RPM Investment Corp v Lange, 2017 ABQB 305

Court of Queen’s Bench of Alberta Citation: RPM Investment Corp v Lange, 2017 ABQB 305 Date: 20170502 Docket: 1101 07876 Registry: Calgary Between: R.P.M. Investment Corp., R.B.G. Corp. and B.F.M. Capital Corporation, collectively operating as Mission Homes Plaintiffs - and - Murray Lange and Kimberley Lange Defendants _______________________________________________________ Reasons for Judgment of the Honourable Mr. Justice C.M. Jones _______________________________________________________ I. Introduction [ 1 ] The Plaintiffs (collectively, “Mission”) are house builders.

They seek recovery from the Defendants, Murray and Kimberley Lange (collectively, the “Langes”) in connection with a construction contract. The Langes seek recovery by way of counterclaim against the Plaintiffs in connection with that contract. [ 2 ] The Langes engaged Mission to construct a high-end home (the “Residence”) in a gated community called “Stonepine” on the outskirts of Calgary. [ 3 ] Differences arose. Mission did not complete construction of the Residence. The Langes engaged a different builder (Winwood Homes) to finish it.

Each side asserts that the unhappy termination of their relationship is attributable to the other side’s actions and seeks damages. II. Factual Background Leading to Contract [ 4 ] The Plaintiffs, corporations formed pursuant to the law of Alberta, were, between November 23, 2004 and March 17, 2006, partners of a partnership registered in accordance with the Partnership Act (Alberta) as “Mission Homes”. This partnership was dissolved on March 17, 2006 and the name “Mission Homes” is no longer registered. [ 5 ] Each of Ryan Glover, Paul Murray and Brian Murray, the principals of R.B.G. Corp, R.P.M.

Investment Corp. and B.F.M. Capital Corporation, was involved in Mission’s business.

[ 6 ] The Langes are husband and wife. They lived in Edmonton until July 2010 when they moved to Calgary in connection with a relocation by his employer. [ 7 ] On April 15, 2009, Mr. Lange and Mission entered into a written residential real estate purchase agreement (the “Lot Purchase Agreement”) by virtue of which Mr. Lange acquired property (the “Lot”) where the Residence ultimately was constructed. [ 8 ] The Lot Purchase Agreement provided that the purchase price for the Lot would be $440,000.00 if the parties could come to agreement by June 30, 2009 to have Mission construct the Residence on the Lot.

If the parties could not come to such agreement, the purchase price was to be $490,000.00. Agreement was not reached by June 30, 2009 and the purchase of the Lot closed at a price of $490,000.00. [ 9 ] In September 2009, Mr. Lange provided Mission with final plans and specifications to be used in construction of the Residence (“Plans and Specifications”). The Plans and Specifications represented the Langes’ efforts to construct a high quality residence. [ 10 ] Mission followed with a proposal setting out the basis upon which it proposed to construct the Residence. That proposal contemplated two components.

The first was a “Fixed Price Component” that originally required payment of $1.14 million for construction of all items noted as coming within the Fixed Price Component. The second was a “Project Management Component” that required payment of a 15% fee on specified items the Langes would select. Invoicing would come through Mission, which was to add its project management fee (“PMF”) and submit an invoice for the total to the Langes. [ 11 ] On September 17, 2009, Mr. Lange expressed acceptance of the two component fee arrangement. The Fixed Price Component was to be $1.1 million.

He undertook to provide Mission with some guarantee of the Project Management Component by agreeing to pay a PMF equal to the greater of 15% of approved costs or $100,000.00. [ 12 ] Mr. Lange also addressed the discussion the parties had had around the original purchase price for the Lot: It is also our understanding that there is a $50,000 credit remaining as part of the land sale which we are counting on to close the gap. III. The Construction Agreement [ 13 ] On October 1, 2009, Mission and the Langes entered into an agreement for the construction of the Residence (the “Construction Agreement”).

The following provisions of the Construction Agreement are at the centre of this action. [ 14 ] Clause 1 sets out Mission’s obligations: 1. OBLIGATIONS OF THE BUILDER 1.01 The Builder covenants and agrees with the Owner as follows: (

a) To construct a Building on the Lands in accordance with: (

i) the plans dated September 16, 2009 that have been delivered by the Owners to the Builder (the “Plans”); (ii) the standard specifications which are described in the attached

Schedule ‘A’ (the “Fixed Price Specifications”); and (iii) the specifications which are listed in the attached

Schedule ‘B’ and which are to be selected and paid for by the Owner on a project management basis (the “Project Management Specifications”) (the Fixed Price Specifications and the Project Management Specifications collectively referred to herein as the “Specifications”). In the event of a conflict between the Plans and the Specifications, the Specifications shall govern and the Building is to be constructed in accordance with the Specifications, as same may be changed from time to time as permitted by this Agreement; (

b) To use the building materials specified in the Fixed Price Specifications, and to provide and maintain competent work crews, retain reputable subcontractors and to construct the Building in a good and workmanlike manner, all in accordance with every applicable government building code, regulation and restriction. … (

d) Subject to Owner’s compliance with the provisions of Articles II and III, to complete the Building and have it ready for occupancy approximately 14 months from commencement of excavation; (

e) To obtain and pay for materials, utility connections, survey fees, all required permits, licenses, consents, surveys and other things of a like nature for the construction of the Building in accordance with the Plans and the Fixed Price Specifications and to conform to all applicable governmental laws, bylaws, ordinances, rules and regulations; … (

l) Prior to the surrender of possession of the Building to the Owner, to conduct a final inspection with the Owner and a representative of the Owner’s Mortgagee (if necessary) and to correct or remedy any reasonable complaints or objections of the Owner, or the representative of the Owner’s Mortgagee, with respect to the construction of the Building. [ 15 ] The Langes’ obligations are outlined at

Article II: II. OBLIGATIONS OF THE OWNER 2.01 The Owner covenants and agrees with the Builder that the “Total Purchase Price” for the Building constructed in accordance with the Plans, the Specifications and the terms of this Agreement shall be comprised of: (

i) the fixed price component which is equal to

$1,100,000 including GST; plus (ii) the project management component which includes the reimbursement of all expenses, disbursements and GST incurred by the Builder in connection with the Project Management Specifications as well as a fee equal to the greater of $100,000 including GST or 15% of all such expenses and disbursements plus GST.

All funds payable shall be in Canadian dollars…The fixed price component of the Total Purchase Price as set forth in subparagraph 2.01(i), is payable by the Owner within five (5) business days after presentation of an invoice at the following stages of completion. (a) $50,000.00 including G.S.T. payable on signing of this Agreement. (b) $225,000.00 including G.S.T. payable upon completion of the foundation walls. (c) $275,000.00 including G.S.T. payable upon completion of the roof shingles. (d) $275,000.00 including G.S.T. payable upon completion of the drywall, taping & sanding. (e) $275,000.00 including G.S.T. plus or minus any amounts which arise in connection with changes made to the Specifications, upon the Building being “ready for occupancy” as defined in clause 2.07.

The project management component of the Total Purchase Price, as set forth in subparagraph 2.01(ii), or any portion thereof, is payable within ten (10) business days of delivery of an invoice to Owner in respect of same provided that the materials for which reimbursement is sought have actually been supplied to the Building and paid for by the Builder, or the work for which a fee is charged has been substantially completed, as the case may be. [ 16 ] Certain other provisions of the Construction Agreement are worthy of note: III.GENERAL CONDITIONS 3.01 (

a) No extra work beyond what has been agreed to in this Agreement will be done by the Builder nor will there be any changes from the Plans or the Fixed Price Specifications, unless such extra work or changes and the price thereof has been approved and agreed upon in writing by the Builder and the Owner, at which time the extra work or changes shall be incorporated into the fixed price component of the Total Purchase Price and shall be subject to and form part of this Agreement; (

b) In the event any extra work or changes referenced in subclause 3.01(

a) will, in the sole opinion of the Builder, delay the completion of the Building, the Builder shall advise the Owner and the expected completion date set forth in clause 1.01(

d) shall be revised accordingly. 3.02 If the Builder shall be delayed in the performance and completion of its work under this Agreement by reason of fire, Acts of God, Acts of War, strikes, unusually severe weather conditions, unavailability of Building materials, or any other cause for which the Builder is not responsible or any event beyond the control of the Builder, the completion date as set forth in paragraph 1.01 (

d) hereof shall be extended for a period equal to the amount of time lost by reason of such causes. 3.03 If the Builder is unable to obtain the materials set forth in the Plans and the Fixed Price Specifications, it shall have the right to substitute materials of comparable quality and performance subject to approval by the Owner of such substitute materials. 3.04 (

a) The Owner, without prejudice to any other right or remedy he or she may have, shall be entitled to terminate this Agreement upon giving notice in writing to the Builder if either of the following events shall occur, namely: (

i) If the Builder shall abandon the work to be performed under this Agreement … (ii) If the Builder shall persistently disregard any relevant governmental laws, ordinances rules and regulations pertaining to the construction of the Building, or shall otherwise commit any substantial breach of this Agreement, and such matters are not remedied within (15) days of the Builder receiving notice in writing thereof from the Owner. 3.05 (

a) If any payment required pursuant to

Article II, less the Holdback, is not made to the Builder within the time period required hereunder and such failure is not remedied within seven (7) days of the Builder giving notice in writing to the Owner of such payment being overdue, the Builder shall be entitled to terminate this Agreement upon giving written notice to the Owner. … 3.09 No waiver by or on behalf of either party hereto or any breach of any of the provisions contained in this Agreement shall take effect or be binding upon the party unless the same is expressed in writing under the authority of that party and any waiver so given shall extend only to the particular breach so waived and shall not limit or affect any rights with respect to any other or future breach. … 3.12 The Builder shall not include warranty coverage on labor and material supplied by the owner.

… 3.17 The Builder is a member in good standing of The Alberta New Home Warranty Program (the “Program”). The Builder will construct the Building so that it can be enrolled in the Program at the earliest possible time, as would be done by a reputable builder in a similar circumstance, with a major structural warranty of five (5) years. The Owner shall execute and file the documents that may be required with respect to such coverage at such times as may be required by the Program [or] the Builder.

Prior to transfer of possession of the Building, the Owner and the Builder shall inspect the Building and prepare a New Home Warranty Certificate of Possession. The Builder shall complete any and all deficiencies or defects as soon as reasonably practical. In the event of disagreement between the Owner and the Builder over a warranty covered by this clause 3.17, the matter shall be referred to the New Home Warranty Program for arbitration. IV. The Construction Project [ 17 ] Construction of the Residence began in October 2009. It appears that matters initially proceeded without difficulty.

Mission’s written trial submission indicates that “By mid-January 2010 the structure of the [Residence] was being completed and the installation of mechanical items was being planned.” [ 18 ] On February 9, 2010, Mr. Lange asked Mission for a

schedule setting out key dates by which the Langes needed to make decisions about various construction items. Mr. Lange stated in his email “We don’t want to end up holding up the progress because we aren’t prepared.” On February 22, 2010, Mission provided a

schedule of required decisions. [ 19 ] On March 1, 2010, Mr. Lange sent Mission a list of appliance specifications, indicating that the appliances already had been purchased. [ 20 ] On March 2, 2010, Mr. Lange advised Mission that he would not be ready for the proposed March 12, 2010 deadline for providing the interior electrical layout. Instead, he proposed a walk through on March 19, 2010. That date was accepted by Matt Eidt, Mission’s site supervisor, on March 3, 2010. [ 21 ] On March 10, 2010, Mr.

Lange advised Mission that they had decided to use an Edmonton-based company to supply their home automation system and that the company owner would attend the March 19 walk through. [ 22 ] On March 21, 2010, Mr. Lange provided a “first draft of our lighting plan that can be used for exterior lighting layout only” (emphasis in original). He indicated that he would distribute final copies sometime after March 29. On March 31, 2010, he sent an email stating “I am working on finalizing the interior electrical plans at this time. I am sending [my] revisions to the designer today.

Please don’t commence any interior electrical until final plans are distributed. We are very specific about this aspect and will drive the trades nuts with changes if they get ahead of us. ” (Emphasis in original.) On April 13, 2010, Mr. Lange advised that “We are nearing completion of [the electrical] plans.” [ 23 ] On April 21, 2010, Mr. Lange provided the lighting plans. His accompanying email indicates that “nothing about them is approximate” and that various aspects “are all deliberate and expected”.

He went on to state that “If there are situations on site that prohibit this exact plan from being implemented then I need to be notified and any changes will be made by me alone.” However, he sent another email on April 22, 2010 stating “You will notice that the electrical outlets, data and telephone are not marked on the plans. I intent [sic] on locating those items on site this weekend.” Further, in response to questions from Mr. Eidt, Mr.

Lange instructed Mission not to proceed with the lighting in part of the Residence. [ 24 ] The Langes advised Mission on a number of other occasions that they would provide their own materials for the Residence. These included hanging light fixtures (April 21), travertine tile (April 23) and cabinets (April 28). [ 25 ] On July 28, 2010, Mr. Eidt emailed indicating that insulation and drywall would begin soon. Mr. Lange responded the same day with instructions to not proceed with insulation and drywall until he had given the go-ahead as he wanted to make further adjustments.

He stated “I know the progress has been painfully slow and it is certainly not your fault but I need to get comfortable before we move on as it will get expensive to make changes post drywall.” He stated that he would be away until August 10 and would resolve the outstanding issues thereafter. [ 26 ] It appears that, at this point, frustration set in and the parties’ relationship began to deteriorate. On July 30, 2010, Mr. Lange sent an email stating “Following the discussion I had with Paul this morning it became apparent that the contract that we are working with currently has our interests misaligned.

Mission Homes is incented to push forward to obtain the next progress payment and we do not want to be pressured under our current circumstances.” [ 27 ] Mr. Lange provided a revision of the Construction Agreement as an attempt to resolve the parties’ differences. He proposed moving the insulation/drywall and plumbing fixtures into the Project Management portion of the Construction Agreement and adjusted the payment

schedule to allow the next draw to be made earlier. [ 28 ] On September 16, 2010, Mission provided a counterproposal accepting Mr. Lange’s changes, reducing the Fixed Price Component of the Construction Agreement to $1,010,300 and removing the $100,000 minimum on the Project Management Component. [ 29 ] Mr. Lange responded on September 20, 2010 seeking an additional $10,300 reduction to the Fixed Price component to compensate the Langes for debt servicing costs associated with the earlier progress payment.

Mission agreed to this amendment to the Construction Agreement on September 22, 2010. [ 30 ] Unfortunately, the amendment did not put an end to the parties’ difficulties, which came to a head as a result of a dispute over the pouring of the driveway and sidewalks. The chronology of relevant events is as follows:

• October 15, 2010 – Mr. Lange emailed Mission attaching highlighted drawings of the landscape and site plans. The highlighted portion of the landscape plan depicted the curvature of the driveway and sidewalk and the shape of the sidewalk as it intersected the front curb. The highlighted portion of the site plan depicted the bell-shaped curve of the sidewalk as it intersected the front of the Residence. Mr. Lange’s email indicated the sidewalk was to be 8’ wide and tapered and noted that he and Paul Murray would review the details onsite that afternoon. • October 20, 2010 – Mr.

Lange attended the site and later sent an email to Mr. Murray expressing concern with forming for the rear patio deck and noting that the curvature in the driveway was not symmetrical. Mr. Murray responded by email asking if Mr. Lange was available to meet that day and indicating that the concrete company had been asked not to pour without Mr. Lange “giving it the green light”. • October 21, 2010 – Mr. Lange and Mr. Murray met at the site. Their stories about that encounter differ dramatically. Mr. Lange claims the sidewalk had not been formed in accordance with the plans.

He claims the two of them discussed inadequate preparation work (gravel, packing and tamping), flair detail for the sidewalk, the fact that the sidewalk had been formed straight instead of with a curve and the lack of bell curve symmetry for the sidewalk as it intersected with the Residence. He also stated that the sidewalk had apparently been formed up at 6’ instead of 8’, despite the Specifications. • Mr. Murray testified that Mr. Lange had verbally authorized a change in sidewalk width from 8’ to 6’ prior to the meeting on October 21, 2010. He claims that Mr.

Lange reviewed matters that morning, directed a small change to the curvature of the driveway and indicated that if that change was made the pours could proceed. Mr. Murray asserts that he had earlier alerted Mr. Lange that the pour was scheduled for October 22, 2010. • Mr. Lange’s evidence was that he had not “given the green light” and that while he indicated he would try to revisit the site again before a pour took place, he had not indicated that a pour could proceed before he could visit, inspect the forming and express a decision on such matters as sidewalk width and curvature.

There is no evidence of written communications from Mr. Lange supporting this position. • October 22, 2010 – The pour began at 7:00 a.m. At 8:10 a.m. Mr. Lange sent the following email to Paul Murray: Please do not pour yet. I didn’t get a chance to review in the daylight yesterday. I will be back this evening and will review tomorrow. • By that time, it was too late to stop the pour. Efforts by Paul Murray and Mr. Lange to connect failed. • October 23, 2010 – Paul Murray attended the site and ascertained that the pour had proceeded. [ 31 ] A series of unhappy communications ensued. On October 24, 2010, Mr.

Lange indicated that the Langes “are not prepared to accept the sidewalk or the driveway in their current condition.” He set out his dissatisfaction in a more detailed email later that day. [ 32 ] On October 25, Paul Murray emailed Mr. Lange saying “We would like to meet you on site to attempt to resolve this.” Mr. Lange responded saying “There is no need to meet regarding this matter.” He also said “…we will not accept less than what we are entitled to receive.” [ 33 ] Nevertheless, there are indications that the parties’ relationship had not completely broken down at that point. On October 28, 2010, Mr.

Lange emailed Paul Murray asking for confirmation that the exterior painting would be completed in the coming week. On the same date, Mr. Murray emailed Mr. Lange to ask if pouring the rear patio could proceed. [ 34 ] Later that same day, Mr. Murray sent Mr. Lange his

summary of the events leading up to the driveway pour. His position was that the pour had been done in accordance with instructions Mr. Lange gave at the site meeting on October 21. Mr. Murray concluded by saying “…we should probably meet to discuss how to proceed from this point.” Mr. Lange responded, taking issue with several of Mr. Murray’s points. He concluded by saying “In

summary, if you can figure out how to change the size and shape of our sidewalk and driveway as well as providing a 6-8” gravel base packed and tamped without removing the existing concrete then we have something to meet about.” [ 35 ] Notwithstanding this response, subsequent emails from Mr. Lange indicate that he intended to continue with the project. On October 29, 2010, he responded to Mr.

Murray’s inquiry about pouring the rear patio, saying “I will review at some point this weekend and respond on Sunday.” On October 31, 2010, he sent an email expressing concern about removal of Mission’s property from the site. He stated “The removal of the garbage bin and portable toilet were not concerning as that would appear to be for cost savings while very little is happening.

The removal of the signage is an indication that you may be abandoning the project.” On November 1, 2010, he instructed that the rear deck, steps and patio be poured according to attached specifications. [ 36 ] However, on November 2, 2010, Mr. Lange sent the following email: Please be advised that as per

article 3.04 of the Construction Agreement we are hereby giving notice of our intent to terminate effective November 8, 2010 based on the following: 1) Abandonment – you have abandoned the work to be performed under this agreement. 2) Substantial Breach – you have blatantly disregarded the contractual specifications of the Agreement which is a breach of the contract and you have been notified of such breach as of October 23, 2010. If your intentions are to continue with the work to be performed under this agreement please advise immediately. [ 37 ] On November 3, 2010, Mr. Murray responded, saying that, based on the above email, he would instruct the painters to stop

work. Mr. Lange responded shortly thereafter saying “I am not asking you to stop. I am asking you to state your intentions with regards to this project.” [ 38 ] Also on November 3, 2010, Mr. Murray sent a letter on behalf of Mission Homes. That letter stated, inter alia , that “the project as a whole is well behind schedule” and that the interior work “remains at a standstill”. It further stated that “the project becomes uneconomical for us if you do not live up to your end of the bargain and move the project along.” Mr.

Murray then said “In short we do not believe that you have lived up to your end of the deal.” and set out a number of alleged breaches of the Construction Agreement, including project delays and direct acquisition of items under the Project Management portion of the Construction Agreement. Mr. Murray denies abandonment or substantial breach on the part of Mission Homes. His letter also states the following: Your letter of November 2, 2010 indicates that you are purporting to terminate the contract effective November 8, 2010. … Your November 2 email is a repudiation of the contract.

In these circumstances we are not in a position to continue with the construction of your home. [ 39 ] Mr. Lange responded the same day saying, inter alia , as follows: We have not repudiated the contract. We indicated our intention to terminate effective November 8, 2010 assuming that you had abandoned the site. You have indicated that is not the case. Obviously the intent to terminate is not a termination and we have until November 8, 2010 to withdraw. This notice was given to try and determine what your intentions were as we hadn’t been able to get a response from you.

Obviously things are strained between us and advancing together may not be feasible but make no mistake you are still fully on the hook pertaining to this contract. If you abandon the site and confirm your abandonment then we will likely proceed with terminating the contract as per

section 3.04 of the agreement. I propose that we develop a deficiency list and a

summary of incomplete items within the fixed price contract to be deducted from the outstanding amounts owing and see if we can reach a satisfactory settlement. Barring that we expect that you will complete the contract as written. [ 40 ] Mr. Lange sent a subsequent email on the same date saying “As it has been determined that abandonment has not occurred we withdraw our notice of our intent to terminate the contract as per

section 3.04 of the Construction Agreement effective November 8, 2010.” [ 41 ] Finally, on November 4, 2010, Mr. Murray sent a letter taking issue with various points in Mr. Lange’s emails and confirming Mission’s decision not to proceed with construction of the Residence. [ 42 ] The relationship between Mission and the Langes ended. Mission did not complete the Residence. The Langes completed the construction of the Residence through another builder, under different terms. V. Pleadings and Issues [ 43 ] Mission’s Amended Statement of Claim asserts the following: 5. There were further terms and conditions to the Construction Agreement, either express or implied, such as (among others): (

a) The Langes were obligated to proceed expeditiously with the [Residence] so as not to cause [Mission] additional cost and expense; and (

b) The Langes were obligated to order all supplies, goods, services and labour, through [Mission], or upon notice to [Mission], so that [Mission] could collect its project management fee – the Langes were not to avoid the project management fee by directly ordering supplies, goods, services and labour. … 10. The land for the [Residence] was purchased by the Langes from [Mission]. [Mission] gave the Langes a $50,000.00 discount on the purchase price of that land (the “ Discount ”), conditional upon the Langes contracting with [Mission] to build the [Residence].

The Discount, which was drafted by the Langes, was provided in exchange for the profit that [Mission] would earn from the Construction Agreement. 11. [Mission] commenced construction of the [Residence] on or about October 15, 2009. The Langes began to experience liquidity problems and could not afford to proceed with construction of the [Residence].

In an effort to improve their liquidity (or for some other purpose unknown to the Plaintiffs) while avoiding termination of the Construction Agreement, the Langes undertook a concerted effort to delay work on the [Residence] by failing to provide instructions or authority to [Mission] to continue to work. 12. As the Construction Agreement contemplated a substantial [Fixed Price Component], the additional delays caused by the concerted actions of the Langes caused [Mission] additional time and cost, well outside the contemplated scope of the Construction Agreement. 13.

The Langes delayed the construction of the [Residence] by approximately 6 months. [Mission] had to re-schedule trades, and incur extra overhead managing the site. The Langes also stopped construction near the end of “roughing-in” the [Residence]. [Mission] had already paid its trades, and was forced to carry those expenses. The Langes forced [Mission] to reduce the fixed price portion of the Construction Agreement in order to obtain its next draw to pay those trades on the value of those appliances or goods. 14.

The Langes ordered a number of appliances and goods directly, which were within the scope of the Construction Agreement. The effect of this, either intentional or unintentional, was to wrongfully deprive [Mission] of the [Project Management Fee] rightly owed to it.

… 17. On November 2, 2010, the Langes repudiated the Construction Agreement… 18.

On November 3, 2010, [Mission] accepted … the Langes’ repudiation… 19.Alternatively, the Langes’ conduct in delaying construction and ordering goods directly to avoid project management fees constituted fundamental breach of the Construction Agreement, which entitled [Mission] to terminate the Construction Agreement, which it did. [ 44 ] The Langes filed a Statement of Defence to Mission’s claim asserting, inter alia , as follows: 17. …there was no contractual link between the Lot Purchase Agreement and the Construction Agreement. … 24. The Construction Agreement was on [Mission’s] form of contract.

The Defendants plead the doctrine of contra preferentem . … 27. Clause 3.01 of the Construction Agreement provided that the Plaintiffs would not do any work other than as expressly provided for in the Plans and Specifications unless the work and price thereof was approved and agreed in writing by the parties. The Plaintiffs had no discretion to do otherwise. As a consequence, any work done that did not comply with the Plans and Specifications would be for the Plaintiffs’ account and with a corresponding obligation to compensate the [Langes] for any discrepancies. 28.

Clause 3.03 provided that if [Mission] were unable to obtain materials required to be used by the Plans and Specifications, the Plaintiffs may substitute materials of comparable quality and performance but only with the approval of the [Langes]. … 29.

Clause 3.04 provided that the [Langes] may, in addition to and without prejudice to any other rights or remedies they may have, terminate the Construction Agreement if, among other things, [Mission] abandoned the work to be performed under the Construction Agreement or if [Mission] committed any substantial beach of the Construction Agreement not remedied with 15 days of notice. … 32. …There were no terms implied in the Construction [Agreement] obligating the [Langes] “to proceed expeditiously” or to order all supplies, goods, services and labour through the Plaintiffs.

No such terms were included in the Plaintiffs’ form of contract, nor did the Plaintiffs attempt to negotiate such terms. The Plaintiffs are estopped from making their substantial claims based upon alleged implied agreements and oral understandings. 33. [Mission] owed a duty of good faith to the [Langes] in connection with the performance of their obligations under the Construction Agreement. That duty included a duty to promptly disclose all material facts to the [Langes] and to respond to the [Langes’] questions, phone calls and correspondence. [Mission] breached that duty by: (

i) withholding material information … and (ii) ignoring questions, phone calls and correspondence from the [Langes] or delaying their response thereto. … 37. [Mission] treated the Construction [Agreement] as if it gave them broad discretion to construct and/or install items not in compliance with the Specifications. [ 45 ] The Langes enumerate several alleged breaches by Mission of the Construction Agreement. They deny any obligation on their part to proceed expeditiously or order all supplies, goods, services and labour through Mission.

They also deny having repudiated the Construction Agreement. [ 46 ] In their Amended Counterclaim, the Langes assert that they “continue to discover latent defects in the construction of [the Residence] which were caused by [Mission’s] negligence and breaches of contractual duties.” [ 47 ] Mission filed a Statement of Defence to Counterclaim, in which it asserts: 3. [Mission] denies that there were any defects in its construction of the [Residence].

In the alternative, if there were defects then those defects would have been remedied by [Mission] if the Langes had not repudiated the Construction Agreement. 4. [Mission] denies any breach of duty of good faith or duty to disclose. The allegation that [Mission] withheld material information and/or ignored the Langes during construction of the [Residence] is outrageous – that never happened.

The time that [Mission] took to respond to the Langes was reasonable and did not cause any delay in the construction of the [Residence]. … 6. [Mission] denies breaching the Construction Agreement by not complying with the [Specifications]. Where completed work and/or installed goods differed from the [Specifications], the Langes agreed to those changes or those changes were permissible under the Construction Agreement. VI. Analysis

[48] Essentially, each party accuses the other of fundamental breach and/or repudiation of the Construction Agreement.Accordingly, it will be useful to canvass what is required to establish those two causes of action. A. Fundamental Breach [49] It is well accepted that fundamental breach is an extraordinary doctrine and is to be applied sparingly because of theexceptional remedy to which it gives rise.

Mission cited the Supreme Court of Canada’s decision in Guarantee Co of North America vGordon Capital Corp, (SCC), [1999] 3 SCR 423, in which the Court made these comments at paras 48 and 50: …Both parties agree that a substantial failure of contractual performance, often described in other contexts as a fundamental breach, mayrelieve the non-breaching party from future executory obligations under the contract. … The Court was called upon to consider the doctrine of fundamental breach, defined as a failure in the breaching party’s performance of itsobligations under the contract that deprives the non-breaching party of substantially the whole benefit of the agreement. …the distinctionbetween a mere contractual breach and a breach that is more appropriately characterized as fundamental is the exceptional nature of theremedy; while the traditional remedy for contractual breach is the obligation to pay damages, a fundamental breach permits the non-breaching party to elect instead to put to an end all remaining performance obligations between the parties.

Given the exceptional natureof the remedy, Wilson J. rightly noted that the purpose of the restrictive definition of a fundamental breach is to limit the remedy to thosecircumstances where the entire foundation of the contract has been undermined. [50] Mission also referred to RIC New Brunswick Inc v Telecommunications Research Laboratories, 2010 ABCA 227, 487 AR340 in which the Court of Appeal set out at para 17 five factors to be weighed in the determination of whether there has been afundamental breach: The chambers judge correctly noted that Spirent suggests five factors that the court should consider when determining whether there hasbeen a fundamental breach: (1) the ratio of the party’s obligations not performed to that party’s obligations as a whole; (2) theseriousness of the breach to the innocent party; (3) the likelihood of repetition of the breach; (4) the seriousness of the consequences ofthe breach; and (5) the relationship of the part of the obligation not performed to the whole obligation… [51] I note in passing that, particularly in a case like this where each side accuses the other of breach, I find terms such as“innocent” and “non-breaching” unhelpful and possibly misleading.

For purposes of this judgment, I will refer to the parties as“repudiating” and “non-repudiating”. B. Repudiation [52] The Supreme Court of Canada in Guarantee also considered the doctrine of repudiation, saying at para 40: Repudiation, by contrast, occurs “by words or conduct evincing an intention not to be bound by the contract. It was held by the PrivyCouncil in Clausen v. Canada Timber & Lands, Ltd. [ (UK JCPC), [1923] 4 D.L.R. 751], that such an intention may beevinced by a refusal to perform, even though the party refusing mistakenly thinks that he is exercising a contractual right” (S.M.

Waddams, The Law of Contracts (4th ed. 1999), at para. 620). Contrary to rescission, which allows the rescinding party to treat thecontract as if it were void ab initio, the effect of a repudiation depends on the election made by the non-repudiating party. If that partytreats the contract as still being in full force and effect, the contract “remains in being for the future on both sides. Each (party) has a right to sue for damages for past or future breaches” (emphasis in original): Cheshire, Fifoot and Furmston’s Law of Contract (12th ed.1991), by M.P. Furmston, at p. 541.

If, however, the non-repudiating party accepts the repudiation, the contract is terminated, and theparties are discharged from future obligations. Rights and obligations that have already matured are not extinguished. Furmston, supra, atpp. 543-44. [53] As the Supreme Court indicated, a party’s words or actions may amount to repudiation even if that party believes those wordsor actions are within its contractual rights.

This was affirmed recently by the Ontario Court of Appeal in Remedy Drug Store Co v Farnham, 2015 ONCA 576, 389 DLR (4th) 671 when it cited Guarantee and stated at paras 47-49: A party can repudiate a contract without subjectively intending to do so. … Swan confirms this approach at p. 618 of her treatise: “The person (or his or her solicitor) may believe when the statement is made thathe or she has an excuse for non-performance and that it is the other party who is in breach of the contract.

The characterization of thestatement as an “anticipatory breach” [or “repudiation”] will then be made when the dispute goes to trial.” However, the subjective intentions of the breaching party are of some moment. They may assist in determining what the objectiveintention was.

Justice Cromwell made this point at para. 171 of Potter: “while the breaching party’s motives as such are irrelevant, theymay throw light on the way the alleged repudiatory conduct would be viewed by a reasonable person.” Thus, the driving factor behindanticipatory repudiation remains the objective intention of the party purportedly about to breach the contract. [54] This Court has also commented on the intention necessary for repudiation of contract.

In Delcor Painting & Flooring Ltd v20/20 Properties Inc, 2009 ABQB 670, 486 AR 114, Justice Manderscheid said at para 24: In determining whether there has been a repudiation of contract, the conduct and circumstances of the parties must be considered as a whole: WCI Waste at para. 329.

In WCI Waste at para. 330, relying on the statements in Joseph Chitty, Chitty on Contracts, 29th ed.(London: Sweet & Maxwell, 2004) at para. 24-018, Campbell J. found that where there has not been an express and absolute refusal byone party to perform its obligations under the contract, the test is to determine whether the defaulting party’s actions could lead areasonable person to conclude he no longer intends to be bound by the provisions of the contract.

[55] The case law is uniform in stating that

an act of repudiation puts the non-repudiating party to an option: either accept therepudiation, terminating any prospective obligations under the contract, or decline it, leaving contractual obligations in place. [56] The case law also establishes that a party may evince an intention to cease to be bound by the contract at some future point,giving rise to an “anticipatory” repudiation. The other party again has the option to accept or refuse the repudiation.

As the Court inFarnham stated at para 42, “Anticipatory repudiation is essentially the same as repudiation simpliciter – the only difference is timing.”The Ontario Court of Appeal in Brown et al v The Corporation of the City of Belleville, 2013 ONCA 148, 114 OR (3d) 561 at para 44referred with approval to this passage: [I]n the context of a repudiatory breach of an agreement, the victim of the breach is entitled either to affirm or disaffirm the agreementand, in either event, pursue remedies for breach of contract.

Similarly, in the context of anticipatory repudiation, the effect of therepudiation is to confer an option upon the innocent party either to disaffirm or affirm the contract.

Thus, although the innocent party isentitled to disaffirm the agreement immediately and sue, that party may prefer to affirm the agreement and encourage or insist uponperformance by the repudiating party or, more passively, simply wait and see whether the repudiating party does in fact eventuallyrefuse to perform his or her contractual obligations as they fall due. [57] The case law is clear that if a party has repudiated a contract, a non-repudiating party wishing to accept the repudiation mustcommunicate that acceptance to the repudiator. Until he does, the contract remains extant.

In Homestar Industrial Properties Ltd vPhilps (1992), (BC CA), 72 BCLR (2d) 69 at para 13, the Court of Appeal quoted as follows from Chitty on Contracts: Acceptance of repudiation. Where there is an anticipatory breach, or the breach of an executory contract, and the innocent party wishesto treat himself as discharged, he must normally make his decision known to the party in default (“accept the repudiation”).

Unless anduntil this is done, the contract continued in existence, for “an unaccepted repudiation is a thing writ in water.” [58] Similarly, this Court in Delcor at para 34 cited with approval this passage: The innocent party must accept the other party’s breach and communicate his election to end the contract on the basis of that breach tothe other party… It is critical for the innocent party to communicate to the other party his acceptance of the other party’s breach orrepudiation of the contract in order for the contract to be ended. [59] That communication, however, need not be immediate.

In Abraham v Coblenz Holdings Ltd, 2013 BCCA 512, 53 BCLR (5th)94, the Court held at para 28: In my view, an innocent party is not required to communicate its acceptance of a repudiation immediately. An innocent party must have areasonable opportunity to assess the circumstances it finds itself in, to assess its options, and to explore the possibility of resolving thesituation. That is particularly so where, as here, the tenants had invested a substantial amount of money in the premises and were notwilling to walk away without trying to negotiate a workable arrangement.

What matters is whether, in all of the circumstances, thetenants acted reasonably in communicating their course of action so as not to prejudice the other party by inducing it to act as if itsrepudiation of the agreement had not been accepted… [60] If the non-repudiating party elects to accept the repudiation and disaffirm the contract, the contract is terminated and bothparties are discharged of any prospective obligations. However, the contract is not voided ab initio.

Rights and obligations that alreadyhave accrued are not extinguished and the non-repudiating party may commence an action for breach. [61] Interestingly, our Court of Appeal has indicated that the non-repudiating party’s disaffirmation of the contract does not put anend to all rights of the repudiating party.

In Vallieres v Vozniak, 2014 ABCA 384, 588 AR 17, the Court of Appeal held at para 11: The extent of the parties’ obligations after breach depends on the proper construction of the terms of the contract, and what the partiesintended their obligations to be after termination: [Guarantee] at paras. 52-3, 56, 59-60. In that case the Supreme Court confirmed thatPhoto Production Ltd. v Securicor Transport Ltd., [1980] AC 827 reflects the law of Canada. A breach entitling one party to terminatethe contract and cease future performance does not mean that all the clauses of the contract had somehow disappeared.

The breachingparty was still entitled to enforce whatever rights it had for past performance, or arising from cross-breaches by the other party … [62] Notwithstanding that acceptance of a repudiation terminates a contract, the case law makes clear that the non-repudiatingparty may claim not only damages for work done prior to the repudiation, but also damages resulting from the repudiation itself.

Thiswas stated by the Alberta Supreme Court in the early case of Van Wezel v Risdon (AB KB), [1953] 2 DLR 382 at para23: That being so, the defaulting party (in this case the plaintiff) has no longer a right to sue either for specific performance of the contract orfor damages for its breach, unless it be for damages for previous breaches. The injured party (in this case the defendant) has, however, achoice of remedies. He is entitled to sue for damages for breach of contract, in which event he is entitled to recover, on the basis andsubject to the qualifications set forth by Williams C.J.K.B. in Brainer v.

Hedges, (MB KB), [1947] 2 D.L.R. 49, 54Man. R. 489, the profits he has lost by his inability to perform the contract in toto, plus compensation for the work he has actually done;or he may elect, despite the fact that the contract was an entire contract, since his failure to perform was caused by the plaintiff’s fault, tosue on a quantum meruit for the work he has actually done… [63] I am satisfied, based on my reading of the case law, that the non-repudiating party has a choice of remedies.

This Courtexpressed the choice thusly in Jayasinghe v Ang et al (1981), (AB KB), 17 Alta LR (2d) 251 at paras 13 and 18: In such a case the plaintiff who has been wrongfully discharged has the choice of two remedies. First of all he can recover the profits hehas lost by his inability to perform the contract to completion, plus compensation for the work already done. Alternatively, he may elect,despite the fact that the contract was a whole contract, to recover on a quantum meruit basis for the work actually done under thecontract.

… On the authorities, it is clearly established the plaintiff can recover damages for lost profits, plus compensation for the work already done or, alternatively, to elect to have his damages assessed on a quantum meruit basis for the work already done. [ 64 ] In Young v Euro Custom Homes Inc , 2015 ONSC 5828 , 61 RPR (5 th ) 281 at paras 14 , 15, 18 and 20, the Court rejected the proposition that the non-repudiating party’s damages were limited to breaches of the contract prior to termination: It is well recognized that the principle by which the court ought to be guided in awarding damages is restitution in integrum , that is, so far as money can do it, to place the injured person in the same situation as if the contract had been performed… Damages calculated according to this principle are often called “expectancy damages” and are forward-looking. … The plaintiffs’ position is that the defendant should simply be restored to the position it was in prior to the Agreement being entered into, by reimbursing it for the cost of constructing the foundation and restoring the property to a vacant lot, representing what are often referred to as “reliance damages” which are, in contrast to the expectancy principle, backward-looking … I similarly find no merit in the plaintiffs’ submission that the acceptance by the defendant of the plaintiffs’ repudiation of the Agreement brought a total end to the Agreement, thereby limiting the plaintiffs’ liability for their breach to the out-of-pocket expenses incurred by the defendant to that point.

In Waddams, The Law of Contracts (6 th ed.) it is stated at p. 470, as follows: “a repudiation puts an end to the contract in the sense that it releases the innocent party from the duty of further performance, but it does not abrogate the whole contract – the innocent party can sue for damages.” … On these principles, acceptance by the defendant of the plaintiffs’ repudiation of the Agreement had no effect on the basis upon which the defendant’s damages are to be determined. They are to be determined in accordance with the expectancy principle referred to above.

Acceptance by the defendant of the plaintiffs’ repudiation only had the effect of relieving the defendant from further performance under the Agreement and conferring on the defendant the right to sue for its damages arising from the plaintiffs’ anticipatory breach. [ 65 ] It is also clear from the case law that the non-repudiating party, while it may claim for damages both prior to the repudiation and arising therefrom, has a duty to mitigate its damages. See, for example, Delcor at paras 46-51. C.

The Langes’ Fundamental Breach Claim [ 66 ] As noted above, each party in this matter accuses the other of fundamental breach and/or repudiation. The Langes allege that Mission committed fundamental breaches of the Construction Agreement in two respects: first, that it did not comply with the Plans and Specifications in various respects and second, that it abandoned the Construction Agreement by unilaterally ceasing work. These allegations are both set forth in Mr. Lange’s email of November 2, 2010. [ 67 ] In my view, the Langes have not established their claim for fundamental breach by Mission.

While there were departures from the Plans and Specifications that constituted breaches of the Construction Agreement, none of them rose to the level of a fundamental breach. As discussed, fundamental breach requires that a party be deprived of substantially the whole benefit of the contract.

While some aspects of the construction of the Residence did not meet with the Langes’ expectations, the deficiencies were not sufficient to deprive them of substantially the whole benefit of the Construction Agreement. [ 68 ] Similarly, I find no merit in the Langes’ assertion that Mission abandoned the Construction Agreement. Mission acknowledges that certain of its property was removed from the job site. However, I accept that this removal was done for cost-savings purposes and did not constitute abandonment. Shortly before the alleged abandonment, Mission had contacted Mr.

Lange to advise that weather conditions were favourable for pouring the rear patio and to try to obtain instructions to proceed. Further, upon receipt of Mr. Lange’s November 2, 2010 email alleging abandonment, Mr. Murray responded by saying that painters were on site. This is inconsistent with the assertion that work had been abandoned. [ 69 ] Accordingly, the Langes’ claim for fundamental breach of the Construction Agreement fails. D. The Langes’ Repudiation Claim [ 70 ] The Langes did not expressly accuse Mission of repudiation of the Construction Agreement.

Had the Langes’ accusation that Mission abandoned the project been substantiated, that abandonment might well have constituted a repudiation prior to Mr. Lange’s November 2, 2010 email. However, as I have found on the facts before me that Mission did not abandon the project, I need not consider this further. E. Mission’s Fundamental Breach Claim [ 71 ] Though it was not pressed strenuously, Mission’s claim in this regard centers on unreasonable delay on the part of the Langes.

While Mission acknowledges that the 14-month timeline contemplated by the Construction Agreement was intended primarily for the benefit of the Langes, it argues that the Langes had an obligation to act in good faith in moving the project forward. [ 72 ] The Langes respond by saying that Mission is attempting to imply a term into the Construction Agreement that was not contemplated by the parties. They argue that the only timing obligation on them was in respect of the payment of invoices. It is common ground that the Langes paid all invoices in a timely manner.

[ 73 ] In my view, there is some merit to Mission’s position. The Supreme Court of Canada held as follows in Bhasin v Hrynew , 2014 SCC 71 , 3 SCR 494 at para 63 : The first step is to recognize that there is an organizing principle of good faith that underlies and manifests itself in various more specific doctrines governing contractual performance.

That organizing principle is simply that parties generally must perform their contractual duties honestly and reasonably and not capriciously or arbitrarily. [ 74 ] The Supreme Court indicated at para 45 that this principle of good faith was not a matter of implying a term into a contract but is inherent in the contractual relationship: Considerations of good faith are also apparent in contract

interpretation: Chitty on Contracts , at para. 1-050; Hall, at p. 347. The primary object of contractual

interpretation is of course to give effect to the intentions of the parties at the time of contract formation. However, considerations of good faith inform this process. Parties may generally be assumed to intend certain minimum standards of conduct. Further, as Lord Reid observed in Schuler A. G. v. Wickman Machine Tool Sales Ltd. , [1974] A.C. 235 (H.L.), at p. 251, “[t]he more unreasonable the result the more unlikely it is that the parties can have intended it”. As A. Swan and J.

Adamski put it, the duty of good faith “is not an externally imposed requirement but inheres in the parties’ relation”: Canadian Contract Law (3 rd ed. 2012), at ss. 8.134 to 8.146. [ 75 ] The Construction Agreement contemplated that the Langes would have extensive input into various aspects of the construction of the Residence. It stands to reason that delay on their

part in making design decisions would result in delays in Mission’s construction efforts. In my view, the absence of a specific contractual provision respecting timing of design decisions does not support the Langes’ position that they were free to take as long as they wished. Taken to its extreme, that assertion would entitle the Langes to mete out such decisions over a period of years with construction at a standstill in between. [ 76 ] This, of course, is not what occurred.

I find that the delays on the part of the Langes did not constitute fundamental breach as they were not sufficient to deprive Mission of the whole benefit of the Construction Agreement. Moreover, in light of my finding below in respect of Mission’s repudiation allegation, I need not decide whether their delays constituted a breach of the overarching duty of good faith articulated by the Supreme Court in Bhasin . [ 77 ] Mission also argued that the Langes fundamentally breached the Construction Agreement by sourcing independently items contemplated under the Project Management Component.

Again, I find that, even if this was a breach, it was not sufficient to deny Mission substantially the whole benefit of the Construction Agreement. I am not satisfied that the Langes’ actions were such as to deprive Mission of the whole or substantial part of the Project Management Component. Accordingly, this claim for fundamental breach is not made out. F. Mission’s Repudiation Claim [ 78 ] Mission takes the position that Mr.

Lange’s email of November 2, 2010 in which he states “…we are hereby giving notice of our intent to terminate effective November 8, 2010” amounts to an anticipatory repudiation of the Construction Agreement that put Mission to the election of rights described above. The Langes take the position that this email was not a repudiation, but merely an attempt to ascertain whether Mission intended to complete the construction of the Residence. [ 79 ] I find that Mr. Lange’s November 2, 2010 email was an anticipatory repudiation of the Construction Agreement.

In coming to this conclusion, I am guided by the comments of the courts in Guarantee and in Farnham to the effect that a party may repudiate a contract even without subjective intention and even if that party believes it is acting within its contractual rights. I am also guided by Justice Manderscheid’s statement in Delcor that what is determinative is whether “the defaulting party’s actions could lead a reasonable person to conclude he no longer intends to be bound by the provisions of the contract.” In my view, Mr. Lange’s email would lead a reasonable person in the position of Mission to that conclusion.

It is possible that Mr. Lange’s email was merely a tactic intended to force a favourable response from Mission. However, the law is clear that the test is what a reasonable person would conclude, not what was subjectively intended. Therefore, Mr. Lange’s strategy, if that is what it was, is irrelevant to the outcome. [ 80 ] Such being the case, Mission had the right to accept the repudiation and terminate the Construction Agreement, provided it did so clearly and within a reasonable time. This it did by way of Mr.

Murray’s letter of November 3, 2010. [ 81 ] Accordingly, I find that the Construction Agreement was terminated as of November 3, 2010, leaving Mission free to seek damages arising from the repudiation and both parties free to seek damages for previous breaches. VII. Damages A. Mission’s Claim for Damages [ 82 ] The case law cited above indicates that a non-repudiating party, having elected to accept the repudiation and terminate the contract, then has a choice of remedies.

It can either seek damages based on what it would have received had the contract been completed or it can seek payment on a quantum meruit basis for that portion of the contract completed prior to termination. [ 83 ] In this case, Mission has calculated its damages using the dual Fixed Price Component / Project Management Component structure of the Construction Agreement. Clearly, then, it has opted to seek “expectancy” damages in the usual manner.

Because of the dual structure of the Construction Agreement, the expected profit component of Mission’s damages is built into the Project Management Component. [ 84 ] Mission asserts that it is entitled to the full Fixed Price Component for the work it actually completed. This includes the

amended fixed price amount plus additional amounts to reflect three Change Orders totalling $23,483.10. These change orders relate to (1) upgrading windows ($7,246.00), (2) hydronics insulation ($7,727.10) and (3) upgraded lighting ($8,510.00). Mission charged a fee in respect of these change orders even though the Construction Agreement does not provide for such a fee in connection with a change order. [ 85 ] The Langes signed Change Order #1 (window pane upgrades), but now dispute payment, arguing that Mission acted deceitfully in obtaining the Langes’ approval.

I have reviewed the email exchange between Mission and its window supplier and I am not satisfied that there was deceit that should obviate the Langes’ obligation to pay for this requested upgrade. This amount is allowed. [ 86 ] Change Order # 2 related to supply and installation of insulation under heated concrete slabs. The Langes signed it but now assert that the Canadian Standards Association required insulation beneath in-floor heating as of April 2008 and that the Municipal District of Rocky View reiterated this requirement during construction.

The Langes’ position is that Mission knew or ought to have known that Code compliance was part of its obligations under the Fixed Price Component of the Construction Agreement. I agree that an item needed to comply with building codes should not be construed as an upgrade, but ought to have been contemplated at the time the Construction Agreement was entered into. This item is not allowed. [ 87 ] Change Order #4 related to lighting and electrical matters. I have reviewed the Plans and Specifications forming part of the Construction Agreement and I find that low voltage lighting was not originally contemplated.

When Mr. Lange provided his electrical design, he made clear that he wanted low voltage lighting, but as this differed from the Plans and Specifications, it was reasonable for Mission to add an additional charge for supplying and installing it. Therefore, this item is allowed. [ 88 ] In addition, Mission’s damages calculation under the Fixed Price Component contemplates payment of the $50,000.00 that it characterizes as a “discount” allowed on the land sale to the Langes. The Langes dispute this and assert that they paid full price for the land.

It is clear, however, that the additional $50,000 paid for the land was taken into account in determining the price under the Construction Agreement. Clearly, Mission contemplated that it would recoup this amount in the completion of the Construction Agreement. In my view, the situation is no different from what it would have been had the Langes made the Construction Agreement with Mission contemporaneously with the land purchase and received the $50,000 discount.

Mission is entitled to this amount. [ 89 ] From the sum of these amounts must be deducted the amount paid by the Langes and the amount it would have cost Mission to complete construction of the Residence. There is no dispute about the former, but there is about the latter. Mission’s evidence is that its cost to complete would have been $87,590.75. The Langes provided two estimates: $96,673.43 as “Winwood Cost/Quote” and $112,142.01 as “Paid or Payable by Langes”. In my view, Mission’s evidence should be accepted.

It was supported by invoices and other documentation, while the Langes estimates were somewhat lacking in that regard. Mission asserts that it arrived at this number based on actual quotes from sub-trades specific to the Lange home. Where such quotes were not available, it used estimates based on its experience. This calculation of damages is intended to approximate what Mission would have received had the Construction Agreement been fully performed.

Mission is in the best position to establish what its costs would have been had it completed the project. [ 90 ] Consequently, Mission’s damages under the Fixed Price Component of the Construction Agreement are as follows: Amended Fixed Price Component $1,000,000.00 Change Order #1 $7,246.00 Change Order #4 $8,510.00 Discounted amount for land sale $50,000.00 Less cost of completion $87,590.75 Amount paid by Langes $875,000.00 Total $103,165.25 [ 91 ] In respect of the Project Management Component, Mission claims $106,709.95, which represents 15% of (

a) the total job cost taken from Winwood Homes’ invoices (

b) minus Mission’s estimated cost to complete the work under the fixed price specifications (

c) plus Mission’s estimate of the cost of materials and work that fell under the Project Management Component but was completed by Langes other than through Winwood Homes. I am satisfied on the evidence before me that this is the appropriate calculation and this amount is allowed. [ 92 ] Accordingly, Mission’s total damages are $103,165.25 + $106,709.95 = $209,875.20. B. The Langes’ Claim for Damages [ 93 ] In their Counterclaim the Langes seek damages, interest and costs in respect of alleged deficiencies in Mission’s construction work.

The case law cited above makes clear that they are entitled to seek such damages notwithstanding that I have found they repudiated the contract. [ 94 ] The Langes provided two tables of amounts breaking down their alleged damages. The first is alleged to show items incomplete and owing by Mission under the Fixed Price Component. The Langes allege that their cost to complete these items was $71,682.87. [ 95 ] Mission disputes all of these items with the exception of one entitled “waste management”.

As Mission has conceded this amount, I will allow it at the Langes’ estimated cost of $6,408.00. [ 96 ] With respect to the remaining items, the Langes have not provided sufficient evidence to establish that any of them arose from breach by Mission of the Construction Agreement. While the case law is clear that a repudiating party may claim damages for past breaches of the repudiated contract, it is equally clear that the onus is on that party to establish both the alleged breaches and the damages arising therefrom.

The evidence before me is insufficient and I decline to award any of the damages claimed beyond the above conceded amount.

[ 97 ] The second table purports to outline costs incurred or estimated to be incurred by the Langes to repair items deficiently constructed by Mission. The Langes estimate $68,765.03 has been or will need to be incurred to remediate these items. Again, however, the evidence before me is insufficient to establish either that these costs were incurred or that, if they were incurred, they were attributable to Mission’s fault. In particular, I am unable to conclude on the evidence before me that the driveway incident was the fault of Mission. Accordingly, I decline to award the claimed damages. VIII.

Disposition [ 98 ] Mission is entitled to damages in the amount of $209,875.20. From that will be deducted the $6,408.00 Mission has conceded in respect of waste management, leaving damages owing to it in the amount of $203,467.20. [ 99 ] If the parties cannot agree on costs, they should provide me with written submissions within thirty days of the date of this judgment. Heard from the 9 th to the 13 th days of March, 2015. Dated at Calgary, Alberta this 2 nd day of May, 2017. C.M. Jones J.C.Q.B.A. Appearances: J. Kelly Hannnan for the Plaintiff Steven H. Leitl for the Defendants