Boehm v. Chergar Enterprises Ltd. (Service Plumbing and Heating), 2010 ABQB 826

Court of Queen ’ s Bench of Alberta Citation: Boehm v. Chergar Enterprises Ltd. (Service Plumbing and Heating), 2010 ABQB 826 Date: 20101229 Docket: 1010 00537 Registry: Red Deer Between: Marjorie Boehm Appellant - and - Chergar Enterprises Ltd. Operating as Service Plumbing and Heating Respondent _______________________________________________________ Reasons for Judgment of the Honourable Mr.

Justice Donald Lee _______________________________________________________ [ 1 ] This is an appeal from a provincial court decision dated March 19, 2010 in which the trial judge awarded the Respondent $2017.08 plus costs and interest for amounts unpaid on an invoice for heating services and repairs. The Trial Judge also dismissed the Appellant’s counter-claim for her costs in supervising the work as well as for lost rent due to the Respondent’s failure to complete the work on time. [ 2 ] The Appellant appeals both the Respondent’s award and the dismissal of her counter-claim. Facts

[ 3 ] The Appellant hired the Respondent to examine her boiler and refit it for natural gas instead of propane. [ 4 ] On May 7, 2008, one of the Respondent’s employees conducted a preliminary examination of the premises. On May 8, 2008, the Respondent gave the Appellant a letter that listed a number of deficiencies that would need to be fixed, and which provided an estimate of how much it would cost to do the work.

The trial judge found that the estimate was $1,200 to $1,800, but the Appellant submits that it was actually $1,200 to $1,500. [ 5 ] When the work was completed, the Respondent invoiced the Appellant for $3,817.08, but the Appellant only paid $1,500. [ 6 ] The trial judge made the following relevant findings of fact: • The amount listed in the May 8 letter was an estimate and not a quote or fixed price. • The work was completed by May 15, 2008, which was within the specified time frame. • The Respondent’s employees did $300 worth of unnecessary work in moving a fireplace vent. • The rest of the hours claimed by the Respondent were not excessive. • The final value of the Respondent’s work, including hours worked, materials and GST was $3,827.58. • In the result, the Appellant owed the Respondent $2,027.58 ($3,827.58 - $1,500 - $300), but because the Respondent only claimed $2,017.08, the Appellant was liable for payment of that amount only. • Any costs incurred by the Appellant were as a result of her desire to be present while the work was being done, not as a result of the Respondent’s actions in repairing the heating system.

Issues [1] Since both parties were unrepresented at trial and on appeal, the reasons for appeal in the Notice of Appeal cannot easily be delineated as distinct grounds of appeal. However, I understand the main issues to be as follows: 1. Did the trial judge err in listing the estimate as $1,200 to $1,800? 2. Did the trial judge err in finding that the final cost of $3,827.58 was not excessive? 3. Under the Fair Trading Act , should the Respondent be restricted to recovering a final price that is no more than 10% higher than the given estimate? 4. Did the trial judge err in dismissing the counter-claim? Analysis

1. Did the Trial Judge Err in Listing the Estimate as $1,200 to $1,800? [2] The trial judge found that the estimate given to the Appellant by the Respondent was between $1,200 to $1,800, based on Exhibit 1. However, Exhibit 1, a letter from the Respondent to the Appellant outlining the work to be done and the estimated cost, lists the estimate as $1,200 to $1,500. [3] With respect, it appears that there was no evidence upon which the trial judge could find that the estimate was $1,200 to $1,800. All witnesses and Exhibits at trial listed the estimate as between $1,200 to $1,500.

Therefore the trial judge was in error in describing the upper limit of the estimate as $1,800 and he should have described it as $1,500. [4] While this error likely did not impact the trial judge’s decision, it is relevant to the determination of the other issues in this appeal. 2. Did the Trial Judge Err in Finding That the Final Cost of $3,827.58 Was Not Excessive? A. The Law [5] In Kidd v.

Mississauga Hydro-Electric Commission (1979), 1979 CanLII 1714 (ON SC) , 23 O.R. (2d) 385, the Ontario Supreme Court considered the legal impact of an estimate where the final invoiced price is much higher than the estimate. In Kidd at 390, Grange J. found that if a contract fails to set a price, the Courts should set a price based on quantum meruit .

However, where the plaintiff estimated a figure that was “wildly inadequate”, the plaintiff should be limited to recovery of the value of that estimate, even if that estimate was vague and not part of the contract. [6] The principle established by Grange J. in the Ontario case of Kidd has been applied and developed in British Columbia, Saskatchewan, Newfoundland, and Nova Scotia: Golder Associates Ltd. v. Mill Creek Developments Ltd. , 2004 BCSC 665 ; Bornhorst Welding Ltd. v. Zwingli , 2007 SKQB 154 ; Household Movers & Shippers Ltd. v. Fanning (1984), 47 Nfld. & P.E.I.R. 169 (N.L.

D.C.) ; Newfoundland Capital Corp. v. Mettam (1986), 1986 CanLII 7023 (NS SC) , 76 N.S.R. (2d) 189 (S.C.T.D.). [ 7 ] In paragraphs 12-13 of Bornhorst , Gerein J. of the Saskatchewan Court of Queen’s Bench summarized the law as laid out in Kidd and developed in each of the other above-listed cases 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 [emphasis added]. [ 8 ] In Bornhorst , Gerein J. also found that his articulated test was consistent with the principles enunciated in the Alberta case of Husky Oil Operations Ltd. v.

Ledcor Industries Ltd. , 2003 ABQB 751 (overturned in part on different grounds, 2006 ABCA 122 ). In Husky Oil at paragraph 40, Nation J. distinguished between a contractual term, a binding estimate, and an estimate that has no legal impact.

In paragraph 38, Nation J. listed a number of factors that a Court should consider in order to determine how the quoted figure should be classified: It is clear the court has to look at the circumstances in which an estimate is provided, the positions of the two parties, the knowledge of the party providing the estimate and whether it was relied upon by the party requesting it.

[ 9 ] In Husky Oil , Nation J. found that the estimate was neither a contractual term nor a binding estimate, and so she did not consider the legal impact of a binding estimate. However, it is likely that where a quoted figure is not a contractual term, but only a binding estimate, the principles applied across Canada and articulated as a test in Bornhorst should be applied. The court should determine whether the variance between the estimate and the final price is reasonable. [ 10 ] In

summary, the test, as established in Kidd and developed in Bornhorst and Husky Oil is as follows: 1. Is the quoted figure a contractual term, a binding estimate, or neither? Apply the following factors: • circumstances in which the estimate is provided • positions of the two parties • knowledge of the party providing the estimate • whether it was relied upon by the party requesting it 2a. If the quoted figure is a contractual term, it is binding. 2b. If the quoted figure is a binding estimate, then consider the following test: is the variance between the estimate and the final cost reasonable? 2c.

If the quoted figure is neither, it has no legal impact. B. Application [1] With respect, it appears that the trial judge applied the wrong test in determining whether the final cost of $3,827.58 was reasonable. In paragraph 27, the trial judge found that the quoted amount of $1,200 to $1,500 was only an estimate, and proceeded to award the Respondent the final amount of $2,017.08 on a quantum meruit basis. However the trial judge failed to address the fact that even when a quoted amount is only an estimate and not a contractual term, it can still have legal significance.

Even if the Respondent was entitled to $2,017.08 on a quantum meruit basis, it is my respectful opinion that the trial judge should have applied the test in Bornhorst and asked whether the variance between the invoiced amount and the estimate was reasonable. [2] In Bornhorst , Gerein J. found that a final cost that was more than double the estimated cost was unreasonable. In the present case, the final cost was also more than double the estimate cost and is therefore unreasonable. A final cost that exceeded the estimate by 10%, or $150 would have been reasonable.

Therefore, the award should be reduced from $2,027.58 to $150. 3. Under the Fair Trading Act , Should the Respondent Be Restricted to Recovering a Final Price That Is No More than 10% Higher than the Given Estimate? [3] Even if I am wrong about the application of the case law under issue 2 above, I find that the Respondent’s recovery should have been limited under s. 6(2) (

e) and s. 13 of the Fair Trading Act , R.S.A. 2000, c. F-2 (the “Act”).. A. Can the Fair Trading Act Be Raised for the First Time on Appeal?

[4] The appellant alleges that the trial judge erred in not applying s. 6(2)(

e) of the Act. The Act was not raised or pled at trial by either party, nor was it addressed by the trial judge. Therefore, the issue has been raised for the first time on appeal. [5] In Olver v. Winnipeg (City) (1914), 1914 CanLII 766 (MB CA) , 6 W.W.R. 161 (M.B. C.A.), the Manitoba Court of Appeal outlined when a new issue can be raised on appeal.

At 163, after surveying a number of cases, including one or more from the Supreme Court of Canada, the Manitoba Court of Appeal summarized the test as follows: It seems clear, then, that this court ought only to decide in favor of the appellant on this ground put forward for the first time if it is satisfied beyond doubt, first, that it has before it all the facts bearing upon the new contention, and second, that no satisfactory answer to these facts could be given by the plaintiff...

The rationale behind this test is that the “conduct of a cause at the trial is governed by, and the questions asked of the witnesses are directed to, the points then suggested” ( Re Tasmania, 15 A.C. 223, at 225, quoted in Olver ). [6] In the present case, I am satisfied that the Court of Queen’s Bench has before it all necessary facts to determine whether the Act should apply. I am also satisfied that the Respondent could not have brought any further evidence at trial to answer this issue.

In this particular case, the parties presented their evidence in a scattered way, without much, if any, regard for the relevant issues. I am satisfied that the parties presented what they felt were their full stories, and that their evidence would not have changed if the Act had been in issue at trial. [7] Therefore, the application of the Act can be considered on appeal. B. What Is the Effect of s. 6(2)(

E) and S. 13 (

f) of the Fair Trading Act ? [8] The relevant sections of the Act are as follows: Unfair practices ... 6(2) It is an unfair practice for a supplier, in a consumer transaction or a proposed consumer transaction, ... (

e) to charge a price for goods or services that is more than 10%, to a maximum of $100, higher than the estimate given for those goods or services unless (

i) the consumer has expressly consented to the higher price before the goods or services are supplied, or (ii) if the consumer requires additional or different goods and services, the consumer and the supplier agree to amend the estimate in a consumer agreement; Court action by consumer

13(1) When a consumer (

a) has entered into a consumer transaction, and (

b) in respect of that consumer transaction, has suffered damage or loss due to an unfair practice, that consumer may commence an action in the Court of Queen’s Bench for relief from that damage or loss against any supplier or any principal, director, manager, employee or agent of a supplier who engaged in or acquiesced in the unfair practice that caused that damage or loss.

(2) In an action under this section, the Court of Queen’s Bench may (

a) declare that the practice is an unfair practice; (

b) award damages for damage or loss suffered; (

c) award punitive or exemplary damages; (

d) make an order for (

i) specific performance of the consumer transaction, (ii) restitution of property or funds, or (iii) rescission of the consumer transaction; (

e) grant an order in the nature of an injunction restraining the supplier from engaging in the unfair practice; (

f) make any directions and grant any other relief the Court considers proper.

(3) In determining whether to grant any relief under this

section and the nature and extent of the relief, the Court of Queen’s Bench must consider whether the consumer made a reasonable effort to minimize any damage resulting from the unfair practice and to resolve the dispute with the supplier before commencing the action in the Court.

(4) The Court of Queen’s Bench may award costs in accordance with the Alberta Rules of Court. Provincial Court 14(1) Subject to the jurisdiction of the Provincial Court, an action under section 13(1) may be commenced under

Part 4 of the Provincial Court Act. [9] Sections 6 and 13 of the Act were interpreted in Brown v. Graul , 2006 ABPC 359 , and in Academy Contractors Inc. v.

O ’Connor , 2004 ABPC 137 . [10] In Academy , Ingram P.C.J. found that a company that did foundation repair work and the homeowner that hired the company were a supplier and a consumer, respectively, under the Act.

Judge Ingram also noted in paragraph 16 that the Act “is intended to protect and enlarge upon the rights of consumers” and that it is not necessary to show negligence or a breach of contract in order for the Act to apply. [ 11 ] In Brown , Norheim P.C.J. decided in paragraph 19 that since s. 13(2) applies “in an action under this section” and not only in an action commenced under it, the Act can be applied by a consumer as a defence to a cause of action. Further, in paragraph 24, Judge Norheim broadly defined the word “estimate” in s. 6(2)(

e) to mean “any amount that the parties have discussed and used as the basis of a consumer transaction.” [ 12 ] In the present case, following Academy , the Respondent is a supplier and the Appellant is a consumer. Following Brown , the Appellant may cite the Act as a defence to the Respondent’s claim. [ 13 ] In this case, the Respondent gave the Appellant an estimate of $1,200 to $1,500. The Appellant did not expressly consent to the higher price before the service was supplied, nor did the parties agree to amend the estimate in a consumer agreement.

Therefore, in charging more than 10% and more than $100 higher than the estimate, the Respondent committed an unfair practice under s. 6(2)(e). [ 14 ] Under s. 13(f), when an unfair practice has been committed under s. 6, the Court has discretion to grant any relief the Court considers proper. At trial, the Respondent’s witnesses emphasized that the house piping had many serious gas leaks that caused the work to take longer than expected. However, the letter that estimated the total cost to be $1,200 to $1,500 was dated May 8, which was the second day of billed work.

Further, the letter listed “several gas leaks on house piping” as one of the many deficiencies that needed to be fixed. Therefore it is proper for the Respondent to be restricted to recovery of an amount only 10% higher than the original estimate. [ 15 ] Therefore the Respondent should have been granted only $150, constituting 10% of the estimated $1,500. [ 16 ] As a final note, while the appellant cited the provisions of the Fair Trading Act in enough detail to give the respondent sufficient notice of the ground of appeal, her citation of the Fair Trading Act was not legally accurate.

The Notice of Appeal should be amended to accurately cite the Fair Trading Act . 4. Did the Trial Judge Err in Dismissing the Counter-claim? [ 17 ] The Appellant counter-claimed for her costs in supervising the work as well as for lost rent due to the Respondent’s failure to complete the work on time. [ 18 ] The trial judge found that the work was done within the specified time frame and that any costs incurred by the Appellant were as a result of her desire to be present while the work was being done, not as a result of the Respondent’s actions in mending the boiler.

In light of these findings, there is no reason to overturn the trial judge’s decision to dismiss the counter-claim. Conclusion [ 19 ] The Appellant’s appeal is allowed in part. The Respondent’s award is reduced to $150. However, the Appellant’s appeal of the trial judge’s dismissal of her counter-claim is dismissed.

[ 20 ] Due to the mixed success of the parties, each party will bear their own costs at trial and at appeal. Heard on the 10 th day of November, 2010. Dated at the City of Red Deer, Alberta this 29 th day of December, 2010. Donald Lee J.C.Q.B.A. Appearances: Both the Appellant and the Respondent Appeared on Their Own Behalf