COURT FILE NO.: CR-19-20
DATE: 2021-09-20
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
MIDDLE LAKE ENTERPRISES INC.
Ms. C. Siran, for the Crown
Plaintiff
- and -
SHERRI-LYNN NYBERG and OLIVE NYBERG
Mr. James Benson, for the Defendant
Defendant
HEARD: Feb. 8, 9, Mar. 9, 11, 19, 2021 Via Zoom
Madam Justice T. Nieckarz
REASONS FOR JUDGMENT
OVERVIEW:
[1] This case is a prime example of the disputes commonly seen in this court arising between contractors and homeowners when the terms of a contract are not set out clearly and in writing.
[2] The Plaintiff was hired by the Defendants to perform work on Sherri-Lynn Nyberg's (Sherri-Lynn's) new home build. The Plaintiff invoiced Sherri-Lynn the total amount of $260,596.45. Sherri-Lynn has a balance owing of $36,010.61.
[3] The Plaintiff claims payment of this amount, less the sum of $1,022.34, identified at trial as an incorrect or double charge, for a total of $34,988.27. The Plaintiff also seeks a declaration that it is entitled to a lien under the Construction Act, R.S.O. 1990, c. C.30, as amended, and an order permitting enforcement of the lien.
[4] The Defendants deny there is any amount owing to the Plaintiff. The Defendants have counterclaimed for set-off on account of the following:
a. the sum of $22,275 as overpayment for labour charges for Justin Longe;
b. the sum of $8,676.04 representing improper charges for a 15% mark-up on subcontractor invoices;
c. an amount equal to the improper charges for a 15% mark-up on materials invoices; and
d. damages sufficient to permit the repair of deficient work performed with respect to drywall, siding, and an improperly installed dormer.
THE FACTS:
[5] David Longe ("David") is the President and owner of the Plaintiff corporation. He has operated a construction company since approximately 2014. He has been involved in building numerous homes and larger commercial construction projects.
[6] Justin Longe ("Justin") is David's son, and a red seal carpenter employed by the Plaintiff. Justin was actively involved in working on the Nyberg home project.
[7] The Defendants, Sherri-Lynn and Olive Nyberg ("Olive") were the registered owners of a property located in the City of Kenora. While Olive is a co-owner of the property, the home constructed on it belongs to Sherri-Lynn and Olive was not involved in the construction project at issue. Olive was not present at, and, did not testify at trial.
[8] Myron Nyberg ("Myron") is Sherri-Lynn's father and Olive's husband. Myron assisted Sherri-Lynn in the negotiation of the terms of the agreement between the parties, was frequently present during construction, instructed the Plaintiff from time to time, and has witnessed the alleged deficiencies.
[9] Sherri-Lynn began to construct a home of between 2200-2400 sq. ft. in the Fall of 2017. Her original contractor was unable to complete the work, and Sherri-Lynn also noticed some difficulties associated with the work completed. A dispute then arose with this contractor over accounts.
[10] In February 2018, Sherri-Lynn, Myron, David and Justin all met at the property to discuss the construction project. Their evidence differs as to the details of the discussion. The Nybergs did agree to hire the Plaintiff to correct some work done by their previous contractor and complete certain limited scope work. There is no dispute as to the scope of work.
[11] The Plaintiff began work on or about February 5, 2018. David and Justin both worked on the project initially, with David leaving Justin to supervise and work on the project in the Spring when he began work on a different project. The Plaintiff also utilized other general labourers, some of which were family members. In addition, the Plaintiff hired subcontractors as required.
[12] As the work progressed the Plaintiff sent Sherri-Lynn regular invoices for work and materials supplied as of the date of those invoices. Sherri-Lynn promptly paid these invoices and raised no issue or concern with them. The invoices did not specify the rate for labour for each individual. There was a general hourly rate stated of $60. The invoices also did not show a 15% mark-up applied to material and subcontractor charges. They contained only a general description of the work performed during the invoice period. Lump sum charges for each category of regular labour, general labour, subcontractors, and materials were shown.
[13] While Sherri-Lynn's work commitments did not allow her to be on-site often, Myron visited the site at least two to three times a week and spoke with Justin or other workers. Except with respect to the siding, as outlined later in this decision, no significant concerns were raised by the Nybergs about the work performed during the project.
[14] On November 5, 2018 the Plaintiff sent a further invoice in the amount of $26,298.29. The invoice was for material charges, subcontractor fees for drywall and labour.
[15] On November 8th, 2018 the Plaintiff sent email correspondence to Sherri-Lynn requesting direction as to the aspects of the home build she was looking to prioritize in preparation for occupancy. Sherri-Lynn indicated a few days later she would advise.
[16] On or about November 23, 2018 the Plaintiff left the site, citing the lack of direction to move forward. Payment for the November 5th invoice was also uncharacteristically late, and a dispute arose with respect to a breakdown of invoices.
[17] Sherri-Lynn's belief is that the Plaintiff ceased work because in or about the end of October/early November she requested a breakdown of all invoices sent, including back-up documentation for material and subcontractor charges. Sherri-Lynn's evidence was that this information was required by her bank as a condition of advancing further funds to pay for the home build.
[18] Initially, the Plaintiff refused to provide the invoice breakdown. It was the evidence of David and Susan Evenden (bookkeeper) that it was not their practice to disclose this information, particularly given the need to protect subcontractor privacy as the subcontractors often give the contractors reduced rates. Ultimately, after involvement of counsel, this information was provided.
[19] On November 25, 2018 a further invoice totalling $8,062.52 was sent to Sherri-Lynn for work performed to November 16, 2018. This invoice has also remained unpaid.
[20] During the litigation, the Plaintiff discovered that it had failed to send to the Defendants an invoice dated April 15, 2018 in the amount of $1,649.80. The November 2018 invoices and the April 2018 invoices remain outstanding and form the basis for the Plaintiff's claim.
[21] The Nybergs allege that once the payment dispute arose, they became concerned and began looking at the work that had been done, more carefully. It is only then that they began to find deficiencies.
[22] Sherri-Lynn has continued with some electrical work on the home, but otherwise has not yet repaired the items alleged as deficiencies or completed the home to a point that she can occupy it.
ISSUES:
[23] The issues raised by the parties, for determination, are:
a. What was the contract between the Plaintiff and Sherri-Lynn as established at the February 2018 meeting?
i. What rate was payable for Justin's work?
ii. How were subcontractor fees to be charged?
iii. How were materials to be billed?
b. If it is determined that the subcontractor fees and mark-up, and material mark-up did not form part of the original contract, has the Plaintiff proved entitlement to the amount claimed on a quantum meruit basis?
c. What amount should be allowed to the Defendants for the alleged deficient work and other damages claimed?
ANALYSIS:
Issue #1 – What Was the Contract?
[24] The parties agree that the Plaintiff and Sherri-Lynn entered into an oral contract for the construction of her home. They agree as to the scope of work that was to be performed pursuant to the terms of the oral agreement between them. It is also agreed that there was no fixed price contract. The discussion at their initial meeting surrounded billing on a "time and materials" basis. The dispute arises as to what "time and materials" encompasses.
What Rate Was Payable for Justin?
[25] The evidence of David and Justin is that the Nybergs were advised at the meeting in February 2018 that $60 per hour was the rate for their labour, while $40 per hour was the rate for general labourers who worked on the project. David and Justin maintain that it was discussed with the Nybergs that once David had to leave the project in the Spring, Justin would be assisted by general labourers.
[26] Sherri-Lynn and Myron's evidence is that the agreement was $60 per hour for David and $40 per hour for Justin, for a combined hourly rate of $100 per hour. Their evidence is that at no time was it discussed that anyone other than David and Justin would be working on the project. Sherri-Lynn alleges that she was unaware that David was leaving the project in the Spring, and that when she became aware, she told David that she did not want anyone else on her property.
[27] I find that the Plaintiff has satisfied the onus of proving that the terms of the oral contract required payment at a rate of $60 per hour for David and Justin, with the lower rate of $40 being charged only for general labourers.
[28] Overall, I found David and Justin's evidence on all points, including labour rates, to be forthright and credible. They were to the point, not evasive on difficult issues, and they were candid in acknowledging facts that had the potential to be problematic to their case.
[29] David and Justin's evidence also makes sense in the context of the facts of this case. Justin testified that he gets paid $35 per hour by the Plaintiff. In addition to this, there are his W.S.I.B. and other costs associated with his employment. It would, therefore, not make sense for them to quote a rate for him of only $40 per hour. The Plaintiff would lose money at this rate. His rate is $60 per hour, and this is what was quoted. I accept this and find it as a fact.
[30] The invoices themselves have only one rate of $60 per hour reflected on them. They contain only lump sum amounts for "labour" and "general labour", without any breakdown of which employee is being charged under which category or their rates. The Nybergs were aware that David had left the project in the Spring and was only there occasionally, yet no question was raised as to why the invoices still reflected a $60 per hour rate, and why a large portion of the time was billed under the higher "labour" as opposed to lower rate "general labour" category. If Justin was to be billed at the lower general labour rate of $40 per hour, it would only stand to reason that once David left the project, the majority of time billed on the invoices would be under the general labour category.
[31] I do not accept that David told Sherri-Lynn and Myron it would only be him and Justin working on that project and that no other labourers were discussed that would have fell into the "general labour" category other than Justin. I prefer the evidence of David that Sherri-Lynn and Myron were told he was leaving the project and others would assist Justin. On the facts of this case, their evidence makes sense.
[32] The Plaintiff has proved the rates charged on account of the "time" component of the contract. The Defendants' claim for damages in the amount of $22,275 on account of an overcharge of Justin's time is dismissed.
How Were Subcontractor Fees to be Charged?
[33] The evidence of all parties is that there were no discussions at the original meeting in February 2018 or any time thereafter, as to how the Nybergs would be charged for subcontractors. This being the case, I do not find that the original contract contemplated payment for subcontractors. The fees charged by subcontractors to the Plaintiff, along with the 15% mark-up must be considered under the quantum meruit claim.
How Were Materials to be Billed?
[34] The evidence of the Plaintiff is that the Nybergs were to be charged for "time and materials". David and Justin were candid in acknowledging that there was no discussion at all, at any point, about a 15% mark-up for materials. I find it was not an express term of the contract.
[35] All materials for the project were ordered by the Plaintiff, primarily from two stores, Home Hardware and McMunn & Yates. Invoices sent to Sherri-Lynn do not specify which store materials came from.
[36] The Defendants have their own account at McMunn & Yates that gives them contractor pricing as opposed to retail pricing. This was an account they established when their first contractor began the project. Presumably, although the evidence was not clear, the Plaintiff receives the same pricing.
[37] Sherri-Lynn and Myron insist that they told David and Justin at the meeting in February 2018, and reminded them periodically thereafter, they were to use the Nyberg account for materials that needed to be ordered from McMunn & Yates. Myron's evidence is that this was so they could save money. He did not clarify how he felt this saved them money over the rates a contractor would also secure.
[38] David testified that the Nyberg's never told him to use their account at McMunn & Yates at the February meeting. All that they discussed was that they would be billed for "time and materials". He did become aware at some point that they had an account at McMunn & Yates, but he denies they told him he should purchase on their account. He did recall using the Nyberg account occasionally when the salesperson indicated they would simply charge it directly to the Nybergs.
[39] Justin testified that the Nyberg's told them they had an account at McMunn & Yates that was available for use if they wished, but there was no direction to do so. His preference was to use their own account to control the flow of materials for the project to avoid delays. Justin's evidence was also that the ability to use the Defendant's McMunn & Yates account if they wished was not communicated to them until some time after the project started. Sherri-Lynn could not recall when she gave McMunn & Yates permission to allow the Plaintiff to charge on her account, although she believed it was around the time of the commencement of the project.
[40] With respect to the mark-up, David's evidence was that had there not been a mark-up charged on materials, additional time would have been charged for labour to ensure the Plaintiff was properly compensated for the time spent in relation to materials. There was no evidence as to what this additional charge would have been.
[41] Counsel did not provide the exact figure, but my calculations based on the documents filed suggest that the 15% mark-up for materials totals approximately $3,000.
[42] The Plaintiff argues that there was a clear agreement for the Defendant to pay for materials and despite the lack of an express agreement for payment of the 15% mark-up, this may be implied as a term of the contract for two reasons:
a. It is standard industry practice to charge an extra 15% over and above the material costs to compensate the contractor for their time in ordering the materials and otherwise dealing with the suppliers. If there were no 15% mark-up, there would be additional charges invoiced to the homeowner for time.
b. The Nybergs' actions demonstrated that they were aware there was a mark-up even though it was not specifically communicated to them or reflected on the invoices.
[43] The Defendants argue that there was no agreement with respect to materials. They asked the Plaintiff on a number of occasions throughout the project to use their account at McMunn & Yates. Ultimately, they did not insist on it, and did not see it as a cause for concern that the Plaintiff was using their own account, as Sherri-Lynn assumed they also had preferred contractor pricing. Sherri-Lynn was content to pay for materials at contractor pricing, but she would not have been content to do so had she known about the 15% mark-up.
[44] The Defendants argue that the mark-up was neither an express nor implied term of the contract. As laypersons, they are not familiar with construction industry standards. The 15% mark-up was also not reflected on the invoices they received, so they were never alerted to the fact that they were being charged a mark-up until after they engaged counsel and finally received a complete breakdown of all items charged.
[45] I find that the Plaintiff has proved that Sherri-Lynn agreed to pay for materials, despite her evidence that she wanted her account at McMunn & Yates used for material charges. I believe the evidence of David and Justin when they state that it was communicated clearly to the Nybergs that the contract was for "time and materials". Sherri-Lynn's own actions in paying all invoices between February and the end of October 2018 demonstrate her agreement to pay for materials. Had she only agreed to pay for materials charged directly to her through McMunn & Yates, it makes no sense to me that she would have paid numerous invoices containing materials charges without complaint. Myron's evidence is that he saw deliveries from Home Hardware and so presumably the Nybergs were also aware that there were other suppliers of materials that they did not have an account with. On the facts of this case it simply does not make sense that Sherri-Lynn did not agree to pay for materials as part of the contract terms.
[46] The question becomes, in agreeing to pay for materials, can it be implied on the facts of this case that Sherri-Lynn also agreed to pay for the 15% mark-up? I find that it cannot.
[47] I accept Sherri-Lynn's evidence that she was not aware that a 15% mark-up was an industry standard. In the absence of evidence that suggests otherwise, industry standards cannot be presumed to be within the knowledge of a layperson.
[48] Without further evidence, the fact that Sherri-Lynn had previously dealt with a contractor on a "time and materials" basis is insufficient to allow me to conclude that she was aware of a 15% mark-up being charged to her.
[49] The fact that Sherri-Lynn paid all invoices between February and the end of October without complaint also does not allow me to infer that she had knowledge of, or, acquiesced to the 15% mark-up as a term of the contract. The invoices did not show the mark-up and did not contain any type of breakdown of the charges or supporting documentation that would have alerted Sherri-Lynn to the fact that a mark-up was being charged as part of the contract.
[50] The Plaintiff quite rightly points out that there are some concerning aspects of the evidence of the Nybergs with respect to the materials issue. Neither of them specifically stated in their evidence the reason why they wanted their account being used other than to 'save money'. They were not clear as to how.
[51] Having said this, I am still unable to infer that the reason for the Nyberg's McMunn & Yates account, and for offering the use of the account to the Plaintiff, was because the Nyberg's knew they were being charged an additional 15% on materials. Otherwise, if the Nyberg's knew they were being charged a mark-up on materials billed through the contractor, it stands to reason that Sherri-Lynn would have been more vocal about complaining about materials charges on invoices and would have been more insistent than she was that her account be used. I accept that the fact that she paid the invoices without complaint supports an inference she was unaware of the mark-up and simply assumed she was being billed the same price for materials that she could obtain at McMunn & Yates.
[52] Overall, I find that the only agreement was for payment for materials, and not materials plus mark-up.
Issue #2 – Are the Plaintiffs Entitled to Recovery of the Subcontractor Fees and Mark-up, and the Materials Mark-up on a Quantum Meruit basis?
The Legal Framework:
[53] If there is an express or implied agreement for work, but no price is agreed upon for the performance of the work, there is no contractual basis for a contractor to claim for the work performed, but the court may "imply a promise to pay a reasonable amount on a quantum meruit basis: See D & M Steel Ltd. v. 51 Construction Ltd., 2018 ONSC 2171, at para. 58 and Kalogon Spar Ltd. V. Stanley Papageorge, 2020 ONSC 710, at para. 210.
[54] For a claim of quantum meruit to succeed, the work for which payment is claimed must be outside the specific contract. If a contract exists covering payment for the particular item in question, quantum meruit has no application. If the contract fails to provide for the terms of remuneration, then the parties may be presumed to have intended a reasonable price. See: CH2M Hill Energy Canada, Ltd. v. Consumers' Co-operative Refineries Ltd., 2010 SKCA 75, at paras. 22 and 24.
[55] The two requirements for a successful quantum meruit claim are:
a. The services in question were furnished at the request, or with the encouragement or acquiescence of the opposing party; and
That such services have been furnished in circumstances that render it unjust for the opposing party to retain the benefit conferred by the provision of the services. See: Kalogon Spar Ltd., at para. 210, citing Consulate Ventures Inc. v. Amico Contracting & Engineering (1992) Inc., 2007 ONCA 324, at para. 99.
[56] Once the court concludes that it is necessary to resort to the principle of quantum meruit because the contract has omitted an essential term, such as payment, it is still necessary to decide what constitutes "reasonable remuneration". See: CH2M Hill Energy Canada Ltd., at para. 27.
[57] The onus is on the contractor to prove both the existence and the value of the work or risk not recovering: See Barenco Inc. v. Ottawa-Carleton Regional Transit Commission (1999), 48 C.L.R. (2d) 200 (ONSC) at para. 27, and D & M Steel Ltd., at para. 93.
The Materials Mark-Up:
[58] In light of my finding that payment for materials was a term of the contract between the parties, the Plaintiff cannot succeed in defeating the Defendants' claim for set-off for the 15% mark-up paid on materials charged to them on the basis of quantum meruit.
The Subcontractor Fees and Mark-Up:
[59] The evidence of the Plaintiff is that subcontractors are routinely used on construction projects as they often have the specialized knowledge that allows them to perform the job faster, more efficiently, and at a lesser cost than the general contractor. Often the Plaintiff receives preferred rates from subcontractors, although it was not specified whether this was the case for the Nyberg project. Subcontractor fees were billed to Sherri-Lynn at the amount charged by the subcontractor plus a 15% mark-up to account for time spent coordinating the services. As with materials, if there was no mark-up, the Plaintiff would have billed more for their labour to compensate for time spent in relation to subcontractors.
[60] Sherri-Lynn's evidence was that she was not aware that subcontractors were to be used on her project and she did not approve this. While I have already found that there was no discussion of the use and payment for subcontractors when the terms of the contract were negotiated, Sherri-Lynn was aware that subcontractors were being used. She was invoiced for subcontractor charges, and while the mark-up was not specified on the invoices, the fact that the charge was on account of a subcontractor clearly was. Myron was also often on-site and had discussions with the drywall subcontractor. I find that the Nyberg's did not object to the use of subcontractors and acquiesced to these services being provided. Knowing that these subcontractors were being used on the project and charging the Plaintiff for their time, it would be unfair not to permit the Plaintiff to recover these costs. On this basis, the two-prong test in Kalogon is satisfied.
[61] The question then becomes what is the value of the work? Despite Sherri-Lynn's evidence that she did not agree to subcontractors being used on the property, the Nybergs do not take issue with paying the invoices of the subcontractors. Their issue is with respect to the 15% mark-up charged by the Plaintiff.
[62] In the circumstances of this case I find that reasonable remuneration to the Plaintiff includes the mark-up, where applied to subcontractor labour (but not materials in light of my previous findings) in addition to recovery for the time charged by the subcontractors.
[63] My findings apply to those subcontractors for which a mark-up was charged, save and except with respect to Bowman Electric. The uncontested evidence of Sherri-Lynn is that she originally did the work to hire Bowman Electric and was billed directly by them. At some point, this was changed to her being billed through the Plaintiff, subject to the 15% mark-up. The Plaintiff provided no evidence as to the reason why (i.e. different scope of work). In the absence of any specific evidence as to deprivation to the Plaintiff with respect to this subcontractor, or value to the Defendants, no mark-up has been proved to be appropriate.
[64] There was limited evidence on the issue of the mark-up in relation to subcontractors. What has influenced my decision to allow the mark-ups charged is:
a. The Plaintiff's evidence is that they invest time in assessing whether the job could benefit from a subcontractor, both in terms of their expertise and costs savings to the owner.
b. The Plaintiff will often use subcontractors when they assess that the cost to the homeowner would be less than if the Plaintiff did the job itself. This represents value to the homeowner.
c. They will often obtain preferred rates from the subcontractors that the homeowner would not receive themselves. The only real evidence I have that this occurred in this case is the labour refund of $400 offered by Timber Wolf Construction.
d. The Plaintiff would bill extra for labour charges for managing the subtrades if they were not adding a mark-up. The amount was not quantified, but it only stands to reason that if there was no mark-up added, there will be a deprivation to the Plaintiff and a benefit to the Defendants who have benefitted from the assessments done by the Plaintiff and time invested in the coordination of subtrades.
e. The Plaintiff charged a mark-up on most, but not all subtrade invoices. For example, Oakwood Roofing was charged at cost. No mark-up should now be added.
f. Unlike the materials issue, and unlike the CH2M Hill Energy Canada Ltd., case relied upon by the Defendants, the subcontractor fees were not contemplated at all in the original contract, and the amount claimed as mark-up represents a very small portion of the overall cost of the project to the Defendants.
[65] Having said this, given my conclusions with respect to materials, the Plaintiff should not be adding a mark-up to materials costs invoiced by the subcontractors. The amount owing to the Plaintiff shall be adjusted for these amounts, and the Bowman Electric mark-up.
Issue #3 – What amount should be allowed to the Defendants for the alleged deficient work and other damages claimed?
Deficiencies:
[66] The Defendants' counterclaim for an unspecified amount on account of work claimed to have been completed by the Plaintiff in a deficient manner.
[67] It is an implied term of any contract for construction services that the work will be performed in a good and workmanlike manner.
[68] The Defendants allege the following deficiencies:
a. Drywall
Sherri-Lynn and Myron's evidence is that there are numerous issues with the drywall such as cracks, screw pops, bumps, bubbling, and a wavy pillowing effect in areas.
b. Siding
The Defendants allege that there is buckling of the siding and large gaps left between pieces that cause it to be aesthetically unappealing. The Defendants further allege that the Plaintiff's use of face nailing in areas, as opposed to the manufacturer required blind nailing has contributed, in part, to the buckling and has caused the siding to no longer be maintenance free. The Defendants allege that the siding needs to be removed and replaced.
c. Improperly installed dormer, which left aspects of the home open to damage from the elements.
[69] Myron's evidence was that the deficiencies are so significant that it makes him "sick" to have to look at the home.
[70] In support of their claims the Defendants offer no third party or expert evidence, merely the opinions of Sherri-Lynn and Myron. Sherri-Lynn has no training or special knowledge of construction, other than her research done herself on the internet. Myron has had some dated experience with construction, but his occupation prior to retirement was as a heavy equipment operator.
[71] The Defendants did tender photographs of the project as evidence. These photographs were disclosed late to the Plaintiff. While I admitted the photographs over the objection of the Plaintiff, I agree with the Plaintiff that very little weight can be given to them. The photographs often made it difficult to know what was being depicted and from what angle. Sherri-Lynn and Myron at times had trouble identifying the location of certain photographs within the home. They were taken from only specific angles, often with no larger pictures for context. There was also confusing evidence as to when the photographs were taken, as they were not time or date stamped. Some were alleged to have been taken in January 2019 and others at later dates. Some photographs were taken of work not performed by the Plaintiff. Without a third-party witness to explain the photographs and given the confusing evidence with respect to timing of the photographs, they were of little evidentiary value.
[72] The Plaintiff acknowledges that there are some minor deficiencies that it would have corrected had it remained on the job and was able to do so, but denies that there is anything significant or that would have prevented Sherri-Lynn from moving forward towards completion of the project and occupancy. The Plaintiff's evidence is that these are common issues that arise following the construction of a home and once the home settles. If there is anything more significant, then it is because the Defendants did not take proper steps to heat and control the moisture in the home once the Plaintiff left the project, or as a result of instructions provided to the Plaintiff contrary to their advice.
[73] It is the Defendants' onus to prove the alleged deficiencies, and I find that they have failed to do so. My analysis focuses on the main issues of the drywall and siding, as little evidence was provided with respect to the dormer.
Drywall:
[74] The photographs taken by Justin in October 2019, almost one year following his leaving the project, do not reveal any significant issues. Justin testified, and I accept his evidence as credible, that there were some small cracks in the drywall and some "screw pops", which are common over time with a new build. He described these as "minor" issues and simple to rectify.
[75] Justin did identify some cracks near the bulkhead in the living room that appeared to be more significant. He testified that this will likely be a recurring problem for the Nybergs, and that it arises because the trusses have moved and shifted over time. He states this is an issue with the truss package selected by the Nybergs and does not arise out of the drywall work performed. In the absence of evidence to the contrary, I accept Justin's evidence on this issue.
[76] The Defendants argue that Justin took photographs strategically from certain locations, using certain angles, and lighting so as not to reveal the more significant issues. I appreciate that this may be the case. Having said this, Justin's photographs make it easier to ascertain the area of the home photographed and are close enough that one would think the significant issues alleged by the Defendants would still be revealed. They reveal some small cracks, but not all of the screw pops.
[77] The subcontractor who did the drywall work, Micheal Rockola testified at trial. He is experienced in his trade. He worked on the Nyberg project for the Plaintiff for approximately 6 weeks. During his work on the project he had various conversations with Myron, who was happy with the work being done. If there were any small issues Myron pointed out, he addressed them.
[78] Mr. Rockola's evidence was that the photographs taken by the Nybergs do not reflect the condition of the drywall when he left the job. He acknowledged that they reflect unacceptable work but insists that this was neither the condition of the drywall when he left the job, nor one year later when he returned to inspect the alleged deficiencies with Justin. Justin's evidence was that Rockola was not with him in October 2019, but that he did show him pictures.
[79] I accept that Mr. Rockola appeared genuinely shocked and upset at the state of the drywall shown to him in the Nyberg photographs. He expressed confusion at what could have happened, given that this was not the condition of the work he performed and saw in the home. He indicated that there could be a couple of causes, being the lighting that was used for the photographs that is altering the appearance of the drywall, or most likely, a lack of proper heating and moisture control in the home in the period of time between him leaving the project and the photographs being taken. He remained insistent that the drywall did not look that way when he left in November 2018.
[80] Regardless of what the condition of the drywall currently is or is not, the Defendants have not satisfied the onus on them of establishing that any issues arising with the drywall are because of improper work performed by the Plaintiff.
[81] I also do not accept the Defendants' claim that the Plaintiff used improper drywall for the ceiling. Sherri-Lynn complains that "ceiling drywall" was not used and in her view, this contributes to some of the issues with the appearance of the drywall and must be replaced. This was her opinion only, with no evidence to support her opinion. The Plaintiff's evidence was that all-purpose drywall was used because ceiling drywall is expensive and not readily available in Kenora. I accept the Plaintiff's evidence that the drywall used is specified for use on ceilings and walls and that there was nothing improper in using this product.
Siding:
[82] With respect to the siding, the Plaintiff acknowledges that it was required to deviate from manufacturer installation instructions in three respects:
a. Justin's evidence is that some face nailing was required because of the construction of the walls by the original contractor that prevented the siding from laying flat. He denies that the use of face nailing was as extensive as the Defendants allege, and states that in any project requiring blind nailing there is often some face nailing required.
b. In some areas he acknowledges that the gaps between pieces are larger than specified by the manufacturer, but that this was done at Sherri-Lynn's direction. He followed the manufacturer instructions except for one area where Sherri-Lynn directed him otherwise. Sherri-Lynn's evidence is that Justin became upset with her over her direction regarding the siding. Any other gaps in siding that have developed as the home has settled are easily remedied by use of caulk.
c. Manufacturer installation instructions require the use of ventilation strips. This allows the siding to properly expand and contract. Over Justin's objection, which he confirmed in an email to David (but not to Myron or Sherri-Lynn), Myron instructed him not to use the strips because of his concern regarding ants.
[83] I cannot conclude based on the select photographs the Defendants have taken of the siding that there are any significant issues for which the Plaintiff is responsible to them at law. While there appears to be some buckling in a particular area, without anything other than Sherri-Lynn and Myron's opinion, it is difficult for me to conclude that the cause is as a result of the Plaintiff's work and not the Nyberg's directions for modification of the installation instructions that were performed over Justin's objections. Justin acknowledged that there are some cracks in the caulking in areas, but that this is to be expected as the siding moves and the house settles, and it is a simple and inexpensive repair.
[84] I accept the Plaintiff's evidence that overall the siding looks the way it should, and that any deficiencies are either minor in nature, easily rectified, or otherwise as a result of instructions given by Sherri-Lynn or Myron that required the Plaintiff to deviate from the manufacturer installation instructions. The Defendants cannot ask for such modifications and then expect the Plaintiff to be responsible for any issues that subsequently arise.
Damages:
[85] Even if the Defendants had proved that there are deficiencies for which the Plaintiff should be liable at law, they have not proved their damages. There was no evidence led at trial as to what would be required to correct the alleged deficiencies or the cost. The only evidence was Sherri-Lynn's opinion that she needed all the drywall and siding installed by the Plaintiff removed and redone completely.
[86] The Defendants did attempt to admit into evidence a quote to have the drywall removed and redone and another to have the siding removed and redone. These quotes were disclosed to the Plaintiff late, prior to trial. The authors of these quotes were not being called as witnesses to explain the quote, whether they inspected the property, or what instructions they were given by Sherri-Lynn when they were prepared. For these reasons the quotes were of no evidentiary value and were not admitted.
[87] There was no evidence as to the cost of the simple repairs that need to be performed. As such, damages have not been proved.
Other Damages:
[88] Sherri-Lynn also claims damages for monthly storage fees, interest incurred on her line of credit, and higher insurance rates for the property. She alleges that the project was not completed on time, and that the significant deficiencies in the home have caused the home to be unavailable for occupancy to this day. She has suffered special damages by having to store her belongings in various storage facilities at a cost of hundreds of dollars monthly. She has also been unable to convert her building line of credit to a conventional mortgage and has had to pay higher interest rates on her line of credit. She alleges that her home insurance is also higher as a result of having to insure while builders are on-site as opposed to the home being completed.
[89] In addition to the Defendants failing to prove the deficiencies, they have similarly failed to demonstrate that the project was not completed on-time. I accept the evidence of David and Justin that no completion date was discussed, and they attempted to work with Sherri-Lynn to prioritize projects that would expedite occupancy.
[90] If I am incorrect with respect to the deficiencies and timing of completion of the work, Sherri-Lynn's claim for these special damages must still fail. Firstly, she has taken no steps to rectify the issues and move the home closer to occupancy in the year and a half from when the Plaintiff left the project to trial. The home was simply left as is. Sherri-Lynn has failed to mitigate her damages.
[91] I am also not satisfied that she needed to have her belongings stored pending completion of the home. Sherri-Lynn's evidence was that they could not be stored in the home because all the drywall needs to be redone. She has failed to prove that the drywall needs to be redone.
[92] With respect to the interest charges, there was no evidence as to what the increased interest charges incurred by Sherri-Lynn are, over what she would have paid on a mortgage.
[93] Similarly, with respect to the insurance, there was no evidence as to what the increase in insurance premiums is, over and above what she claims she should be paying.
ORDER:
[94] In a Statement of Agreed Facts, the Defendants have admitted that the statutory requirements for the preparation and perfection of the lien are met.
[95] For the reasons provided herein, it is ordered that:
a. The Plaintiff shall have judgment for the sum of $34,988.27, subject to set-off for the following:
i. All amounts charged on account of materials mark-up, including any mark-up charged by the Plaintiff on materials costs invoiced to it by a subcontractor; and
ii. The mark-up charged by the Plaintiff on all Bowman Electric invoices.
b. A declaration shall issue that the Plaintiff is entitled to a lien against all of the estate, title and interest of the Defendants in the lands and premises located at 1401 Airport Road, Kenora, Ontario, in the amount calculated pursuant to paragraph 95 (a) herein.
c. In default of payment of this judgment, the estate and interest of the Defendants in the lands and premises to which the aforementioned lien attaches, and which is the subject matter of this action, be sold and the proceeds applied towards payment of the Plaintiff's claim pursuant to the provisions of the Construction Act.
d. The Plaintiff shall have pre-judgment and post-judgment interest on the amount calculated pursuant to paragraph 95(a) herein, from November 23, 2018, to the date of payment, calculated in accordance with the provisions of the Courts of Justice Act, R.S.O. 1990, c. C.43, and amendments thereto.
[96] Counsel shall schedule a brief video appearance before me if there are any mathematical errors in this decision that require correction, or if they are unable to agree as to the calculation of the set-off.
[97] If the parties cannot agree as to costs, written submissions shall be delivered as follows:
a. No later than 30 days following the release of this decision from the claiming party;
b. No later than 30 days thereafter from the responding party;
c. No later than 15 days thereafter for any reply; and
d. Submissions shall be limited to five pages, double-spaced, excluding offers, bills of costs, caselaw and other attachments.
[97] All other claims of the parties are dismissed.
[98] As an aside, I wish to commend counsel and thank them for the way in which they conducted this virtual trial. This was an early fully virtual trial for the region, and counsel demonstrated a high level of proficiency with the technology, and an ability to adapt to technological issues that arose.
The Honourable Madam Justice T. Nieckarz
Released: September 20, 2021
COURT FILE NO.: CV-19-20
DATE: 2021-09-20
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
MIDDLE LAKE ENTERPRISES INC.
- and –
SHERRI-LYNN NYBERG and OLIVE NYBERG
REASONS FOR JUDGMENT
Nieckarz, J.
Released: September 20, 2021
/sf