Rickard Construction Ltd. - v. -, 2014 SKPC 182

IN THE PROVINCIAL COURT OF SASKATCHEWAN CIVIL DIVISION Citation: 2014 SKPC 182 Date: October 25, 2014 File: 36/13 Location: Estevan _____________________________________________________________________________ Between: Rickard Construction Ltd. - and - Raymond Burns Tom Rickard For the Plaintiff Sharon Burns For the Defendant _____________________________________________________________________________ JUDGMENT L. WIEGERS, J _____________________________________________________________________________ Introduction [ 1 ] The plaintiff is an earth moving construction company owned by Tom Rickard.

The defendant, Raymond Burns, is a farmer. In July 2012, Mr. Burns hired the plaintiff to bury rocks located on his farmland.

[ 2 ] The work was performed between October 25 th and 29 th of the same year. After completion, the plaintiff presented Mr. Burns with two detailed invoices that totalled $21,031.50. [1] After considering the invoices for several weeks, Mr. Burns responded with a cheque in the amount of $13,571.25 and a written note that explained why he would not pay the remainder. [2] [ 3 ] With that, the plaintiff commenced this action claiming breach of contract and seeking judgment for the outstanding balance of $7,460.25 along with interest according to The Pre-Judgment Interest Act [3] and the costs of the action.

The Evidence [ 4 ] Mr. Rickard has worked in the earth moving construction industry since the early 1980s. The great majority of the plaintiff’s work is performed for commercial clients with interests in the oil sector. Occasionally, the plaintiff will perform smaller jobs for private clients such as Mr. Burns, but only after serving its commercial clients first. [ 5 ] On July 24, 2012, Mr. Burns contacted Mr. Rickard by telephone. [4] The two men did not know one another. Mr. Burns asked Mr. Rickard what he would charge to bury rocks that were located on his farmland.

Both men agreed that a trackhoe and bulldozer would be required for the job. [ 6 ] From this point onward, it is helpful to organize the trial evidence around two subjects: price terms and work performance. [ 7 ] With regard to price terms, Mr. Rickard testified that Mr. Burns specifically asked for a “D6” model bulldozer. Mr. Rickard quoted Mr. Burns his standard rate of $220.00 an hour for each machine consisting of $160.00 for the machine and $60.00 for the labour to operate it. Mr. Rickard told Mr.

Burns he would be charged an additional hourly rate of $250.00 to transport the equipment to and from the work site. Mr. Burns agreed to those terms. Mr. Rickard did not ask for written confirmation of the arrangement and did not make notes of the conversation. Mr. Burns called him on later dates asking when the work would be performed. On those occasions, Mr. Rickard told him he would get to the work as soon as he could spare the labour and equipment to perform the work. [ 8 ] Mr. Burns takes a different view of the conversation.

He testified that he received a quote of $220.00 an hour for the bulldozer, but that it was for a more powerful D7 model that he specifically requested, not the D6 model Mr. Rickard described. Mr. Rickard quoted him $160.00 for the trackhoe with no mention of another $60.00 for labour. Finally, Mr. Rickard quoted him a flat rate– not an hourly rate-- of $250.00 to transport the heavy equipment. Unlike Mr. Rickard, the defendant made notes of this conversation. He claimed he confirmed the price quotes in subsequent telephone conversations with Mr. Rickard on October 1 st and 16 th . For his part, Mr.

Rickard testified that he does not recall discussing prices in subsequent conversations, but in any event, he would not have strayed from the plaintiff’s standard prices that had been provided to Mr. Burns in the first telephone conversation. [ 9 ] Before the plaintiff began work on Mr. Burns’ land, the defendant obtained an estimate from another contractor. The hourly estimate provided by the contractor was $195.00 for both machines including labour. As well, the contractor was willing to waive the equipment delivery charge. Mr.

Burns elected to continue with the plaintiff, however, because based on his understanding of their initial conversation he anticipated the plaintiff would be more affordable. [ 10 ] Mr. Burns called Armand Aalbers as a witness. Mr. Aalbers is a farmer who lives near Mr. Burns’ farm. During the summer of 2012 he was privy to a conversation in which Mel Beatty, an employee of the plaintiff, provided an hourly rate of $160.00 for a trackhoe. Mr. Aalbers testified that he understood this to include labour. By the time Mr. Aalbers testified to this, Mr. Beatty had already testified on behalf of the plaintiff.

Unfortunately, Mr. Beatty was not cross-examined on this point. [ 11 ] Mr. Rickard and Mr. Burns did not discuss certain expenses that were later charged to Mr. Burns: the cost of a transport permit, the use of a service truck, and the cost of labour while the operators were transported to the work site. When asked in cross- examination why he had not informed Mr. Burns of these charges during their initial conversation, Mr. Rickard replied, “because he

never asked.” Later, in closing argument he stated such charges are standard in his industry and he compared these charges to hidden fees that he claimed are commonly imposed by car dealerships when they service motor vehicles. As well, the two men never discussed the method Mr. Rickard would use to calculate the time worked by his operators. [ 12 ] On the first day, the D6 bulldozer broke down a couple of hours into the job. The only machine the plaintiff had available to replace it with was a D7 model for which the plaintiff ordinarily charged an additional $20.00 an hour.

As a result, from that point onward Mr. Burns was billed $240.00 for the bulldozer including labour. The price increase was not discussed with Mr. Burns who was not charged for the short time the D6 worked before it stopped functioning. [ 13 ] With regard to the work quality, Mr. Burns testified the plaintiff’s bulldozer operator “did not know what he was doing.” His opinion was based on the work of operators he had observed in the 1980s and 1990s. Mr. Burns claimed the bulldozer operator’s incompetence likely added to the number of hours required to complete the work.

He did not, however, attempt to quantify the cost of this perceived problem. Mr. Burns was pleased with the work of the trackhoe operator and, overall, Mr. Burns was content with the finished work. [ 14 ] Mr. Rickard testified that on October 26 th – the second day of work– he visited the work site and met personally with Mr. Burns. At the time, Mr. Burns complained that the bulldozer operator was not spreading topsoil properly. In response, Mr. Rickard had a brief discussion with both of his operators in which he told them how he wanted the work accomplished. Mr.

Rickard did not receive another complaint. [ 15 ] Mel Beatty was the trackhoe operator. He testified for the plaintiff. He described the bulldozer operator as someone with substantial experience in that role and said he performed the role well on this project. He added that the work was completed in the manner directed by Mr. Rickard. Finally, he said he did not receive any complaints from Mr. Burns while work was underway. [ 16 ] Mr. Burns testified that each day either he or his wife, Sharon Burns, watched the heavy equipment and recorded their time in motion.

The purpose of this was to ensure they were not charged for a minute of time in which the equipment was not in motion performing work. Mr. Burns applied this approach strictly. For example, he said he should not bear responsibility for the time required to add oil to a machine that had run low during the course of the work day. In his experience, Mr. Burns has noted heavy equipment are sometimes equipped with time clocks that measure actual motion to facilitate what might be called minute-by-minute billing. In all, Mr.

Burns calculated he was charged for an extra 4 hours and 27 minutes of trackhoe time and 2 hours and 9 minutes of time during which the bulldozer was not moving ground. [ 17 ] Mr. Rickard testified that the industry norm is not to bill minute-by-minute but to round time worked to the nearest hour or half-hour. In completing the invoices, Mr. Rickard relied on time reports provided by his operators who were instructed to round to the half-hour and not bill for time taken for lunch or coffee breaks.

He illustrated this approach by claiming his operators would bill a half- hour if they worked to twenty minutes past the hour but would bill nothing if they finished the job five or ten minutes after the hour. He testified he would never accept a job on the basis of minute-by-minute billing. [ 18 ] Mr. Beatty also provided evidence on this point. He confirmed that the time claimed by the operators was rounded to the nearest half-hour.

He said he was familiar with older equipment that included motion-time clocks, but he claimed those devices were notoriously inaccurate and as a result had fallen out of use many years ago. Position of the Parties [ 19 ] The plaintiff’s position is straightforward. Mr. Rickard claims he and Mr. Burns had a binding agreement and his understanding of the terms is correct. Therefore, he asserts Mr. Burns has breached the agreement. He states the plaintiff should be paid for its work. [ 20 ] Mr. Burns also alleges a binding agreement, but on his stated terms.

The charges he disputes may be categorized as follows: (1) charges that exceed the agreed terms; (2) charges that were never discussed; and, (3) charges that result from rounded billing. He

adds that his costs were greater than they should have been because the bulldozer operator was not competent. [ 21 ] With regard to the first category, Mr. Burns paid the plaintiff according to his understanding of the agreement. Therefore, he paid $220.00 dollars an hour for the bulldozer, $160.00 for the trackhoe, and an equipment hauling charge of $250.00 for each machine. [ 22 ] Mr. Burns was charged for items that were not discussed.

This included a permit fee of $100.00 that enabled the plaintiff to lawfully transport the heavy machinery across a highway, the operators’ wages as they travelled to and from the work site, and a charge for the use of the service truck that transported the operators. [ 23 ] As detailed above, Mr. Burns and his wife tracked the operation of the machines minute-by-minute and he disputes the accuracy of the work time claimed by the plaintiff. As a result, in addition to paying less for each machine than what the plaintiff charged, Mr.

Burns paid for less time than the plaintiff claimed. [ 24 ] At this point, I will deal briefly with the subject of the bulldozer operator’s competence. The evidence of Mr. Rickard and Mr. Beatty demonstrates that the bulldozer operator was experienced and was following Mr. Rickard’s direction. Both Mr. Rickard and Mr. Beatty are more knowledgeable in this area than Mr. Burns and even though they have an interest in the outcome of this matter, I found Mr. Rickard and Mr. Beatty credible on this point.

I find that the bulldozer operator’s work performance was reasonable in the circumstances and it will not be a factor in my decision. Issues [ 25 ] The evidence and position of the parties give rise to two issues:

a) Were the parties bound by an enforceable contract and if so what were its terms?

b) If the parties were not bound by an enforceable contract does the plaintiff have a valid claim for restitution on the basis of quantum meruit ? Analysis Were the parties bound by an enforceable contract? [ 26 ] The parties intended to create a legally binding contract through which the defendant’s rocks would be buried and the plaintiff would be paid for its effort. Yet, intention alone will not produce an enforceable contract. [ 27 ] Mr. Rickard did not make a record of his conversations with Mr. Burns and I do not think he has a clear, present recollection of his conversation with Mr. Burns.

At the same time, however, it is noteworthy that he was quoting Mr. Burns the same standard prices he routinely provided to potential clients. Further, the plaintiff company was very busy during the summer and autumn of 2012 and Mr. Burns’ project was considered relatively minor. I accept that Mr. Rickard was confident he could find other work if Mr. Burns did not accept his proposed rates. Mr. Rickard remained firm on these points throughout his testimony. [ 28 ] Mr. Burns submits his account of the initial conversation is more reliable than Mr.

Rickard’s because price was crucial to him and he made notes of the conversation. He claims he also confirmed his understanding of the agreement in the subsequent telephone conversations. Like Mr. Rickard, his evidence was not disturbed under cross-examination. Further, he asserts his account is buttressed by Mr. Aalbers’ evidence. However, I place little weight on Mr. Aalbers’ evidence because Mel Beatty was not cross-examined regarding the conversation at which Mr. Aalbers was present. As well, it is unlikely that Mr. Beatty had the authority to negotiate on behalf of the plaintiff; the real issue is what Mr.

Rickard said to Mr. Burns.

[ 29 ] There is nothing inherently faulty in the evidence of either Mr. Rickard or Mr. Burns. Neither witness struck me as deceptive or dishonest. I accept that each witness honestly believes his recollection of the initial telephone call is accurate. I find that each party simply misunderstood the other. As a result, there was no meeting of the minds on the issue of price. [ 30 ] In some circumstances a contract may be enforceable despite a lack of consensus regarding a term of the contract.

In a case where price is the term at issue the Court may find that at the time the agreement was struck the parties intended that a reasonable amount would be paid for the sought services. Such a finding, however, must be based on the evidence. [ 31 ] If price is regarded as the central term of the contract, then without an agreement as to price or a method to determine a reasonable price the parties’ discussions do not graduate to the status of a legally enforceable contract: Infinity Steel Inc. v B&C Steel Erectors Inc . [5] [ 32 ] The initial conversation between Mr. Rickard and Mr.

Burns was brief and focused primarily on the price of the required work. Having heard and observed both parties testify, I have no doubt that neither party would have intended to enter a contract with the other if he had actually understood what the other side’s expectations were. Mr. Rickard felt the plaintiff did not have to work at a reduced rate to attract clients and Mr.

Burns chose the plaintiff because he thought its services would be less expensive than those of another construction company. [ 33 ] I conclude that the price of the plaintiff’s services was a crucial aspect of the parties’ discussion and there was no agreement on that point. Each party expected his version of the price arrangement would carry the day. Under the circumstances, there is no basis to find that the parties implicitly agreed that a reasonable price would be paid for the plaintiff’s services.

The plaintiff has alleged breach of contract and to succeed in its claim it must prove the existence of a valid contract. It has failed to do so. Therefore, its action on the basis of breach of contract is dismissed. Quantum Meruit [ 34 ] Where a Court finds a valid contract, quantum meruit may be applied as one tool of construction. Where, as here, the Court finds a contract was only contemplated, then quantum meruit may be applied to provide restitution for a plaintiff. [6] A small claims court has authority to order relief on this basis. [7] [ 35 ] In Saskatchewan Government Insurance v Medynski (C.O.B.

Lakland Towing), [8] Smith J. described quantum meruit in these succinct terms: 88. It is well settled that where there is service performed for work done for another and there is no agreement as to price, the doctrine of quantum meruit applies.

In Black ’s Law Dictionary, 6 th ed., s.v. “ quantum meruit ” is: “as much as deserved”. [ 36 ] In Zawislak v Lush Lawn Irrigation Inc. [9] , Kovach J. identified three conditions that must be met before restitutionary quantum meruit will be available to a claimant: (1) the recipient was aware of the work; (2) the work was rendered for the benefit of the recipient; and (3) there was an expectation the claimant would be paid for the services. [10] Clearly these elements are established in the present case. [ 37 ] If relief is ordered, it must reflect what the Court considers reasonable in the circumstances.

In Medynski , Smith J. noted that Courts and commentators have considered several factors to be germane to this inquiry. The factors include: fair market value; the cost to the plaintiff; the amount discussed under the ineffective agreement; what is customary in the industry; the value of the work to the defendant; and what has the defendant previously paid for the same or similar services. [11]

[ 38 ] The present case does not include evidence respecting some of these factors. Although the plaintiff’s detailed invoices inform me of its charges they do not inform me of the actual cost of the services to the plaintiff. As well, I have no evidence of what the defendant previously paid for similar work. In any event, the utility of the latter evidence, if available, would be dubious given it has been many years since Mr. Burns has hired contractors for similar purposes. [ 39 ] There is some evidence respecting the other factors referred to in Medynski .

Prior to turning to them, however, it is helpful to consider the rounded billing issue. I accept Mr. Rickard’s evidence that rounded billing is common in the plaintiff’s industry. I also note that rounded billing has been found to be an effective way to assign value to work in certain professions. [12] I also view Mr. Burns’ minute-to-minute billing approach as unreasonably strict. For example, it would not allow an operator to bill for briefly halting his equipment to survey the work terrain, discuss work strategy with the other operator, or service the equipment.

Finally, the difference in time between the two billing approaches was significant but not great. In these circumstances I am satisfied that the plaintiff’s method of rounded billing was reasonable. [ 40 ] The plaintiff billed $220.00 an hour for the trackhoe. According to the plaintiff’s invoice the trackhoe worked 33.5 hours and therefore he expected $7,370.00 for its use. In his reply [13] , Mr. Burns explained why he paid $4,648.00 for the bulldozer. He calculated the machine’s operation time at slightly more than 29 hours and applied an hourly rate of $160.00. Mr.

Burns received a third party quote of $195.00 an hour for a trackhoe with operator. I find this is a reasonable amount for the service. Therefore, Mr. Burns is responsible for the trackhoe service at an hourly rate of $195.00 for 33.5 hours. Taking into account what he has already paid for this service I find he must pay the plaintiff an additional $1,884.50. [ 41 ] The plaintiff’s bulldozer was billed at a rate of $240.00 for 37.5 hours. The defendant paid a rate of $220.00 for the service for a period of 35.3 hours. When Mr.

Rickard substituted the more powerful D7 model for the D6 bulldozer he did not inform Mr. Burns of the cost increase to $240.00 an hour. In my view, Mr. Rickard should have informed Mr. Burns of this price increase. It is not reasonable for Mr. Rickard to say “he never asked” as an excuse for not keeping Mr. Burns informed of changes that most individuals would consider important. As a result, I conclude Mr. Burns has already paid a reasonable rate for the bulldozer service. However, he is required to pay for another 2.2. hours of work at the $220.00 rate, or $484.00. [ 42 ] The plaintiff charged Mr.

Burns $1,000.00 for transporting the heavy equipment to and from the work site. He based this figure on an hourly fee of $250.00 ($190.00 for the flatbed that moved the vehicle and $60.00 for the driver) applied to each piece of heavy equipment. Expecting a flat rate of $250.00 per machine, Mr. Burns paid $500.00. I conclude Mr. Burns is responsible for the outstanding $500.00. There was actual cost to the plaintiff for these services, movement of the equipment was essential, and Mr.

Burns was generally pleased with the work once it was completed. [ 43 ] Although the transportation permit fee and the cost of the operators’ wages as they travelled to and from the work site were not discussed by the parties, I consider these charges reasonable because they represent the cost of actions that were essential to complete the work and were reasonably foreseeable charges. Together these two charges lead me to impose another $1,060.00 on the defendant. [ 44 ] The plaintiff charged an additional $1,600.00 for sending service trucks to the work site.

Apparently, the service trucks served as a carrier for the employees and were not otherwise important to the completion of the work. I gather the rationale for charging for the truck was that it could not be in use elsewhere while it stood idle on Mr. Burns’ farm. However, there was no evidence provided that the trucks were required elsewhere or that they were useful at the work site. Bearing this information in mind and that the service truck charge was not discussed with the defendant, I consider this charge unreasonable in the circumstances and Mr.

Burns is not responsible for it. [ 45 ] Based on the above findings, the plaintiff is entitled to an additional $3,928.50 along with GST in the amount of $196.43. Conclusion [ 46 ] The plaintiff’s claim for damages due to breach of contract is dismissed. However, I find the plaintiff is entitled to restitution by way of quantum meruit . The plaintiff will have judgment in the amount of $4,124.93 along with pre-judgment interest and the costs

of the action. L. Wiegers, J [1] Exhibits P-1 and P-2 [2] Exhibit P-3 [3] SS 1984-85-86, c P-22.2 [4] Mr. Rickard did not recall the date of this conversation or the dates of subsequent telephone conversations. Mr.

Burns did keep a record of the dates and they were not disputed. [5] 2009 BCSC 1053 at para 41 , 87 CLR (3d) 149; and, Infinity Steel Inc. v B&C Steel Erectors Inc ., 2011 BCCA 215 at para 12 , 99 CLR (3d) 6 [6] CH2M Hill Energy Canada Ltd. v Consumer ’s Cooperative Refinery , 2010 SKCA 75 at paras 23-27 , SJ No 309 [7] Classic Paving Inc. v Fresh Air Experience Ltd. , 2014 SKPC 132 paras 70-72 , SJ No 333 [8] 2012 SKQB 157 , 396 Sask R 104 [ Medynski ] [9] 2001 SKQB 386 , SJ No 492 [ Zawislak ] [10] Zawislak , at note 9, paras 15-16 11 Medynski , at note 9, paras 91-94 [12] Regarding lawyer’s fees see: Commonwealth Trust Company (In liquidation) (Re), 2009 BCSC 1493 at paras 491-494 , 60 CBR (5 th ) 163; and, for trustees see: Michipicoten First Nation v Michipicoten First Nation Community Trust , 2014 ONSC 594 at paras 40 , 43, OJ No 1094 [13] Exhibit P-3