CNN Enterprises Ltd. - v. -, 2013 SKPC 14

IN THE PROVINCIAL COURT OF SASKATCHEWAN CIVIL DIVISION Citation: 2013 SKPC 014 Date: January 29, 2013 File: 96-11 Location: Moose Jaw _____________________________________________________________________________ Between: CNN Enterprises Ltd. - and - Darrel Novak & Shauna Novak K. Cornea For the Plaintiff D. Novak For the Defendant _____________________________________________________________________________ JUDGMENT D. KOVATCH, J _____________________________________________________________________________ I. BACKGROUND [ 1 ] The Plaintiff corporation has for many years owned and operated a restaurant business in Moose Jaw. The principals in this

company are Nick and Christina Hasapis. The Defendants owned and operated a business known as D & S Upholstery and Supplies. In the 90's, the Plaintiffs retained the Defendants to build a number of booths, together with upholstery covered benches and chairs in their restaurant. In December of 2009, the Plaintiffs again contacted the Defendant, Darrel Novak, and retained him to remodel and renovate the interior of their restaurant. At this time, the Defendant supplied a written quote to do this work in the amount of $35,821.50 (Exhibit D2).

Over the next approximately three months, the Plaintiff paid to the Defendant the total sum of $31,601.50. [ 2 ] According to the Plaintiff, the Defendant estimated that this work could be concluded by the end of February 2010. According to the Defendant, the original estimate was that the work could be concluded by the end of March 2010. There may have been a discussion between the parties and an agreement reached to extend the deadline to the end of May 2010.

Through the balance of 2010, it is clear the parties had a number of conversations regarding completion of the work, and that the Plaintiffs repeatedly requested and encouraged the Defendant to conclude the work. [ 3 ] In March of 2011, the Defendant still had not concluded the work. The parties filed a large number of pictures of the restaurant premises. There were allegations and denials that some of the Defendant’s work was poorly done. I would conclude that the work done by the Defendant was properly done. The major problem was that 15 months after commencement, the work was still not completed.

Open boards remained exposed and uncovered. Some booths and areas of the restaurant were simply not useable. The restaurant was unfinished and unsightly, and certainly not what the Plaintiff had bargained for, and not what he wanted to present to the public. [ 4 ] In March of 2011, Mrs. Hasapis went to see the Defendant. Mr. Novak prepared a final invoice in the amount of $31,601.50, being the amount that the Plaintiff had paid. He returned some unused material to the Plaintiffs. [ 5 ] The Plaintiffs then retained a company known as Unique Upholstery out of Saskatoon to conclude the work.

The Defendant had prepared a couple of fairly large booths, but had not installed these booths. The Defendant maintained that the value of these two booths was $11,000.00. When the Plaintiff terminated the contract, he determined that these two large booths were unuseable. He contacted a third party to take them away. The Plaintiff testified that he believed the third party paid him approximately $600.00 for these booths. [ 6 ] Apparently, the job was then finished relatively expeditiously by Unique Upholstery. The Plaintiff was invoiced for $14,237.00 by Unique.

The Plaintiff then brought this action claiming $14,237.00 in damages, plus additional damages for loss of business income during the extended renovation period. [ 7 ] I will deal with some further aspects of the evidence as I analyze the various issues. II. ISSUES 1. Whether the Plaintiffs have any action as against the Defendant, Shauna Novak. 2. Whether the Defendant, Darrel Novak, is in breach of the contract with the Plaintiff by not completing the agreed upon work by March 2011. 3. Assessment of Damages.

a) What is the base amount of damages incurred by the Plaintiff? What is the value of the contract with Unique Upholstery Inc.?

b) Should there be a deduction of $4,220.00 on the basis that the Defendant had quoted a full price of $4,220.00 higher than he actually charged?

c) What deduction should be made for booths prepared by the Defendant and sold by the Plaintiff?

d) Is the Plaintiff entitled to some damages for loss of business income, and if so, in what amount? III. ANALYSIS 1. Whether the Plaintiffs have any action as against the Defendant, Shauna Novak [ 8 ] In the 90's, the Defendants maintained a shop with the business name D & S Upholstery and Supplies. Apparently, at that time the Defendant, Shauna Novak, was actively involved in the business with her husband. The Plaintiffs filed a Saskatchewan Corporate Registry Profile Report for D & S Upholstery and Supplies . It indicates that this business name and partnership was registered on May 6, 1994.

When no annual return was filed, it was struck from the Corporate Registry as being inactive, effective May 6, 1997. [ 9 ] The Defendant, Darrel Novak, filed copies of his 2010 and 2011 Business Licences, issued by the City of Moose Jaw. These Business Licences indicate that D & S Upholstery and Supplies has a licence to carry on business within the City of Moose Jaw, and that the owner of that business is Darrel Novak. [ 10 ] Mr. Novak testified that his wife has not been involved in this business for a number of years. He has carried on the business utilizing the same name.

In fact, he testified that one of the reasons it took so long for him to do this work was that his wife is no longer involved in the business, and that he could not locate another suitable employee. [ 11 ] Lastly, on this issue, I note that the Plaintiffs did not testify that they had any involvement with Mrs. Novak for this contract. [ 12 ] In the circumstances, I must conclude that the contract was solely between the Plaintiffs and the Defendant, Darrel Novak, and the Plaintiffs have no actionable cause against the Defendant, Shauna Novak.

There is nothing illegal, and it is in fact quite normal, for a business to be sold or transferred and for the new owner to carry on business under the prior business name. This cannot, in and of itself, create any liability for the prior business owner. As the Defendant, Shauna Novak, had nothing to do with the Plaintiffs in this transaction, I cannot conclude that she was a party to the action, or that there is any actionable claim against her. She took no

part in this action and did not retain counsel. As a result, this action, as against Shauna Novak is dismissed without costs. 2. Whether the Defendant, Darrel Novak, is in breach of the contract with the Plaintiff by not completing the agreed upon work by March 2011. [ 13 ] For various reasons, I would conclude that the Defendant, Darrel Novak, was in breach of the contract by not concluding the work before March 2011. There is some evidence that the parties had specifically directed their minds to the issue of the time required to conclude the contract. [ 14 ] Mr. Hasapis testified that he was originally given the end of February 2010, as an estimated completion date. Mr. Novak

testified that the original estimation was the end of March. He further testified that there were then conversations and the deadline was extended to the end of May. Even if I view this as not a “ hard and fast ” deadline, March 2011, is a further ten months down the road. This is clearly so far out of line that I must conclude that the Defendant was in breach. [ 15 ] In addition, in a recent case of NLS Construction Ltd. v.

Kirkby and Kirkby , 2013 SKPC 5 , I held that a warranty that work be done in a reasonably timely fashion was implied and encompassed within the condition that work be done in a good and workmanlike manner. I stated: [34] I am prepared to conclude that in order for work to be done in a good and workmanlike fashion, it must also be done in a reasonably timely fashion. Work that greatly exceeds the agreed upon and specified time lines, will not be done in a good and workmanlike fashion. [ 16 ] I adopt these same statements in this case.

Because such a large amount of time had elapsed in this case, and the work was still not concluded, I must conclude that the Defendant did not do the work in a reasonably timely fashion, and did not do this work in a good and workmanlike fashion. [ 17 ] The textbook, Waddams, The Law of Contracts , 6 th Ed, at para. 596, speaks of the time to perform a contract.

It indicates that: “Time is not normally of the essence, unless this is specified in the agreement.” However, in paragraph 598, the author states: Where time is not, initially, of the essence, one party can, by issuing a notice to complete, make time of the essence. [ 18 ] I am satisfied that the parties had numerous conversations regarding completion of this work and that in so doing, the Plaintiff made time of the essence. The Defendant never did conclude the work and was in breach. 3. Assessment of Damages.

a) What is the base amount of damages incurred by the Plaintiff? What is the value of the contract with Unique Upholstery Inc.? [ 19 ] The Plaintiff filed the invoices issued to him by Unique Upholstery. The total is $14,237.00. It is clear that this is the base figure from which damages must be calculated.

b) Should there be a deduction of $4,220.00 on the basis that the Defendant had quoted a full price of $4,220.00 higher than he actually charged? [ 20 ] The Waddams text, referred to above, at paragraph 698 deals with the calculation of damages in contract cases. The author states: Nevertheless, the possibility of actual performance is, logically, a prior consideration for the award of damages has come to be regarded as a substitute for actual performance, and is therefore measured by the value that the performance would have had if actually rendered. [ 21 ] The author then quotes from Lord Atkinson in Sally Wertheim v. Chicoutimi Pulp Company (1911), A.C. 301, at page 307 as follows:

And it is the general intention of the law that, in giving damages for breach of contract, the party complaining should, so far as it can be done by money, be placed in the same position as he would have been in if the contract had been performed. [ 22 ] In this case, the Defendant, Darrel Novak, quoted $35,821.50 for the full value of the contract. He actually charged $31,601.50, a reduction of $4,220.00 for the work that he actually performed. If Mr. Novak had concluded the contract, the Plaintiff would have had to pay the Defendant an additional $4,220.00.

If the Plaintiff had been required to pay Unique Upholstery only $4,220.00 he would have no complaint regarding the cost of the contract, in that he would have paid the exact and agreed upon price. As a result, I am of the view that the Plaintiff is required to pay $4,220.00 to Unique Upholstery to conclude this work, and he suffers no damages by paying this amount. Stated just a little differently, the Defendant must be given a credit in this amount, and it reduces the Plaintiff’s damages accordingly.

The result is that the base amount of damages referred to above in the amount of $14,237.74, must be reduced by $4,220.00, leaving a balance of damages of $10,017.74.

c) What deduction should be made for booths prepared by the Defendant and sold by the Plaintiff? [ 23 ] The Defendant had done considerable work on two large booths. If the Plaintiff could not utilize these booths, he was required to sell them for the best price he could get to mitigate his damages. Both parties testified as to the value of these booths. The Defendant testified that the value of these booths should be approximately $11,000.00. The Plaintiff said he just called somebody to take them away. He couldn’t recall an exact sale price and produced no records to establish that price.

His best recollection was a guess in the amount of $600.00. In my view, both parties have exaggerated the value of these booths. These were large booths and no doubt the Defendant had put considerable materials and labour into their construction. However, these booths did not amount to something in excess of one third of the work that the Defendant did. However, on the other side of that issue, in my view the booths were worth more than $600.00. Arbitrarily, and based upon a mid-point between these two positions, I would estimate that the Defendant put $6,000.00 worth of materials and labour into these booths.

Based upon the old statement that as soon as one carries furniture out the front door of the store, it has lost fifty percent of its value, I would estimate the resale value of these booths at $3,000.00. In my view, this is a fair estimate of the sum that the Plaintiff could have, and should have, received for these booths. Accordingly, this sum must be deducted from the damages claimed. This reduces the Plaintiffs damages to conclude this contract to $7,017.74.

d) Is the Plaintiff entitled to some damages for loss of business income, and if so, in what amount? [ 24 ] The Plaintiff has claimed damages for lost business income during the extended period of the renovations. Mrs. Hasapis who keeps the books testified that throughout this extended time period, the restaurant looked somewhat unkempt. It looked like it was under construction. Open boards were exposed. It didn ’ t look like a nice, finished, and comfortable restaurant. She said that because of this, she is sure that they lost some business.

She went on to say however, that she cannot quantify or give us any kind of exact calculation as to what was lost. In my view, that is a very honest assessment of the situation. It is always very difficult to quantify that which never was or came into being. [ 25 ] However, having said this, I have no doubt that there was some loss of business. The Plaintiffs have been in business for a long time and have an established reputation. It is clear to me that they were not embarking upon these renovations for the good of their health or for something to do.

Rather, they were embarking upon these renovations with the clear expectation that business would be maintained at a particular level, or increased as a result of these renovations, with the further result that over a period of time, they would recoup or recover this investment. With these renovations not being completed, and the premises looking like a construction site, it stands to reason that some business was lost, and they suffered damages as a result of that. In argument, Mr.

Cornea urged me to allow for business losses of $400.00 to $500.00 per month for a one year period of April 1, 2010, to March 31, 2011. In my view, the request for business losses of $400.00 per month is relatively modest and fair in relation to the total cost of this project. The total cost of this project comes in at approximately $45,000.00. If one assumes $400.00 per month income as a result of these renovations, the renovations would be paid for in approximately ten years, which seems to me to be the approximate life span of the renovations.

As a result, I am prepared to allow lost revenue from business at $400.00 per month for the one year period, for total damages under this head at $4,800.00. [ 26 ] This brings the total allowable damages in this claim to $11,817.74. All of my calculations regarding the damages are set out

in Appendix “A” attached to this judgment. IV. CONCLUSION AND ORDER [ 27 ] As a result of all of the above, the Plaintiff shall have judgment in the amount of $11,817.74, plus interest under the Pre- Judgment Interest Act from March 31, 2011, to the date of this judgment. In addition, the Plaintiff shall have the costs of this action, which I hereby set at $600.00. [ 28 ] Dated at the City of Moose Jaw, in the Province of Saskatchewan this 29 th day of January, A.D. 2013. ______________________ D. J. Kovatch, J APPENDIX “ A ’

a) Base Amount of Plaintiffs ’ Claim $14,237.00

b) Deducted from Original Contract value of $35,821.50 -$4,220.00 Revised Award Amount $10,017.74

c) Deducted for value of Booths -$3,000.00 Revised Award Amount $7,017.74

d) Award for Loss of Business Income $4,800.00 Total amount awarded to Plaintiffs $11,817.74