ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
1694467 Ontario Inc. o/a Keesmaat Homes Plaintiff/Defendant to the Counterclaim
– and –
Ron Vandenhengel and Betty Vandenhengel Defendants/Plaintiffs by Counterclaim
Counsel:
John V. Kranjc, for the Plaintiff/Defendant to the Counterclaim
Richard A. Wellenreiter, for the Defendants/Plaintiffs by Counterclaim
HEARD: June 24, 27, 28, 29 and 30, 2022
Justice D.A. Broad
Background
1This proceeding arises from a custom home building project that went seriously off-track.
2The plaintiff (Keesmaat Homes) is a building contractor carrying on business in the Counties of Haldimand and Norfolk. At all material times the principal of Keesmaat Homes was Ike Keesmaat (“Ike”).
3The defendants (together the “Vandenhengels” or individually “Ron” and “Betty”) are spouses and at all material times were the registered owners of a property municipally known as 6874 Rainham Road in the Town of Dunnville, Ontario (the “property” or the “home”). In the spring of 2016 Ron retired from farming. He and Betty sold their farm shortly before entering into the construction contract with Keesmaat Homes described below. Prior to going into farming, Ron had worked for a construction contractor building barns, outbuildings and houses for approximately 10 years.
4The principal of the plaintiff and the defendants’ given names are used throughout these Reasons for clarity and brevity, and no disrespect is intended by so doing.
5The Vandenhengels contracted with Keesmaat Homes on July 2, 2016 to build a custom home on the property according to plans prepared for the Vandenhengels by a residential design company Rijus Home Design Inc. (“Rijus”). The written agreement between the parties, referred to in the document as an “agreement of purchase and sale” provided for a “purchase price” of “time and material plus 10 percent for an overall projected price of $308,520 plus HST” and for payment by the Vandenhengels in instalments - first a deposit of $40,000 and then $40,000 following completion of shingles, $40,000 at completion of drywall and the balance upon completion of the project. The Vandenhengels ultimately paid the sum of $360,000 in five instalments.
6Following completion of the project and occupation of the home by the Vandenhengels, Keesmaat Homes claimed that the sum of $148,093 remained owing by them for the construction of the home. The Vandenhengels denied that they owed any further amount.
7The parties dispute the essential nature of the agreement. Ike maintained that it was a “time and material” contract whereby the Vandenhengels were obliged to pay all of the invoiced costs of materials and labour of Keesmaat Homes’ suppliers and subcontractors plus a fee for administration and management of 10% of those costs. The Vandenhengels maintained that the stated “overall projected price” of $308,520 was a fixed price, inclusive of the 10 percent administration and management fee, and that they were only obligated to pay that amount plus the cost of any extras specifically authorized by them.
8The Vandenhengels claimed that there were numerous deficiencies in the materials and workmanship of Keesmaat Homes and its subcontractors. By the time of trial all of the deficiencies, save two, had been corrected through the involvement of Tarion which administers and enforces the Ontario New Home Warranties Plan Act and Regulations. The two remaining alleged deficiencies relate to the concrete stairs from the garage to the basement and the concrete basement floor, each of which the Vandenhengels claim were not constructed in accordance with the plans and specifications and/or the Ontario Building Code.
9Ron alleged that Ike intimidated, harassed, bullied and wrongfully pressured him to pay more money to Keesmaat Homes which led to him suffering serious health problems including admission to hospital on May 11, 2017 due to a significant increase in blood pressure.
10By Statement of Claim issued under the Simplified Procedure in rule 76 of the Rules of Civil Procedure Keesmaat Homes brought action against the Vandenhengels claiming payment of the sum of $148,093 plus interest at the rate of 2% per month or pursuant to the Courts of Justice Act, or in the alternative damages for breach of contract and breach of trust in the amount of $148,093, or in the further alternative, damages in the said amount for quantum meruit and relief from unjust enrichment.
11By Statement of Defence and Counterclaim the Vandenhengels defended the action and counterclaimed against Keesmaat Homes and Ike Keesmaat for indemnity, or in the alternative contribution, to the extent of any judgment which Keesmaat Homes may recover against them in the action, general damages for breach of contract, negligence and delay in the amount of $250,000, special damages in the amount of $250,000, and aggravated and exemplary damages in the amount of $100,000 and a declaration that the defendants by counterclaim produce and transfer all warranties, guarantees, and indemnity or similar agreements associated with the materials used in the construction of the home.
12At some time prior to trial Keesmaat Homes reduced its claim for payment on the contract from $148,093 to $71,629.55 and the Vandenhengels confined their counterclaim for outstanding deficiencies to those relating to the concrete stairs from the garage to the basement and the basement floor. The Vandenhengels also claim hotel expenses of $391.86 for delay due to the home not being ready for their occupancy on the specified completion date. Ron maintains his claim for damages against Keesmaat Homes and Ike for “harassment” and “intentional infliction of mental and physical suffering.” The Vandenhengels did not pursue their claim for production of warranties, guarantees, and indemnity or similar agreements associated with the project.
13The trial was conducted as a summary trial pursuant to subrule 76.12(1) whereby the evidence in chief of each of the parties’ respective witnesses were adduced by affidavit, all of whom underwent viva voce cross-examination.
Issues
14The issues for determination are the following:
Was the Agreement a “time and material” or a “fixed price” contract?
Are there any amounts remaining owing by the Vandenhengels to Keesmaat Homes for construction of the home, and if so, how much?
Were the concrete basement floor and/or concrete stairs from the garage to the basement constructed deficiently as not conforming to the plans and/or the Ontario Building Code?
If so, what are the costs to remedy these defects and are the Vandenhengels entitled to recover those costs from Keesmaat Homes?
Are the Vandenhengels entitled to damages equal to their hotel expenses for delay?
Did Ike commit unlawful harassment and/or intentional infliction mental distress on Ron and if so, is Ron entitled to damages for this?
Evidence
(a) The agreement
15On July 2, 2016 the parties entered into an agreement (the “Agreement”) providing for the construction by Keesmaat Homes of a dwelling on the property owner by the Vandenhengels. The Agreement, prepared by Ike, was titled “Purchase Agreement” and referred to in the document as an “agreement of purchase and sale” notwithstanding that the Vandenhengels owned the property, and no purchase and sale of real property was contemplated by the Agreement.
16The Agreement provided for a “purchase price” of:
“Time and Material plus 10 percent for an overall projected price of $308,520 plus HST.”
17The Agreement provided for the dwelling to be completed 120 days after commencement of the project and for the “buyers” (the Vandenhengels) to pay “the balance” in the following instalments:
“$40,000 upon acceptance, $40,000 at shingles, $40,000 at drywall and the remaining sum upon completion.”
18The Agreement provided at Schedule C, inter alia, as follows:
the Seller/Builder agrees to obtain all permits to construct a dwelling on the property in a good and workmanlike manner, and generally, in accordance with the Plan;
any and all extras or alterations of the plans, in addition to items referred to in this agreement, shall be paid to the Seller/Builder by the Buyer at the time that the written confirmation of any extras or alterations are acknowledged by both parties signing and must accompany any and every change;
The Seller/Builder to provide to the Buyer a Tarion warranty on the dwelling upon the completion date, that such warranty is in lieu of all other guarantees or warranties by the Seller/Builder and that it is included in the “purchase price”; and
the Seller/Builder agrees to construct the dwelling in accordance with all governing codes, by-laws, rules and regulations pertaining to such construction,
19Schedule D to the Agreement set forth various written specifications under the headings “Exterior”, “Interior” “Kitchen/bathroom” “Construction” “Allowances” and “Included in purchase price” and stated “homeowner to finalize house plans and site plan prior to construction. All excavation, septic, and fill are buyers’ responsibility.”
20The section entitled “Allowances” provided for the Vandenhengels to choose paint colours, brick, fascia, soffit and eave colours, custom kitchen cabinetry and cabinetry hardware and carpet, hardwoods and ceramics “from Builder’s samples.” It also provided for “allowances” in specified dollar amounts for lighting, kitchen including vanities and built-ins, and flooring.
(b) Preparation of the design plans and execution of the Agreement
21Prior to entering into the Agreement the Vandenhengels retained Rijus to prepare detailed plans for the home construction (the “plans”). The plans were dated June 2016 and comprised four sheets entitled “Elevations” “Foundation Plan” “Main Floor Plan” and “Specifications.”
22Ron deposed in his affidavit in chief for trial that when he first spoke with Ike about the project and prior to the preparation of the plans, he asked him something to the effect of “can you build me a house for $350,000?” He also told Ike that the home needed to be completed by November 2016 as he and Betty had sold their farm and were required to vacate the farm residence by November 11, 2016, to which Ike responded that he could “fit it in.”.
23Ron deposed that Ike received the plans around June 28, 2016 and notified Ron that he was ready to meet with him and Betty four days later on July 2, 2016. The Vandenhengels and Ike met at a coffeeshop on that date and executed the Agreement.
(c) Construction and alleged upgrades and changes to the plans and specifications
24Ike deposed that, following execution of the Agreement, Keesmaat Homes took steps to apply for a building permit and began to order materials for the project. Ike stated that construction commenced in July 2016 and was completed approximately three months later. He deposed that during construction the Vandenhengels requested changes, improvements and upgrades to the design and construction of the home, resulting in an increase to the projected cost. He stated that the Vandenhengels also discussed and arranged upgrades to the design and the materials directly with various subtrades of Keesmaat Homes. The added costs for materials and labour were charged by the subtrades to and were paid by Keesmaat Homes, with the exception of a few minor changes which the Vandenhengels paid directly to certain subtrades.
25Ike deposed that additions and upgrades to the construction requested by the Vandenhengels included the following:
(a) installation of services including Hydro and gas;
(b) increase in height to the basement ceiling from 7’10” to 8’6”;
(c) installation of wiring in the basement;
(d) hanging and trimming of doors in the basement;
(e) spray foam insulation covered with ROXUL insulation;
(f) use of plywood rather than particleboard for the walls and roof of the home;
(g) upgrades to the furnace, air conditioning and plumbing; and
(h) extra costs for supervision resulting from requested changes;
26Ike deposed that the total cost for materials, labour and subcontractors for the construction of the home was $347,248.49. That amount together with the 10% supervision fee provided by the Agreement and HST resulted in a total amount to be paid of $431,629.55. He stated that the Vandenhengels made the following payments:
July 4, 2016 - $40,000
September 10, 2016 - 40,000
October 14, 2016 - 100,000
November 22, 2016 - 100,000
January 20, 2017 - 80,000
TOTAL PAYMENTS - $360,000
27Ike deposed that the balance owing following application of the payments made by the Vandenhengels is the sum of $71,629.55 as follows:
Total cost inclusive of HST $431,629.55
Payments 360,000.00
BALANCE $71,629.55
28Ron deposed that Ike was not present during much of the construction process and did not supervise or monitor the quality of the work and workmanship of Keesmaat Homes’ employees or trades.
29Ron stated that the home was not completed by November 11 2016 and as a result he and Betty were required to stay in a hotel for four nights at a cost of $ $391.86 inclusive of HST.
30Ron deposed that at no time did he or Betty agree to what Ike referred to as upgrades, extras, changes, alterations or improvements and no requests for such approval were ever made by Ike or any of his representatives except for the following eight items for which he and Betty paid the sum of $9,937.67 plus HST in the sum of $1,291.90 for a total of $11,229.57:
(i) stamped concrete porch;
(ii) upgraded shower door;
(iii) upgraded windows and doors;
(iv) generator panel;
(v) basement outlets;
(vi) central vacuum system;
(vii) laundry tub in the basement; and
(viii) framing in the mechanical room
31Ron alleged that Ike defaulted under the Agreement in the following respects:
(i) he failed to report to him and Betty on the progress of the work;
(ii) he failed to provide details and supporting documentation with monthly statements;
(iii) he abandoned the completion of the construction in November 2016 leaving deficiencies,
(iv) he failed to provide invoices in relation to the alleged items over and above what Ron maintained was the original contract price;
(v) he failed to provide any warranties on any work completed including roof shingles, windows, doors, flooring, furnace, and HVAC system,
(vi) he failed to enroll the home with Tarion under the Ontario New Home Warranty Program;
(vii) he failed to complete and provide a pre-delivery inspection, statement of adjustments, statement of reconciliation and occupancy permit; and
(viii) he failed to conduct a walk-through of the home with him and Betty prior to their taking occupancy.
32Ron deposed that Ike first informed him and Betty of any purported overage or extra charges in January 2017, approximately one month after they moved into the home.
(d) Alleged deficiencies in the concrete basement floor and concrete stairs
33The Vandenhengels initially complained of twelve outstanding deficiencies which had not been corrected by Keesmaat Homes. By the time of trial, through the intervention of Tarion, all but two of the deficiencies had been rectified. The Vandenhengels continue to claim damages for the cost to correct the following two alleged deficiencies in the construction of the home:
(a) the concrete stairs from the garage to the basement were not constructed in accordance with the Ontario Building Code; and
(b) the concrete basement floor is covered with cracks and was not constructed in accordance with the plans which called for a thickness of 4 inches. The concrete floor is between 2 to 3 inches thick resulting in excessive cracking.
34Ron asserted that the two outstanding deficiencies will require the following remedies:
(a) the stairs will have to be broken down and removed and new stairs will have to be measured, poured and installed; and
(b) the concrete basement floor will need to be broken out and re-poured. Alternatively, a dry core floor would have to be installed over the existing floor.
35Ike deposed that he ordered and paid for a 4 inch concrete floor for the basement from its subcontractor Elgin Concrete. He stated that variations in the depth of the floor are consistent with normal industry standards and do not affect the structural integrity of the floor. He characterized the solution proposed by the Vandenhengels as “ridiculous” as there is nothing wrong with the concrete floor as it is well within standards of normal construction. He had proposed to send a crew to fill in any surface cracks and cover the floor with epoxy.
36Respecting the poured concrete stairs to the basement, Ike deposed that if the steps are not constructed to code, Keesmaat Homes is prepared to construct wooden stairs to cover the poured concrete stairs. However, Ron has refused that option.
37The Vandenhengels called an expert Mark Nielsen who was qualified following a voir dire to give expert opinion evidence within the following scope:
forming, grading and finishing of concrete
application of the requirements of the Ontario Building Code to the forming, grading and finishing of concrete
providing pricing for the installation of concrete into a residential building and the work to be done in such installation
38Mr. Nielsen was engaged by counsel for the Vandenhengels to prepare a report concerning the quality of the concrete installed in the basement of the home and to prepare an updated quote for the cost to remedy identified deficiencies in the concrete floor of the basement and the concrete steps leading from the garage to the basement.
39In order to fulfil his mandate Mr. Nielsen attended at the home on June 12 and June 19, 2020 for the purpose of providing an expert opinion with respect to the following matters:
(i) is the concrete basement floor compliant with the building plans prepared by Rijus?
(ii) if not compliant, what are the particulars of the non-compliance?
(iii) is the concrete basement floor compliant with the Ontario Building Code (the “Code”)?
(iv) if not compliant with the Code, what are the particulars of the non-compliance?
(v) do the deficiencies in the basement floor pose a structural concern?
(vi) if the floors not compliant with the Code and/or the building plans, what remedies are available?
(vii) are the concrete stairs leading from the garage into the basement compliant with the Code?
(viii) if not compliant, what are the particulars of the non-compliance?
(ix) if the stairs are not compliant with the Code, what remedies are available?
(x) what is the estimated cost to remedy or correct any issues with the concrete basement stairs?
40On June 12, 2016 Mr. Nielsen conducted a visual inspection of the basement concrete floor comprising approximately 1750 ft.² divided into two rooms. The first room comprising approximately 350 ft.² is a work/utility room housing the furnace and water heater. The main room comprises approximately 1400 ft.² He took extensive photos and took borehole samples and reviewed his preliminary findings with the contract specifications.
41Mr. Nielsen re-attended at the home on June 19, 2020 to undertake a further inspection and to take more core samples.
42Respecting the concrete floor in the workshop/utility room, Mr. Nielsen concluded that the cracking in the concrete was significant and was particularly pronounced in the centre of the room. The gaps in the cracks measured up to 5/32” in width in some cases and had 1/8” in height differential. Based on the core samples he found that the concrete was 2 inches thick at the centre of the room which is less than the 3 inches required by the Code.
43Mr. Nielsen offered the opinion that the concrete had not been poured in accordance with the specifications required by the contract and that the reasons for the cracking of the concrete in the workshop/utility room were as follows:
(i) the gravel was installed too high and was not checked before pouring the concrete floor;
(ii) the concrete was ramped up or raised to make it a little thicker in the middle. Had the concrete been poured level rather than being ramped up, it would only have had 1 inch of concrete thickness in the middle;
(iii) the concrete was too wet when poured and installed, resulting in shrinkage cracks;
(iv) the concrete was poured too thin. The 4” thickness required by the building plans is necessary for a proper dry time and proper strength of concrete pad because a 4” pour with the proper slump (“slump” being a test that measures the consistency of the concrete when it arrives on site) is stronger and less prone to cracking than a pour of 3 inches or less;
(v) the contract clearly stated that 4 inches of concrete was to be installed
(vi) the invoice of Elgin Concrete reflects concrete floor pour and finish at 4 inches thick;
(vii) the concrete was never set up to be poured at 4 inches thick but rather was set up to be poured at 3 inches and not even that was achieved due to the improper installation of the gravel pad;
(viii) the floor is not compliant with the Code which required, pursuant to section 9.16.4.3, a minimum thickness of the concrete slab floor to be 75mm, or approximately 3 inches;
(ix) the floor is structurally weak and will continue to crack and have its surface deteriorate over time; and
(x) the deterioration has started in some areas where the cracks have smaller cracks branching off, allowing holes to form following regular use of the basement.
44Respecting the concrete floor in the main room of the basement, Mr. Nielsen observed substantial cracking in multiple areas. He drilled two 3 ½ in. diameter core holes to determine the thickness of the concrete and utilized a laser level to determine whether the edges of the concrete floor had been poured level. He confirmed that the concrete had been set up to pour at 3 inch thick. The floor has a 3” pad and not a 4 inch pad as specified in the building plans, the quotation by East Elgin Concrete and its invoice.
45Mr. Nielsen offered his opinion that the concrete in the main room of the basement was poured too thin at 3 inches and too wet, causing it to shrink as the excess water evaporated during the drying process. The concrete floor did not have the integrity that it would have if it had been poured to the specifications in the building plan.
46Mr. Nielsen stated that the Code at section 9.16.4.3 requires that concrete slab shall be not less than 75 mm thick, exclusive of concrete topping, which is approximately 2.95 inches. The floor in the workshop/utility room does not meet this minimum requirement of the Code whereas the floor in the main room of the basement does. However, the entire floor comprising both rooms fails to meet the specification in the building plans calling for a 4 inch thick basement floor. He offered the opinion that the deficiencies in the basement floor do not pose a structural risk because they are not foundational.
47Mr. Nielsen reported that he re-attended at the home on August 25 2020 and observed that the general area of the basement floor had begun to develop breakaway areas where the cracking has occurred in some areas and holes have developed. He stated that the breakaway areas will worsen in coming years with general use of the basement, especially the workroom which will have service technicians attending and general home repairs conducted in that room. He also noted a trip hazard in the workroom where the concrete cracks have differentials of 5/16 inch.
48Respecting the concrete stairs from the garage to the basement, Mr. Nielsen noted that the Code at section 9.8.41 requires private stairs to have:
ii - a maximum rise (height) of 200 mm per step and a minimum rise of 125 mm per step
iv - a maximum tread depth of 355 mm per step and a minimum tread depth of 235 mm
49Mr. Nielsen measured the tread depth and rise of each individual stair and found that each step fails to meet the minimum tread depth requirement specified in section 9.8.41. Six steps had tread depths of 215 mm, two had a tread depths of 216 mm, one had a tread depth of 217 mm, one had a tread depth of 218 mm, and one had a tread depth of 220 mm.
50With respect to the work required to remedy the deficiencies, Mr. Nielsen offered the opinion that to ensure that the basement floor meets the requirement of 4 inch thickness provided for in the building plans, the following steps will be required:
(i) the floor will need to be broken down and removed;
(ii) a portion of the drywall and studding on the walls will need to be removed;
(iii) the staircase from the main level to the basement will need to be removed;
(iv) the sump pump well will need to be raised;
(v) the water heater, furnace and water pump will need to be removed and replaced;
(vi) the workbench and any shelving in the basement will need to be removed and replaced;
(vii) any excess gravel will need to be removed and the gravel will then need to be re-levelled;
(viii) the concrete will need to be set to pour at 4 inches; and
(ix) the concrete pour may then be commenced to ensure that the floor meets the 4 inch thickness referred to in the contract specifications.
51In his initial report Mr. Nielsen estimated the cost of completing the foregoing work at $70,000. He stated that an available alternative option would be to install a dry-core floor and carpeting at an approximate cost of $30,000.
52With respect to the basement stairs, Mr. Nielsen offered the opinion that, in order to bring them into compliance with the Code, the stairs will need to be completely removed and redone. The stairs must be extended by an additional 240 mm in order for the tread depth of each step to meet the minimum requirements of the Code. In his initial report he estimated the cost of completing the work necessary to bring the basement stairs into compliance at $12,000.
53In July 2021 Mr. Nielsen prepared three detailed quotations of the cost of possible remedial work for the deficiencies, the prices for which were as follows:
(a) the cost of replacing the basement floor (including both the workroom and the main area) in its entirety: $69,765 plus HST of $9,069.45 - total $78,834.45;
(b) the cost of covering the basement floor, without removing concrete, with a dry core subfloor with carpet in the main area and vinyl in the workroom and roughed in bathroom area: $36,995 plus HST of $4,809.35 - total $41,804.35;
(c) the cost of replacing the concrete basement stairs: $23,875 plus HST of $3,103.75 - total - $26,978.75.
54On cross-examination Mr. Nielsen agreed that a dry core subfloor is a frequently used product for basements and has a useful life of 10 to 15 years. He stated that covering the concrete floor with a dry core subfloor and carpet would be satisfactory for the main area, but it would be very difficult to install it in the workroom. He stated that the workroom represented one quarter of the entire area of the basement.
55Mr. Nielsen did not accept the suggestion put to him on cross-examination that building wooden stairs above the concrete stairs would be a feasible solution, as to do so in a way which would provide the minimum tread depth and riser height required by the Code would not provide sufficient space for the bottom landing.
56Mr. Nielsen also rejected the alternative suggestion put to him on cross-examination of placing wooden panels on the top of each stair to provide the necessary tread depth as this would reduce the riser height below the required minimum in the Code.
57Mr. Nielsen stated that the cracks in the workroom floor represented trip hazards and the concrete floor in that area showed signs of instability. However, he did agree that the cracking in the main area of the basement represented a cosmetic and not a structural issue.
58Ron acknowledged on cross-examination that, since their occupancy, he and Betty had used the main basement area only for storage and as a play area for their grandchildren.
(e) Ron’s claim for damages for harassment
59Ron deposed in his affidavit in chief that commencing in December, 2016 Ike bullied, intimidated and pressured him to pay him more money causing him to develop serious health problems. He stated that Ike sent frequent texts and called him on his cell phone and at his place of employment multiple times a day demanding more money and threatening to come to the home to remove the alleged upgrades. He stated that this behavior continued until May, 2017.
60In May, 2017 Ike texted to advise that he would be at the home the following morning to remove the upgrades. Ron and Betty’s son Joshua stayed home from work that day in the event that Ike attempted to enter the home. Although Ike did not attempt to do so, Ron deposed that anxiety and fear overtook him and he was admitted to hospital for six hours with extremely high blood pressure.
61Ron deposed that due to Ike’s harassment he developed health problems resulting in the following injuries and medical care:
(i) hospital admittance on May 11, 2017 due to a significant increase in blood pressure;
(ii) missed time from work;
(iii) inability to drive or operate any equipment due to increase medication;
(iv) increase blood pressure causing dizziness;
(v) anxiety, stress and fatigue;
(vi) emotional and psychological distress and trauma;
(vii) loss of focus at work;
(viii) loss of sleep and insomnia;
(ix) depression; and
(x) panic attacks.
62Ron deposed that he is claiming damages in the amount of at least $10,000 for the personal and psychological injuries caused by Ike’s conduct, which continue to affect him.
63On cross-examination Ron agreed that his text exchanges with Ike were friendly until January 20, 2017 when he delivered his final cheque in the sum of $80,000, representing what he had calculated to be the remaining amount he and Betty owed for construction of the home, including extras. He stated that a week or two later he advised Ike that he would be paying no more and the relationship soured after that.
64Ron acknowledged that he had suffered previously from anxiety, was a smoker, was overweight and pre-diabetic. He also acknowledged that his physician had previously advised him to make dietary changes, and to stop smoking.
Discussion
(a) Issue One: - Was the Agreement a “time and material” contract or a “fixed price” contract?
65As indicated above, the parties fundamentally disagree on whether the Agreement for the construction of the home was on a “time and materials” (alternatively called a “cost-plus”) or a “fixed price” (alternatively called a “lump sum”) basis. Ike for Keesmaat Homes maintains that it was the former and the Vandenhengels maintain that it was the latter.
66The difference in law between these two types of construction contracts is well-known.
67In a “cost-plus” contract the contractor is entitled to the cost of doing the work plus a stipulated percentage of that cost for overhead and profit.
68By contrast, in a lump-sum contract the contractor is entitled to the whole of the price, but to no more, irrespective of whether the work carried out is more or less than anticipated. Extras to the contract must be paid for in addition to the contract price and the parties may agree to make a deduction for work omitted.
[see CED Building Contracts I.1.(d) at paras. 12 and 14 and the cases therein referred to]
69It is necessary to interpret the agreement according to recognized governing principles in order to determine the true nature of the Agreement.
70In the seminal case of Creston Moly Corp. v. Sattva Capital Corp., 2014 SCC 53, [2014] 2 S.C.R. 633 (S.C.C.), Rothstein, J. stated as follows at para. 47,
the interpretation of contracts has evolved towards a practical, common-sense approach not dominated by technical rules of construction. The overriding concern is to determine "the intent of the parties and the scope of their understanding" (Jesuit Fathers of Upper Canada v. Guardian Insurance Co. of Canada, 2006 SCC 21, [2006] 1 S.C.R. 744 (S.C.C.), at para. 27 per LeBel J.; see also Tercon Contractors Ltd. v. British Columbia (Minister of Transportation & Highways), 2010 SCC 4, [2010] 1 S.C.R. 69 (S.C.C.), at paras. 64-65 per Cromwell J.). To do so, a decision-maker must read the contract as a whole, giving the words used their ordinary and grammatical meaning, consistent with the surrounding circumstances known to the parties at the time of formation of the contract. Consideration of the surrounding circumstances recognizes that ascertaining contractual intention can be difficult when looking at words on their own, because words alone do not have an immutable or absolute meaning.
71In the recent case of Ottawa (City) v. ClubLink Corporation ULC, 2021 ONCA 847 (Ont. C.A.) Roberts, J.A. succinctly expressed the principles governing interpretation of commercial contracts at para 52 as follows:
. . . the basic rules of contract interpretation require the determination of the intention of the parties in accordance with the ordinary and grammatical words they have used, in the context of the entire agreement and the factual matrix known to the parties at the time of the formation of the contract, and in a fashion that corresponds with sound commercial principles and good business sense: Weyerhaeuser Company Limited v. Ontario (Attorney General), 2017 ONCA 1007, 77 B.L.R. (5th) 175, at para. 65, rev'd on other grounds, Resolute FP Canada Inc. v. Ontario (Attorney General), 2019 SCC 60, 444 D.L.R. (4th) 77.
72In Geoff R. Hall, Canadian Contractual Interpretation Law (4th ed.) the author made the following observations respecting the role that the factual matrix plays in the contractual interpretive process:
(a) the factual matrix must be taken into account when interpreting a contract whether or not there is linguistic ambiguity in the text of the document. Indeed, a conclusion that a contract is ambiguous cannot occur unless the factual matrix has first been considered (para. 2.3.2);
(b) the scope of what may be considered within the rubric “factual matrix” is quite broad and involves a highly contextual analysis and will necessarily vary from case to case. The point of the factual matrix is to understand the relevant background facts at the time of contracting (para. 2.3.3);
(c) the factual matrix does not include evidence of subjective intention, events occurring after contract formation and at least in theory does not include evidence of negotiations, however this latter principle is becoming questionable (para. 2.3.4);
(d) the factual matrix must be assessed objectively, consisting only of objective facts known to the parties at or before the date of contracting (para. 2.3.5);
(e) the contextual analysis mandated by the factual matrix must not overwhelm the language of the contract. Given the paramount importance of the words, being the very language agreed upon by the parties to govern their legal obligations, in cases of conflict the words will always prevail over the context. The factual matrix cannot be used to contradict the parties’ intentions as expressed in the written agreement, create an ambiguity which otherwise does not exist in the written document, or have the effect of making a new agreement. Interpretation of a written contractual provision must always be grounded in the text and read in light of the entire contract. The role of the factual matrix is to assist in fixing the meaning of the words used by the parties, not to provide a new meaning inconsistent with the words.
[Citations omitted]
73In support of his submission that, properly interpreted using the contextual analysis mandated by the factual matrix, the contract was for a fixed price of $308,520, Mr. Wellenreiter for the Vandenhengels pointed to the initial conversation between Ron and Ike in which Ron asked whether Ike could build a house for him for $350,000. From this Ike was fully aware that Ron and Betty had a specific budget and that certainty of the price was of utmost importance to them.
74Wellenreiter notes the qualifying word “overall” in reference to the “projected price of $308,520” as confirmatory of the fixed nature of the price. He also points to the provisions of the Agreement providing for payment for agreed-upon extras, allowances for specified items, and the listing of identified trades as well as the lack of provision for payment for Keesmaat Homes’ own forces and the lack of specified hourly rates for those forces as pointing away from a time and material contract and towards a fixed-price contract.
75In my view, the most important objective fact known to both parties was that Ike was not given the plans for the home until June 28 2016 and had them for only four days before he presented the contract to the Vandenhengels. This was necessitated by the urgency communicated to him by the Vandenhengels by their need to be out of their existing home by November 11, 2016. Thus it was, or should have been, readily apparent to the Vandenhengels that there had been insufficient time for Ike to obtain detailed pricing from all or most of the subtrades and material suppliers to permit him to develop a proposal to build the home for fixed price. Moreover, the previous discussion about whether Ike could build a home for the Vandenhengels for $350,000 took place before the plans were drawn and before any details of the scope of the project were known to Ike.
76Moreover, the inclusion of a process for approving extras before they would be constructed and increase the total cost is not inconsistent with the Agreement being a time and material contract, but rather may simply imply that there was to be a degree of certainty around the “overall projected price” (see Patel v. W.G. Housing Ltd., 2012 ABQB 734 (Alta. Q.B.), at para. 115). Similarly, there is nothing antithetical to the existence of a time and material contract by the inclusion of allowances for specified finishes that the Vandenhengels could choose such as lighting, flooring and kitchen cabinets. The allowances simply served to help clarify what the overall projected price included.
77In my view the fact that the Vandenhengels had in their minds a specific budget for the project and that Ron had expressed it to Ike prior to preparation of the plans cannot overwhelm the language of the Agreement itself which was clearly expressed to be a “time and material” contract providing for a “projected price” of $308,520 plus HST. In my view the adjective “overall” did not have the effect of transforming the “projected price” into a “fixed price.”
78I find that the Agreement between the parties was a “time and material” contract providing for the amount to be paid by the Vandenhengels for the construction of the home to be based upon the amounts billed to Keesmaat Homes by subtrades and suppliers, plus 10 percent of those invoiced amounts as a fee for administration and profit. It was not a fixed-price contract providing for payment only of a set price of $308,520 plus HST and the costs of approved extras.
79However, as discussed below, the stated “projected price” was not superfluous to the Agreement as the parties included it in the written document for a reason.
Issue Two: Are there any amounts remaining owing by the Vandenhengels to Keesmaat Homes?
80In the case of Infinity Construction Inc. v. Skyline Executive Acquisitions Inc., 2020 ONSC 77 Healey, J. conducted a review of the jurisprudence and very usefully summarized at para. 114 the legal principles which have application to cost-plus (or time and materials) contracts as follows (citations omitted):
It is fair to say that the body of case law arising from disputes connected to cost-plus contracts is fact specific. However, I draw the following principles from the authorities to which counsel has directed the court:
a) even in an open-ended, cost-plus contract, there is still an obligation on the part of the parties to exercise a degree of diligence in carrying out the work so that they do not incur costs significantly higher than the estimate without prior approval;
b) In open-ended cost-plus contracts, courts will imply terms preventing payment for wasteful or uneconomic use of labour and materials;
c) Where there is an estimate that provides a guide-post, the final price should fall somewhere near the estimate. The degree of variance between the estimate and the final price is subject to the "bounds of reasonableness", which will be circumstance specific;
d) Factors that go into assessing the "bounds of reasonableness" will depend on the size of the project, its uniqueness, the number of different cost inputs, and whether each cost input was reasonably ascertainable. There will be a narrower band of reasonable variance where the project comprises numerous input costs where variability in each may offset each other to a degree, and a wider band of reasonable variance the more unique the subject matter of the project;
e) In assessing the role played by the estimate in the parties' agreement, various criteria should be examined. These include the circumstances in which the estimate was given, whether the owner communicated that price was of overriding importance, the knowledge and expertise of the party providing the estimate, whether it was relied upon by the party requesting it, whether the owner required the contractor to design a project at a specified cost or seek assurances as to what the project will cost, whether the agreement provided for a percentage of the project cost as a fee to the contractor, whether the contractor made it clear that it was not assuming any of the risk that the estimate might be exceeded, whether the contractor provided the owner with information regarding rates for labour, equipment rental and materials, and whether the owner encouraged the contractor to proceed with the construction despite actual or constructive knowledge that the estimate would be exceeded;
f) The inclusion of a process in the contract for approving extras before they would be constructed implies that there would be a degree of certainty around an estimate;
g) The relative sophistication and knowledge of the parties is important in determining the degree to which the party should be required to adhere to the estimate;
h) A contractor is obliged to promptly notify an owner if there are cost overruns to a budget estimate in a cost-plus contract;
i) Alterations in the work directed while it is in progress by the owner or the owner's agent are to be paid for on the cost-plus basis prevailing for the original contract if no special agreement is entered into for the price of such alterations;
j) Where a contractor is seeking to recover on a cost-plus basis the evidentiary burden of proving these costs is a heavy one;
k) It is not necessary that the accounts be kept in any particular manner or to a high standard, but well enough to show proof of the contractor's charges;
l) Once a contractor proves that he has kept proper accounts and is able to show supporting documentation, the onus shifts to the opposing party to adduce evidence to show that the amounts claimed or the accounts are incorrect or unreliable;
m) Once doubt is cast upon the accounts the onus shifts back to the contractor to satisfy the court that his accounts are accurate and support his claim. If the court is left in doubt, he fails; and
n) As far as materials are concerned, so long as the building is in existence and the system of recording material is capable of providing a substantially accurate result, the court may find that the plaintiff has proved his claim upon evidence somewhat less conclusive. The records of the time of the workmen employed must be strictly proved since it is difficult to verify after the fact.
81In Patel, P.R. Jeffrey J. elaborated at paras. 115 to 118 on the role that an estimate or projection of cost plays in the context of a cost-plus or time and material contract. The parties are taken to have included an estimate in the written agreement for a reason. Moreover, the inclusion of a process for approving extras before they would be constructed and thereby increase the total cost implies that there would be a degree of certainty around the estimate.
82Jeffrey, J. quoted from the case of Bornhorst Welding Ltd. v. Zwingli, 2007 SKQB 154, (Sask. Q.B.) at paras 12 and 13 as follows:
It is a common practice to provide estimates of future costs when negotiating a variety of commercial transactions. The recipient relies upon the represented cost and it forms the basis of the eventual contract. It is only right that such reliance obtain a degree of enforcement.
However, it must also be recognized that an estimate normally will not be elevated to a guarantee. Rather, it is a reasoned and considered representation of anticipated cost, the exact amount of which remains to be ascertained upon completion of the contract. However, that final price must bear a reasonable relation to that which was estimated. There will be room for error, but the variance must meet a test of reasonableness. [citations omitted]
83Thus, in the case at bar, the Vandenhengels were entitled to rely upon the “projected price” as a “reasoned and considered representation of anticipated costs” and to expect that the final price would bear a reasonable relation to the projected price. Keesmaat Homes cannot reasonably assert the position that, as it was a time and material contract, then all of its costs, as long as they are documented, were legitimate and the projected price was really not of much concern (see Topsiders Construction Ltd. v. Nielsen (1997), 1997 CarswellOnt 3698, 38 O.T.C. 273 (Ont. Gen. Div.) at para. 64).
84Keesmaat Homes had an obligation to keep the Vandenhengels informed of cost overruns to the projected price as the project proceeded, to keep proper accounts of the costs and to provide regular accounting to the Vandenhengels of the costs on an ongoing basis.
85There was no evidence that Ike, on behalf of Keesmaat Homes, fulfilled the duty to keep the Vandenhengels informed of the cost of construction in relation to the projected price as construction proceeded. Moreover, he never provided the Vandenhengels with a proper and complete accounting of the cost of construction, as required.
86In or about January 2017 Ike began demanding payment from the Vandenhengels of a final amount of $148,093 prior to the provision of any accounting of the cost of construction, or indeed any disclosure to them of invoices of subtrades and suppliers.
87Keesmaat Homes commenced an action on September 13, 2017 claiming payment of $148,093, without providing any accounting to the Vandenhengels nor any disclosure to them of invoices from subtrades and suppliers.
88As indicated above, sometime prior to trial Keesmaat Homes reduced its claim to $71,629.55, being 48.37% of the amount previously claimed. Ike provided no explanation for the discrepancy in the original amount claimed.
89There was no indication that Keesmaat Homes provided any disclosure of invoices from subtrades and suppliers until delivery of Ike’s affidavit of September 21, 2021, some 4 years and 9 months after completion of the home, appending copies of bills and receipts that he has “been able to locate with respect to this build.” This disclosure may be colloquially and charitably characterized as a “document dump” with no attempt to organize or categorize the invoices for the Vandenhengels or indeed for the court. It is noted that no amounts were included for any labour of any of Keesmaat Homes’ own forces.
90In his affidavit, Ike itemized a number of additions and upgrades to the construction that were requested by the Vandenhengels; however, he provided no accounting of the additional costs associated with these upgrades.
91The only accounting for upgrades and additions to the original scope of work was prepared by Ron and appended as exhibit D to his affidavit of September 17, 2021 representing the sum of $9,937.67 plus HST thereon of $1291.90 for a total of $11,229.57. Ron asserts that payment of this amount was included in his final cheque in the amount of $80,000 dated January 20, 2017.
92In Patel at para. 18 Jeffrey, J. found a variation range of plus or minus 5% of the original estimate to be reasonable. There was nothing in the evidence to suggest that the project in the case at bar was particularly unique so as to widen the range of variation from the projected price. Applying a similar variation of 5% to the case at bar would result in the following preliminary calculation:
Projected price $308,520.00
Approved extras 9,937.67
SUBTOTAL #1 318,457.67
Variation at 5% 15,922.88
SUBTOTAL #2 334,380.55
10% Fee 33,438.06
TOTAL 367,818.60
HST 47,816.42
TOTAL incl. HST $415,635.01
93I find that it would be reasonable to apply a reduction of 30% of the fee component to account for the fact that an accounting of costs, a fundamental part of the required management of the project by Keesmaat Homes, was never performed by it. This reduction is $10,031.42 plus HST thereon in the sum of $1,304.08 for a total of $11,335.50. The net amount allowed to Keesmaat Construction for construction of the home is therefore $404,299.51 inclusive of HST.
94The balance owing by the Vandenhengels for the cost of construction is therefore:
Net amount $404,299.51
Less payments (360,000.00)
BALANCE OWING $44,299.51
95Although it may be argued that no amount has become owing by the Vandenhengels on the time and material contract due to the failure of Keesmaat Homes to provide a proper accounting of the costs of construction, I find that it is reasonable to allow the foregoing amount to Keesmaat Homes based on its alternate claim for payment on a quantum meruit basis. I find that there was an enrichment of the Vandenhengels in this amount on the basis that the costs represented by the invoices of subtrades and suppliers and Ike’s supervision of the work contributed to the value of the home, there was a corresponding deprivation to Keesmaat Homes which incurred those costs, and there is no juristic reason for retention of the enrichment by the Vandenhengels.
Issue Three - Were the basement concrete floor and/or concrete stairs constructed deficiently as not conforming from the plans and/or the Ontario Building Code?
96The onus is on the Vandenhengels to satisfy the court, on a balance of probabilities, that Keesmaat Homes failed to satisfactorily perform its contractual obligations resulting in a breach, or that it failed to perform its duties or to carry out its work in a good and workmanlike manner (see Fougere v Enfield Hardware Ltd., 2009 NSSC 52 (N.S. Sup. Ct.) at paras. 26-27.
97With respect to the basement floor, there is no dispute that the plans for the home, incorporated by reference into the Agreement, called for the concrete slab basement floor to be 4 inches thick. Mr. Nielsen’s expert evidence, which I accept, was that no part of the floor in the workroom/utility area was 4 inches thick and was as little as 2 inches thick in the centre. This resulted from the gravel being installed too high. This caused the concrete contractor to ramp up or raise the concrete to make it thicker in the middle. Had the concrete not been ramped up it would have been only 1 inch thick in the centre. The concrete was also too wet when poured, resulting in shrinkage cracks. Mr. Nielsen described excessive cracking in the floor of the workroom/utility area with differentials in height representing trip hazards.
98The concrete floor in the main room of the basement, unlike the floor in the workroom/utility area, was level, however, it was uniformly 3 inches thick and not 4 inches as required by the contract. The concrete in the main room was too thin at 3 inches and poured too wet, causing excess shrinkage during the drying process. Moreover, the floor lacked the integrity it would have had with a thickness of 4 inches as required by the plans.
99The Ontario Building Code in effect at the time of the construction required a minimum thickness of concrete slab floor of 75 mm or approximately 3 inches. Accordingly, although the floor in the main area met this minimum standard, the floor in the workroom/utility area did not.
100With respect to concrete stairs, Mr. Nielsen’s evidence, which I accept, was that the treads of all of the stairs fail to conform to the minimum requirement of the Ontario Building Code in effect at the time of the construction of 235 mm. Six of the eleven steps deviated from this minimum standard by 20 mm. The smallest deviation was 15 mm.
101As noted above, the Agreement required Keesmaat Homes to “construct the dwelling in accordance with all governing codes, by-laws, rules and regulations pertaining to such construction.” This would include the Ontario Building Code in effect at the time of the construction.
102I therefore find that Keesmaat Homes breached the Agreement in respect of the construction and installation of both areas of the concrete basement floor and the concrete stairs from the garage to the basement.
103In his final submissions Mr. Kranjc, on behalf of Keesmaat Homes, acknowledged these breaches.
Issue Four: What are the costs to remedy the defects in the basement floor and the concrete stairs and are the Vandenhengels entitled to recover those costs from Keesmaat Homes?
104As noted above, it was Mr. Nielsen’s opinion that the only reasonable and appropriate remedy for the defects in the concrete floor in the workshop/utility area of the basement is to remove and replace the concrete floor in conformity with the requirement of the contract plans for a 4 inch thickness.
105As indicated above, the concrete floor in the main area of the basement was installed in compliance with the Ontario Building Code but not of the contract plans. He stated that the shrinkage cracks in this section of the floor represent a cosmetic issue only and not a structural defect. As a less expensive alternative to removing and replacing the concrete slab floor, Mr. Nielsen suggested that installation of a dry core subfloor covered with carpet would be a suitable remedy for the main area and would provide 10 to 15 years of useful service. He testified that installation of a dry core subfloor in the workroom/utility area would be difficult and would not represent a suitable remedy.
106It was Mr. Nielsen’s opinion that there is no suitable and realistic alternative remedy to removing and replacing the concrete stairs, specifically building wooden stairs above the concrete stairs or placing wooden panels on the stair treads.
107Keesmaat Homes led no expert evidence respecting suitable alternate remedies for its breaches in respect of the basement floor and concrete stairs.
108As noted above, Mr. Nielsen provided detailed estimates for the remedial work as follows:
(a) the cost the cost of replacing the entire concrete basement floor (including both the workroom and the main area) - $78,834.45 inclusive of HST;
(b) alternatively covering the entire basement floor with a dry core subfloor with carpet in the main area and vinyl in the workroom and roughed in bathroom - $41,804.35 inclusive of HST; and
(c) the cost of replacing the concrete basement stairs: $26,978.75 inclusive of HST.
109Keesmaat Homes led no evidence of alternate estimated pricing for the cost of these remedies.
110In Heintzman, West and Goldsmith on Canadian Building Contracts, 5th ed. Para. 9.38 it is stated as follows:
If the breach [on the part of the contractor] consists of defective work, the damages will most often be the reasonable cost of remedying the defects. The actual cost of remedying the defect is usually a good starting point to determine those damages unless that cost is unreasonably high.
111In my view, replacement of the concrete floor in the workroom/utility area of the basement and replacement of the concrete stairs from the garage to the basement are the only feasible and reasonable remedies to the defects in those areas. However, I find that the cost of removing and replacing the concrete floor in the main area of the basement is unreasonably high in relation to the value to be gained by its expenditure given that the defect is cosmetic and not structural in nature (see Hydrapower Marine Ltd. v. “Tara M.J.” (The), 1990 CarswellNat 854 (Fed. Ct. Tr. Div.) at para. 49, citing Nu-West Homes Ltd. v Thunderbird Petroleums Ltd., 1975 CanLII 1009 (AB CA), 59 D.L.R. (3d) 292 (Alta. C.A.)).
112Mr. Nielsen testified that the main area of the basement represents 3/4 of the entire basement and the workroom/utility area 1/4. However, he noted that there will mobilization and other costs included in his estimate which would be incurred regardless of whether the whole or only a part of the basement floor were to be replaced.
113Doing my best to estimate the cost of replacing the workroom/utility area based upon the best information available, I allow $30,000 inclusive of HST for this item.
114I allow 3/4 of Mr. Nielsen’s estimated cost of installing the dry core subfloor covered with carpet and vinyl for the entire basement or $31,353 inclusive of HST to remediate the floor in the main area of the basement.
115I allow $26,980 for the cost of remediating the concrete stairs.
116The total amount to be allowed to the Vandenhengels on their counterclaim for damages relating to the defects is the sum of $88,333 inclusive of HST on the costs of remediation,
Issue Five: Are the Vandenhengels entitled to damages equal to their hotel expenses for delay?
117The Vandenhengels claim hotel expenses for four nights on the ground the home was not ready for occupancy on the date set for completion of November 11, 2016.
118It is noted that time was not stated in the Agreement to be “of the essence” deeming Keesmaat Home to be in default when the date for completion was not met.
119In the case of Sail Labrador Ltd. v. Navimar Corp., 1998 CarswellNat 2690 (S.C.C.) the Supreme Court of Canada stated at para. 53 that since the Judicature Acts, the rule of equity has prevailed in Canada and there is therefore no general presumption that time is of the essence. In my view the circumstances surrounding the Agreement would not make it equitable for the court to presume that time was of the essence in relation to the date for completion.
120I find that time was not of the essence, and that therefore Keesmaat Homes was not in immediate default when the contract was not fully performed and the home ready for occupancy by November 11, 2016. It had a reasonable period of time thereafter to complete.
121The Vandenhengels’ claim for hotel expenses is therefore dismissed.
Issue Six: Did Ike Keesmaat commit unlawful harassment and/or intentional infliction mental distress on Ron Vandenhengel?
122As indicated above, Ron Vandenhengel claims damages against Ike Keesmaat and Keesmaat Homes for harassment or wrongful infliction of mental distress. He categorizes these damages as general or alternatively punitive or exemplary damages.
123The tort of intentional infliction of mental distress has three elements:
(a) flagrant or outrageous conduct;
(b) that the conduct was calculated to produce harm; and
(c) that harm in the form of a visible or provable illness ensued.
see Boucher v Wal-Mart Canada Corp., 2014 ONCA 419 at para. [41]]
124In order to meet the required threshold, the plaintiff must prove an intent on the part of the defendant to cause specific harm which then ensued (see Thelwell v. Elaschuk, 2020 ONSC 340 at para. 70-72).
125The Court of Appeal put it as follows in Boucher at para. 44:
The plaintiff cannot establish intentional infliction of mental suffering by showing only that the defendant ought to have known that harm would occur. The defendant must have intended to produce the kind of harm that occurred or have known that it was almost certain to occur.
126In High Parklane Consulting Inc. v. Royal Group Technologies Limited, [2007] O.J. No. 107 (S.C.J.) observed as follows at para. 36:
Tort law does not provide compensation for all stress-causing and nasty conduct that individuals may suffer at the hands of another, and the elements of the tort of intentional infliction of mental distress that the conduct must be extreme, flagrant, outrageous and calculated to cause harm are the law’s ways of narrowing the ambit of the tort.
127I am not satisfied that the conduct engaged in by Ike, however concerning and troublesome it might have been to Ron, met the threshold of being extreme, flagrant and outrageous. Even if it were, the evidence does not support a finding, on a balance of probabilities, that the conduct was calculated by Ike to produce the kind of harm that occurred or that he knew that it was almost certain to occur. At its highest, the evidence showed that Ron told Ike that he did not handle stress well.
128In my view Ron’s claim for intentional infliction of mental distress must be dismissed.
Findings
129In conclusion, based upon the foregoing, I find as follows:
(a) Keesmaat Homes is entitled to payment from the Vandenhengels on a quantum meruit basis in the sum of $44,299.51 inclusive of HST;
(b) the Vandenhengels are entitled to damages representing the cost of remedying the remaining deficiencies in the sum of $88,333;
(c) given that Keesmaat Homes failed to provide the Vandenhengels with a proper accounting of the costs of construction of the home pursuant to the Agreement, I disallow pre-judgment interest to it pursuant to s. 130(1) of the Courts of Justice Act, R.S.O., 1990, c. C.43;
(d) the Vandenhengels are entitled to pre-judgment interest on the said sum of $88,333 at the rate of 0.8% per annum pursuant to the Courts of Justice Act calculated from November 11, 2016 to the date hereof; and
(e) the amount owing by the Vandenhengels to Keesmaat Homes as aforesaid shall be set off against the damages and prejudgment interest owing by Keesmaat Homes to the Vandenhengels; and
(f) the Vandenhengels are entitled to post-judgment interest on the said net amount from the date hereof pursuant to the Courts of Justice Act.
Disposition
130It is ordered and adjudged as follows:
(a) the defendants shall pay to the plaintiff the sum of $44,299.51 inclusive of HST in respect of the main action;
(b) the plaintiff/defendant to the counterclaim 1694467 Ontario Inc. o/a Keesmaat Homes shall pay damages to the defendants/plaintiffs by counterclaim in the sum of $88,333 plus pre-judgment interest thereon at the rate of 0.8% per annum pursuant to the Courts of Justice Act calculated from November 11, 2016 to the date hereof;
(c) the amount to be paid by the defendants to the plaintiff pursuant to subparagraph (a) shall be set off against the amount to be paid by the plaintiff/defendant to the counterclaim 1694467 Ontario Inc. o/a Keesmaat Homes pursuant to subparagraph (b); and
(d) the defendants/plaintiffs by counterclaim shall be entitled to post-judgment interest on the net amount following the said set-off pursuant to the Courts of Justice Act.
Costs
131The parties are strongly encouraged to agree on the costs of the action including the motion for summary judgment. If the parties are able to settle the issue of costs, they shall advise the court accordingly.
132If the parties cannot agree on costs, the defendants may make written submissions as to costs within 21 days of the release of these Reasons. The plaintiff has 14 days after receipt of the defendants’ submissions to respond. The defendants have a further seven days to make reply submissions. All such written submissions are to be forwarded to me, care of the Trial Coordinator at Brantford by email at the address utilized for the release of these Reasons.
133The initial submissions of each side shall not exceed four (4) double-spaced pages, exclusive of Bills of Costs or Costs Outlines, and the reply submissions, if any, shall not exceed two (2) such pages.
134If no submissions are received within this timeframe, the parties will be deemed to have settled the issue of costs as between themselves.
135If either party does not intend to file costs submissions or reply costs submissions, that party is requested to advise the court accordingly.
D.A. Broad, J.
Released: September 7, 2022