2010 QCCA 2168, 2010 QCCA 2168

Unofficial English Translation Dunn c. Williams 2010 QCCA 2168 COURT OF APPEAL CANADA PROVINCE OF QUEBEC REGISTRY OF MONTREAL No.: 500-09-019431-097 (500-17-020188-044) RECORD OF PROCEEDINGS DATE: NOVEMBER 26, 2010 CORAM: THE HONOURABLE FRANÇOIS PELLETIER, J.A. PIERRE J. DALPHOND, J.A. YVES-MARIE MORISSETTE, J.A. APPELLANT(

S) INCIDENTAL RESPONDENTS COUNSEL DONALD DUNN WOLFGANG RAAEN PAOLO D’ALLESIO Mtre Éric Potvin LAPOINTE ROSENSTEIN MARCHAND MELANÇON RESPONDENT(

S) INCIDENTAL APPELLANT COUNSEL WILMA KIM WILLIAMS Mtre Nicola Sanzari HANNA, GLASZ, SHER COUNSEL

On appeal from a judgment of the Superior Court, District of Montreal (the Honourable Mr. Justice Rodolphe Bilodeau), rendered on January 27, 2009. NATURE OF THE APPEAL : CONTRACT Court clerk: MARC LEBLANC Courtroom: PIERRE-BASILE-MIGNAULT HEARING File suspended from November 23, 2010, to November 26, 2010, so that the judgment could be rendered. Judgment rendered – see page 3. Marc Leblanc Court clerk PER THE COURT

JUDGMENT [ 1 ] The respondent brought an action in first instance seeking cancellation of the construction hypothec published by the appellants. The parties subsequently agreed that a deposit of $125,000 would replace the hypothecary warranty. They also reached an agreement whereby the respondent consented to the remittance of $60,796.11 from the deposit to settle several claims made by the appellants. [ 2 ] During the trial, the respondent reneged on her agreement, however, arguing defect of consent on the basis of error.

Accordingly, she sought to have the partial settlement agreement annulled, but the judge did not allow her argument. [ 3 ] The judge also dismissed the appellants’ claims that were not the subject of the settlement. The principal appeal challenged this part of the conclusions. [ 4 ] The appellants first argued that the judge failed to rule on their claim for interest and additional indemnity related to the payment of principal in the amount of $60,796.11. They also challenge the determinations concerning the three other refused claim items.

Finally, the appellants asked that their expert fees, which total $18,139.47, be included in the legal costs. [ 5 ] As part of her incidental appeal, the respondent reiterated her arguments concerning the nullity of the partial settlement agreement. She added that the judge had failed to rule on her claim for indemnity for the prejudice that she allegedly suffered because of the contractual breaches of which she accused the appellants. [ 6 ] The judgment’s many deficiencies call for intervention. [ 7 ] Concerning the principal appeal, the Court finds the following:

A) Claim for interest and additional indemnity: $15,802.59 [ 8 ] The appellants are entitled to interest on the principal amount of $60,796.11 that the respondent has acknowledged owing under the partial settlement. The judge failed to rule on this claim item, and the judgment should be set aside in this respect. The accrued interest to the date of partial payment amounts to $10,294.17. [ 9 ] The Court is of the opinion, however, that there is no ground to grant additional indemnity because the appellants themselves acknowledged the existence of deficiencies in the work at the time of the partial settlement agreement. Moreover, this matter progressed rather slowly.

B) Claim for work involving the powder room: $7,900 plus taxes [ 10 ] The judge rejected this item laconically, stating the following: [ translation ] [19] Again, concerning the evidence adduced during the hearing, it involves work that was not done in accordance with good practice, especially concerning electricity. [ 11 ] This reason has nothing to do with the parties’ arguments. In the first instance, the respondent refused to pay, asserting that the work had not been completed. She stated the following: Q. Now, I understand that you were planning on having four bathrooms during this construction period? A.

Yes, it’s on the plan. Q. How many were operational? A. Three was half operational. They were not fully operational. [1] … A. …It’s a powder room. It’s not big, it’s small. It’s just a toilet, a wash basin, a mirror. And if you notice and all, that he says here, “installed cupboard, the mirror installed, the handles”, the, nothing was done. Nothing like that was done. Not one single thing was done like that. [2]

[Reproduced word for word.] [ 12 ] Her expert added: As the front bathroom laundry room, the finishing work is substantially complete, although wall-mounted hardware (toilet paper holder, mirror, towel bar, etc…) and the wall-mounted light fixture have not yet been installed. [Reproduced word for word.] [ 13 ] On appeal, the respondent defended the judge’s conclusion, citing his discretionary power and adding subsidiarily that the result was just and proper because the appellants would have damaged the tiles and would have failed to perform the other work in the building adequately. [ 14 ] It goes without saying that the trial judge’s discretionary power does not authorize him to draw conclusions that find no support in the record. [ 15 ] The subsidiary ground does not have any greater merit.

The work as a whole, with the exception of that involving the powder room and the basement, is the subject of a final settlement. This settlement cannot be challenged indirectly in a debate concerning an element that is still in dispute. [ 16 ] From another standpoint, it appears that the work in the powder room was not completed. The only evidence concerning specifically the costs required to complete it arises from the report by the expert White. He proposes a reduction of $600, and the Court agrees with this suggestion.

Taking into account the applicable taxes, the claim for this item must therefore be allowed in the amount of $8,392.21.

C) Claim for work in the basement: $24,300 plus taxes [ 17 ] The judge wrote the following about this claim item: [ translation] [16] It involves work carried out for plumbing in the basement of the building. The evidence adduced at the hearing shows, on a balance of probabilities, that it was very specialized work for sanitary facilities (bath, toilet and arches). [17] The testimony by the plumbers, Bruce Clausen and Richard Cantwell, is consistent in stating that the defendants did not have the requisite experience for this type of work.

They should have hired specialists, which they did not do. [18] This amount of $24,300 will not be accepted. [ 18 ] The appellants argued with reason that the witnesses, Clausen and Cantwell, dealt with problems involving the sanitary facilities on the first floor and not in the basement. The reasons cited in the judgment are the result of a palpably erroneous assessment of the evidence.

Moreover, the problems to which the judge referred are covered by the partial settlement agreement. [ 19 ] It must be pointed out that the work involving the basement is the subject of a separate contract signed by the respondent in November 2003. The respondent argues on appeal that she signed it without reading it, trusting the appellant Dunn.

In the same breath, the respondent denies the binding nature of the contract while challenging the advisability of some of the work and asserting that other work was necessary because of previous defects attributable to the appellants themselves. [ 20 ] Generally speaking, the grounds proposed by the respondent consist of challenging the validity of the contract of November 2003. Such a defence cannot succeed to the extent that the respondent has not demonstrated a defect of consent attributable to a cause other than her own negligence. [ 21 ] On the whole, this claim by the appellants is well founded.

It totals $27,951.08 including taxes, and the judgment must be set aside accordingly.

D) Claim for purchases in January 2004: $1,183.17 plus taxes [ 22 ] This claim involves purchases of goods intended to be incorporated into the basement of the respondent’s building. She argues that she did not authorize them. She kept them and used them, however. She argues on appeal that she was justified in doing so because the supplier would not have agreed to take the merchandise back. [ 23 ] This ground is without merit. To succeed, the respondent would have had to offer to return the property to the appellants and not to the supplier. The judge had no valid reason to refuse the appellants’ claim in this respect, which totals $1,360.94 with taxes.

E) Claim for expert fees [ 24 ] Taking into account all the circumstances, the judge believed it was fair that each of the parties pay the fees for the services of their experts. The Court is of the opinion that it is not appropriate to set aside this part of the judgment. Conclusion concerning the principal appeal [ 25 ] In total, the respondent therefore owes the appellants $47,998.40 in principal. This amount must bear interest at the legal rate, but the Court is of the opinion that it is not appropriate to grant additional indemnity. [ 26 ] Concerning the incidental appeal, the Court finds the following:

A) Application for annulment of the settlement [ 27 ] The judge was right to reject the argument that the partial settlement agreement was null. The Court believes that the ground of error raised by the respondent does not justify setting aside the settlement. To the extent that an error occurred, which the evidence is far from showing clearly, it can only be concluded that it had no cause other than the respondent’s own act. This type of misunderstanding cannot lead to annulment, because it is inexcusable within the meaning of

article 1400 C.C.Q .

B) Claim for prejudice caused by contractual breaches: $10,000 [ 28 ] The judge did not rule on this claim by the respondent. The evidence shows that the appellants incurred substantial delays in the performance of the original contract.

Moreover, they executed some work poorly, hence their acknowledgment of the existence of defects estimated at more than $10,000. [ 29 ] The delays and problems of execution caused many problems and much inconvenience to the respondent, whose health was fragile. [ 30 ] Concerning the whole, the Court is of the opinion that the respondent’s claim should be allowed in the amount of $5,000, which reduces the appellants’ debt accordingly.

FOR THESE REASONS: [ 31 ] ALLOWS the principal appeal with costs; [ 32 ] ALLOWS the incidental appeal with costs; [ 33 ] SETS ASIDE the trial judgment accordingly and renders the judgment that should have been rendered: GRANTS in part the originating motion of the plaintiff, Wilma Kim Williams; CONDEMNS the defendants solidarily to pay the plaintiff $5,000 with interest from the date of service of the action until the date of service of the counterclaim, namely $5,188 in principal and interest; CONDEMNS the defendants to the costs calculated on an action of this amount, the plaintiff, however, to assume the fees of her expert; DECLARES the plaintiff’s debt in principal and interest to be extinguished by compensation; ALLOWS the defendants’ counterclaim in part; CONDEMNS the plaintiff to pay the defendants $42,810.40 with interest at the legal rate from the date of service of the counterclaim; CONDEMNS the plaintiff to pay the costs for the counterclaim, the defendants, however, to assume the fees of their expert;

ORDERS the remittance to the defendants of the amounts held as the warranty substituted for the legal construction hypothec in the amount of $42,810.40 with interest at the legal rate from the date of service of the counterclaim; DECLARES that the plaintiff is entitled to the balance of the warranty. FRANÇOIS PELLETIER, J.A. PIERRE J. DALPHOND, J.A. YVES-MARIE MORISSETTE, J.A.