficiencies
50The Fitzsimmons have admitted that they decided within a short time after July 10, 2015 that they did not want IDH to finish the construction project and were no longer going to allow IDH or its sub-trades onto the Property. However, they never communicated this decision to IDH at any relevant time, either verbally or in writing. As a result, as set out below, Robinson wrote numerous times, fruitlessly seeking to schedule the return of tradesmen to the Property to resolve the deficiencies and ultimately, to be paid.
51Robinson went so far as to comply with the Fitzsimmons’ demand for every receipt for the build, even though the (fixed cost) Contract did not call for that production and the process was costly as well as time consuming. He did so unaware that his correspondence and requests were in vain.
52The Fitzsimmons originally asserted that they required this documentation for an HST rebate, but if so, that was not the sole reason for the request. They eventually admitted that they wanted the invoices for their lawyer. But even then, Robinson believed that the lawyer was assisting with the HST rebate. He suggested that the money could be better spent, presumably on a bookkeeper or accountant. Even though he knew and articulated that IDH was not required to supply those receipts, Robinson acted as if he had nothing to hide. In his email to the Fitzsimmons of July 29, 2015, he states that he compiled hundreds of thousands of dollars in receipts, believing that this was assisting them in obtaining the HST rebate.
53The Fitzsimmons did allow three subcontractors onto the Property after they commenced occupation: Tim Daigle, a cabinetmaker; Bill Gauthier of Eden Tile; and Dave Shwedyk of Advantage Electric. But only Mr. Daigle was allowed to complete his work.
54On July 29, 2015 Robinson emailed Noel, stating that IDH has “workers wishing to return to complete the work, but they will want to be paid/be assured that payment is coming”. The Fitzsimmons say that the clear implication of this email is that the workers would not attend if they did not pay more money to IDH. Noel presses that point at para. 43 of her affidavit of January 14, 2020, where she deposes:
In August 2015, IDH began demanding a payment of $150,000. IDH communicated to us that that the $150,000 payment would be required prior to the completion of the project and fixing the deficiencies[.] Given that the Dig-It Lien was still registered on our property among other issues, we were not prepared to provide IDH with payment in advance of work as we had previously done.
Four Problems with the Argument that IDH was Refusing to Complete its Work Unless Paid
55There are four problems with the argument that IDH was refusing to finish the job unless it was paid. First, IDH continued working even after the payments ended in April 2015. IDH completed enough work to allow the Fitzsimmons to take possession of the new home in late June 2015.
56Second, the evidence does not demonstrate that IDH refused to correct any deficiencies after the Fitzsimmons moved into their new home. To the contrary, the emails exchanged between the parties demonstrate that IDH continued to be more than willing to perform the work and send in the appropriate workers to do so. It was also willing to invest the time and money to produce the expense records that the Fitzsimmons had demanded, despite having no right to make that demand. Those points are made in the July 29, 2015 Robinson email to Noel, where he said:
During the past few weeks, little tweaks or meetings have taken place at your home, including Bill from Eden Tile to address a few things. During this time we have been compiling page after page after page of documents regarding … the expenses incurred…It wasn’t our arrangement but there is no issue in providing the documents… We are also anxious to get an aggressive plan in place to complete the touch ups, grading, sod, etc. What is your schedule for the next few days? Are you in town? Can we start booking to come in and complete the necessary work? We have a great list as supplied by the IDH Team and yourselves. … Can we schedule a meeting…a really nice meeting…to complete the home. … Can we please set a time for this week.
57Third, by this time, the Fitzsimmons had already decided not to allow IDH to complete its work. For reasons of their own, they chose to withhold that decision from IDH.
58Fourth, the parties admitted the following through an exchange of requests to admit:
At no time did IDH refuse, in writing, to continue construction work at the Property due to lack of payment by the Fitzsimmons.
As of July 29, 2015, IDH was willing and asking to continue construction work at the Property.
As of August 7, 2015, IDH was willing and asking to continue construction work at the Property.
As of August 27, 2015, IDH was willing and asking to continue construction work at the Property.
After the end of August 2015 the Fitzsimmons did not permit any further workers or trades or sub-trades on behalf of IDH to do any further work at the Property.
Fitzsimmons’ Refusal to Allow Sub-Contactors onto the Property
59Robinson wrote to Noel on August 7, 2015, trying to arrange the entry of Mr. Daigle, the cabinetmaker, into the Property, to complete his work. He stated that he understood that the Fitzsimmons were at their cottage. Robinson stated that Mr. Daigle was “anxious to instal [sic] and get the balance of payment…we actually advanced him $5,000 this week to assist him financially.” Noel responded that Robinson was correct in that she had told Mr. Daigle that the Fitzsimmons were not available until August 21. She dismissively added:
I would comment given the significance of the outstanding issues and work to be completed, the cabinet doors are really the least of our concern. For this reasons I would suggest that you proceed with payment to him out of the approx. $614,000 we have provided to date. Although we have issues with some of the other trades/overall job quality, we are happy with the cabinetry work completed by Tim. Marnie told us that if we had any issues with the kitchen that Tim said he would fix it., we have full trust in Tim.
60While Noel had not openly stated that the Fitzsimmons would be refusing to allow IDH to complete its work (with the exception of Daigle), her email appears to be clear about her refusal to pay anything further to IDH. Nonetheless, Robinson responded in a positive manner about completing the work on the Property. He optimistically responded later that day:
Glad you had the conversation with him.
With the 21st being available, does that mean that we can schedule the trades to work for your interior at approximately the same time?
We would like to map it out with you so that it has as little disruption as possible and so that you don’t have scores of workers on site at the same time.
If you are able to give this some consideration, including things you would like to list as your priorities, we will do our best to accommodate your wishes.
The more advance notice we can give people, the better chance we have of getting them on the dates that suit you best.
Testimony of two Sub-Contractors
61Mr. Gauthier, the tile installer, testified that he has been to many new homes. He attended at the Fitzsimmons’ home at their request because of a concern with a potential flaw in the ceramic tile he had installed. It turned out that their concern related to marks from the packaging, which Mr. Gauthier removed. Noel did not ask him to look at any other issue. Mr. Gauthier felt that there was nothing unusual about the Fitzsimmons’ home when he attended. It looked “lovely”.
62Dave Shwedyk of Advantage Electric also testified. He was a licenced electrician but now allows his company to hold the licence because of (unspecified) “union issues”. He was personally involved in the job at the Property. At the time of occupancy, the electrical work was about 95% done. He returned to the Property about a week after occupancy. There was barely anything outstanding at the time. He spoke of the need for paint and plates and switches as well as the odd fixture to install as well as getting “anything not working” to work. He described this as what an electrician would do on a last visit to a home.
63Mr. Shwedyk testified that he was not able to complete the electrical work on the Property because he was told by Robinson that the owners would not allow the work to be completed. He took it upon himself to speak to the Fitzsimmons as he had always gotten along with them. He told Noel how close to completion he was and that the Electrical Safety Association (“ESA”) could come in to inspect, after which “it would be done”. But Noel told him that she did not want anyone in her home, whether electrical, painters or anyone. Mr. Shwedyk called Noel again but she again refused to allow him to complete his work.
64Mr. Shwedyk subsequently “pulled” or removed the permit regarding the electrical work because he did not want a negative rating or “black mark” against his company for failing to complete the job. On August 4, 2015, the Fitzsimmons received a notice from the ESA regarding Working Without Electrical Inspection. That notice appears to have arisen from Mr. Shwedyk’s removal of his firm’s permit to conduct the electrical work on the Property. While the Fitzsimmons wish to point to that ESA notice as proof of IDH’s substandard work, Mr. Shwedyk’s evidence offers a more objective explanation.
IDH’s Further Attempts to Remediate Deficiencies
65From late July through to the end of August 2015, IDH continued to seek entrance to the Property in order to remediate any deficiencies. IDH asserts that the Fitzsimmons refused to allow them into the Property because they had no interest in either allowing it to complete its work or in paying it for that work. IDH points to the email exchanges between the parties to buttress its argument. The following is a summary of their exchanges between July 31 and August 27, 2015, six days after IDH placed a construction lien on the Property:
July 31, 2015 – Robinson to the Three Fitzsimmons (Noel, David and Scott): “Are you around this weekend or are we looking at early next week? Let us know.”
August 1, 2015 – David to Robinson: “We are at the cottage and will reach out later next week. Let us know, in the meantime, when the invoices are ready. Scott will be available to pick them up.”
August 5, 2015 - Robinson to the Three Fitzsimmons: “Attached please find the spreadsheet for the expenses incurred….We have copies of the invoices etc. in a file for your review and will have them dropped at the house tomorrow morning….We would like to make arrangements for additional funds…it has been nearly 4 months please. And, we still have touch ups etc to continue with. …”
August 6, 2015 – Robinson to the Three Fitzsimmons: “Matt and Dave exchanged the set of documents related to the expenses incurred/invoices today. We are in a position where we are now in need of funds and have commitments that need to met tomorrow. We are respectfully requesting further payment on your account…At this time a progress payment of $150,000 will be of the assistance required… Note: Matt also had a brief conversation with Dave regarding the best timing for handling the deficiencies and was directed to Noel for a timetable. Looking forward to scheduling this while the team and the contributors have availability in their schedules…”
August 6, 2015 – David to Robinson: “We have been waiting more than a couple of months for the package you sent over this morning. And as you stated, there is a lot of documents to reconcile back to the spreadsheet. We are going to need at least 10 days to complete the validation. I will contact you at that point to arrange a meeting and discuss next steps”
August 6, 2015 – Robinson to the Three Fitzsimmons: “…We have made a very, very reasonable request with respect to a partial payment that will allow for the ‘validation’ period that you have requested and also for reasonable holdbacks for work still to be completed. We are not in a position to wait for 10 more days and then arrange a meeting. It is not a financially viable option for us. … Makes me wonder why our contract financial arrangement at $829,000 and payments more than $200,000 less than that are being upheld for such an extended period.”
August 7, 2015 – Robinson to the Three Fitzsimmons: (email cited above) “Tim [Daigle, the cabinetmaker] is anxious to instal and get the balance of payment…we actually advanced him $5,000 this week to assist him financially”
August 13, 2015 – Noel to Robinson: “…I had a conversation with Tim and explained we are not available until the 21st… I suggest you proceed with payment to him out of the $614,000 we have provided to date…”
August 13, 2015 – Robinson to the Three Fitzsimmons: “With the 21st being available, does that mean we can schedule the trades to plan the work for your interior at the same time? We would like to map it out with you so that it has as little disruption as possible so that you don’t have scores of workers on site at the same time. If you are able to give this some consideration, including things you would like to list as your priorities, we will do our best to accommodate your wishes.”
August 13, 2015 – Noel to Robinson: “I realized I stated the wrong date, it is a week from this coming Tuesday, which is actually August 25th. We will get back to you regarding the best time to schedule trades”.
August 27, 2015 – Robinson to the Three Fitzsimmons: “With your return from holiday, we would like to schedule the balance of trades to attend your residence and continue with the interior and exterior work required to complete the project.”
66The Fitzsimmons never followed through with Noel’s August 13, 2015 email promising to get back to Robinson to schedule the return of the trades to the Property. They also never responded to his August 27, 2015 email, making a similar request. In fact, they never allowed IDH to return to the Property. IDH filed its lien on August 21, 2015 but expressed its willingness to complete the project on August 27, 2015.
67IDH argues that the Fitzsimmons deliberately misled it to believe that their issues would be resolved in order to run out the clock on its lien claim period. I will have more to say about that assertion below.
Analysis of Which Party Breached or Repudiated the Contract
68IDH argues that the issue of breach is a simple one. There was a written contract between the parties. Its obligation was to construct a new custom home on the Property. It did so. The Fitzsimmons were required to pay the full Contract amount. They failed to do so. The Contract did not set a completion or occupancy date. Occupancy occurred just over six months after the Contract was signed. IDH remained committed to completing its work when the Fitzsimmons effectively locked them out of the Property, preventing them from completing the work and resolving the deficiencies.
69The Fitzsimmons say that it was IDH which breached the contract. In their written submissions, they refer to:
The “bait and switch” of negotiations that let the Contract price move upward from their initial budget of about $600,000 to the actual Contract price. They state that they felt that they had no choice but to sign the Contract.
The failure to register the Property with Tarion.
IDH’s misrepresentation of the construction schedule – which “strongly implied” a completion date of March 4, 2015, but which was behind schedule on the day that the Contract was signed.
IDH’s misrepresentation of the payment schedule and continual pressing for more money that was not due under the Contract.
“Significant deficiencies” in the quality of work delivered under the Contract. The Fitzsimmons refer to Noel’s testimony, their list of deficiencies in Scott’s email to Robinson of July 3, 2015, the Frontline report’s list of deficiencies, and a number of photographs of the state of the Property after occupation. They state that IDH understates the work to be done following occupancy, in particular, the following “significant problems”:
i. heated floor in master bath that didn’t work,
ii. a leaking shower,
iii. plumbing leak in basement ceiling,
iv. fireplace mantel installed over heat vents,
v. improperly secured exterior stonework,
vi. improperly placed porch pillars,
vii. trim workmanship issues (door jams, trim, moldings) that would need to be replaced as too short, damage through-out the house, etc.
- IDH’s unilateral repudiation of the Contract or in the alternative, the parties’ mutual repudiation.
The Contract is Binding
70The Fitzsimmons complain about the lengthy process of negotiating the Contract. Their original budget was in the neighbourhood of $600,000 but ultimately they agreed to pay far more than that amount. Their counsel uses the term “bait and switch” in his written submission. I frankly do not see the application of that pejorative description to IDH’s precontractual conduct. Equally importantly, the Fitzsimmons never pleaded any allegations regarding misrepresentation or oral terms of the Contract in their statement of defence and counterclaim. The fact is that they ultimately agreed to pay a far higher price for their home than they had originally planned, in return for more features and amenities than those in their original plans. There is no evidence of any impropriety in IDH’s precontractual behaviour. The Contract is binding on the parties, whatever regret the Fitzsimmons may have about its price.
The Tarion Registration
71I agree with the Fitzsimmons that Robinson and IDH were not candid with them about the Tarion warranty and IDH’s non-registration. But Robinson explained the reason that it was not registered at the time of construction. It had previously relied on Collela and Rubycrest’s Tarion registration. But IDH ultimately became registered with Tarion and so too was the Property. The Fitzsimmons were covered by the warranty, effective the time that they moved into the Property. They lost nothing from IDH’s registration delay.
72In 2016, the Fitzsimmons attempted to utilize the Tarion warranty, but failed to follow through by following Tarion’s procedures. According to Tarion’s letter to them of July 12, 2016, they would have been required to allow “your builder’s representatives and subcontractors access to your home to complete necessary repair work…” Robinson testified that even at the time of receipt of the Tarion letter, IDH remained willing to go into the Property to fix any deficiencies. But Noel testified, somewhat evasively, that the Fitzsimmons refused to move forward with their Tarion claim because she was told by a Tarion representative that she would have to both pay IDH what was owed to it and allow it to complete the work if it wanted to utilize the warranty. Noel also claimed that another reason for failing to follow through with the Tarion warranty was that the parties were in litigation. It is not clear why that would have prevented the utilization of the Tarion warranty process.
73While the Tarion registration issue was a legitimate concern to the Fitzsimmons, it was rectified with no loss of warranty. It was the refusal of the Fitzsimmons to comply with Tarion’s rules, rather than IDH’s registration delay, that led to the loss of Tarion warranty coverage. IDH’s conduct regarding the Tarion warranty was not a ground to repudiate the Contract.
IDH’s Alleged Misrepresentations Regarding Schedule and Payments
74While the Fitzsimmons argued about IDH’s alleged misrepresentations regarding the Contract’s completion and payment schedules, it did not plead the issue of misrepresentation. Further, there was no clear term in the Contract stating that the dates in the construction schedule were firm and fixed. The Contract described them as “milestones”, not “deadlines”. The Contract did not state that time is of the essence or that any delay in the construction schedule meant that the Contract was at an end, or that all further payments were suspended. Further, while the Fitzsimmons did express their concern about the timing of completion of the construction, they never stated that they treated the Contract as having been breached by IDH before they obtained occupancy. They never stated that they were walking away from the Contract because of the delays, nor did they offer their own deadline for completion.
75Furthermore, IDH offered explanations for many of the delays, particularly the winter weather following the signing of the Contract in December 2014. By the time spring had arrived, construction moved ahead apace. Without expert evidence, I cannot say that the speed of the construction of the new, custom home was outside of industry standards. By the time that the Fitzsimmons were able to occupy their new home, June 29, 2015, the majority of the Contract’s milestones had been met.
Allegation of Significant Deficiencies
76Turing to the Fitzsimmons allegations of significant deficiencies upon occupation, Robinson and IDH admit to the deficiencies cited by Scott in his email of July 3, 2015. Robinson does question whether those deficiencies were significant and why IDH was not allowed to remediate them.
77The two issues relevant to the determination of whether the deficiencies were sufficient to entitle the Fitzsimmons to repudiate the Contract or treat it as repudiated or breached by IDH are:
whether IDH breached either the standard of the Contract or industry standards, and
whether the Fitzsimmons were required to allow IDH to complete the job and fix any deficiencies.
No Independent Evidence that IDH Breached Industry Standards
78In C.S. Bachly Builders Ltd. v. Lajlo, 2008 57444 (Ont. S.C.), at para. 84, Hill J. set out the principle that, absent fundamental breach, “‘[m]ere bad or defective work will not, in general, entitle an owner to terminate a contract’” (citations omitted).
79Here, the Contract sets out the standard of care required of IDH in its work for the Fitzsimmons. It requires IDH to work diligently and in a “good, workmanlike manner”. That is not a standard of perfection.
80The onus was on the Fitzsimmons, as the parties alleging that IDH breached or repudiated the Contract with substandard work, to prove that claim. They rely on Noel’s evidence, a number of photographs of the state of the home around the time of occupation and Robinson’s admission as to the accuracy of Scott’s list of deficiencies.
81During the trial, the Fitzsimmons also attempted to rely on the Frontline report as confirmation of their allegations against IDH. But its author never testified, making it hearsay. As a purported expert report, it is clearly not a business record. No evidence was provided that it meets the criteria of ss. 35(2) and (3) of the Evidence Act, R.S.O. 1990, c. E.23, as amended. The report’s author, Mr. Ganassini, never provided an acknowledgment of expert’s duty and the report does not meet the criteria of rr. 53.03(2.1)(3)–(7) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. In the body of the report, its limited scope is set out when Mr. Ganassini writes that its use “for legal purposes and actions is prohibited without the express consent of the author of this report”.
82The Fitzsimmons further argued for the admissibility of the Frontline report by asserting that Robinson stated in his discovery that he agreed with many of the items in the Frontline report. Robinson undertook to advise which elements of the report he did not agree with but failed to comply with the undertaking. The Fitzsimmons took no further steps regarding the undertaking under r. 31.07 or r. 34.15.
83None of the above makes the Frontline report admissible as evidence, let alone as an expert report. The Frontline report is not evidence of anything except the fact that it contains a list, longer than the list created by Scott on the Fitzsimmons’ behalf, of what they claim to be deficiencies. To the extent that Noel testified as to her reliance on the report, it is admissible only as such. But it is not admissible for the truth of the facts or opinions asserted in the report.
84As stated above, the Fitzsimmons decided not to give the Frontline report to Robinson at a time when he believed that he would be allowed to complete the building project. If they wanted the deficiencies corrected, surely they would have wanted IDH to have the report so that it could work with it, along with Scott’s list and its own list. The only reasonable inference from the failure to immediately provide the Frontline report to Robinson is that the Fitzsimmons had no interest in allowing IDH to fix the deficiencies, or in paying it any further to complete the job.
85The Fitzsimmons complain that Robinson lacks expertise in building construction in that he was merely an overseer of their construction project. They conceded that Mr. Collela had that expertise, but he left IDH before the construction on the Property began. Nonetheless, they had even less experience in these matters. They have provided no evidence of any familiarity with building trades. Noel spoke of learning of building standards for homes similar to hers from speaking to neighbours with similar homes. Robinson clearly had more experience in building than them.
86IDH also called two experienced contractors, who worked on the Property, to testify. While they were not qualified as experts, they clearly had a great deal of experience in their trades. They spoke positively about their observations of the condition of the Property around the time of occupation by the Fitzsimmons.
87The Fitzsimmons rely on a number of photographs showing the condition of the Property around the time that they first occupied it. Noel narrated those photos in her testimony, explaining why the deficiencies that they illustrated concerned her and David. But Robinson spoke of the deficiencies as items that are, in his experience, in the normal course. The Fitzsimmons called no contradictory evidence, whether of Mr. Ganassini or the contractor that they retained to complete the work on the Property. It is open to me to draw an adverse inference from the absence of any such evidence: that it would not have assisted the Fitzsimmons. I draw that inference. I note as well that the Fitzsimmons did not avail themselves of the opportunity to obtain the independent Tarion inspection, which would have been very telling if it confirmed their allegations.
88Most of the items seen in the photos appear to a nontrained eye to be touch ups and minor repairs/completions. Others though appear to be more significant, such as a heated floor that was not working, a leaking shower, the placement of vents, as well as issues with pillars and trim. Further, it appears that at least as a primer, an inferior grade of paint was used than that chosen by the Fitzsimmons. But it is not manifest, based on the evidence of Noel and her photographs, and in the absence of expert evidence, that IDH was unwilling or incapable of remediating those concerns if allowed to do so. Those deficiencies do not amount to a fundamental breach of the Contract or go to its root. I add although it is not determinative, that the Fitzsimmons did not plead fundamental breach in their statement of defence. I will have more to say about the Fitzsimmons’ refusal to allow IDH to return to the Property below.
Alleged Repudiation of the Contract
89In their written arguments, the Fitzsimmons assert that through its delays, improper demands for payment and incompetence, IDH repudiated the Contract. In the alternative, they argue that their relationship with IDH irretrievably broke down, leading to mutual repudiation. I reject those arguments.
90The Fitzsimmons rely on the authority of Pelliccione v. John F. Hughes Contracting and Development Company (2005), 2005 34822 (ON SC), 47 C.L.R. (3d) 104 (Ont. S.C.), where each party accused the other of repudiating their construction contract. The plaintiffs refused to pay the holdback and extras while the defendant refused to continue its work to completion without payment. Ferrier J. decided that each party had repudiated their construction contract, at least in part.
91Ferrier J. set out the applicable legal principles regarding the repudiation of a building contract, citing I. Goldsmith and T. Heintzman, Goldsmith on Canadian Building Contracts, 4th ed. (Scarborough, ON: Carswell, 1988), as follows:
Repudiation is a unilateral act of one party to a contract which, in essence, indicates that he no longer regards himself as being bound by the contract. A repudiation may be express, i.e., by a party announcing his intention no longer to be bound by the contract, or implied, i.e., by a party acting in such a manner as to indicate such an intention, e.g., by committing a breach which goes to the root of the contract. (pp.1-63, 64)
... a contractor is under an obligation equivalent to that of the owner not to delay the work beyond any express period for completion and, in the absence of such a provision, to carry out the work with reasonable expedition. (p.5-12)
An owner is entitled to have his work completed within the time specified in the contract, or within a reasonable time if no specific time is provided for.... A sufficient delay will enable the owner to terminate the contract. (p.5-16)
...if such delay amounts to repudiation of the contract, the owner may terminate the contract for inexcusable non-performance and have the work finished by others. (p.5-16)
But even when delay has been caused by the owner, the contractor must still complete within a reasonable time.... (p.5-17)
An owner is entitled to terminate a contract if it is clear that either before the commencement of the work, or during the course of it, the contractor is not in substance able or willing to perform the work.
If it is clear that a contractor is unable to complete a contract, and in substance repudiates it, an owner must accept the repudiation and arrange to have the work completed by another contractor.... (p.6-3)
92The Fitzsimmons also rely on the decision of the Ontario Court of Appeal in 1394918 Ontario Ltd. v. 1310210 Ontario Inc. (2002), 2002 19996 (ON CA), 57 O.R. (3d) 607 (C.A.), which holds at paras. 22-24 that in the event of mutual repudiation, both parties are freed from their future contractual obligations. They further rely on Gokdenz Construction Ltd. v. Dalakis, 2011 ONSC 7135, at para. 32, where Master Albert found that “[t]here has been ample case law dealing with situations where a contractor demands payment and refuses to proceed unless paid.... [T]he court found that such conduct amounts to repudiation of the contract by the contractor.” She went on to state, at paras. 33-34, that an unwarranted demand for payment accompanied by a threat to stop complying with the party’s contractual obligations amounts to repudiation.
93None of those authorities applies to the facts of this case. While IDH continuously requested payment of amounts called for under the Contract, whether prematurely or not, it did not demand that payment or threaten to breach its contractual obligations if its demand were not met. It did not act as if its obligations to the Fitzsimmons were over. From its point of view, as demonstrated in its voluminous correspondence, IDH’s relationship with the Fitzsimmons was not irretrievably broken. In fact, there was some justice in its request to be paid at least part of the draws to which it was entitled under the Contract, particularly by the time that the Fitzsimmons obtained occupancy.
94In Rocksolid v. Bertolissi, 2013 ONSC 7343, a case that both counsel cite in their written submissions, Smith J. found that a homeowner’s failure to pay a contractor’s necessary expenses and refusal to allow it to complete its work amounted to a repudiation of their contract (at paras. 73, 75 and 77).
95As the Fitzsimmons admitted, even after August 21, 2015, the day that IDH registered its lien, it “remained willing and asking to continue construction work at the Property”. Based on that admission, the correspondence of Robinson cited above and in the absence of evidence to the contrary, I find that IDH never repudiated the Contract, even when it registered its lien.
96For the same reasons, I reject the argument offered by the Fitzsimmons’ counsel in his written submissions that if it they were the ones who repudiated the contract by failing to pay IDH as required or failing to allow them to complete further work, IDH accepted that repudiation by placing the lien “and essentially abandoning the job”. That contention is simply not supported by the evidence and admissions cited above.
Factual and Credibility Findings
97While credibility is not the central issue in this case, it is relevant to my considerations. I found that Robinson was generally credible and sincere in his expressions of his desire that IDH complete the work in the contract. I do not find that the Fitzsimmons were always truthful with Robinson.
98The evidence cited above demonstrates that IDH was consistent in its desire to meet its end of the Contract. At points it went above its obligations under the Contract to keep the Fitzsimmons satisfied with its contractual performance. In particular:
It replaced the roof of the Property in January 2015 when the Fitzsimmons were unhappy about the leaks and IDH’s roofer’s response to these leaks. I see the willingness to engage with the Fitzsimmons and pay their roofer to replace its own roofer’s work soon after the original roof was applied to be evidence of IDH’s good faith in meeting its obligations under the Contract.
IDH had no contractual obligation to produce its receipts to the Fitzsimmons. Recall that the Contract was a fixed-price one. Yet Robinson willingly accepted the demand, at some financial and temporal cost, even when the Fitzsimmons’ lawyer was brought into the picture. Robinson acted as one with nothing to hide. It cannot be ignored that despite the production of hundreds of thousands of dollars of receipts, no evidence was called as to the impropriety of those receipts.
IDH never threatened to walk off the job, even when the Fitzsimmons made it increasingly clear that they were not prepared to pay any further for the work for which they had contracted. Even when Noel irreverently suggested that IDH simply pay Mr. Daigle out of the money that it had already received (which was well short of the contractual amount), he did not rise to the bait. He continued to be willing to comply with IDH’s contractual obligations.
IDH continued to be willing to fix any deficiencies long after the Fitzsimmons occupied the Property. Robinson openly accepted Scott’s list and promised to work on it.
Robinson’s correspondence in July and August 2015 reveals someone who is almost begging the Fitzsimmons to allow him to schedule his contractors to complete the job and meet his contractual obligations.
99It is true that Robinson was not straightforward with the Fitzsimmons about the Tarion registry issue. But his optimism that he would get the registration done in time to cover the home turned out to be well-placed.
100On the other hand, there were many occasions where the Fitzsimmons, and Noel in particular, were not candid in their dealings with Robinson. I refer to the following:
The Fitzsimmons’ references to IDH’s alleged “bait and switch”, the ultimate contractual price being higher than their original estimate, and to comparable neighbouring properties, offers confirmation for IDH’s theory of buyer’s remorse. The Fitzsimmons felt that they had overpaid for what they received. The point was made at the end of Noel’s cross-examination, when she testified that when she signed the Contract, she felt that she had been dragged into an overpriced house. It is reasonable to infer that that feeling motivated the Fitzsimmons’ subsequent actions, including their increasing lack of candour with Robinson.
In light of what is now known, and in light of the involvement of Fitzsimmons’ lawyer at the time, I do not accept that their demand for receipts was solely motivated by an HST rebate. The demand started with a request to be assured that tradespersons were paid. It then extended to the HST rebate. It then expanded even further to the request that all receipts be sent to their counsel. The Fitzsimmons were building a case against IDH while determining that they would not allow it to complete its work. However, as stated above, nothing in those receipts has been brought to my attention that indicates any impropriety by IDH.
Despite that fact, Noel misleadingly led Robinson on with the notion that she and David would allow IDH to resolve the Property’s deficiencies. Yet she kept putting Robinson off with a series of excuses. She did this when she and David had no intention of allowing IDH to perform any further work on the Property. They even withheld the Frontline report from Robinson, something that they would never do if they truly wanted IDH to repair all of the matters cited in the list. The Fitzsimmons never explained their duplicity with Robinson in that regard. The only reasonable explanation, which Noel alluded to but could not admit in cross-examination, was that the Fitzsimmons were attempting to “run out the clock” on the timing of IDH’s lien claim. In other words, they were attempting to give IDH a false sense of security so that it would lose the ability to register a lien against the Property.
The Fitzsimmons had the opportunity to provide the court with independent evidence regarding their claims of poor workmanship, including a Tarion report, but did not do so.
Conclusions Regarding Repudiation and Breach of Contract
101In conclusion regarding repudiation and breach of contract, I find that it was the Fitzsimmons who repudiated and/or breached the Contract. They did so by failing to allow IDH to repair any deficiencies in its work at the Property and refusing to make any further payments to IDH after April 27, 2015. The exact amount which they owe to IDH will have to be determined in a damages hearing.
102For its part, IDH neither breached nor repudiated the Contract nor did it accept the Fitzsimmons’ repudiation of it.
Issue No 2: If IDH breached or repudiated the Contract, did the Fitzsimmons fail to mitigate their damages by refusing to allow IDH to remediate any deficiencies?
103Inasmuch as I did not find that IDH either breached or repudiated the Contract, this issue of the Fitzsimmons’ mitigation is moot. However, in the event that I am wrong, and IDH breached or repudiated the Contract or accepted the repudiation of the Fitzsimmons, I add the following.
104The law holds that, when considering the issue of mitigation in a construction context, absent fundamental breach, a homeowner is required to give the builder the opportunity to attend at the home to repair deficiencies before claiming the cost of correcting those deficiencies. As Smith J. stated at para. 92(b) of Rocksolid:
if the owner fails to provide the contractor with a reasonable opportunity to correct the deficiencies in its work, which do not constitute a fundamental breach of the contract and where there is no urgency, the owner is not entitled to claim damages based on his or her cost to have the deficiencies repaired by a third party contractor.
See also paras. 99 and 118.
105This court arrived at a similar finding in DiBella Construction Ltd. v. Cloud, 2015 ONSC 7544. There, McIsaac J., citing Rocksolid, wrote the following at para. 7:
Although I have found in favour of the plaintiff on the issue of liability, I make the following comments in relation to the damages alleged to have been suffered by the defendant. Much of the counterclaim related to late-breaking alleged deficiencies as to the quality and completeness of the work undertaken by the plaintiff. However, the plaintiff was ordered off the job site and never given an opportunity to rectify any of these deficiencies on its own. In my view, this circumstance disentitles the defendant from any compensation for the alleged deficiencies because they were of a relatively minor nature and did not constitute a fundamental breach of the arrangement between the parties. [Citations omitted.]
106The same principle is repeated by Master Albert in Beta Construction Inc. v. Chiu, 2015 ONSC 5288, at para. 86, where she wrote:
Before an owner is entitled to damages for deficient work, the owner must mitigate by informing the contractor of the complaint and allowing the contractor an opportunity to repair the item, call in the supplier on warranty items and rectify or otherwise complete the work that is the subject of the complaint.
Conclusion and Order
107In conclusion, I find that the Fitzsimmons repudiated the Contract and are liable to IDH for its damages arising from the repudiation. The Fitzsimmons’ counterclaim is dismissed.
108If the parties are unable to agree on the amount of damages owing to IDH, they shall schedule a damages hearing before me, which will likely have to occur during a blitz trial sitting. If they wish, they may arrange a further conference before another judge to assist with resolution of that issue. They may also arrange a Zoom conference with me to deal with any details of the damages hearing.
109Costs of this portion of the trial are reserved to the conclusion of the damages hearing.
“Marvin Kurz J.”
Electronic signature of Justice Marvin Kurz
Date: July 23, 2021