Virtual Bldg. Systems Inc. - v. -, 2017 SKPC 3

IN THE PROVINCIAL COURT OF SASKATCHEWAN CIVIL DIVISION Citation: 2017 SKPC 003 Date: January 06, 2017 File: SC#530 of 2015 Location: Saskatoon _____________________________________________________________________________ Between: Virtual Bldg. Systems Inc. - and - Integrated Designs Inc. Self Represented For the Plaintiff Self Represented For the Defendant _____________________________________________________________________________ JUDGMENT V.L.

MONAR ENWEANI , J _____________________________________________________________________________ Introduction [ 1 ] The plaintiff, Virtual Building Systems Inc. (the “plaintiff”) contracted to provide architectural construction drawings to the defendant, Integrated Designs Inc. (the “defendant”), for a unique home that was to be built at a remote site near Duck Lake, Saskatchewan for the defendant’s customers, Mr. and Mrs. Molaro (the “Molaros”). For various reasons, the project did not proceed in

2015 as planned. Rather, construction began in 2016. [ 2 ] The parties disagree on the proper

interpretation of the contract. Specifically, the parties are at odds over whether the contract was for a fixed fee, or whether the plaintiff was entitled to charge at an hourly rate. The plaintiff rendered a total of five invoices to the defendant. The first two invoices were fully paid. The last three invoices were not paid. The plaintiff brings this action for payment of the three outstanding invoices. The defendant counterclaims for an overpayment to the plaintiff in relation to the first two invoices, and denies that any monies are owing in relation to the final three invoices. Background Facts [ 3 ] Four witnesses testified at trial:

(1) Geoffrey Urwin, the president, owner and lead designer of the plaintiff;

(2) Murray Guy, the founder and CEO of the defendant;

(3) Steffen Bertelson, an engineer in training with the defendant, who initially acted as project manager for the Molaro residence project and then later as lead designer; and

(4) Murray Molaro, the client of the defendant for whom the residence was being built. [ 4 ] Generally speaking, all of the individuals who testified presented as credible witnesses. While they disagree on how the contract should be interpreted, there is little dispute over what in fact transpired. Accordingly, I find the facts are as follows. [ 5 ] The defendant was hired by the Molaros to design and build a unique low energy home near Duck Lake, Saskatchewan. It was to include features such as a greenhouse, garage, a green roof and roof top garden. Mr.

Molaro had experience with design and drafting and provided the defendant with concept drawings for the home. The defendant needed a designer and requested proposals from three firms, including the plaintiff. Two quotes were received, and the defendant awarded the contract to the plaintiff. The defendant was impressed with the plaintiff’s extensive experience in architectural drafting, mechanical design and project management. The defendant was interested in working with the plaintiff and possibly doing other projects together in the future.

Similarly, the plaintiff was interested in obtaining work from the defendant on an ongoing basis. [ 6 ] The quote provided by the plaintiff to the defendant on February 23, 2015, for the provision of architectural construction drawings, was accepted by the defendant and it constitutes the agreement between the parties (the “contract”). In addition, the parties later agreed that the drawings would include a shade structure requested by the homeowner, and the fee for this would be $400.00.

The contract stated as follows: Provide fully dimensioned architectural construction drawings for the proposed residence located on Lot 9, of Whitetail Trail, R.L. 24,

Section 30, Twp. Rd. 43 Range Rd. 1 W3M, RM of Duck Lake No. 463, in the Province of Saskatchewan. These would be based upon concept drawings & material recommendations provided by the client. The cost of providing a complete set of architectural construction drawings as described in this quote is $5,200 plus GST. Drawings are typically delivered via email as 11 x 17 pdf’s.

Drawing Deliverables will be as follows: ∙ Basement, main floor, second floor & roof plans, including attached garage, greenhouse, carport, enclosed deck, entrance canopy and shading structure ∙ Architectural plans will include locations of all plumbing fixtures and cabinets ∙ Exterior Elevations - indicating exterior materials, building height, doors, window style and opening direction, lintel height & percentage of glazing per exterior wall ∙ Cross-sections of building to indicate typical floor to ceiling and floor to floor heights, stairs & construction materials

∙ Electrical plan - showing lighting and power receptacle locations Any layout or design changes to the Architectural drawings that are requested after the print review would be charged at an additional hourly rate of $65 per hour. 3D renderings of the home, consisting of perspective views of the back and front of the building, based upon a 3D model of the exterior walls and roof would be an additional $1040 plus GST. It is assumed that a Site Plan has already been provided to the client by others and is therefore not included in this list of drawing deliverables.

This can be provided at an extra cost if requested. Procurement of structural drawings including the foundation plan, stamped by a Structural Engineer registered in the Province of Saskatchewan, can be arranged by VBS at an additional cost. A copy of the soils report & any other geo-technical survey data would need to be forwarded to the Structural Engineer. Engineering of floor joists and roof trusses would be by the truss manufacturer. Any Mechanical design and consultation would be charged at a rate of $100 per hour. [ 7 ] Most of the communication between the plaintiff and the defendant occurred between Mr.

Urwin and Mr. Bertelson. Mr. Bertelson was held out to be the project manager for the Molaro residence. As well, Mr. Urwin on many occasions dealt directly with the client, Mr. Molaro, when design issues and changes to design plans were discussed. Often, Mr. Urwin, Mr. Bertelson and Mr. Molaro were all copied on correspondence respecting the design of the residence. It was clear from the evidence of all parties that the design for the Molaro residence evolved from the beginning of March, 2015 through to at least the beginning of August 2015, when it was determined that the project could not proceed that year.

It was also evident from the testimony of all of the witnesses that the client, Mr. Molaro, wanted design control. The sheer volume of correspondence passing between the parties during this time frame is reflective of the constant evolution and ever changing nature of the design of this very unique residence. [ 8 ] The total initial budget for the project was $800,000.00. This figure included $600,000.00 to construct the home, which would be a 3,000 square foot residence at a target cost of $200.00 per square foot.

There were additional sums included for design costs and a $100,000.00 contingency as part of the $800,000.00 overall budget. The original concept drawings provided by the client included a basement, main floor, second floor, garage, and greenhouse. [ 9 ] The defendant anticipated constructing the residence using prefabricated walls that were manufactured off site. Therefore, it was essential for the drawings to be precise. As well, the client wanted to proceed with construction in 2015.

The goal was to have shovels in the ground by May, 2015, so time was of the essence. [ 10 ] By mid-April 2015, the plaintiff had prepared a complete set of architectural construction drawings as described in the contract. [ 11 ] On April 13, 2015 Mr. Urwin provided the defendant with the electrical plans (lighting and power). Also on April 13, 2015, Mr. Molaro wrote to Mr. Urwin to apologize for the number of changes being requested and for late changes that had been made to the design.

In his email he stated: I’m used to a “sign off/date” strategy for completed drawings with knowledge that changes after that will be an additional time and cost. We are prepared to do that any time now as plans are complete and only second flooring finishes (and entrance parapet height?) are not confirmed at this point. [ 12 ] On April 16, 2015, Mr. Urwin corresponded with Mr. Molaro and stated in part as follows:

Michael, here is my AutoCad equivalent of your QCADD floor plan with the wall thickness tweaked.

I will be issuing a different floor plan generated from my Revit model as part of the print issue set . . . [ 13 ] The plaintiff provided hard copies, or the print issue set, of the architectural construction drawings, based on the client’s original concept drawings for the residence, to the defendant at a project meeting held at the defendant’s offices on April 17, 2015. [ 14 ] Shortly before delivery of the print issue set of architectural drawings by the plaintiff to the defendant, there was a design change to the Molaro residence.

In particular, on or about April 15, 2015, a decision was made to eliminate the basement. The plaintiff testified at trial that this was due to sandy soils at the site, and I accept this evidence. The design changes included: deleting the basement in favor of a slab on grade foundation, increasing the two car garage to a three car garage and enlarging the main floor footprint.

Because the goal was to have construction underway by May, work quickly commenced on the second version of the plans in order to complete the drawings expeditiously given the urgency in timing. [ 15 ] On April 30, 2015, the plaintiff provided hard copies of a second complete set of architectural construction drawings to the defendant at a project meeting held at the defendant’s office. [ 16 ] On May 1, 2015, the parties participated in a conference call to discuss concerns about the overall house construction costs being over budget.

By this time, the projected budget had ballooned from $800,000.00 to $926,300.00. Over the next day or two, Mr. Guy spoke with the client, Mr. Molaro, about shrinking the room sizes and reducing the budget. On May 3, 2015, in email correspondence sent to Mr. Molaro and copied to the plaintiff, Mr. Guy wrote as follows: Hi Michael Spending the day visiting open houses and collecting data on expected construction costs, I have come to the conclusion that it will be challenging to build a 2750 sq. ft. high performance home for the $810,000 budget.

Based upon my analysis the expected cost will be $300 psf as a complete turnkey project... [ 17 ] As of May 4, 2015 the plaintiff understood that the project was over and that the client was no longer proceeding, given Mr. Guy’s May 3, 2015 correspondence. Matters were put on pause for a period of time. [ 18 ] The plaintiff submitted, and received payment for the following two invoices totaling $16,889.95 ( $17,734.44 including GST) from the defendant for work performed during the period March 2, 2015 to May 1, 2015: Invoice No. Billing Date Total Total Incl.

GST Payment Date VBS-15-326 -1 March 26, 2015 $3,390.50 $3,560.02 April 1, 2015 VBS-15-326 - 2-1 May 4, 2015 $13,499.45 $14,174.42 May 5, 2015

[ 19 ] The plaintiff was next contacted by the defendant on May 19, 2015. On that date Mr. Guy emailed Mr. Urwin to enquire about the state of the drawing package. He also stated as follows: We are value engineering the current design to establish a tighter budget. Before we spend anymore $$$ on a redesign we will [need] to determine if the $810k budget is feasible at 2750 sq. ft. [ 20 ] Shortly thereafter, the plaintiff was re-engaged to do work for the defendant. During a telephone conversation on June 11, 2015, Mr. Urwin was assured by Mr. Bertelson that he would be paid for his work on an hourly basis.

On June 17, 2015 Mr. Bertelson corresponded with the plaintiff to confirm that the defendant was proceeding to prepare a revised design based upon a reduced building footprint of 2,750 square feet of living space. [ 21 ] After the plaintiff was re-engaged, Mr. Bertelson stepped down from his role as project manager, but remained involved as lead designer. The role of project manager was assumed by Mr. Guy. However, this was not made known to the plaintiff. [ 22 ] On June 18, 2015 Mr. Guy corresponded with Mr. Urwin and indicated that he was determining the feasability of Mr.

Urwin “coming on board” with the defendant and asked him to forward his resume on an Integrated Designs Inc. template. [ 23 ] On June 29 and July 2, 2015, the plaintiff delivered floor plans and interior layout options for the third version of the Molaro residence which was based on 2,750 square feet of living space. Mr. Urwin invoiced the defendant for work performed from May 19 to July 2, 2015 by invoice #VBS-15-392 - 5. He forwarded this invoice to Mr.

Bertelson on July 2, 2015 by email stating: Attached is my invoice for Architectural design & drafting work performed since May 19th, covering the revised 2750 sf interior area & 2 car garage floor plans, entrance canopy plus room, window & door changes. [ 24 ] On or about July 2 or July 3, 2015, Mr. Molaro rejected the defendant’s value engineering proposal based upon 2,750 square feet of living space. On July 3, 2015, Mr. Molaro emailed the defendant to express his disappointment. He stated: It’s been stressful losing this building year but we thought we were on track again in May and June.

We don’t want to “back up” anymore... Mr. Molaro asked that working drawings be completed “as per the versions agreed on in May.” [ 25 ] Between July 4 and July 23, 2015, Mr. Urwin worked to prepare architectural drawings based on Mr. Molaro’s sketches. He described this as the fourth version of the Molaro residence. On July 24, 2015, Mr. Urwin wrote to Mr. Bertelson. He attached the updated architectural drawings and indicated that once the client signed off on this set of drawings, the structural engineer could get involved. Mr.

Urwin also attached his invoice #VBS-15-324 - 4 for work performed during this time period. [ 26 ] Between July 31 and August 4, 2015, the plaintiff made further changes to the architectural construction drawings in order to incorporate preferential changes requested by Mr. Molaro. On August 4, 2015, Mr. Urwin forwarded to Mr. Bertelson invoice #VBS- 15-326- 6 for work performed during this time period. [ 27 ] Accordingly, the following three invoices, totaling $5,944.30 ($6,241.52 including GST), were forwarded by the plaintiff to the defendant for payment but were not in fact paid:

Invoice No. Billing Date Total Total Incl. GST Payment Date VBS-15-326 -5 July 2, 2015 $2,228.25 $2,339.66 VBS-15-326 - 4 July 24, 2015 $2,757.30 $2,895.17 VBS-15-326 -6 August 4, 2015 $958.75 $1,006.69 [ 28 ] The plaintiff’s last three invoices were not paid because Mr. Guy believed the plaintiff had already been paid too much. As the plaintiff’s invoices were not being paid, Mr. Urwin performed no further work after August 4, 2015 and left the project. Mr. Molaro was frustrated that the project could not proceed as planned in 2015.

Eventually, the defendant hired a structural engineer and a drafting firm to help finalize, coordinate and finish the drawings, and construction occurred in 2016. Position of the Plaintiff [ 29 ] The plaintiff alleges that he is owed the sum of $5,944.30 ($6,241.52 including GST) for work performed at his hourly rate from the period between May 19 to August 4, 2015. [ 30 ] The plaintiff acknowledges that he was paid the sum of $16,889.95 ($17,734.44 including GST) by the defendant on May 5, 2015 in relation to work performed under the contract from March 2 to May 1, 2015.

He denies that this was an overpayment and asserts that he was entitled to this amount pursuant to the terms of the contract. Specifically, he denies that the contract was for a fixed fee. The plaintiff says that he contracted to provide the defendant with buildable construction drawings based on the client’s original concept drawings.

The contract provided that he would be paid the sum of $6,640.00 ($5,200.00 for architectural construction drawings, an additional $1,040.00 for 3D renderings of the home consisting of perspective views of the front and back of the building, and $400.00 for the shade structure) until the print review stage. After print review, he was entitled to charge at an hourly rate. The plaintiff says he was entitled to charge $65.00 per hour for drafting and he was entitled to charge $100.00 per hour for consultation and design. [ 31 ] At trial, the plaintiff suggested that print review occurred on March 26, 2015.

He also testified that he began tracking his hours immediately, as early as March 2, 2015, because the defendant changed the contract by requesting changes prior to the print review stage. The plaintiff asserted that the contract contemplated that he would take the client’s concept drawings and prepare architectural construction drawings for presentation to the defendant, without any input from the client. [ 32 ] The plaintiff also asserted that he provided a complete set of architectural construction drawings, based on Mr. Molaro’s original concept drawings, to the defendant on April 17, 2015.

He says he was entitled to charge for all further work on an hourly basis after that date. He continued to work for the defendant based on assurances he received from Mr. Bertelson that his invoices would be paid. Mr. Urwin asserts that he provided drawings for four versions of the Molaro residence. [ 33 ] The plaintiff says that the decision to eliminate the basement was a fundamental change to the design of the Molaro home. Mr. Urwin asserts that there was urgency to performing his work given that the project was to proceed to construction in May, 2015. His

drawings had to be detailed and precise because the defendant anticipated constructing the home using pre-fabricated walls. The defendant was responsible for the budget. The plaintiff says that the defendant expressed satisfaction with his work, and that he was entitled to use 3D software and choose the manner in which he performed the work. Position of the Defendant [ 34 ] The defendant alleges that the contract was for the fixed fee amount of $6,640.00 ($6,972.00 including GST).

Accordingly, the defendant says the plaintiff was overpaid by the sum of $10,249.95 ($10,762.44 including GST) [1] and he counterclaims to recover this amount from the plaintiff. Specifically, Mr. Guy alleges that the plaintiff’s first two invoices were paid without his knowledge by his junior engineer in training, Mr. Bertelson, who was unaware that the plaintiff had overbilled the defendant. [ 35 ] At trial, the defendant argued that the print review stage was never achieved.

In particular, the defendant asserted that the plaintiff was required to coordinate the drawings with a structural engineer and until that occurred his obligations under the contract were not fulfilled. The defendant argued that as the print review stage was never achieved, the plaintiff was not entitled to bill on an hourly basis, and there is no amount owing to the plaintiff. [ 36 ] The defendant says that the design of the Molaro home evolved in a typical fashion, that there were no excessive changes requested by Mr. Molaro, and that there was only one project and one design.

The defendant further alleges that the plaintiff’s drawings were too detailed and that he did not design within the budget. The defendant denies that there were any major changes to the project. The defendant alleges that the plaintiff coerced Mr. Bertelson into agreeing to pay him more for work that he was already obligated to perform under the contract.

The defendant also says that the plaintiff spent excessive time on the project, largely due to his use of 3D software, and that as a result the total amount billed was not fair and reasonable. [ 37 ] Finally, the defendant counterclaims against the plaintiff for the additional sum of $1,560.00, being the cost incurred by the defendant to have another firm complete and coordinate the drawings with a structural engineer. Issues 1. What was the contract between the plaintiff and the defendant? 2. Did the plaintiff overcharge for work performed under the contract between March 2 - May 1, 2015? 3.

Is the plaintiff entitled to payment of three outstanding invoices for work performed between May 19 - August 4, 2015? 4. Is the defendant entitled to recover the sum of $1,560.00 from the plaintiff, for the cost of engaging another firm to complete and coordinate the drawings with a structural engineer? Analysis 1. What was the contract between the plaintiff and the defendant?

[38] The parties have very different views regarding the proper

interpretation of the contract. [39] The principles of contractual

interpretation were recently reviewed and clarified by the Supreme Court of Canada in SattvaCapital v Creston Moly Corp, 2014 SCC 53. Those principles were summarized by Wilkinson J. in Dyck v JCL Property ManagementLtd., 2014 SKQB 274 as follows: [37] In relation to matters of contractual

interpretation, these are the fundamental principles. [38] The role of the Court is to determine, objectively, the parties’ intention at the time the contract was made. The Court must construethe plain and ordinary meaning of the words used in the contract as a whole, aided by reference to the surrounding circumstances (orfactual matrix) that existed at the time the contract was made. [39] In Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, [2014] SCJ No 53 (QL), at paragraphs 47 and 48 the Supreme Courtof Canada stated that the

interpretation of contracts has evolved towards a practical, common-sense approach not dominated by technicalrules of construction. The overriding concern is to determine “the intent of the parties and the scope of their understanding”. To do so, adecision-maker must read the contract as a whole, giving the words used their ordinary and grammatical meaning, consistent with thesurrounding circumstances known to the parties at the time of formation of the contract.

Consideration of the surrounding circumstancesrecognizes that ascertaining contractual intention can be difficult when looking at words on their own, because words alone do not havean immutable or absolute meaning. Contracts are not made in a vacuum. In a commercial contract the Court should know the commercialpurpose, the genesis of the transaction, the background, the context, the market in which the parties are operating, and the nature of therelationship created by the agreement. [40] The nature and scope of “factual context evidence” is addressed at paras. 56-61 of the Sattva decision.

To summarize, while suchevidence is an aid to understanding the mutual and objective intent expressed in the words of the contract, it cannot overwhelm thewords. The

interpretation of a written contractual provision must always be grounded in the text and read in light of the entire contract.The nature of such evidence varies from case to case. It should consist only of objective evidence of the background facts at the time ofthe execution of the contract -- that is, the facts that reasonably ought to have been within the knowledge of both parties at or before thedate of contracting.

Subject to these requirements and the parol evidence rule, this includes absolutely anything which would haveaffected a reasonable person’s understanding of the language employed. [41] Where a document is clear and unambiguous there is no need to resort to extrinsic evidence because it is presumed the partiesintended the legal consequences of their words: Eli Lilly & Co. v. Novopharm Ltd.; Eli Lilly Co. v. Apotex Inc., (SCC),[1998] 2 S.C.R. 129, 161 D.L.R. (4th) 1 at para. 55. [42] Only if the words viewed objectively are capable of giving rise to two or more reasonable

interpretations may the Court considerextrinsic evidence. [40] Both Mr. Guy and Mr. Urwin testified at trial about their intentions at the time the contract was made, and provided theirviews on how it should be interpreted. Evidence of subjective intentions is inadmissible. As pointed out by Madame Justice Wilkinson,it is the Court’s task to determine intentions objectively. [41] There was considerable evidence at trial regarding the genesis, formation and purpose of the contract, and this evidence isadmissible, as it constitutes evidence of surrounding circumstances or factual context.

However, the Court must be mindful that suchevidence cannot overwhelm the words of the contract. The contract is to be construed as a whole and the words used are to be construedin their plain, ordinary and popular sense. [42] With respect to the surrounding circumstances, the evidence at trial was clear that both the plaintiff and the defendantunderstood that a very unique residence was to be built for the Molaros. Further, both parties understood that Mr. Molaro would havesignificant involvement in the design process. Mr. Molaro had prepared concept drawings which would form the basis for the design of

the residence. It was also understood that the goal was to construct the home in 2015 with “shovels in the ground” by May 2015. Finally, this contract was the first step in what the parties hoped would be the beginning of a long term relationship. [ 43 ] While the surrounding circumstances provide important context for interpreting the contract, I find that this matter can be decided primarily on the ordinary principles of contractual

interpretation and the plain language of the contract. The plain language of the contract indicates that the plaintiff was to provide a complete set of architectural construction drawings at a cost of $5,200.00 plus GST. For 3D renderings of the front and back of the home, there was an additional cost of $1,040.00 plus GST. I also find, based on the evidence, that there was a subsequent agreement between the parties for the plaintiff to include a shade structure in the drawings at an additional cost of $400.00.

Therefore, the total cost payable to the plaintiff for a complete set of architectural construction drawings “based upon concept drawings and material recommendations provided by the client” was $6,640.00 plus GST. [ 44 ] It is also clear from a plain reading of the contract that layout or design changes to the architectural drawings, requested after print review, would be charged at an additional rate of $65.00 per hour. Accordingly, the central question is what was meant by print review and when did print review occur? [ 45 ] The plaintiff states that print review occurred during a meeting on March 26, 2015.

Further, he suggests that the contract contemplated there would be no additional changes or input received from the client prior to print review. I reject the plaintiff’s

interpretation as unreasonable, as it is inconsistent with the surrounding circumstances and with his own evidence at trial. He stated at trial that print review would occur once he had completed the architectural construction drawings, including the electrical plan. By his own evidence, he had not completed the electrical layout by March 26, 2015. Further, the meeting on March 26, 2015 was primarily a site visit - not a meeting for the purpose of reviewing drawings prepared by the plaintiff.

The plaintiff disregarded the fee he had quoted and began charging his hourly rate almost immediately after the contract was formed. He did this notwithstanding the fact that he knew Mr. Molaro would be heavily involved in the design and would want design control. [ 46 ] The defendant alleges that print review never occurred at all, because the plaintiff left the project before the structural engineer became involved and therefore did not coordinate this work in order to get a permit. This

interpretation strains the language of the contract and does not accord with the parties conduct, nor with the clear wording of the contract which provided that structural drawings could be arranged by the plaintiff at an additional cost. This work was clearly outside the scope of the contract. [ 47 ] Based on the surrounding circumstances, and the wording of the contract, I find that “print review” contemplated a review by the client of drawing deliverables at the point when the plaintiff had a completed set of all drawing deliverables described in the contract, in a form suitable for presentation.

After print review, any layout or design changes would be charged at an hourly rate, above the stated flat fee. Further, procurement of structural drawings would occur after print review and after any final layout or design changes, and would be an additional cost. [ 48 ] In all of the circumstances, I find that print review occurred on April 17, 2015. On this date, the plaintiff delivered to the defendant a complete set of architectural construction drawings, based upon Mr. Molaro’s concept drawings. At this point, the material could have been reviewed by Mr.

Molaro for final changes, the parties could have proceeded to engage a structural engineer, apply for permits and build the residence. [ 49 ] This

interpretation of when print review occurred is supported by email correspondence from Mr. Molaro dated April 13, 2015 indicating that he considered the plans to be essentially complete at that time. In email correspondence dated April 16, 2015, Mr. Urwin indicated he would be providing a “print issue set” for the April 17, 2015 meeting. Finally, the drawings he provided on April 17, 2015 indicated a “Print Review” date of April 17, 2015. [ 50 ] The plaintiff argued that he was entitled to charge $100.00 per hour for any type of consultation he provided in relation to the Molaro residence - not just mechanical consultation. However, this

interpretation is not supported by the plain wording of the contract. The contract provides that “layout or design changes to the architectural drawings” could be charged, after print review, at the rate of $65.00 per hour. In contrast, the contract stipulated that “Any mechanical design and consultation” would be charged at $100.00 per hour.

[ 51 ] The reference to an hourly rate of $100.00 is found only at the end of the contract, where mechanical design and consultation is specifically dealt with in one sentence. The word “mechanical” is used to modify the words “design” and “consultation”. When the phrase “Any mechanical design and consultation” is read in the context of the contract as a whole, I find it is clear that the hourly rate of $100.00 applies only to mechanical work.

All work in relation to the architectural construction drawings was to be charged at the rate of $65.00 per hour. [ 52 ] Finally, the contract expressly provided for the provision of 3D renderings of the home, consisting of perspective views of the back and front of the building. It was acknowledged by the defendant that it accepted the “add on” for these 3D renderings at an additional cost of $1,040.00 plus GST. However, apart from this specified cost, the defendant did not agree to compensate the plaintiff for extra time he spent preparing a full 3D model of the home. 2.

Was the plaintiff overpaid by the defendant? [ 53 ] Given my findings regarding the proper

interpretation of the contract, the plaintiff overcharged the defendant for work performed between March 2 and May 1, 2015, and for which the plaintiff was paid the sum of $16,889.95 ($17,734.44 including GST). [ 54 ] The plaintiff’s invoices VBS - 15 - 326-1 and VBS - 15 - 326-2-1, along with Mr. Urwin’s time sheets (Exhibit P-23), reveal that the plaintiff charged the defendant at an hourly rate prior to print review occurring. In particular, Mr. Urwin began to charge an hourly rate to the defendant almost immediately, beginning on March 2, 2015. [ 55 ] I have found that print review occurred on April 17, 2015.

Pursuant to the contract, the plaintiff’s fees up to and including that date should have been limited to $6,640.00 ($6,972.00 including GST). However, the plaintiff charged and received fees in the amount of $10,436.45 ($10,958.27 including GST).

Accordingly, the plaintiff was overpaid by the sum of $3,796.45 ($3,986.27 including GST) for work up to and including April 17, 2015. [ 56 ] Furthermore, after the date of print review on April 17, 2015, any additional work in relation to layout or design changes to the architectural construction drawings should have been billed at the rate of $65.00 per hour, not $100.00 per hour. The plaintiff’s time sheets reveal that between April 18 - May 1, 2015, Mr.

Urwin billed additional fees in the amount of $6,453.50 (11.25 hours of consultation and design work at the rate of $100.00 per hour, and 82 hours of drafting work at the rate of $65.00 per hour). All hours should have been billed at the rate of $65.00 per hour. [ 57 ] Had the plaintiff performed mechanical design and consultation work during this time period, he would have been entitled to a rate of $100.00 per hour. However, the plaintiff did not itemize the nature of the work he performed. While there was some suggestion by Mr.

Urwin in his evidence at trial that he provided a limited amount of mechanical consulting advice to the defendant, he was unable to quantify it. I find that the plaintiff has not established, on a balance of probabilities, an entitlement to compensation in the amount of $100.00 per hour for work performed. [ 58 ] The defendant led some evidence at trial regarding the amount of fees he had paid to other firms in the past for the provision of architectural construction drawings, on other projects. He argued that this demonstrated that the plaintiff’s fees were not fair and reasonable, and that Mr.

Urwin spent too much time on the project. This evidence was of limited assistance to the Court. As the parties acknowledged, the Molaro residence was a very unique and challenging project. Added to that, Mr. Molaro was very particular, and heavily involved in the design process. There was a significant change to the design with the elimination of the basement and the parties were operating under tight time constraints. All of this added to the work of the plaintiff, and the time he was required to spend on the project.

This largely, but not entirely, accounts for the significant number of hours billed to the defendant. [ 59 ] Finally, the defendant argued that the plaintiff’s fees were too high because Mr. Urwin used 3D software to draw and model the entire project. There was contradictory evidence at trial from Mr. Urwin, Mr. Guy and Mr. Molaro about whether the plaintiff’s use of 3D Revit software throughout the project led to excessive time being billed to the defendant. [ 60 ] Both Mr. Guy and Mr. Molaro testified that the use of 3D software is more time intensive. Mr. Molaro has significant

experience in the field of drafting. [ 61 ] Mr. Urwin acknowledged in his testimony that the use of 3D software involved more time at the front end, but he said that it was more efficient when making changes. However, he appeared somewhat evasive in his evidence regarding the use of the Revit software. He was insistent that the contract did not specify what software he was to use, and that he was entitled to use the tool of his choice. When specifically asked if he had obtained approval to use Revit software at a cost in excess of $1,040.00, he said he could not answer that question.

Instead, he stated that everyone was enthusiastic about his use of 3D. When asked if anyone approved extra hours for 3D, he said he was approved to do drafting at an hourly rate. [ 62 ] Considering all of the evidence, I find the plaintiff has not satisfied me, on a balance of probabilities, that the amount of time he billed for his services was fair and reasonable.

While the plaintiff was entitled to use the tool of his choice, he was not entitled to bill the defendant for extra time incurred as a result of that choice, particularly where the contract was for the provision of 2D drawings, with a specific additional cost of $1,040.00 contemplated for 3D perspective views of the back and front of the house. While it is not possible to determine with any degree of precision, I am satisfied that at least some additional time was incurred by the plaintiff and billed to the defendant, as a direct result of the plaintiff’s use of the 3D software. Mr.

Urwin was interested in demonstrating his capabilities to the defendant, from whom he hoped to secure additional work in the future, and this may have played a

part in his decision to create a full 3D model of the home. In all of the circumstances, I find it appropriate to reduce the number of hours billed by 10%. [ 63 ] Applying a 10% reduction to the hours billed between April 18 and May 1, 2015, and applying a rate of $65.00 per hour to those hours worked, the plaintiff’s fees amount to $5,455.13. The plaintiff billed $6,453.50.

Accordingly, the plaintiff overcharged for work between April 18 and May 1, 2015 by the sum of $998.37 ($1,048.29 including GST). [ 64 ] In the result, I find that the plaintiff overcharged the defendant in relation to the first two invoices for work performed between March 2 - May 1, 2015, by the total sum of $4,794.82 ($5,034.56 including GST) [2] . [ 65 ] Looked at in isolation, the defendant’s counterclaim to recover excess fees paid to the plaintiff in relation to the plaintiff’s first two invoices, could be construed as a claim for restitution to properly be dealt with by the Court of Queen’s Bench, as suggested by the decision in Hope v RM of Parkdale #498 , 2015 SKQB 194 .

However, the counterclaim by the defendant is only one component of the dispute between the parties, and the action before me. Therefore, in order to avoid bifurcation of the proceedings, which would entail a whole new action, I am prepared to deal with the counterclaim in the context of the entire action, and by way of set-off. [ 66 ] As set out above, the plaintiff was entitled to the sum of $12,095.13 for work performed under the contract between March 2 - May 1, 2015. He received $16,889.95. Therefore, there was an overpayment by the defendant to the plaintiff of $4,794.82.

However, that does not end the matter. The plaintiff was re-engaged to perform additional work for the defendant after May 1, 2015, and the plaintiff has not been paid for this work. I now turn to a consideration of this aspect of the case. 3. Is the plaintiff entitled to payment from the defendant for three outstanding invoices relating to work performed between May 19 and August 4, 2015? [ 67 ] The plaintiff performed work for the defendant from May 19 to August 14, 2015 at the defendant’s request. Mr.

Bertelson was held out by the defendant as its project manager for the Molaro residence, with full authority to act on the defendant’s behalf. I accept the plaintiff’s evidence, corroborated by the evidence of Mr. Bertelson, that he received assurances from Mr. Bertelson that he would be paid his hourly rate for this additional work. In particular, I find that Mr. Urwin was re-engaged by Mr. Bertelson to perform additional work for the defendant on the Molaro residence, at the same hourly rate as set out in the original contract. [ 68 ] I reject the argument of the defendant that Mr.

Bertelson was coerced into agreeing to pay the plaintiff his hourly rate for this additional work. It was entirely appropriate for Mr. Urwin to continue to communicate with Mr. Bertelson. It was not made known to the plaintiff that Mr. Bertelson had stepped back from his role as project manager and that the role had been assumed by Mr. Guy. Further, the evidence does not support a finding of any coercion. The defendant needed the services of the plaintiff to carry on with the project and sought Mr. Urwin out.

[ 69 ] I also reject the defendant’s argument that there was only “one design” for the home, and that the work undertaken by the plaintiff between May 19 and August 4, 2015 was all work the plaintiff agreed to perform under the contract for the sum of $6,640.00 (plus GST). [ 70 ] The decision to eliminate the basement from the residence was a fundamental change to the design. Thereafter, the design continued to change, primarily because of budgetary concerns. In particular, the defendant initially budgeted for construction at the rate of $200.00 per square foot.

However, the defendant ascertained at the beginning of May, 2015, that the actual cost of constructing the home would be as high as $300.00 per square foot. As the project manager, the defendant was required to exercise diligence in ascertaining building costs and budgeting appropriately. Correspondence sent from Mr. Guy to Mr. Molaro on May 3, 2015 demonstrates that the defendant did not have a good understanding of the costs involved at this point. The evidence suggests that the defendant advanced the design work too quickly, and well before it had a good understanding of construction costs.

The plans for the home continued to change given budgetary concerns, the large number of design changes requested by Mr. Molaro, and decisions that were made to change the materials used to construct the home. None of these decisions were the responsibility of the plaintiff. [ 71 ] Based on all of the evidence, I find that Mr. Urwin was re-engaged by the defendant to continue work on the Molaro home at the rate of $65.00 per hour.

This hourly rate is what was in fact charged by the plaintiff for work performed between May 19 and August 4, 2015. [ 72 ] The plaintiff’s three unpaid invoices amount to the sum of $5,944.30 ($6,241.52, including GST). [ 73 ] The plaintiff’s time sheets indicate that Mr. Urwin spent approximately 90 hours on the project between May 19 and August 4, 2015. The hourly rate charged was appropriate. However, as noted above, I am satisfied that the plaintiff’s use of 3D software led to some additional time being billed to the defendant. The sum of $6,453.50 was billed.

Applying a 10% reduction to the number of hours billed, the fees owing to the plaintiff for the three remaining invoices amount to $5,348.07. 4.

Is the defendant entitled to recover the sum of $1,560.00 from the plaintiff, for the cost of engaging another firm to complete and coordinate the drawings with a structural engineer? [ 74 ] The defendant also counterclaims against the plaintiff for the sum of $1,560.00, being the amount incurred by the defendant to engage another firm to complete and coordinate the drawings with a structural engineer, after the plaintiff ceased work. [ 75 ] I find no merit in this aspect of the defendant’s counterclaim. [ 76 ] The plaintiff was not required to perform this work.

He was being retained, after May 1, 2015, to perform work on an hourly basis. The defendant refused to pay him for work he had performed after May 1, 2015, and he was not obligated to perform any further work. [ 77 ] As well, it is clear from the wording of the contract between the parties dated February 23, 2015, that this work was outside the scope of the contract. It was always contemplated that this work would involve additional cost. Specifically, the plaintiff was not contractually bound to perform this work as part of the contract dated February 23, 2015. Conclusion

[ 78 ] The plaintiff has proven a debt owing to it from the defendant in relation to its last three invoices, in the amount of $5,348.07 ($5,615.47 including GST). [ 79 ] The defendant has proven an overpayment to the plaintiff in the amount of $4,794.82 ($5,034.56 including GST) in relation to the plaintiff’s first two invoices. [ 80 ] The difference is $553.25 ($580.91 including GST). [ 81 ] Accordingly, by way of set-off, the plaintiff shall have judgment against the defendant for the sum of $580.91, plus pre- judgment interest from September 1, 2015 to the date of judgment. [ 82 ] As success was divided, I make no award as to costs. ________________________ V.L.

Monar Enweani, J [1] $16,889.95 - $6,640.00 = $10,249.95 [2] $3,796.45 + $998.37 = $4,794.82