Slimmon v Precision Fitting Ltd., 2012 ABQB 771

Court of Queen ’ s Bench of Alberta Citation: Slimmon v Precision Fitting Ltd., 2012 ABQB 771 Date: 20121220 Docket: 1101 15263 Registry: Calgary Between: Calvin Slimmon and Janet Slimmon Appellants - and - Precision Fitting Ltd. Respondent _______________________________________________________ Reasons for Judgment of the Honourable Madam Justice S.M. Bensler _______________________________________________________ Appeal from the Oral Decision of The Honourable Assistant Chief Judge N.R. Hess on October 3, 2011 I. Background

[ 1 ] This appeal is brought by two homeowners, Calvin and Janet Slimmon (the "Slimmons"), who entered into an oral agreement with a local landscaping company, Precision Fitting Ltd. ("PFL"), to build a retaining wall on their acreage near Priddis, Alberta. The Slimmons engaged the services of Mr. Stacey Drewes, owner and operator of PFL, to build the retainer wall although they chose to purchase some of their own rock material. No written contract was entered into between the parties. [ 2 ] PFL began work on the Slimmons' property on May 18, 2009. Work continued on the property until May 27. On that date, Mr.

Drewes requested payment of $7,000.00, which the Slimmons paid. The Slimmons then received an invoice on June 1 for $12,611.30. The invoice did not detail any of the work done prior to May 28, nor did it acknowledge the $7,000.00 payment made by the Slimmons. After discussing the invoice with Mr. Drewes, the Slimmons were issued with a second invoice on June 4 that acknowledged the $7,000.00 payment and included details of work carried out prior to May 28.

The amount outstanding was stated as $12,299.92 despite the $7,000.00 payment. [ 3 ] The Slimmons disputed the invoice, arguing that the price greatly exceeded the $6,100.00 price they had purportedly agreed to and that they were dissatisfied with the quality of work performed by PFL. The parties were unable to agree upon a final account and PFL initiated a civil claim against the Slimmons on November 13, 2009.

The Slimmons consulted several landscape companies to determine the nature and extent of deficiencies in the retainer wall, and filed a counterclaim against PFL for their damages on November 15, 2010. [ 4 ] The trial of the Action occurred on October 3, 2011. PFL argued that no payment had been made on the outstanding balance, disputed the Slimmons' claim that the parties had agreed to a price of $6,100.00 and denied that PFL's work had been deficient in any way. The Slimmons' argued that the invoice greatly exceeded the price quoted by PFL and that the wall was not built properly.

Specifically, the Slimmons claimed the wall was "crumbling" and called Mr. Nicholas Lennon, a landscaper, to testify that the wall was so badly built it posed a safety risk. [ 5 ] The Slimmons also presented an estimate of repair costs provided by Burnco Landscape Centre (the "Burnco Estimate") as an estimate of damages but called no one from Burnco to testify as to the content of the document. The trial judge marked the Burnco Estimate as an exhibit but relied on the rules of evidence relating to hearsay in giving it no weight.

It is the trial judge's treatment of the Burnco Estimate that is largely at the centre of the dispute. [ 6 ] While the trial judge stated "in 12 years I've been sitting on this bench, this is one of the worst jobs I've ever had the privilege of watching be completed" and described PFL's work as an "utter breach of contract" and "a substantial breach of contract," he granted PFL's application for a non-suit on the counterclaim for lack of evidence and awarded damages to PFL in the amount of $6,586.15. II. Issues [ 7 ] The Slimmons appeal the trial judge's decision, claiming he erred in law as follows: (

a) in awarding damages to PFL where he also found the contract to have been fundamentally breached (

b) in refusing to consider or give any weight to the Burnco Estimate: (

i) failing to consider, or misapplying,

section 36 of the Provincial Court Act , RSA 2000 c. P-31 (the " Act "); (ii) failing to consider that consideration and weight may be given to hearsay evidence where no objection is made to that evidence; (iii) failing to consider the necessity and reliability of the Burnco Estimate under the exception to hearsay; and, (iv) failing to consider the Burnco Estimate under the business records exception to hearsay; and,

(

c) in granting the Respondent's motion for a non-suit. III. Standard of Review [8] On questions of law, the standard of review is correctness. On findings of fact, appellate courts defer to the trial judge'sfindings and will not interfere unless the trial judge made a palpable and overriding error. Questions of mixed fact and law are reviewedon a standard of palpable and overriding error, unless the trial judge has made an extricable error in principle, which would amount to anerror of law and therefore be subject to review on the correctness standard.

See: Housen v Nikolaisen, 2002 SCC 33, at para 36, [2002] 2SCR 235 [Housen]; Gillespie v 1200333 Alberta Ltd., 2012 ABQB 105 at para 16, [2012] AWLD 1682. [9] The Slimmons submit that the trial judge's errors are all errors of law and should be reviewed on the standard of correctness.Accordingly, the Slimmons state the trial judge should not be entitled to any deference from this Court. IV. Analysis [10] The Slimmons argue the trial judge erred on six grounds. I will address each argument in turn.

(1) The trial judge erred in awarding damages to PFL where he also found the contract to have been fundamentallybreached [11] As stated, the trial judge found there had been an "utter breach of contract" and a "substantial breach of contract" by PFL.Counsel for PFL argues that the trial judge made this finding in the context of the application for non-suit and that it has no bearing onthe rest of the judgment. With respect, I disagree. [12] The trial judge's reasons contain no language limiting his findings regarding PFL's breach to the counterclaim.

His conclusionis based on findings of fact related to the poor quality of PFL's workmanship, which, as previously mentioned, was one of the worst jobshe had seen during his time on the bench. [13] While the trial judge does not explicitly state that PFL fundamentally breached its agreement with the Slimmons, hispronouncements on the extent and severity of PFL's breach are on par with instances where courts have found fundamental breach.

Forexample, at para 42 of Angeltvedt v Flint Field Services Ltd., 2010 ABQB 749, 504 AR 265 [Angeltvedt], Topolniski J. detailed a numberof different formulations of fundamental breach, some of which would apply to the case at bar, including: (

a) A breach which goes to the root of the contract (First City Trust Co. v Triple Five Corp. (1989), 1989 ABCA 28 , 65Alta LR (2d) 193 (Alta CA) at para. 36); (

b) A breach which frustrates the object of the contract (First City Trust Co. at para. 36); (

c) A substantial failure of performance (First City Trust Co. at para. 36); (

d) A breach that deprives a party of substantially the whole benefit which it was the parties' intention that he should obtain from thecontract. The foundation of the contract must be undermined or the very thing bargained for not be provided (Syncrude Canada Ltd. vHunter Engineering Co., (SCC), [1989] 1 SCR 426 (SCC) at para. 137) [14] Fundamental breach of a contract gives the innocent party the right to either affirm the contract or accept the other party's

repudiation [H.G. Beale, ed., Chitty on Contracts , vol. 2 (Toronto: Carswell, 2004) at p. 729]. [ 15 ] I find no error with the trial judge's finding of utter and substantial breach of the agreement by PFL. However, I would add that a finding of utter and substantial breach is effectively a finding of fundamental breach.

PFL's utter failure to build even a minimally safe and effective retainer wall is a substantial failure of performance and a breach that goes to the heart of the agreement, substantially depriving the Slimmons of the whole benefit of the contract. [ 16 ] Accordingly, I find that the trial judge erred in awarding damages to PFL where he also found the contract to have been fundamentally breached. PFL's hapless performance amounts to a repudiation of the agreement, which the Slimmons accepted. There is no longer a contract so there can be no damages.

(2) The trial judge erred in failing to consider, or misapplying,

section 36 of the Provincial Court Act (the " Act ") [ 17 ]

Section 36 of the Act states:

(1) For the purposes of a hearing, the Court (

a) is not bound by the laws of evidence applicable to judicial proceedings, and (

b) may admit any oral or written evidence that it, in its discretion, considers proper, whether admissible in a court of law or not.

(2) Nothing is admissible in evidence at a hearing (

a) that would be inadmissible by reason of any privilege under the law of evidence, or (

b) that is inadmissible by any Act . [ 18 ] While

section 36 grants a provincial court justice discretion to admit a wide variety of material as evidence, it does not require a judge to give that evidence any particular weight. According to Housen , a trial judge's factual determinations, drawing of inferences and assessment of the weight accorded to evidence are all treated with a great deal of deference on appeal. [ 19 ] Opinion evidence which is not spoken to by a witness will likely be given little weight. For example, in Abraham v Peddie Roofing & Waterproofing Ltd. (c.o.b.

Great Canadian Decking) , 2009 ABQB 726 , [2010] AWLD 1805 [ Abraham ], McMahon J. considered the weight of a damage report used to support the issuer's claim for reimbursement. As an assessment of damages, that report is substantially similar to the Burnco Estimate tendered by the Slimmons. Additionally, as with the Burnco Estimate, the Respondents failed to call anyone to speak to the damage report.

At para 14, McMahon J. considered the admissibility and weight of the damage report, concluding: The trial judge also quoted at length from a report prepared by Gravity Engineering. (...) The trial judge allowed it into evidence in the exercise of his discretion pursuant to

Section 36 of the Provincial Court Act (...). There is no error in doing so but given that the report was not spoken to by any witness and that it contained opinion untested by cross-examination, I would give it very little weight. [ 20 ] In the case at bar, the trial judge exercised his discretion in allowing the Burnco Estimate to be tendered. Like McMahon, J. in Abraham however, he correctly accorded the document little weight. The Burnco Estimate was opinion evidence provided by a third party that was not spoken to by a witness and was untested by cross-examination.

It is hardly the conclusive document counsel for the Slimmons claim it to be. [ 21 ] Indeed, the trial judge warned counsel for the Slimmons at trial that the Burnco Estimate would be awarded no weight "unless the author of this document is here for purposes mostly of being cross-examined as to the content of what he has put in this

document." [ 22 ] The trial judge used his discretion to admit the Burnco Estimate and correctly gave it the weight it deserved, which is very little or nothing. The trial judge made no error under

section 36 .

(3) The trial judge erred in failing to consider that consideration and weight may be given to hearsay evidence where no objection is made to that evidence [ 23 ] As discussed, the trial judge considered the Burnco Estimate and accorded it proper weight. [ 24 ] While the Slimmons point out that PFL made no objection to the Burnco Estimate, Mr. Rappel, counsel for PFL, responds that an objection was unnecessary: the trial judge had already made clear he would accord the Burnco Estimate no weight. Consequently, there was nothing more a further objection would have accomplished.

I refer to p. 72 of the trial transcript: THE COURT: But just to make you happy, sir, because you asked it be marked as an exhibit, after I asked Mr. Rappel if he has any objection, I'm going to tell you, sir, if it does hit my bench, it is worth absolutely nothing. Mr. Rappel, do you have any objection to this document being marked in evidence? MR. RAPPEL: No, sir. [ 25 ] The judge considered the weight of the Burnco Estimate and stated his decision. Mr. Rappel's decision not to object to a decision clearly in his favour has no bearing on the weight accorded to the Burnco Estimate by the trial judge.

(4) The trial judge erred in failing to consider the necessity and reliability of the Burnco Estimate under the exception to hearsay [ 26 ] At para 15 of R v Mapara , 2005 SCC 23 , [2005] 1 SCR 358, the Supreme Court of Canada reviewed the principled approach to the admission of hearsay evidence, stating: The principled approach to the admission of hearsay evidence which has emerged in this Court over the past two decades attempts to introduce a measure of flexibility into the hearsay rule to avoid these negative outcomes. Based on the Starr decision, the following framework emerges for considering the admissibility of hearsay evidence: (

a) Hearsay evidence is presumptively inadmissible unless it falls under an exception to the hearsay rule. The traditional exceptions to the hearsay rule remain presumptively in place. (

b) A hearsay exception can be challenged to determine whether it is supported by indicia of necessity and reliability, required by the principled approach. The exception can be modified as necessary to bring it into compliance. (

c) In "rare cases", evidence falling within an existing exception may be excluded because the indicia of necessity and reliability are lacking in the particular circumstances of the case.

(

d) If hearsay evidence does not fall under a hearsay exception, it may still be admitted if indicia of reliability and necessity areestablished on a voir dire. [27] Hearsay evidence, should it be sufficiently reliable and necessary, is admissible under the principled approach.

In R vKhelawon, 2006 SCC 57 at paras 62-63, [2006] 2 SCR 787, the Supreme Court of Canada noted two ways in which a party candemonstrate that hearsay evidence is sufficiently reliable to be found admissible: One way is to show that there is no real concern about whether the statement is true or not because of the circumstances in which it cameabout.

Common sense dictates that if we can put sufficient trust in the truth and accuracy of the statement, it should be considered by thefact finder regardless of its hearsay form. (...) Another way of fulfilling the reliability requirement is to show that no real concern arises from the fact that the statement is presented inhearsay form because, in the circumstances, its truth and accuracy can nonetheless be sufficiently tested. [28] Neither requirement is met in the case at bar. The Burnco Estimate is opinion evidence.

As such, the only way the trier of factcould fairly and effectively assess its reliability is through cross-examination. This is not the type of case where "even a sceptical cautionwould look upon (the evidence) as trustworthy" [Wigmore on Evidence (2nd ed. 1923), vol.

III — §1420, p. 154]. [29] Hearsay evidence may be necessary in a variety of circumstances including where the witness: is deceased (R v Smith, (SCC), [1992] 2 SCR 915, 75 CCC (3d) 257); is non-compellable (R v Hawkins, (SCC), [1996] 3 SCR1043, 141 DLR (4th) 193); is a child, in certain circumstances (R v F (C), (SCC), [1997] 3 SCR 1183, 104 OAC 321);is mentally or physically unfit to testify (R v F (WJ), (SCC), [1999] 3 SCR 569, 138 CCC (3d) 1); or, repeatedlyrefuses to be sworn and testify (R v Goodstoney, 2005 ABQB 128, [2005] AWLD 1823). [30] The trial judge refused to accept that a Burnco representative could not testify due to a supposed conflict of interest, stating: "(T)here is absolutely no reason that that gentleman can't be here and shouldn't have been here – should have been here, rather, andshould have offered testimony as to why this work was required, the nature and scope of the work that he was going to carry out, andwhy it was going to cost 12,000 or 15,000 or $21,000 to carry out." [31] Admission of the Burnco Estimate under the principled approach to hearsay was not necessary.

While the principled approachto hearsay evidence requires a court to be flexible, it does not go so far as to allow hearsay evidence for the mere reason that it would beeasier or more convenient to proceed without a witness.

While Justice Nation held in Husky Oil Operations Ltd. v Ledcor Industries Ltd.,2003 ABQB 751 at para 196, 125 ACWS (3d) 268 [Husky Oil] that "unavailability, being the impossibility of presenting the evidence ina non-hearsay form, is not a strict requirement under the principled approach to hearsay", the circumstances of the case at bar do notreveal any good reason why the author of the Burnco Estimate could not speak to the document at trial.

(5) The trial judge erred in failing to consider the Burnco Estimate under the business records exception to hearsay [32] In Ares v Venner, (SCC), [1970] SCR 608, 14 DLR (3d) 4, the Supreme Court of Canada set out the test forthe admissibility of business records as an exception to the rules of hearsay. Specifically, the Court held at p. 626 that hospital recordscould be entered into evidence by someone other than the author where: (

a) the documents were made contemporaneously in the course of business; (

b) the author had a duty to record the information in the documents; (

c) the author had personal knowledge of the information contained in the documents; and, (

d) the author had no motive to misrepresent the truth in the documents.

[33] In R v Monkhouse, 1987 ABCA 227 , 83 AR 62, 56 Alta LR (2d) 97 at p. 105, Laycraft J. held: These hearsay records are not to be accepted in evidence merely to avoid the inconvenience of identifying a witness or because manywitnesses would be involved, or even because otherwise no evidence would be available. Rather, they can be admitted only if they havecome into existence under circumstances which makes them inherently trustworthy.

Where an established system in a business or otherorganization produces records which are regarded as reliable and customarily accepted by those affected by them, they should beadmitted as prima facie evidence. [34] As part of her analysis of the business records exception to hearsay in Husky Oil, Justice Nation suggested that even under thetraditional exceptions to hearsay rules, courts must consider the role of the principled approach.

After setting out the test for the businessrecords exception, Justice Nation stated at para 196 that "(t)he principled approach to the introduction of hearsay evidence also requiresthat this Court look at whether the record meets the requisite tests of reliability and necessity." [35] Similarly, in R v Metalore Resources Ltd., 2012 ONCJ 518, Dechert J. stated at para 123: It is clear that the thrust of Mr.

Justice Iacobucci's decision in Starr is that to the extent that any traditional common law exceptions to thehearsay evidence rule, including the common law business records exception, may conflict with the requirements of the principledapproach to hearsay, a principled analysis should be undertaken by the trial court. [36] The Burnco Estimate is not a business record. While the documents were made in the regular course of business and involvedpersonal knowledge of the retainer wall, the author was not under a duty to prepare the document.

An estimate is entirely different from ahospital record or a financial statement, both statements of fact involving a duty to record events objectively and truthfully. An estimateis an opinion. Moreover, an estimate is a statement of opinion tendered in an attempt to elicit the sale of goods or services. The businessrecords exception to hearsay does not apply to the Burnco Estimate. [37] If I am wrong and the Burnco Estimate is a business record, I must still consider whether the admission of that documentwould conflict with the principled approach to hearsay.

As stated, I find that the Burnco Estimate fails to meet the requisite tests ofreliability and necessity required under the principled approach to hearsay. Accordingly, the Burnco Estimate would be inadmissibleeven if it qualified as a business record.

(6) The trial judge erred in granting the Respondent's motion for a non-suit [38] The test for an application for non-suit is set out in Belzil v Bain, 2001 ABQB 890 at paras 33-35, 300 AR 72. Specifically, atpara 33, Justice Kenny states: A non-suit should only be granted in the clearest cases. There must be "no evidence which if believed and not contradicted would supporta jury finding for the plaintiff" (W.A. Stevenson & J.E.

Côté, Civil Procedure Guide 1996, Vol. 1 (Edmonton: Juriliber, 1996) at 1142[emphasis added]). [39] More recently in Inland Concrete Ltd. v Commonwealth Insurance Co., 2010 ABQB 600 at para 15, 37 Alta LR (5th) 155,Justice Germain stated "non-suit applications succeed where the plaintiff fails to provide any legal or evidentiary basis on which thelawsuit can succeed." [40] Addressing counsel for the Slimmons, the trial judge stated "there's been a breach, but, in my view, no evidence introducedwhatsoever as to what it's going to cost to renovate the breach. So what am I going to do with your counterclaim?"

[ 41 ] Given the Slimmons' failure to provide reliable evidence quantifying damages, there was no legal basis on which their counterclaim could succeed. Accordingly, the trial judge was correct in granting PFL's motion for a non-suit. V. Conclusion [ 42 ] The trial judge erred in awarding damages to PFL where he also found the agreement to have been fundamentally breached. Accordingly, I set aside the trial judgment granted in favour of PFL. [ 43 ] However, despite the breach by PFL, the Slimmons were unwilling or unable to call evidence sufficient to establish their loss.

Specifically, the Burnco Estimate was properly admitted and given appropriate weight by the trial judge. Consequently, I dismiss the Slimmons appeal on their Counterclaim. Heard on the 29 th day of June, 2012. Dated at the City of Calgary, Alberta this 20 th day of December, 2012. S.M. Bensler J.C.Q.B.A. Appearances: Alexis Teasdale, Bennett Jones LLP for the Appellants Christopher P. Rappel, Hoffman Dorchik LLP for the Respondent