Versailles Building v. Encore Entertainment Date:, 2012 BCPC 54

Citation: Versailles Building v. Encore Entertainment Date: 20120213 2012 BCPC 0054 File No: 09-27393 Registry: Vancouver IN THE PROVINCIAL COURT OF BRITISH COLUMBIA BETWEEN: VERSAILLES BUILDING & DESIGN CLAIMANT AND: ENCORE ENTERTAINMENT SERVICES AND PRODUCTS INC. DEFENDANT REASONS FOR JUDGMENT OF THE HONOURABLE JUDGE M.F. GIARDINI Appearing for the Claimant: J. Hanratty Appearing for the Defendant: G. Davie Place of Hearing: Vancouver , B.C.

Dates of Hearing: November 15 & 16, 2010, March 28 & 29, & June 28, 2011 Date of Judgment: February 13, 2012 INTRODUCTION [ 1 ] This case concerns a dispute between a general contractor and a sub-contractor about carpentry work done on a fire-damaged house. The cost of the work done by the sub-contractor exceeded an initial quote.

The parties disagree about the scope of the work and whether it changed during the course of the project. [ 2 ] The claimant, Versailles Building & Design, (“Versailles”) claims that the defendant, Encore Entertainment Services and Products Inc., (“Encore”) owes it money for carpentry work its employees carried out at a house on Kelvin Grove Way in Lions Bay. Versailles claims it should be paid an additional $25,000, plus interest, filing fees and service fees, in addition to the $14,490 already paid by Encore for the work. [ 3 ] Encore, the general contractor, originally built the Kelvin Grove house.

In 2008 Encore was retained to make repairs to the house following a fire (“the Kelvin Grove project” or “the residence”). Encore contacted Versailles to see if it wanted to submit a quote for cedar ceiling work. Encore was given a written quote by Versailles of $8,800 to install cedar ceilings at the house plus $3,520 to install strapping. Encore maintains it paid Versailles the $8,800 quoted for the cedar ceiling installation plus an additional $5,000 out of compassion. Accordingly, Encore says it is not liable for any further payment to Versailles. ISSUES TO BE DECIDED 1. Was there a legally binding contract?

2. Did Versailles do additional work? 3. Does Versailles have a claim for compensation either based on contract or on a quantum meruit basis? EVIDENCE ON BEHALF OF VERSAILLES [ 4 ] Versailles works as a contractor or sub-contractor as needed and provides the full scope of carpentry related services. Mr. Hanratty is a carpenter and is the owner of Versailles. He has known Greg Davie, the owner of Encore, for a number of years but, before the Kelvin Grove project, they had not worked together. Mr. Davie asked Versailles for a quote on the installation of tongue and groove cedar ceilings at the residence.

The quote was to include a price for strapping to the vault. Mr. Hanratty went to the residence. He reviewed the work to be done, which was to prepare the framing with strapping and then install tongue and groove cedar. [ 5 ] Mr. Hanratty prepared a quote dated February 16, 2009, which he sent to Mr. Davie by email. Mr. Davie responded on February 17, 2009, also by email. In that email Mr. Davie wrote that his own crew “might” install the strapping and he would let Mr. Hanratty know. Mr. Hanratty testified that if Mr. Davie decided to install the strapping that would change the quote. Mr.

Hanratty heard nothing further about the strapping work. Mr. Hanratty said he and Mr. Davie had discussed the work to be done. Mr. Davie was very specific about the standard of quality he wanted for the tongue and groove installation. Mr. Hanratty said Mr. Davie wanted a “finishing standard”, which is different from a framing standard. [ 6 ] Mr. Davie called Mr. Hanratty to start the project. When Mr. Hanratty arrived at the residence he found the strapping had already been installed. Mr. Hanratty said he told Mr. Davie, at the time, he had concerns about the strapping Mr. Davie’s crew had installed. Mr.

Hanratty said Mr. Davie told him the only area that needed to be addressed was at the ridge of the open ceiling. [ 7 ] Mr. Hanratty explained that the strapping was meant to provide a new layer on which the tongue and groove cedar would be installed. When the strapping was installed care had to be taken to shim it, flatten it and straighten it. That way when the tongue and groove cedar was installed it could easily slide together. Proper preparation of the strapping eliminates having to cut tapers on cedar boards to make them fit properly. [ 8 ] Mr. Hanratty said the strapping installed by Mr.

Davie’s crew was not properly installed. Consequently, Mr. Hanratty and his crew could not proceed with the immediate installation of the tongue and groove cedar because they had to correct the strapping before they could start installing the cedar. They needed to undo the strapping, shim it, and straighten it in order to install the tongue and groove cedar properly. That work had to be done in the vaulted areas of the residence as well as around the bulk heads. Mr. Hanratty said they had to “re-work” all the strapping. Some of this re-working was done by his crew; some of it was done by Mr. Davie’s crew. Mr.

Hanratty said they re-worked the strapping as they went along. The initial re-working of the strapping was down the ridge of the vaulted ceiling. This probably took about a week and a half. The rest of the re-working of the strapping was done as the installation of the tongue and groove cedar progressed. [ 9 ] Mr. Hanratty said, in addition to the problem with the strapping, there was also a problem with the cedar material Mr. Davie supplied for the tongue and groove ceiling. Mr. Hanratty himself was not present at the residence every day but his workers were.

He received a telephone call from one of his workers who told him the cedar material was all different sizes. Mr. Hanratty said the tongue and groove cedar boards were supposed to meld to a certain target size. That meant they were all supposed to be within a certain range. In order to install the tongue and groove cedar to the finishing standard Mr. Davie had requested, the cedar material provided had to meet that standard. The cedar provided by Encore was not even close. There were approximately 1,800 square feet of tongue and groove cedar to install. Mr. Hanratty had two employees working at the residence.

His workers told him the cedar material supplied by Mr. Davie varied up to a 1/4 inch in size. [ 10 ] Mr. Hanratty called Mr. Davie and told him about the problems Mr. Hanratty’s employees were having with the cedar material. Mr. Hanratty asked Mr. Davie what he wanted done because the material was all different sizes. Mr. Davie told him he should select through all the cedar boards and find the ones that matched up. In other words, Mr. Davie told him to separate the sizes and put the same sizes together.

Given the square footage to be installed, it was impossible to start categorizing 1,800 square feet of different size cedar boards. Further, Mr. Davie had asked him to match up the colour of the boards because he did not want a dramatic change in colour from one cedar board to the other. [ 11 ] Mr. Hanratty said part of the problem with the size of the cedar boards was that each board was not necessarily the same size from one end to the other. Because of the way the boards were milled they did not maintain the same range all the way down the board.

For example, if he cut six inches off a cedar board that board would change in size. This was a significant issue. If they had a board that matched other boards but trimmed six inches off to do the joining, they found the board was not in the same size range. Therefore they would have to start all over again, find another board, cut it to size, make sure it fit, and then install it. As well, the length of the boards ranged from six feet to eighteen feet. Mr. Hanratty therefore encountered two significant obstacles.

One was straightening the strapping that was not installed properly and the other was working with cedar boards that were not necessarily the correct size. [ 12 ] Mr. Hanratty spoke with Mr. Davie approximately one and a half weeks into the project. He could not recall the exact date, but it was February 2009. Mr. Hanratty told Mr. Davie the project was going to cost more. Mr. Davie asked how much and actually suggested a number. Mr. Hanratty told Mr. Davie he did not know and, until they moved further into the project, he would not be able to tell Mr. Davie how much more it would cost. Mr. Hanratty said Mr.

Davie asked if it was $2,000 or $3,000 more. Mr. Hanratty told him he had no idea. [ 13 ] Mr. Hanratty said, as a result of all these obstacles, the job took longer than anticipated. At one point he had five of his eight employees working at the residence. He had all the employees work on the job to find the ones best suited to get the job done faster and to lower the expense. He asked two of his framing carpenters to install cedar boards. He himself went to the residence and worked on it for three days to see what the problems were. Mr.

Hanratty said there was limited progress because of the problems with the strapping and the size of the boards. All of the boards had to be custom cut and tapered to fit the strapping. Additionally, he had to deal with boards that were not the same size.

[ 14 ] Mr. Hanratty said the job was eventually completed. He did not know how many days he worked on the project but he had the number of hours each of his workers worked on the residence. An invoice dated 5/5/2009 showed six men had worked on the project: Jason (364.25 hrs.) Tyler (296 hrs.) John (86 hrs.) Brett (7 hrs.) Austin (16 hrs.) Jeffrey (18 hrs.) [ 15 ] Towards the end of the project, Mr. Hanratty started to have more discussions with Mr. Davie about the cost. Mr. Hanratty said, because of the amount of time it took to get things done, he took responsibility “somewhat”. When he met with Mr.

Davie they discussed simply accepting Versailles’ actual payroll costs for Mr. Hanratty and his crew without any mark up, overhead or profit. Mr. Hanratty said the invoice he sent to Mr. Davie (05/05/2009) only reflected his actual costs for straight time hours plus other actual costs such as Worksafe, CPP, etc. Mr. Hanratty said that invoice was sent to Mr. Davie based on an agreement Mr. Hanratty had discussed with Mr. Davie and to which he thought Mr. Davie agreed. The total balance of that invoice was $17, 239.77. This was over and above $7,350 already paid by Encore. [ 16 ] Mr.

Hanratty received a letter from Mr. Davie dated May 26, 2009. In that letter Mr. Davie offered to pay an additional $5,000 above the amount ($8,800) originally quoted for the work. The letter also stated that Mr. Davie would pay Mr. Hanratty more at the completion of the project if there was more money. Mr. Hanratty noted that the closing comments in that letter show Mr. Davie was satisfied Versailles had done a first class job. Mr. Hanratty spoke to Mr. Davie on the telephone to find out what was going on. Mr. Davie discussed the financial situation of the project with him. Mr. Hanratty agreed to send Mr.

Davie a copy of their full bill-out rates. He did so but received no response for months. Mr. Hanratty then sent an email to Mr. Davie on May 31, 2009, explaining the situation. [ 17 ] Mr. Hanratty also wrote a letter to the homeowners in 2010 and attached an invoice he had previously sent to Mr. Davie. He asked the homeowners to pay the invoice as it was the homeowners who were receiving the insurance cheque for the repair of their home. He advised that if the matter wasn’t settled he would put a lien on the property. However, as it turned out, Mr.

Hanratty could not put a lien on the property because it was outside the time limit. Mr. Hanratty then decided to pursue a claim in Provincial Court. [ 18 ] Mr. Hanratty said he made inquiries about the cedar boards supplied to him by Mr. Davie. He found out the supplier was Haida Forest Products. Someone from Haida Forest Products told Mr. Hanratty that if he had had problems with the cedar boards they should have been rejected and returned. Mr. Hanratty made further inquiries at Haida Forest Products and also spoke to someone at the National Lumber Grading Authority.

He was advised by both organizations that if there was a problem with the cedar boards they should have been returned within seven days of shipment. He said they also told him the “tolerances” were less than 1/16th of an inch. He maintains that the cedar boards in fact changed up to 1/4 of an inch, not only in width but also along the length of the board. [ 19 ] Mr. Hanratty said even after he filed the Notice of Claim he continued to have discussions with Mr. Davie. At that point they were still on talking terms. He suggested that Mr. Davie go to the insurer to explain the problems they encountered on the job.

Mr. Hanratty believed some of the problems with the strapping and the trusses, which resulted in extra work, were caused by the fire. Therefore, Mr. Hanratty thought some of the cost might be covered by the insurance company. Mr. Davie asked Mr. Hanratty to write a letter setting out the problems so he could use the letter to go to the insurance company to see if it would cover some of the extra costs. Mr. Hanratty sent a copy of a letter to Mr. Davie who made changes to it. Mr. Hanratty said Mr. Davie re-wrote the letter. Mr. Hanratty had no idea what Mr. Davie did with the letter. However, in his view, Mr.

Davie’s actions with respect to the letter show Mr. Davie realized there were extra costs involved and that Mr. Davie was trying to recoup them. [ 20 ] Mr. Hanratty said, as far as he was concerned, the scope of the work on the Kelvin Grove project changed the very day he sent in his quote. He maintains Mr. Davie took some of the work himself; namely, the installation of the strapping. Once Mr. Davie got involved in directing the work it became a different contract. He noted there was never any contract signed. He merely quoted on the work that needed to be done.

As far as he is concerned the original quote was nullified by Mr. Davie’s response to the quote; namely, adding more work and asking him to adjust the price accordingly. Mr. Hanratty claimed that during the course of the project Mr. Davie acknowledged there were price adjustments but never squared away on what they were. [ 21 ] Versailles, also called as a witness Jason Glaeser, one of the carpenters who worked the greatest number of hours on the project. Mr. Glaeser confirmed he was briefed about the job one week before he went to the site.

He and the other workers from Versailles were expecting to do the strapping. Mr. Glaeser also said when he began the installation he noticed variations in the tongue and groove cedar boards supplied to him. The variations were up to a 1/4 inch in width. He said the width was inconsistent on individual boards in that it could vary from one end of the board to the other. He learned this the hard way. He simply could not pick up a board for colour, measure it, cut it and install it.

He could not have done the quality of work that was done without taking into account and adjusting for the considerable differences in the cedar boards. Mr. Glaeser said he could not have completed the work to the standard required (finishing standard), if he did not make adjustments both to the cedar boards and to the strapping. As well, some shimming was required in the course of the installation. He said he had to “cope” and “scribe” in a number of “crooked areas” of the house. Mr.

Glaeser also said some of the work slowed down when the owners of the house, who were elderly, came to the site. [ 22 ] In cross-examination Mr. Glaeser confirmed that he worked on the residence for Versailles from start to finish. Mr. Glaeser said he believed, at one point or another, all the strapping had to be shimmed or tweaked. He himself did shimming and tweaking. He recalled asking one of the other workers John Klassen to do some tweaking on the ridge. EVIDENCE ON BEHALF OF ENCORE [ 23 ] Mr. Davie testified for Encore. He said he asked Mr.

Hanratty if he was interested in submitting a quote for the cedar work at the Kelvin Grove residence. In February 2009 they met at the residence to discuss the work. At that meeting they discussed the areas that were to be completed with tongue and groove cedar. He was not sure about the soffit area in the bedroom. He told Mr. Hanratty, if tongue and groove was to be installed, he could adjust his price accordingly for that area. Mr. Davie also told Mr. Hanratty that the cedar boards at the “ridge” area of the ceiling had been shimmed during the previous installation and Mr. Hanratty should include that in

the price. According to Mr. Davie, he told Mr. Hanratty he was thinking of having his employees do the strapping work but he agreed that Mr. Hanratty could give him a separate quote for the strapping work. [ 24 ] Mr. Davie received a quote from Versailles. The labour costs for the strapping were $3,500; the labour quote for the installation of the tongue and groove cedar was $8,800. Mr. Davie said he spoke to Mr. Hanratty on February 20, 2009, on the telephone. He called him to ask how long it would take to complete the job. Mr. Hanratty told him 2 – 3 weeks. However, Mr.

Hanratty could not start the job right away because he had other work. As a result of that call, Mr. Davie told Mr. Hanratty his own employees would be installing the strapping. According to Mr. Davie, Mr. Hanratty responded that would be fine. Mr. Davie said during that conversation he confirmed with Mr. Hanratty that he was accepting his quote for the tongue and groove cedar installation. [ 25 ] Mr. Davie said he spoke to Mr. Hanratty again on March 5, 2009. At that time Mr. Hanratty told him he could start work the following week. Mr. Davie ordered tongue and groove cedar from Curtis Lumber.

The cedar was manufactured by Haida Cedar Products. The cedar was delivered to the house. Mr. Davie and one of his employees unwrapped it and placed it in several areas of the house. [ 26 ] Mr. Davie said the first day of the installation was March 17, 2009, or possibly March 16. In any event, Mr. Hanratty was not there. The only people there were two Versailles employees (John and Jason). Mr. Davie said no one from Versailles told him they had expected to be installing the strapping. He said, during the first few days on the job, employees of Versailles spent time on the telephone or standing by waiting. Mr.

Davie said he was at the job site every day and observed this himself. He said during the rest of the first week Mr. Glaeser and John took some full days and half days off to work on other jobs and attend medical appointments. During the first week he had to step in and direct John and Mr. Glaeser about locating the line of ridge boards. [ 27 ] Mr. Davie said during the first week John told him the cedar boards varied in width. Mr. Davie himself measured them and there was slightly more than 1/16th of an inch difference. He said this was an allowable variation for the cedar boards. Mr.

Davie noted that samples of off-cuts of tongue and groove cedar that were submitted as evidence (the Haida cuts) varied .066 inches from largest to smallest. He said this was well within the variations allowed by the National Lumber Grades Authority. Mr. Davie also testified that he checked the moisture content of the cedar boards and the moisture content varied from 6% - 12%. [ 28 ] Mr. Davie said the first time he saw Mr. Hanratty at the job site was the end of the second week. Mr. Hanratty apologized to him for the lack of productivity of his crew. According to Mr. Davie, Mr.

Hanratty told him he had to let John go because John had blown a hole in his budget. Mr. Davie said he felt badly and he told Mr. Hanratty he would give him $1,000 more to help out. He said Mr. Hanratty declined the offer and said they would be back on track the following week. [ 29 ] Mr. Davie testified about the things he observed on the job site regarding the Versailles crew. John left part way through to get another job. Mr. Davie kept his own crew out of the way so as not to disrupt the Versailles crew. Mr.

Hanratty was late in making a template for an elliptical cut and when he did the template was wrong and could not be used. Shimming on the valances and soffits was done by Don Klassen, Encore’s employee, not by Mr. Glaeser. When John was still working there he often was waiting for direction and not doing anything on many occasions. Mr. Hanratty was not there to supervise his crew. [ 30 ] Mr. Davie said he ran into Mr. Hanratty on May 4, 2009, at Capilano Glass. This was towards the end of the sixth week on the job. Mr. Davie offered to give Mr.

Hanratty a $7,000 draw and an additional $5,000 to cover the shortfall. According to Mr. Davie, Mr. Hanratty declined the offer but said he would send him an account. Mr. Davie said on May 4, 2009, he nevertheless gave Mr. Hanratty a cheque for $7,000 plus GST. On May 5, he received an email and a receipt for $7,350. [ 31 ] On May 14, 2009, Versailles completed the job. On May 23, 2009, Mr. Davie received an email. Attached to that email was an invoice dated May 5, 2009. Mr. Davie said the invoice was a complete surprise to him as this was not something agreed upon. He also received an email dated May 31, 2009.

He disagreed with a statement in that email that he and Mr. Hanratty had together determined that additional resources would be needed due to the nature of the cedar material and the framing. Mr. Davie said he never entered into any verbal or written agreement regarding the arrangement claimed by Mr. Hanratty. [ 32 ] Mr. Davie said he measured the tongue and groove cedar at the house and it was not off a 1/4 inch . He used digital callipers to measure the living room ceiling and the kitchen and family room ceiling. He did that a number of months ago before testifying.

He measured the size of the boards that had been installed. Mr. Davie said that if there had been a 1/4 inch variance then there would be gaps. But if there was a 1/16th inch variance that is acceptable. Mr. Davie said, if the cedar material he provided was a 1/4 inch off, they would have had to sort every board by width but the variance would still be a 1/4 inch. Mr. Davie maintained he measured the boards and there was less than a 1/8th inch variance. That was also the case with the samples of the tongue and groove boards that were submitted by Mr. Hanratty at trial. [ 33 ] Mr.

Davie also testified he had notified Mr. Hanratty many times that he was going to be doing the strapping. He denied that Mr. Hanratty had to undo and redo the strapping. Area wise the Versailles crew was working on 10 - 15% of the total ceiling area. Mr. Davie also noted Mr. Hanratty spoke of problems at the ridge of the ceiling and said it had taken about a week to install the tongue and groove in that area. Mr. Davie said Mr. Hanratty was not at the site and was not available to deal with issues as they arose. [ 34 ] Mr. Davie said he asked one of his men to help the Versailles crew to shim or tweak strapping.

That employee was Donald Klassen. Mr. Davie told Mr. Glaeser to instruct Mr. Klassen about what needed to be done by way of shimming and tweaking. He said Mr. Klassen did what Mr. Glaeser asked him to do. [ 35 ] Mr. Davie also said he believed that Tyler, who was a first year apprentice, spent some time waiting for directions. This happened on many occasions. He took it upon himself to take Tyler off Mr. Glaeser’s hands. Mr. Davie drew up three reflected ceiling plans for the dining room, family room and guest bedrooms. He then picked the tongue and groove cedar for the family room and labelled the boards.

He gave the drawing to Tyler and left him to complete the ceiling by himself. He said, after Tyler completed the family room, Tyler telephoned him and told him “that was easy”. Mr. Davie maintained the square footage covered per hour on that occasion was four times greater than Versailles’ productivity on other areas of the residence.

[ 36 ] In cross-examination Mr. Davie was asked about the need to acclimatize the cedar. He said cedar needs to be acclimatized because the moisture content changes. He said he had unbundled the cedar and had taken most of it into the residence. Mr. Hanratty put to Mr. Davie that when he was at the job site he saw a dehumidifier at one end of the cedar boards and a dryer at the other end. Mr. Davie said that was a possibility but only for a short period of time. Mr. Davie agreed the cedar was being further dried on the job site. He agreed that changing the moisture content of the cedar would change the size.

However, he said, in this case that did not occur because he did not put the heater and the dehumidifier close to the pile of cedar. What he did was to bring the cedar down to the same water content as the environment in which it was going to be placed. He said the cedar was allowed to be up to 15% moisture content and he and John had measured the moisture content using a meter. It was in the 6% – 12% range. [ 37 ] Mr.

Davie was asked whether the moisture content at the ends of the long boards (10 - 12 footers and 22 footers) would be affected if a heater or dehumidifier had been placed close to the ends of the boards. He said, if a heater was placed close to the ends of a pile of boards, it would have only been there for one or two days. He said the dehumidifier was in another room. He did not believe the size of the boards had been changed. It was put to Mr. Davie again that using a heater and dehumidifier on the cedar boards could affect the boards. Mr.

Davie said he understood it could have had an effect, however, he maintained the heater and dehumidifier were there for one or two days only and then were moved away. [ 38 ] Mr. Davie was asked whether the problems the Versailles employees were having were brought to his attention. He did not recall John and Jason telling him they were having problems with the cedar when they were doing the work. Mr. Davie said there was a concern that the cedar was not perfect. At the time he noted there was 1/16th inch difference between some of the cedar and he told them to do their best. Mr.

Davie denied he received a call from Mr. Hanratty advising him that the boards were problematic and could not be used. He denied having a conversation on his cell phone with Mr. Hanratty. He also denied he told Mr. Hanratty not to mention this to the home owners. Mr. Davie also denied that approximately 1 1/2 weeks after Versailles started on the project Mr. Hanratty informed him that the project was not as discussed. In that regard, Mr. Davie said that absolutely did not happen. He was then asked why he had offered Mr.

Hanratty more money when they had had a face-to-face discussion several weeks after the project had started. Mr. Davie said he felt sorry for Mr. Hanratty; that was why he offered the money. He said when he offered a couple of thousand dollars it was a gesture to help Mr. Hanratty out. He denied that Mr. Hanratty told him he had no idea how much the project was going to cost. [ 39 ] Mr. Davie was shown a photograph of the kitchen area and was asked why all the framing structures were painted white. He explained that was because of the fire which had occurred in the lower floor.

He acknowledged that some of the trusses and supporting timbers were definitely not perfectly straight. He was asked about the standard of work he had requested for the tongue and groove ceiling. Mr. Davie said he didn’t think he had discussed the exact tolerance that was to be met. His recollection was that he just asked Mr. Hanratty to do a “professional” job. It was suggested to Mr. Davie that he had asked for the finishing work to be done to 1/32nd of an inch. Mr. Davie said he did not recall specifying that tolerance. [ 40 ] Mr. Hanratty referred Mr. Davie to his letter of August 20, 2009. In that letter Mr.

Davie acknowledged more work had to be done in the areas of the soffits and bulkheads. In that letter he had also referred to the fact that, although he felt he was not obligated, he had given Mr. Hanratty an additional $5,000 to compensate him for the time to tweak the ridge line and soffit lines that required like treatment and for time spent on inconsistent boards. Mr. Davie agreed an amount had never been discussed with Mr. Hanratty. He was asked how he came up with the $5,000. He said it was an educated guess. Mr. Davie agreed more work needed to be done before cedar could be installed in certain areas.

He was asked if it was an oversight on his part not to address the extra work needed. Mr. Davie responded, no not as such. He knew that certain areas may need to be addressed. [ 41 ] Mr. Hanratty asked Mr. Davie about the cedar boards that had been used at the residence and that were depicted in photographs entered at trial. Mr. Davie agreed the cedar boards used on the job were of mixed grain. He agreed that all of the material on the project was mixed grain. However, he pointed out, there was no specification or stipulation that the material was going to be of a specified grain. [ 42 ] Mr. Hanratty asked Mr.

Davie if he recalled the conversation they had about the different sizes of the boards. Mr. Davie agreed they may have had such a conversation. He said most of his conversations were with Mr. Lynott, one of Versailles’ employees. However, he agreed he may have had a conversation with Mr. Hanratty. Mr. Davie said he had told Mr. Lynott that if there was a slight variation in the boards he should put them up and, if they ended up with a small variation, not to point it out to the owners. He said the boards did not vary a lot; maybe there was a small variation of 1/16th inch. Mr.

Davie claimed it was not a variation of a 1/4 inch. He was asked whether he told John Lynott to continue using the boards because Mr. Lynott did not have a valid complaint. Mr. Davie said he told John Lynott to continue using the boards because they did not vary more than 1/16th inch. [ 43 ] Mr. Hanratty asked Mr. Davie whether, when he was selecting the overall lengths of the boards, he went through the boards to find corresponding widths to be matched up. Mr. Davie agreed he did that to keep the rows continuous. He said if he did not do so there would be the odd gap. It was put to Mr.

Davie that he had instructed the Versailles employees to do the same thing. Mr. Davie responded he made it clear that he did not want gaps. He indicated this particular installation may have been more of a challenge. [ 44 ] Encore, also called Donald Klassen, an employee of Encore as a witness. He was at the residence from the end of March to the time Versailles finished the job, which was approximately May 14, 2009. Mr. Klassen said from March 31 to May 14, 2009, he only saw Mr. Hanratty on the site two full days and then two or three other days when he visited for a few hours each time. [ 45 ] Mr.

Klassen testified that Jason, a Versailles employee, told him he had been waiting for four or five days for the elliptical template. Apparently, Mr. Hanratty made the elliptical template to assist in cutting the cedar for areas around pipes. Mr. Klassen said the template was not used but he did not know why it was not used. He said Jason and John were in

part impacted by the lack of the elliptical template. They had to stop work in one area and work in another area and then go back. [ 46 ] Mr. Klassen was asked about a number of areas in the house and whether he had seen a number of the Versailles employees shimming or tweaking the strapping. He indicated he did not see Versailles employees tweaking or shimming the strapping at the sloped portion of the ceiling. Mr. Klassen said there were areas where he himself did the tweaking and shimming at Jason Glaeser’s request. That was at the master bedroom valance, the dining area, kitchen valance, the family room near the fireplace as well as in an area of the

living room. [ 47 ] In cross-examination Mr. Klassen agreed that if shimming had been done at the ridge he could not have seen it but if done in the field he could have seen it. He was asked whether it would be difficult to install tongue and groove cedar if the strapping was uneven. He said it would not. He was then asked if it would result in an uneven, wavy finish if the area was not shimmed. He agreed it would. He agreed the strapping was installed by a framer who was hired by Mr. Davie.

He was asked whether, considering all the shimming and tweaking that he did, he would say that the strapping was installed properly. He said yes it was. LEGAL PRINCIPLES Burden of proof [ 48 ] In Hersley v. EMRlogic Systems Inc ., [2010] BCPC 339, I reviewed some of the legal principles applicable to contracts. The party who alleges a breach of an agreement has the onus of proving on a balance of probabilities, that a contract was made as alleged, see: Clifford v. Flores [2004] B.C.J. No. 522 (B.C.S.C.) . In this case Versailles says there was no contract.

Encore says the quote was the contract and it was accepted. Versailles says the agreement was not reduced to writing. The fact an agreement may not have been reduced to writing does not alter the requirement to satisfy the court about the certainty of the terms agreed to by the parties, see: Canadian Bedding Co. v. Western Sleep Products Ltd . , [2009] B.C.J. No. 2180 (B.C.S.C.) . The basic contractual principles of offer and acceptance and certainty of terms apply, see: Clifford v. Flores .

Elements of a valid contract [ 49 ] In order to determine whether Versailles is entitled to additional payment from Encore I need to decide whether the parties entered into a legally enforceable contract. The elements necessary for the formation of a contract are : 1. Making an offer – has an offer been made to enter into an agreement on certain terms? 2. Acceptance to the offer – has each term of the offer been accepted by each party, either by words or by conduct? 3. Is there consideration – has one party given a benefit or has the other suffered a detriment or loss? 4.

Do the parties to the agreement intend to create legal relations? 5. Are the terms of the agreement certain and not vague? 6 Is the agreement complete - are there any terms left outstanding to be agreement upon later? [ 50 ] In order to create a contract there must be a meeting of the minds of the parties ( consensus ad idem ) about the essential terms. There can be no contract without a meeting of the minds of the parties.

The question to be asked is whether the reasonable observer, examining the exchanges between the parties, would conclude that a contract had been entered into, see: British Columbia (Minister of Transportation and Highways) v. Reon Management Services Inc ., [2001] B.C.J. No. 2500 (B.C.C.A.) . [ 51 ] The question is not what a party believed or understood, but what a reasonable person in the situation of the parties would understand the agreement to be.

Sometimes it is a simple matter to decide what the parties have manifested to each other, for example, where the parties have put their agreement into a written document and have signed it. If there is no single document then everything that occurred between the parties relevant to the alleged contract must be considered by the court. This will assist the court in determining whether an agreement can be established on the basis of what the parties have said, done, or written, see: G. H. L. Fridman, The Law of Contract in Canada 4th ed. (Toronto; Carswell 1999) at pp. 16-18.

ANALYSIS Was there a legally binding agreement? [ 52 ] There is no question that Mr. Hanratty went to the job site and looked over the work that had to be done. He prepared an email which he sent to Mr. Davie on February 16, 2009. In that email he wrote: “Please review the attached estimate. contact (sic) me if you have any question.” The attached document was on a Versailles form labelled “Quote”. In that document Mr. Hanratty described two items of work. One item was millwork – labour cost for installing strapping to vaulted ceiling, drops and soffit, 64 hours at $3,520.00.

The other item was millwork – labour cost for installing 1x6 cedar tongue and groove to ceiling soffit and valance areas, 160 hours at $8,800.00. [ 53 ] Mr. Davie responded by email the following day, February 20, 2009. He thanked Mr. Hanratty for the “quote”, and advised Mr. Hanratty that his workers might be installing the “stripping”. He also advised that the soffit in the master bedroom was going to be tongue and groove instead of rough cedar and wrote that Mr.

Hanratty was to “adjust your price accordingly”. [ 54 ] The evidence suggests that a partial agreement was reached but some of the terms were not finalized. In particular the scope of the work to be done was not finalized i.e. who was going to install the strapping? Further, the price was not settled because Mr. Davie asked for the soffit in the master bedroom to be finished in tongue and groove cedar. He did ask Mr. Hanratty to adjust his price accordingly. However, there is no evidence that the parties specifically agreed on what that price would be or how the price was to be calculated.

As noted in my review of legal principles, in order to establish consensus ad idem the parties must manifest their joint agreement to the essential terms of the contract. The fact that one party thought there was an agreement is not sufficient. Mutuality of agreement is the basis of any legal enforceable contract. Where the parties have set out their agreement in writing, the task of determining what they agreed to is relatively straight forward.

However, where they have not done so, the court must consider what the parties have said, done or written in relation to the alleged contract to decide if a legally enforceable contract exists, see: Fridman in Law of Contract in Canada pp. 16 to 18.

[ 55 ] Another issue that arises in this case is whether the document Mr. Hanratty sent to Mr. Davie was a fixed price quote or merely an estimate of what the job was likely to cost. Mr. Hanratty says it was an estimate. In fact, he used that term in his email to Mr. Davie. However, the Versailles form that was sent to Mr. Davie was titled “Quote”. It was also referred to as a quote by Mr. Davie who, made a change to include additional tongue and groove work in the master bedroom and noted that Versailles was to adjust its price accordingly.

As often happens in cases that find their way to small claims court, there was what appears to be a partial agreement between the parties but that agreement was not set out in detail. There were oral discussions between Mr. Hanratty and Mr. Davie but there was no written contract regarding the terms of the agreement, including time frame, quality of work, extra costs, contingencies and so forth. This case is a classic example of a “handshake deal” where the parties did not turn their minds to a number of specific terms before the work began.

After considering the evidence at trial, the written exchanges between Mr. Davie and Mr. Hanratty, as well as their discussions, I find that the extent of the work to be done and the price for that work was not sufficiently precise or clear. Accordingly, I conclude that the parties had not reached consensus ad idem on an essential term. Did Versailles do additional work? [ 56 ] The other issues that arose in this case relate to the assertion made by Versailles that its employees did additional work. Mr. Hanratty and Mr. Glaeser testified that additional work was necessary because:

a) the quality of the strapping work was poor and it affected Versailles ability to do the cedar work within the price it had set out in the February 16, 2009, quote;

b) the quality of the cedar boards supplied by Encore was not what it should have been for finishing work. [ 57 ] I am satisfied on the evidence of Mr. Glaeser and Mr. Klassen that a considerable amount of work (i.e. tweaking and shimming) had to be done to the strapping that had been installed on the vaulted ceiling, drops and soffits by Encore employees. As noted, that strapping was not installed by Versailles employees. I accept, however, that Mr. Klassen, who worked for Encore, did some of the additional tweaking work. Accordingly, some of the cost was ultimately incurred by Encore.

However, I find that an additional considerable amount of work (i.e. tweaking and shimming) was also done by employees of Versailles. The possibility that the strapping work would be done by someone else was raised by Mr. Davie. However, I find, it was not until the Versailles employees arrived at the residence that they learned the strapping was already done. [ 58 ] I also find Mr. Davie was aware there were issues regarding the quality of the strapping work.

In his testimony he appeared to minimize the significance of this in terms of the effect it had on the ability of the Versailles employees to complete their work in a timely way. However, on his own evidence and the evidence of Mr. Klassen, it is clear that Mr. Davie was aware additional work had to be done before the tongue and groove cedar could be installed. Mr. Davie was at pains to point out during his cross-examination that he had made Mr. Klassen available to Mr. Glaeser to use as needed to assist with the tweaking and shimming of the strapping. Mr.

Klassen only arrived on the job several days after Versailles started the work. Some of the work had already been done. Mr. Glaeser worked on the project for Versailles from start to finish. I accept his evidence that, at one point or other, all of the strapping had to be shimmed. He himself did shimming and tweaking of the strapping. He could not have completed the work to the standard required; that is the finishing standard, if he had not made adjustments to the strapping as well as to the cedar boards. The quality of cedar boards will be addressed later in these reasons. [ 59 ] On the evidence of Mr.

Hanratty and Mr. Glaeser, I find Mr. Davie asked Versailles to install the tongue and groove cedar to a finishing standard. Mr. Davie himself was less specific about how he described the quality of the end product he wanted. However, he did acknowledge he asked that the job to be done to a “professional” level. Mr. Davie also acknowledged that the homeowners, in particular the wife, were very fussy. He also acknowledged that Versailles had done “a first class job”. Given the quality of work Encore requested, I find it was important to have a proper base or foundation on which to install the cedar boards.

Encore was free to choose to have the strapping done by its own employees or subcontractors. However, it was its responsibility to ensure the quality of the strapping work was such that the Versailles crew could install the tongue and groove cedar to the standard requested without having to do any significant additional work. In this case, I find the strapping was not installed in a manner that allowed the tongue and groove installation to be completed to the finishing standard required by Encore.

More preparatory work had to be done by Versailles to ensure a first rate finished product. [ 60 ] The other issue in this case relates to the quality of the cedar material supplied for the tongue and groove installation. There was no dispute that the cedar tongue and groove material was to be supplied by Encore. However, there was no agreement between the parties about the quality of the cedar material, the specifications of the cedar, and so on.

This was one of the terms of the agreement that the parties failed to address. [ 61 ] Considerable evidence was presented by both parties about the properties of tongue and groove cedar boards, the tolerances, the grading rules for tongue and groove cedar, and so on. There was also considerable evidence about whether the tongue and groove cedar boards supplied by Encore had variations in width exceeding 1/16th inch. In my view, it is not necessary to analyze the measurements of the cedar boards with mathematical precision.

It is clear from the evidence of the witnesses who worked with the cedar boards; namely, Mr. Hanratty and Mr. Glaeser as well as Mr. Davie, that there were variances between the boards both in terms of colour, grain and size. In particular, Mr. Hanratty testified that the tongue and groove cedar boards did not maintain the same sizing range all the way down the boards. Mr. Glaeser also testified there were noticeable variations in the tongue and groove cedar boards supplied to him. According to his evidence, the variation was as much as 1/4 of an inch in width.

He said the width was inconsistent on individual boards in that they could vary from one end of the board to the other. Therefore, he could not simply pick up a board for colour, measure it, cut it and install it. Instead, he had to choose boards and make adjustments. Mr. Glaeser said he could not have completed the work to the finishing standard required by Encore unless he made adjustments to the boards as well as to the strapping. [ 62 ] I have found that Encore wanted the work to be completed to a finishing standard.

The work was finished to that standard and Encore and its client, the homeowners, received the benefit of “first class” work. I find that in order to complete the work to that standard Versailles had to do a considerable amount of additional work to make sure the cedar boards were matched not only for colour but also for size. Versailles employees had to make adjustments to the boards to ensure the end product would meet the standard

required by Encore. [ 63 ] I have concluded there was no legally enforceable contract because the parties had not reached consensus ad idem on essential terms. However, even if that were not the case, given the problems described with both the quality of the strapping work and the quality of the tongue and groove cedar supplied by Encore, I conclude that the quote initially supplied by Versailles for the tongue and groove work did not contemplate that additional work. Having so concluded the question that arises is what amount, if any, is owing to Versailles.

Does quantum meruit apply? [ 64 ] In Golder Associates Ltd. v. Mill Creek Developments Ltd . [2004] B.C.S.C. 665, the court stated the following about determining compensation in a quantum meruit claim: 1. The court may apply equitable principles to determine the value of the services provided; 2. In some cases the value will be the amount claimed or billed by the estimator while in other cases it may be more difficult to attach a value to the services when an estimate has been exceeded; 3. The court’s goal is to set a reasonable price upon a quantum meruit 4.

The amount which a contractor is entitled to on a quantum meruit basis is the value of the work from the point of view of the value of the services rendered by him, not the benefit to the person for whom the work is done; 5. The contractor is entitled to recover as “cost” the cost and expenses that he incurred in doing the work in so far as they were reasonable in amount and reasonably and justifiably incurred with regard to all the circumstances; 6. The burden of proving that the disbursements were reasonable and otherwise proper is on the contractor; 7.

In evaluating quantum meruit the courts may use the estimate as a starting point and then determine what range or variance from that estimate was reasonable in the circumstances; 8. The court’s task is to determine the value of the services rendered by considering the reasonable costs and expenses incurred in performing the services having regard to the amount of reasonable variance from the estimate and all the circumstances between the parties. (see paragraphs 26 – 29) [ 65 ] In Noh v.

Plaza 88 Developments Ltd . , [2011] B.C.C.A. 461, the court summarized the relevant principles of unjust enrichment which can anchor a claim in quantum meruit : there must be an enrichment of Encore; a corresponding deprivation of Versailles; and an absence of juristic reason for the enrichment. In this case, there is no question that there was enrichment for Encore given the completion of the work and the first class job done to a finishing standard. Encore received payment for the restoration.

There is a corresponding deprivation of Versailles because its employees had to do considerable additional work in order to complete the project to the required standard for which no payment was made. There is also, in my view, an absence of juristic reason for the enrichment. I have found that the additional services performed by Versailles to achieve the standard of work requested by Encore fell outside the work contemplated by the initial quote.

The work Versailles had to do to achieve the standard requested by Encore was extra work over and above the work quoted for the installation of the tongue and groove cedar. [ 66 ] There was no specific agreement that Encore would pay for the additional work, however, such an obligation is implied in the circumstances. Mr. Davie was at the job site and fully aware of the shimming and tweaking work done in relation to the strapping. In fact, he put one of his employees at the disposal of Mr. Glaeser to help with this.

He was also aware of the work required to match the cedar boards and install them to the finishing standard. The work was required because the cedar boards he provided could not be used “as is” but required considerable fine-tuning before they could be installed. Value of Services [ 67 ] As previously noted Versailles claims $25,000 plus interest and other costs. The original quote was $8,800 plus GST. By way of email dated May 25, 2009, Mr. Hanratty sent Encore an invoice dated 5/5/2009. This invoice reflected only his actual payroll cost for the hours worked – no mark up, no profit.

The total labour cost reflected in that invoice was $23,336.52; (this did not include $86.42, an amount that was not explained). That invoice acknowledged that $7,350.00 had been paid. On May 26, 2009, Mr. Davie wrote to Mr. Hanratty. He enclosed a cheque for $7,140.00. In the note Mr. Davie wrote that this was $5,000 more than the original $8,800 quote. He also wrote that upon completion of the project he would determine if there was any more money available to pay to Versailles. [ 68 ] Mr. Hanratty sent a second invoice, also dated 5/5/2009.

It was based on the same number of hours worked by his employees, as set out in the earlier invoice, but the charge-out rate per hour was substantially higher. Mr. Hanratty testified that the second invoice was based on the “full bill-out rate” for carpenters. The total labour cost shown on that invoice, before deductions for payments Encore made, was $40,178.75 (this did not include $86.42, an amount that was not explained).

Once the two payments made by Encore were deducted the net amount, claimed by Versailles for labour was $25,688.75. [ 69 ] Applying the principles set out in the above noted cases, I have taken the following into account to determine compensation on a quantum meruit basis: 1. The original quote given by Versailles was 160 hours labour for cedar installation and 64 hours labour for strapping. That is a total of 224 hours. Mr. Hanratty’s invoices of 5/5/2009 (exhibit 5) and 5/5/2009 (exhibit 9) shows the total hours worked by his crew at 787.25 2.

There is a significant difference between the actual hours claimed and the hours originally estimated for the ceiling work and the

strapping work. 3. Comparison of the initial estimated cost of $8,800 (cedar installation only) and, $12,320 (cedar installation and strapping) to the cost of actual labour (based on lower rate set out in exhibit 5), which is $23,336.52, also shows a significant difference. 4. This significant difference cannot be accounted for only on the basis of the extra work that was required to adjust the strapping and adjust for the variances with cedar boards. A reasonable inference, which was raised in passing during the trial, is that Mr. Hanratty under-estimated the time necessary to do the ceiling work. 5.

In the circumstances the results of that inaccurate estimation should not be borne only by Encore. 6. It is clear that additional work was done by Versailles for which it should be compensated. 7. Given the imprecise nature of the evidence on the issue of the value of that work, I have made a “ball park” assessment of an amount that is a reasonable value of the additional services on a quantum meruit basis. That amount is $8,000; GST must be added to that amount.

In reaching this conclusion I have taken into account the money already paid by Encore, namely, $14, 490 (not including GST). [ 70 ] Accordingly Encore must pay Versailles $8,000 plus GST. Versailles is also entitled to court ordered interest on that amount beginning the date the claim was filed, plus filing fees and service fees. _____________________________ The Honourable Judge M.F. Giardini Provincial Court of British Columbia