McKercher v The Renovation Store Ltd, 2015 ABQB 748

Court of Queen ’ s Bench of Alberta Citation: McKercher v The Renovation Store Ltd, 2015 ABQB 748 Date: 20151126 Docket: 0903 04274 Registry: Edmonton Between: Barry McKercher and Jeri McKercher Plaintiffs - and - The Renovation Store Ltd and Randall Edward Keehn Defendants _______________________________________________________ Reasons for Judgment of the Honourable Madam Justice S.J. Greckol _______________________________________________________ I. Introduction [ 1 ] The McKerchers embarked on a dream home renovation with that went badly awry.

They have sued the corporate Defendant and its principal, Randall Keehn, for breach of contract, and invoked the terms of the Fair Trading Act , RSA 2000 c F-2 ( FTA ), to gain redress from the owners and proprietors of the business.

II. The Claims [ 2 ] Jeri McKercher and Barry McKercher are married and own a home at [...] 105 Street in Edmonton, Alberta. The Renovation Store Ltd (The Renovation Store) is a limited company carrying on business in Edmonton and elsewhere in Alberta. Randall Edward Keehn (Mr. Keehn) is a Shareholder and Director of The Renovation Store and acted on behalf of The Renovation Store in all dealings and communications with the Plaintiffs. [ 3 ] The McKerchers filed a Statement of Claim on March 24, 2009, alleging breach of a renovation contract.

They filed an Amended Statement of Claim on August 29, 2013, further alleging breach of contract, as well as breach of the FTA . In particular, they plead the provisions of Parts 1, 2, and 10 of the FTA . [ 4 ] They state that The Renovation Store and Mr. Keehn represented to them that they were experts in performing renovations to residential premises. They also represented that the work would be completed in a timely fashion, and in a good and workmanlike manner using superior materials and highly skilled workers.

Relying on the representations, the couple entered into an agreement with the Defendants for the construction of improvements to their home (the contract), on September 27, 2007. The McKerchers allege that a term of the contract was that the workers would be skilled in their trade or calling, and that un-skilled labourers would not be used in the performance of the contract. [ 5 ] Mr. and Ms. McKercher allege that The Renovation Store and Mr. Keehn breached the terms of the contract or alternatively, engaged in unfair practices, by inter alia : (

a) Engaging agents, employees, sub-contractors and labourers who were not duly licensed or skilled; (

b) Failing to perform work in a good and workmanlike manner using superior materials and highly skilled workers; (

c) Failing to obtain the necessary permits before commencing the renovation, or at all; (

d) Proceeding with replacement of the wiring system in the house when such replacement was not needed or desirable; (

e) Removing a load-bearing wall without a permit or approval; (

f) Supplying and installing goods which were different than those referenced in the Contract; (

g) Failing to complete the scope of work referenced in the Contract; (

h) Failing to remedy deficiencies; and (

i) Stating that the goods and services would be supplied within a stated period when the Defendants knew that they would not. [ 6 ] They contend that the Defendants neglected and refused to correct the deficiencies and shoddy workmanship, or complete the contract in a good and workmanlike manner, notwithstanding that the Defendants are in possession of a report outlining the deficiencies and the corrective action required. [ 7 ] The McKerchers contend that they paid costs of accommodation prior to moving into their uncompleted home, suffered inconvenience and significant mental distress because the Defendants failed to complete the renovations, and that they will be required to retain the services of an engineer and contractor to complete the renovations to their home as well as to rent accommodations for approximately one to three months in order to have the renovations completed. [ 8 ] The Defendants initially filed a Statement of Defence and Counterclaim on May 22, 2009.

They then filed an Amended Statement of Defence and Counterclaim on January 3, 2014. In their Amended Counterclaim, the Defendants allege that the McKerchers failed to pay the amounts agreed to under the contract and must pay damages for the unpaid sums together with interest, as well as solicitor-client costs under the terms of the contract. Alternatively, they claim that the McKerchers have been unjustly enriched by the work of the Defendants or owe damages on a quantum meruit basis. [ 9 ] Although properly served, the Defendants did not attend this trial nor were they represented by counsel.

Their Counterclaim is dismissed for want of prosecution. III. Facts [ 10 ] Ms. McKercher works for the Edmonton Catholic School Division teaching and helping blind children. Mr. McKercher is a tradesman. They have lived at [...] 105 Street since 1978. Their home was built in 1947. They had done few improvements over the years, and were looking to renovate and update their home. They imagined an open concept design on the main floor and a bay window with a window seat in the living room. [ 11 ] I found Ms. McKercher to be a very capable and credible witness.

She gave her evidence clearly and had a strong memory for details. She had appropriately high expectations that the job would be completed as promised and done well. While a self-confessed perfectionist, it is also clear that she planned carefully for the changes she would make to this house that they loved over many years, electing to renovate it so that they could remain there the balance of the years of independent living, rather than move to a new or different home. In short, I accept all of her evidence as to the failure of The Renovation Store and its principal, Mr.

Keehn, to meet the contractual obligations. [ 12 ] Mr. Keehn came to the McKercher home five or six times to discuss the vision for the project, then drafted a written contract,

which he prepared. This written contract consists of three pages. The first two pages detail the work, services, and materials that The Renovation Store would provide. Additional terms are typed into the “Comments” section. There is some handwriting on the first page referencing a deposit of $24,000 and, on the second page, Ms. McKercher printed her name, and signed and dated it. The third page contains approximately 17 bulleted items under the heading “Description and Terms”.

Notably, this page does not contain what is typically called an “Entire Agreement Clause”. [ 13 ] The written contract set out all the specific supplies and installations to be provided and identifies various appliances by model number. The contract states that the price was based on the client leaving the home for 30 days; accommodation would be covered for any longer period. A warranty extended to labour for one year. All permits were to be included. [ 14 ] Ms. McKercher gave evidence of additional terms that she says were part of the contract, but which are not expressly stated in the written document.

She specifically required that licensed tradespeople be used for the job. She also testified of Mr. Keehn’s representations that the work would be completed in a timely fashion and in a good and workmanlike manner using superior materials and highly skilled workers. I find that the written document was not the entire agreement between the parties and that the requirement to use skilled tradespeople and Mr. Keehn’s other representations were also terms of the contract. [ 15 ] The Plaintiffs gave Mr.

Keehn a down payment cheque in the sum of $24,000, a further cheque of $24,000 when the hardwood was installed, and eventually, sums totalling $72,000. The balance was to be provided upon completion. [ 16 ] Mr. and Ms. McKercher moved out of the home on December 16, 2007 and did not move back in until March 8, 2008. Mr. McKercher worked nearby. He visited the site on many occasions in that period, but found that neither the workers nor Mr. Keehn were there for periods of up to a week.

When they moved back into the home, the renovation was not close to being finished. [ 17 ] The bathroom contained neither a counter nor a shower. There were no kitchen appliances nor washer and dryer. When the washer and dryer did arrive, they were not the correct models. The house was not completed by the summer of 2008, and the McKerchers lived in their garage while the work continued. The installation of the plumbing and hot water was still underway. Mr. McKercher made fruitless requests to see the building permits. [ 18 ] A building inspector from the City of Edmonton visited.

Through discussions with him, Ms. McKercher learned that The Renovation Store had obtained a permit for an existing window rather than a new bay window. The permit had been obtained based on a misrepresentation. The inspector issued orange violation tickets that stated “unacceptable”. [ 19 ] About August 25, 2008, The Renovation Store workers stopped coming to work on the project. [ 20 ] Ms. McKerchers particularly wanted natural stone flooring and a window box in the kitchen as well as the bay window.

The stone that arrived at the home was not the stone she had ordered and was not the right colour; the merchant from the tile store was summoned and confirmed the tile was not from his store. The tile was flat brown, rather than natural, glazed orange. Despite Ms. McKercher’s objections, the wrong tiles were installed. The cost to remove and replace the tiles is $11,380.52. [ 21 ] The Renovation Store told Ms. McKercher that window boxes to fit her kitchen windows could not be found and so it installed smaller windows.

Award Windows has provided an estimate for replacement of windows to the correct specifications at a cost of $3,711.75. [ 22 ] All of the problems remain. It will cost more money to repair the mistakes than to begin work afresh; and the family cannot afford it. The bathroom has no functioning shower and Ms. McKercher must wash her hair in the laundry room. The bathroom counter is too low, with the backsplash being too short to be effective. The shower rod does not hold weight. [ 23 ] In the kitchen, the plan called for a narrow and deep fridge to fit the allotted space.

The Defendants ordered a fridge of the wrong size, so that the door cannot open completely. The cupboards are the wrong depth. Where Ms. McKercher formerly had a set of double stainless steel sinks, she now has a sink and one half as the renovators miscalculated and improperly cut the space for the installation. [ 24 ] The McKerchers commissioned an expert report concerning the major deficiencies from Eldon Schechtel who has over 49 years’ experience in residential, commercial and industrial construction and has been involved in building inspection since 1983. Mr.

Schechtel was qualified as an expert to testify at trial, and his report was accepted in evidence. [ 25 ] He inspected the McKercher home for the purpose of collecting information on the quality of workmanship provided by the contractor in completing renovations and to provide cost estimates for necessary repairs. In his report of September 6, 2012, Mr. Schechtel concluded that The Renovation Store did not meet the requirements of the Alberta Safety Code Act and permit requirements of the City of Edmonton that were necessary to complete a renovation.

He found that The Renovation Store performed substandard and shoddy workmanship in numerous areas and billed for extra work that was unnecessary and inappropriate. [ 26 ] The report prepared by Mr. Schechtel lists a host of deficiencies, including ruined hardwood floors, wall damage, and a slope in the floor as a result of two support walls having been removed.

He notes deficiencies with the electrical junction box at the base of the stairs, the hallway closet, the bathroom, the master bedroom, the living room, the front entrance, the dining room, the kitchen, the basement, the paint job throughout the house, as well as faulty repairs on the exterior of the house. [ 27 ] He summarizes some of the issues at page 6 of his report: I reviewed the report addressed to Jeri McKercher from Quinn’s Plumbing dated June 1, 2009 and, based on what I found in place, I believe this report provides an accurate description of what was needed to rectify the problems associated with the gas supply lines and venting for the water heater.

I am of the opinion that the structural concerns with the floor of the bedroom above the kitchen area, where the walls supporting this

floor were altered, can be corrected by installing engineered joists in the affected area. This will, however involve a considerable amount of work which will include removing and replacing the drywall ceiling over the entire kitchen area. It is important to note that the City of Edmonton building inspection department advised me that this is a significant deficiency and must be corrected for which a building permit will be required, as there has never been a permit issued for structural alterations.

The only record they have on file, as far as building permits are concerned, is for installing a bay window, which was issued on August 22, 2008. Confirmation of that is attached. With regard to the electrical rewiring of the house, I am of the opinion that the service amperage to the house should have been assessed by the person(

s) who quoted and recommended the installation of the electric water heater. My understanding of the proposal/contract is that all of the electrical work needed to accommodate the appliances, lights, and rerouting of wires, is included in the total price.

It is understandable that some unforeseen issues often come about with electrical wiring as renovations progress resulting in additional costs; however it is normal practice when quoting installation of appliances that will require more electricity than that of current components in use, the amount of available power (volts/amps) must be determined and compared with the added demand modifications such as replacing a gas fired hot water heater with the electric type described in the proposal/contract.

It appears that The Renovation Store failed to take into consideration that the electrical service needed to be upgraded from 70 amps to 100 amps for the added power demanded by the electric water heater and presented the McKerchers with a change order in the amount of $11,948.49, dated February 29, 2008. It should be noted that the change order states that the house must be rewired, which is false and deceiving.

The only changes needed for operating the electric water heater was the service entrance at an average cost of $3,500.00 and, since it has been removed, the added cost of upgrading the service entrance was unnecessary as well. [ 28 ] Mr.

Schectel’s estimated costs to rectify the major deficiencies is found at page 8 of his report: • Repair second floor structures over the kitchen area in compliance with Alberta Safety Code requirements and complete all casing and trim $ 12,000.00 • Install handrail to basement stairs $ 400.00 • Supply heat duct to bay window area of living room $ 800.00 • Install bracket support under bay window of dining room $ 1,000.00 • Install flashing and proper trim to south facing windows $ 700.00 • Reinforce electrical service mast $ 400.00 • Provide backing support for shower curtain rod $ 600.00 TOTAL $ 15,900.00 • Add quote from Quinn’s Plumbing to rectify plumbing $ 564.00 [ 29 ] The McKerchers retained Quinn’s Plumbing & Heating Ltd to repair the plumbing issues.

This company was called to the home on May 4, 2009 to look at the water heater as there was no hot water. The report prepared by Quinn’s details installation problems such that it was necessary to shut the gas-fueled heater down for safety reasons and replace the heater. Though the initial quote was $564.00, the invoices dated May 4, 2009 amount to $6,611.85 ($2,262.75 plus $4,349.10). [ 30 ] Of the many deficiencies that Mr.

Schechtel attested to, he was particularly concerned about the lack of any building permits from the City; about the improper installation of the water heater that was repaired by Quinn’s; about the removal of supporting walls on the main floor that resulted in structural problems including a sagging floor in the bedroom; and the installation of the bay window installed without a permit proper exterior supports, or a heating vent. He also testified that the change order purporting to require the rewiring the house was excessive and unnecessary.

He noted that the report from the City of Edmonton building inspector dated August 25, 2008, directed a new building permit to detail all construction components, and a report from a structural engineer. [ 31 ] In questioning, Mr. Keehn agreed that he did not obtain permits for the McKercher renovation, and that he did not have an inspection by the City of Edmonton. He also agreed that the walls were not primed so as to seal them before painting. He acknowledged not fixing cracks in the stone floors or dealing with the issues about the stone flooring. [ 32 ] Mr.

Schechtel testified that the costs to rectify the problems would increase by 3% each year after his report was completed. Presumably this is due to inflation. IV. Law [ 33 ] The common law of contract and the FTA apply in this action. The FTA is comprehensive legislation aimed at protecting consumers. As noted by Jeffrey J in Patel v W G Housing Ltd , 2012 ABQB 734 , “The legislative purposes of the FTA have been found to ‘protect unsuspecting consumers from unconscientious suppliers of goods and services’” (at para 170, citations omitted).

This Act contains significant consequences for unconscientious suppliers, including punitive or exemplary damages. V. Analysis [ 34 ] The Plaintiffs claim breach of contract. They also claim breach of the FTA . I will address each separately.

A. Breach of the Contract [ 35 ] The original contract was for the sum of $96,000. The written part of the contract does not specify who the parties of the contract are, though The Renovation Store is on the letterhead. Because of my findings that the contract consisted of oral terms in addition to the written terms and that Mr. Keehn’s representations formed part of the contract, I find that the parties to the contract are Barry McKercher, Jeri McKercher, The Renovation Store, and Mr. Keehn.

I further find the contract to be a valid and enforceable agreement. [ 36 ] The McKerchers paid the Defendants $72,000 of the total amount. The promised renovation was not provided and not completed. Simply stated, the Defendants did not fulfill their part of the bargain. [ 37 ] The Counterclaim for the balance of the contract price was not prosecuted and hence, this Court dismisses it. The Renovation Store and Mr.

Keehn failed to attend at trial and did not defend against the Plaintiffs’ claims. [ 38 ] I am satisfied that the McKerchers have proved on a balance of probabilities that the Defendants breached the contract by failing to provide the below elements of the renovation as promised.

Alternatively, where the elements were provided, they were done in a substandard fashion, with deficient and poor workmanship: • the appliances as agreed, with a narrow and deep refrigerator to fit the renovated space; a two-bowl stainless steel sink, and window boxes; • the open concept living space as agreed; instead, removing two support walls so that the structure of the second floor was compromised and the bedroom floor slopes; • a usable shower in the bedroom or a suitable counter space and backsplash around the bathroom sink; • a stone floor of a quality and colour agreed upon between the parties; • a functional water heater, such that necessarily the heater was replaced; and • a bay window with proper exterior supports and a heating duct. [ 39 ] The McKerchers have also proved that the Defendants used agents, employees, sub-contractors, and labourers who were not duly licensed or skilled and failed to perform work in a good and workmanlike manner using superior materials and skilled workers.

The Defendants further failed to obtain the necessary permits before commencing the renovation; indeed, the permits were never obtained. [ 40 ] I conclude that the McKerchers have proved their claims with respect to the breach of contract. [ 41 ] The Plaintiffs claim costs for remediation of the deficiencies and the Defendants’ various errors in performing the contract. Of the costs that are claimed for remediation, as listed at para 28 above, I conclude that all have been proved except the amount of $564 included in the Quinn’s quote.

I find that amount to be subsumed in the Quinn’s account that was paid in full. [ 42 ] I also conclude that the costs to replace the tiles and the wrongly-sized windows have been proved. B. Breach of the Fair Trading Act [ 43 ] The McKerchers have also brought a claim for breach of the FTA . Under the s 1

definitions, I find that the McKerchers are consumers, and The Renovation Store and Mr. Keehn are each suppliers of services.

I further find that the contract is a transaction for the provision of services that involved the “alteration of a residential dwelling”. [ 44 ] By the terms of s 6(4), unfair practices include “a supplier’s representation that goods or services are of a particular standard, quality, grade, style or model if they are not” (s 6(4)(e)); “a supplier’s representation that goods or services will be supplied within a stated period if the supplier knows or ought to know that they will not” (s 6(4)(n)); and “a supplier’s representation that a part, replacement, repair or adjustment is needed or desirable if it is not” (s 6(4)(p)). [ 45 ]

Section 7 allows consumers to cancel the contract if a supplier engaged in unfair practices. This

section specifically entitles consumers to any remedy that is available at law, including damages.

Section 7.1 requires the consumer to “give notice within one year of a supplier having been found to have engaged in an unfair practice” to be able to access the remedies outlined in ss 7(1)-(3). If the consumer does not do this within the one-year period, the Court may, nonetheless, disregard the s 7.1 requirement “if the Court considers that it is in the interest of justice to do so” (s 7.2(3)). [ 46 ] Under s 7.2(1), the Court may award exemplary or punitive damages as well as any other remedy it considers proper.

Section 7.2(2) permits oral evidence respecting the unfair practice despite the existence of a written agreement, and though it pertains to a representation concerning a term not provided for in the agreement. Under s 7.3, each “… person who engages in an unfair practice is jointly and severally liable with the supplier who entered into a consumer transaction that was subject to the unfair practice with a consumer for any amount to which the consumer for any amount to which the consumer is entitled under

section 7 or 7.2.” [ 47 ] Additionally, s 13 provides that a consumer may commence an action in this Court for relief from 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 has caused the damage or loss. This

section also delineates that the Court may declare that a practice is an unfair practice; award damages for damage or loss suffered; award punitive or exemplary damages, grant any relief the Court considers proper, and award costs in accordance with the Alberta Rules of Court , AR 124/2010 ( Rules ).

[ 48 ] Section 13(3) mandates that when determining whether to grant any relief under s 13, the Court must consider whether the consumer made a reasonable effort to minimize any damages resulting from an unfair practice and to resolve the dispute with the supplier before commencing an action. [ 49 ] I find that The Renovation Store and its principal, Mr. Keehn, breached s 6(4) of the FTA . The Defendants made representations that the goods or services would be provided by skilled tradesmen, and those particular models of appliances, fixtures, and flooring would be provided, but they failed to do so.

They made representations to the McKerchers that the work would be done within a reasonable time, but exceeded the time frame by many months, causing great inconvenience to them and disruption to their lives, and for some of the contracted renovations, did not ever complete them. Finally, they represented to the McKerchers that a particular alteration – the re-wiring of the house – was needed, rather than a more modest electrical upgrade. I am satisfied on the whole of the evidence that the re-wiring of the entire house was unnecessary. I find that the Defendants’ representations were unfair practices.

Since both Defendants engaged in unfair practices, both are jointly and severally liable under s 7.3. Even if I am wrong that Mr. Keehn personally engaged in unfair practices, because he is the principal and director of The Renovation Store, he is liable by virtue of s 13(1). [ 50 ] What is not clear on the evidence is whether the McKerchers satisfied the notice requirement under s 7.1. The problems with the renovation (and incidentally, an awareness of the problems with the Defendants’ representations about the renovations) surfaced in the spring and summer of 2008.

They would have known of significant issues when the Defendants or their agents, sub-contractors, employees or labourers stopped working at their home on or about August 25, 2008. [ 51 ] The McKerchers’ original Statement of Claim was filed on March 24, 2009 and the Defendants filed their original Statement of Defence on May 22, 2009. This was likely within the one-year period contemplated by s 7.1. However, the original Statement of Claim makes no mention of unfair practices or the FTA . This leaves me with some doubt as to whether the s 7.1 notice requirement was met.

However, given the seriousness and magnitude of the deficiencies, together with the Defendants’ complete abrogation of responsibilities to fulfill the contract I conclude that it is in the interests of justice for this Court to disregard the notice requirement as authorized by s 7.2(3). [ 52 ] Turning now to the s 13(3) considerations, I find that the McKerchers made reasonable efforts to minimize damage resulting from the Defendants’ unfair practices. They did so by living in their garage in the summer of 2008, and repeatedly asking the Defendants to remedy the deficiencies. They sought an opinion from Mr.

Schechtel as to the cost of repairing the major deficiencies and received quotes to replace the tiles and wrongly-sized windows. Unfortunately for them, they have been unable to remediate much of the damage the Defendants caused due to a lack of funds. However, the FTA does not require them to remediate the damage, just to make reasonable efforts to minimize it. I am satisfied that they have fulfilled their responsibility. The McKerchers also undertook many efforts to resolve their dispute with the Defendants before commencing this action. They have satisfied their obligations under s 13(3). C.

Damages [ 53 ] The McKerchers have proven their claims in breach of contract and breach of the Fair Trading Act . Therefore, they are entitled to damages. Having made these findings, I must now determine the quantum of damages available to the McKerchers. i. Special Damages [ 54 ] In his oral evidence, Mr. Schechtel testified that the cost to repair the major deficiencies outlined in his September 2012 report (and repeated at para 28 above) should be increased by 3% per year to reflect the increased costs in today’s dollars. I accept this.

Therefore, the sum of $15,900 is to be increased by 9% (i.e. 3% per year for each of the three years from the date of his report to the commencement of the trial). The McKerchers are entitled to special damages for the deficiencies outlined in Mr. Schechtel’s report in the total sum of $17,331. [ 55 ] The McKerchers are entitled to be recompensed for the amount paid to Quinn’s for the plumbing and heating services required to repair and complete some of the deficiencies, which I have found to total $6,611.85.

They are further entitled to the cost to replace the tiles in the sum of $11,380.52 and the cost to replace the wrongly-sized windows in the sum of $3,711.75. ii. General Damages [ 56 ] Counsel for the McKerchers argued that in this case, given the extreme problems with the renovation, and given the mental distress caused particularly to Ms. McKercher, an award of $25,000 damages for mental distress ought to be awarded. [ 57 ] The evidence shows that the McKerchers lived in their modest home for almost four decades without notable improvements.

As they approached retirement, rather than move to a newer home, they decided to bring a contemporary new design to their home by doing an extensive renovation. Ms. McKercher invested a great deal of time and energy in the project and had agreed to pay a large amount of money ($96,000) to achieve her dream home. [ 58 ] The evidence also shows that Ms. McKercher is a woman of taste and has certain style standards. She was not content with low quality substitutes for the design elements that she had been promised and was entitled to receive.

Instead, The Renovation Store and its principal failed to provide the appliances, fixtures, structural improvements, and finishing’s as promised or in some cases, at all. [ 59 ] The renovation was to be completed within a month of the McKerchers leaving the home for that purpose in December of 2007; instead, they moved back in March of 2008, having to pay rent while the house was under construction. Even then, it was not finished. There continued to be problems: the upstairs bathroom was without a shower or counter and there were no appliances in place.

These problems resulted in them staying in their garage over the summer of 2008. [ 60 ] Ms. McKercher has proved that she suffered anxiety and stress caused by the failure of Mr. Keehn and/or The Renovation Store to obtain building permits from the City of Edmonton. The Defendants kept pressing for more money though the renovation was

proceeding so badly or not at all. The work was never completed, and the structural, as well as finishing, deficiencies remain to this day. [61] Ms. McKercher loved her home. I find that she did not want to buy another home when the time arrived to plan forimprovements that would see the couple into retirement. She takes great pride in being a homemaker and in ensuring that her home is inorder, clean and ready for family activities. Her home has not been in order now for eight years. The renovation and its aftermathaffected Ms. McKercher’s job.

She became increasingly anxious and was diagnosed with an anxiety disorder. She saw a psychologist fora period of three years, three times a week at the outset and then once a week. Her physicians, a family doctor and a psychiatrist,prescribed Xanax. She missed almost two years of work. Ms. McKercher’s work involves helping blind children, an occupation thatundoubtedly requires patience and focus. [62] Ms. McKercher provided convincing evidence of her mental distress and frustration occasioned by her dealings with theDefendants.

She did not obtain the workmanship or the product that was promised to her by the terms of the contract. She presented as afastidious and conscientious person with reasonable expectations for her version of a dream home. Instead, she had a nightmarerenovation where the Defendants provided substandard and wrong services and products. Moreover, The Renovation Store and itsprincipal caused substantial damage that remains.

The couple has not been able to afford repairs of the damage and rectification of thedeficiencies. [63] Though damages for mental distress were traditionally not recoverable in contract, that principle began to change by theinnovation of Lord Denning. The Supreme Court of Canada traces the history of the rule in Fidler v Sun Life Assurance Co of Canada,2006 SCC 30, at paras 27 to 44. Specifically at paras 44-47, the Supreme Court stated: 44 We conclude that damages for mental distress for breach of contract may, in appropriate cases, be awarded as an application ofthe principle in Hadley v Baxendale: see Vorvis.

The court should ask “what did the contract promise?” and provide compensation forthose promises. … The measure of these damages is, of course, subject to remoteness principles. There is no reason why this should notinclude damages for mental distress, where such damages were in the reasonable contemplation of the parties at the time the contract wasmade.

This conclusion follows from the basic principle of compensatory contractual damages: that the parties are to be restored to theposition they contracted for, whether tangible or intangible. 45 It does not follow, however, that all mental distress associated with a breach of contract is compensable. In normal commercialcontracts, the likelihood of a breach of contract causing mental distress is not ordinarily within the reasonable contemplation of theparties. It is not unusual that a breach of contract will leave the wronged party feeling frustrated or angry.

The law does not awarddamages for such incidental frustration. The matter is otherwise, however, when the parties enter into a contract, an object of which is tosecure a particular psychological benefit. In such a case, damages arising from such mental distress should in principle be recoverablewhere they are established on the evidence and shown to have been within the reasonable contemplation of the parties at the time thecontract was made.... … 47 This does not obviate the requirement that a plaintiff prove his or her loss.

The court must be satisfied: (1) that an object of thecontract was to secure a psychological benefit that brings mental distress upon breach within the reasonable contemplation of the parties;and (2) that the degree of mental suffering caused by the breach was of a degree sufficient to warrant compensation. These questionsrequire sensitivity to the particular facts of each case. [64] In Bortolussi v Besselton Construction Ltd, 2013 BCSC 475, Weatherill J awarded damages for breach of contract in respectof a construction contract for a pool, spa, and back yard improvements. The company did not defend.

The Court described the company’sperformance as a disaster, the workers inept, the project delayed, the foreman incompetent, and the shoddy. He awarded Ms. Bortolussigeneral damages in the sum of $20,000, stating, at para 34: 34 The law is also well-settled that non-pecuniary losses arising from breach of contract are compensable, including complaints ofphysical inconvenience or emotional distress, so long as that loss is foreseeable: Fidler at para. 31. Here, the complaints of the plaintiffgo beyond mere disappointment.

She must live with permanent deficiencies in what was intended to be her dream backyard pool and spa.General damages have been awarded in such circumstances: Mundell v Wesbild Holdings Ltd, 2007 BCSC 1326 at para 86; Erskine vMacArthur, [2000] OJ No 462, 2000 CarswellOnt 431 at para 20, cited with approval by Mr. Justice Cullity in Tucci v City ConceptsConstruction Ltd, [2000] OJ No 1723, 2000 CarswellOnt 1753 at para 15. [65] As noted in Bortolussi, another case of an unfortunate renovation is Tucci v City Concepts Construction Ltd (2000), 2 CLR(3d) 291, [2000] OJ No 1723 (Ont SCJ).

The work was to be completed by July 1999 but was not yet finished by the date of hearing,May 2000. A building inspector testified as to the long list of deficiencies that would cost $66,000 to repair. The company did not defendand was noted in default.

Considering the degree of inconvenience, loss of enjoyment and emotional distress caused by the company’ssubstandard performance, and the period of months it continued, the court awarded $15,000 for mental distress damages for therenovation gone wrong. [66] In Taylor v Gill, (Alta QB), Deyell J awarded mental distress damages for a real estate transaction wherethe vendors relied on an unconditional offer to enter another real estate transaction. The Court set out a number of considerations at para44.

There, the Court considered that the claimant suffered more than “vexation, frustration, distress and anxiety”; rather she was too ill toattend work on a number of occasions. She broke out in hives, and experienced facial swelling, all evidence of mental distress caused bythe breach of contract of the proposed purchasers. The Court awarded $7,500 for mental suffering in that case. [67] I note parenthetically that the considerations that Deyell J laid out in Taylor have been overtaken by the Supreme Court rulingin Fidler.

However, in my view the principles described continue to apply, as does the availability of general damages for mentaldistress. [68] Adverting to the considerations set out in Fidler at para 47, I am satisfied that an object of this renovation contract was tosecure a psychological benefit that brought mental distress upon breach within the reasonable contemplation of the parties and the degree

of mental distress caused by the breach was of a degree sufficient to warrant compensation. [69] The McKerchers are entitled to be recompensed for the damage caused to their home and deficiencies in the performance ofthe renovation contract, as well as damages for the emotional harm occasioned by the breach of contract. [70] As a result of this renovation fiasco, the mental distress suffered by Ms. McKercher should be recompensed by a generaldamages award of $20,000. iii. Punitive or Exemplary Damages [71] Under s 13(2)(

c) of the FTA, the Court may award punitive or exemplary damages in addition to any other remedy available. [72] In Whiten v Pilot Insurance Co, 2002 SCC 18, the Supreme Court of Canada described the test for punitive damages at para36: 36 Punitive damages are awarded against a defendant in exceptional cases for “malicious, oppressive and high-handed” misconductthat “offends the court’s sense of decency”: Hill v Church of Scientology of Toronto, (SCC), [1995] 2 SCR 1130(SCC), at para 196.

The test thus limits the award to misconduct that represents a marked departure from ordinary standards of decentbehaviour... [73] On the whole of the evidence, the Defendants’ conduct towards the McKerchers and their approach to the renovationsrepresent a marked departure from the ordinary standards of behaviour that this Court expects from renovation contractors. I amparticularly troubled by the Defendants’ removal of a load-bearing wall without any consideration of the effect of that act or consultationwith engineers or other experts.

Moreover, the Defendants’ irresponsible actions in failing to get proper building permits and, in fact,misrepresenting to the City of Edmonton the type of work they were doing in getting the one permit for window replacement offends theCourt’s sense of decency. [74] This action is not one of disagreement over finishing touches or extra expenses. The Defendants have left the McKerchers’home in a state of shambles.

They have spent significant sums of money and are left with an unfinished home, requiring further majorand costly repairs. [75] Accordingly, I award punitive damages in the sum of $10,000 against the Defendants. [76] Another possible basis for awarding punitive damages has to do with the Defendants requiring the McKerchers to pay some ofthe construction costs up front, which I find they did. This type of contract is referred to as a “prepaid contract” in s 5(2) of theDesignation of Trades and Businesses Regulation, AR 178/99.

Part 10 of the FTA requires any prepaid contracting business to belicensed. The FTA also provides consequences for failure to hold the proper license. [77] In this case, the evidence is not clear whether the Defendants held the proper license for a prepaid contracting business.Therefore, I decline to award additional punitive or exemplary damages on that basis. Evidence that they did not hold the requisite licenselikely would have resulted in increased punitive damages. VI.

Non-compliance with the FTA [78] On the strength of this Court’s decision, and in particular the Court’s findings of the Defendants’ non-compliance with s 6 ofthe FTA, the Court encourages the McKerchers to notify the Director of Fair Trading at Service Alberta. This might spare otherunsuspecting homeowners from finding themselves in a similarly unfortunate mess. VII. Conclusion and Costs [79] The McKerchers are entitled to damages for breach of contract and breach of the FTA, as set out in this decision. They arealso entitled to pre-judgment interest under the Judgment Interest Act, RSA 2000 c J-1.

The Renovation Store and Mr. Keehn are jointlyand severally liable under the provisions of the FTA. [80]

Part 10, Division 2 of the Rules governs costs. Trial judges have a wide discretion to award costs: Stagg v Condominium Plan882-2999, 2013 ABQB 684 at para 20. That discretion must be exercised judicially and in accordance with established principles:Lameman v Alberta, 2011 ABQB 532 at para 6. Often, costs are awarded in accordance with

Schedule C of the Rules, though as theAlberta Court of Appeal noted, “Schedule C is a purely-optional rubber stamp for a judge, who may use it or not, or amend it, as he orshe sees fit”: Hill v Hill, 2013 ABCA 313 at para 38. Litigation misconduct may be the basis for elevated costs: r 10.33(2)(g); Malton vAttia, 2015 ABQB 430. [81] The McKerchers advanced a formal offer of settlement in the sum of $100,000 on August 8, 2013 under r 4.24. They did notbest that offer. Therefore, they do not qualify for double costs under r 4.29. They also seek costs on a solicitor-client basis.

I decline to doso since there is already an order for punitive damages. [82] However, the Defendants’ refusal to set this matter down for trial after they filed a Statement of Defence and Counterclaimand participated in questioning resulted in delay and the necessity for additional court proceedings. Moreover, they did not participate inthis trial. Parties who engage in litigation cannot simply ignore part of the process, especially when that

part is trial. In my view, this islitigation misconduct and it is to a sufficient degree so as to attract double Column 2 costs, on a joint and several basis.

Heard on the 13 th day of October, 2015. Dated at the City of Edmonton, Alberta this 26 th day of November, 2015. S.J. Greckol J.C.Q.B.A. Appearances: Neil Fenna Neil Fenna Professional Corporation for the Plaintiffs No one appeared for the Defendants