Blunden Construction Ltd Claimant – v. –, 2018 NSSM 24

SMALL CLAIMS COURT OF NOVA SCOTIA cite: Blunden Constuction v. DeYoung 2018 NSSM 24 SCCH No.473973 BETWEEN: Blunden Construction Ltd Claimant – and – Kyle DeYoung Defendant Adjudicator: Augustus Richardson, QC Heard: May 9, 2018 Decision: May 18.2018 Appearances: Doug Blunden, for the claimant Scott Campbell, for the defendant DECISION [ 1 ] When can a homeowner cancel a contract with a contractor? And if that cancellation constitutes a breach of contract, what are the damages? These are the central questions in this proceeding. [ 2 ] The claimant Blunden Construction Ltd (“BlundenCo”) is a contractor.

It has been run as a family business for three generations. Mr Blunden is the current owner/operator of the company. The defendant is a lawyer. At the material time he was working in the north. He (or he and his sister) are the owners of a house in Halifax, Nova Scotia. In or about March 21, 2017 he entered into a contract with BlundenCo to perform certain renovation work on the house. On May 1, 2017 Mr DeYoung purported to cancel the contract. BlundenCo claims its lost profit on the contract, which it calculates at $9,051.00: Ex. C1, Attachment 2 (“Estimate”).

Mr DeYoung denied that he breached any contractual obligations; argues that he was entitled on the facts and law to terminate the contract; claims that BlundenCo repudiated the contract; and counterclaims for $7,500.00 for lost rental revenue caused by the delay attendant upon finding a new contractor to finish the work that had been contemplated in his contract with BlundenCo. [ 3 ] I heard the testimony of Mr Blunden and of Mr DeYoung. A large number of exhibits were also entered into evidence. [ 4 ] Based on that evidence and testimony I was satisfied on a balance of probabilities of the following:

a. This house was the first house Mr DeYoung had ever purchased; b. To effect the purchase he obtained mortgaging financing that included a component to finance the required renovations, which component had to be used prior to the end of 2017; c. Mr DeYoung planned to divide the house into two units, one to be occupied by his sister and the other to be rented out on AirBNB while he worked in the north, and otherwise occupied by him when he returned to Halifax in the summers; d.

Mr DeYoung did enter into a contract with BlundenCo for the work and services outlined in a Proposal and Contract dated March 21, 2017, all to be done for a contract price of $55,400.00 plus HST: Ex. D3; e. Mr DeYoung was in the north at the material time, and communicated with Mr Blunden by email or phone call; f. At this time the interior of the house had already had extensive preliminary work, mostly of a “tear-out” nature, much of which was performed without any municipal permit, which had been done by other contractors, leaving the house in the state depicted in photos entered into evidence as Ex.C24; g.

The work to be performed by BlundenCo was not the only work necessary to accomplish the defendant’s goal of turning the house into a two-unit rental suitable for use as an AirBNB rental; h. Following March 21 st Mr Blunden attended at the site; took measurements; prepared plans; and obtained a permit for the contemplated work; i. To obtain the permit Mr Blunden had to engage the services of an engineer, the cost of which ($644.00) formed part of an invoice sent by BlundenCo to Mr DeYoung on April 21, 2017 that was said to be an extra to the March contract price: Ex D13; j.

Mr DeYoung, already anxious about time limits, became concerned about delays that he felt were occurring because of Mr Blunden’s actions and frequent emails, some of which he found confusing; k. The April 21 st invoice added to Mr DeYoung’s concerns, by suggesting that the cost of work undertaken by BlundenCo was going to exceed the contract price; and l. Mr DeYoung accordingly decided to terminate his contract with BlundenCo on May 1, 2017: Ex. D14; m.

In so doing Mr DeYoung acknowledged that BlundenCo expended time and effort on the file (though actual construction had not yet started) and asked for an invoice for “any outstanding charges for your work:” Ex. D14; n. Mr Blunden responded with an invoice for $5,000.00 plus HST, but refused to provide any breakdown of work and services comprised in the invovice. [ 5 ] Mr Blunden did not accept the termination with grace. He took it as a personal insult. He expressed his anger—an anger that only grew over time—in an intemperate email to Mr DeYoung dated May 1, 2017: Ex. D14.

As matters developed after May 1 st Mr Blunden refused to provide details of the work he had performed up to May 1 st . He accused Mr DeYoung (and subsequently Mr DeYoung’s lawyer) of sharp and unethical behaviour. None of these accusations were accurate, deserved or fair. Mr Blunden’s conduct in making the accusations was unprofessional. He allowed his temper to get the better of him.

[ 6 ] Having said that, I am also satisfied that Mr DeYoung’s decision to terminate the contract on May 1, 2017 did constitute a breach of that contract. Mr Blunden had commenced the work and services contemplated under the contract. He did produce plans for the necessary work that were reviewed and approved by Mr DeYoung. He did commence the permit application process. [ 7 ] Mr DeYoung argued that Mr Blunden’s decision to obtain an engineer to stamp the plans was not authorized, or constituted a breach, or both. I do not agree.

It is or should have been common knowledge that municipal permits for any major structural work requires an engineer’s “stamp.” In obtaining that stamp Mr Blunden was carrying out work required by Mr DeYoung and, moreover, was performing it in the expedited fashion that Mr DeYoung, who was constantly concerned about time lines, required. Nor was I persuaded that Mr Blunden’s decision to obtain the engineer’s stamp before obtaining express authorization from Mr DeYoung constituted a repudiation by BlundenCo of its contractual obligations.

Indeed, on the evidence, particularly the email correspondence between Mr DeYoung and Mr Blunden, I am satisfied that in so doing Mr Blunden was acting in the good faith performance of what he understood Mr DeYoung’s needs under the contract were. He was performing, not repudiating, the contract. [ 8 ] Mr DeYoung also argued that the initial rejection of the permit application by the municipality also constituted justification for the breach, in part as evidence of poor work on BlundenCo’s part. I do not agree. First, the rejection took place after the contract was terminated.

Second, on the evidence the permit was rejected because of a relatively minor defect that was subsequently corrected to the satisfaction of the permitting authority. I think as well that I can take judicial notice of the fact that municipal planning authorities often require changes, additions or amendments to building and renovation plans before issuing a permit.

The fact that that happens is not in and of itself evidence of any poor workmanship—or at least, workmanship so poor as to justify termination of a contract. [ 9 ] The question then becomes one of the quantum of damage arising from Mr DeYoung’s breach of contract. [ 10 ] Mr Blunden argued that BlundenCo’s loss was its loss of profit. He calculated that loss of profit at $9,051.00. He demonstrated that loss using the estimate calculations that had underlay the contract price. His calculation was not seriously challenged by counsel for Mr DeYoung.

I am satisfied that that figure does represent the profit that BlundenCo would probably have made had the contract been performed. However, that does not end the analysis. [ 11 ] The second question involves whether BlundenCo in fact , on a balance of probabilities, lost that profit. Here the evidence was deficient. [ 12 ] In his submissions Mr Blunden argued that BlundenCo performed 40 contracts that year, and that he personally did 10 of them. I took this to mean that of those 40 contracts, Mr Blunden took personal supervision of 10, leaving the other 30 to be supervised by other employees of BlundenCo.

I take the contract with Mr DeYoung to have been, at least initially, one of those 10 contracts. What was not clear, however, was whether a. BlundenCo could have performed the 40 contracts as well as Mr DeYoung’s contract, or whether b. BlundenCo in fact only performed 39 contracts because of Mr DeYoung’s breach, even though it could have performed 40, or whether c.

BlundenCo’s performance of 40 contracts included a contract with another party that it took up after Mr DeYoung’s breach—a contract it could not have performed had Mr DeYoung’s contract remained in place. [ 13 ] In short, BlundenCo did not establish on a balance of probabilities that it in fact lost the profit it expected to make that year as a result of entering into the DeYoung contract. That being the case its claim for lost profit must fail. [ 14 ] But that conclusion does not end the analysis. The evidence was clear that Mr Blunden did perform some work and services pursuant to the contract.

That fact was indeed admitted by Mr DeYoung. There is thus a quantum meurit claim. Mr Blunden expressly refused to provide any details as to the actual time or work he did prior to May 1, 2017. He did so on the grounds that the contract was a fixed price contract. That may be so, but it leaves me at a disadvantage when coming to an assessment of the value of that time and work. Given that there was a little more than a month between the time the contract was entered into and its breach; that this was not the only

contract Mr Blunden was working on at the time; that he did do up a number of plans; that the projected profit of $9,051.00 would have involved substantially more work than had been done up to May 1st; and doing the best that I can, I assess the value of his work to the date of breach at $1,000.00. [ 15 ] The defendant’s counterclaim is dismissed. First, the defendant, not the claimant, breached the contract. Second, the work on the house was eventually completed within the time contemplated by the mortgage financing.

Given that the house had been torn apart by other contractors by early 2017 I am not surprised that the renovations took as long as they did. If there was any delay, I was not satisfied that it was the result of Mr DeYoung having to find someone else to do the work contemplated by his contract with BlundenCo. DATED at Halifax, Nova Scotia this 18 th day of May, 2018. Augustus Richardson, QC Adjudicator