Bragg Financial Corporation - v. -, 2011 SKPC 20

IN THE PROVINCIAL COURT OF SASKATCHEWAN Citation: 2011 SKPC 020 Date: January 18, 2011 Information: 62/08 Location: Swift Current _____________________________________________________________________________ Between: Bragg Financial Corporation - and - Lawrence Connor Davis - and - Mike Bender & Sons Agri Products Ltd. (Third Party) Mr. Glenn Forrester For the Plaintiff Mr. Curtis Wiebe For the Defendant Mr. Douglas Heinricks Q.C. For the Defendant - Third Party JUDGMENT L.A. MATSALLA, J [ 1 ] The plaintiff claims damages in the amount of $15,025.54 arising out of a contract for the sale and purchase of a piece of

revenue property in Swift Current. The property is a five unit residential rental property consisting of two single bedroom units, a bachelor unit and two other units each of which have two bedrooms. The defendant was the previous owner of the property. He was living in one of the units in 1993 when a problem in the roof required him to retain a firm to install a tin roof on the building. He moved out of the city to Medicine Hat, Alberta where he now resides. He had a manager look after the property for him. In 2007, he decided to sell the property and he listed it for sale with a local real estate agency.

The plaintiff, through its agent Mr. Tyler Bragg, viewed the property and noticed that a corner of the metal roof was pulled up and the ceiling in one of the units was water stained. Mr. Bragg testified that Ms. Terri Pozniak, daughter of Mr. Davis, was of the view that the roof may be subject to a warranty and she offered to look into that possibility.

In any event, the plaintiff expressed interest in buying the property and so an offer to purchase the premises was prepared on conditions – one of which (“the condition”) was drafted by the real estate agent and reads as follows: Subject to both Buyer and Seller reviewing and being satisfied with inspection report, recommendations and quote, at Seller’s expense, to repair aspects of roof and insulation in the attic space causing moisture problems in property as well as abating any mould identified in property as a result of these moisture problems.

This information to be provided by qualified professional on or before the 11 th day of January 2008. The Seller hereby agrees to fulfill and pay for all recommendations identified on quote prior to possession. This is a condition of both Buyer and Seller and either party can choose not to remove the condition prior to January 11 th at such time as the contract would be considered null and void. All of the conditions were to be satisfied by January 18, 2008 and the closing date was February 1, 2008. A “Contract of Purchase and Sale” was prepared and the buyer signed the offer on January 5, 2008. Mr.

Davis accepted the offer on January 7. [ 2 ] The real estate agent testified that “at the eleventh hour” he received a fax from Ms. Pozniak in the form of a price quotation that had been prepared by Mike Bender & Sons Agri Products Ltd. (“the third party”). According to Ms. Pozniak she testified that in discussing the matter with her father, she had offered to obtain a quote to satisfy the condition noted above. She is employed by the Calgary Herald in Calgary, Alberta thereby giving her access to a fax machine and so she was able to obtain and send documents.

She had some difficulty locating a roofer who had experience working with a tin roof but, after January 7, she did contact Mr. Mike Bender who was president of Mike Bender & Sons Agri Products Ltd. (“the third party”). She testified that she told him that the property in question had been sold and that there was some damage in the inside of the building. She wanted a quote for the cost to fix the problem. Mr. Bender, she said, called her and he gave her some specific information about the roof. She did not recollect all of the details of the conversation.

She acknowledged, in-chief, that she was told that the steel on the roof was not overlapped properly, however in cross- examination she testified that she didn’t recall any reference to the use of the wrong type of steel for the roof or that the overlap was in the wrong direction. She said that she did not fully understand what he was saying about the roof and that she “felt at his mercy”, however, she wanted him to provide her with a written quote (“the quote”).

He said nothing to her about the need to replace the roof and, although she did tell him that the building had been sold, she did not advise him to complete cosmetic work only. [ 3 ] The quote from the firm referred to the cost to apply caulking to two seams and to replace screws. The ridge cap was to be sealed and screws were to be added. The cost was noted to be $1,197.00. A second part of the quote suggested that the screws on the eave were lifting up as were the bottom sheets on the roof and so, if requested, the eave could be re-screwed so as to prevent the steel from blowing off.

The cost for the work was noted to be $420.00. She testified that she was not convinced that the second part of the work had to be done. Written authorization was required before any work could commence. She testified that she spoke to her father and, while she did not tell him about the specific discussions that she had with Mr. Bender, she did review the quote with him. He approved the work and she faxed the quote back to Mr. Bender with authority to do the work. Mr. Davis agreed that his daughter was involved in the transaction and, according to him, she did tell him about her conversation with Mr. Bender.

It appears that Mr. Davis himself spoke to Mr. Bender on at least one occasion. [ 4 ] The caretaker of the building testified for the defendant. He said that he had lived in a suite in the premises from 1978 to 2008. He was aware of a leaky roof in the building and he believed he may have mentioned that problem to Mr. Davis. To remedy the leaking, he actually went into the attic and put sponges on the rafters to soak up the water. He said he had to do something because the tenants were complaining. [ 5 ] The evidence tendered by the plaintiff is at odds with the evidence presented by the defendant. Mr.

Bender testified that he was initially contacted by Ms. Pozniak, however, after inspecting the roof, he told her that the roof should be replaced because the wrong steel had been used when it was installed some years prior and that the steel was secured using nails instead of screws with rubber washers. According to him, she was only concerned with a leak in the southeast corner of the roof. She told him that the building had been sold and that she wanted a quick fix. He went on to say that he told her that the ridge was not sealed properly and she responded by telling him to seal the cap and the seams.

He said that she was also told that the sheets along the eaves were loose and that she directed the firm to screw down those sheets. He said that he was not aware of the existence of the condition in the agreement and he testified that he was not asked to complete an inspection report of the roof or to provide recommendations. His quote referred only to the work that she wanted done.

[ 6 ] Mr. Bender’s son, Scott Bender, also spoke to Ms. Pozniak. He, too, recalls explaining the problems with the roof and that he suggested that it should be replaced. He testified as well that she wanted a quick fix because the building had been sold. [ 7 ] The plaintiff received a copy of the quote and seemed to be content with it and so the parties to the agreement removed the condition. The transaction proceeded although the work to the roof was not completed. It was agreed that there would be a hold back of $4,000.00 until the work was done.

Eventually the work was done and on April 9, 2008, the hold back was released. The plaintiff, believing that the roof had been repaired, did some painting in the common area of the building. [ 8 ] Unfortunately, on June 11 and 12, 2009, the city received a significant amount of rain. The plaintiff was notified that drywall in the units was falling down. Mr. Tyler Bragg, on behalf of the plaintiff, spoke to Scott Bender about the roof and it was then that he became aware of Mr. Bender’s discussion with Ms. Pozniak. He then took immediate steps to repair the roof.

On June 26, he obtained a quote from Elite Metal Builders Ltd. to replace the roof for $8,972.30. Then, on January 7, 2009, the plaintiff retained Servicemaster to repair the drywall in one of the units for the sum of $5,160.74. On October 20, 2009, the plaintiff retained Manhatten Contracting to fix water stains on the drywall and to paint a unit for the sum of $892.50. Position of the Plaintiff [ 9 ] The defendant was aware that the roof required repair. Mr. Davis agreed to have the roof inspected and to pay for the cost of any repairs. Instead, Ms. Pozniak, on behalf of Mr. Davis, requested a quote from Mr.

Bender to do a quick fix. The inadequate roof installation was known by the defendant and the information was concealed from the plaintiff. The Position of the Defendant [ 10 ] The plaintiff was aware that the roof was old and that there could be a problem with it and so the defendant had the roof examined and he agreed to do the repairs that were suggested. The plaintiff was satisfied with the quote. The work was done and the hold back was released. There is insufficient evidence to establish that the roof should have been replaced.

As I understand the position of the defendant, he relied upon the third party to complete a report or quote for the proper repair of the roof and the work was to be conducted in a workmanlike fashion. Failure to provide a proper quote and to do the work properly establishes liability on the part of the third party. The Position of the Third Party [ 11 ] Initially the defendant sought to hold Mr. Bender (in his personal capacity) and the third party responsible for the claim of the plaintiff. However, prior to trial, Mr. Davis discontinued proceedings against Mr.

Bender personally. [ 12 ] The company takes the position that it was not requested to inspect the roof or to make recommendations about repairs to the roof and that it was retained by Ms. Pozniak, on behalf of Mr. Davis, to conduct specific repairs even though representatives of the company had advised Ms. Pozniak about the advisability of replacing the roof. The company did the work properly and liability for the damages rests with the defendant.

Issue [ 13 ] Whether it has been established by the plaintiff that the defendant breached a condition of the “Contract of Purchase and Sale” and, if so, whether the defendant is responsible for the damages that the plaintiff alleges resulted from the breach or whether the defendant has shown that the third party is responsible for the damages. Analysis [ 14 ] The parties, including the defendant, have not argued that Ms. Pozniak was not an agent of the defendant in this case, however

the role she played deserves some comment. [15] The law of agency has been generally described by S.N. Waddams in The Law of Contracts, 4th ed. (Aurora: Canada LawBook 1999) at paragraph 257 as follows: The relationship between the principal and the third party is of more general interest to the law of contractual enforceability and ofpractical importance in a time when most contracts of commercial significance are made with corporations.

When an agent in fact isexpressly or impliedly authorized to contract with a third person on behalf of his principal, and the third person knows it and deals withthe agent on that basis, there is no difficulty in concluding that a contract is formed between the principal and the third party. It is asthough the principal were dealing directly with the third party, an agent forming a mere means of communication between two principalparties. For the purposes of this case, the passage above refers to Mr. Davis, as the principal party, Ms.

Pozniak as the agent, and the plaintiff asthe third party. [16] The comments of Feehan J. in Russel Steel Ltd. v. Consolidated Northern Drilling & Exploration Ltd., [1981] A.J. No. 973(Alta.

Q.B.) at paragraph 6 are applicable where he said: Where a principal holds out to a third party that an agent has been authorized to act on behalf of the principal, theprincipal is bound by the acts of the agent, although the agent may, in fact, have no authority or only a limited authority, or where theagent’s authority has been reduced or terminated by the principal but the third party received no notice, on the grounds that the agent hasapparent or ostensible authority and the principal knows that the third party may rely on such holding-out and the principal is therebystopped from denying the agency: Hayes v.

Douglas, (AB KB), [1976] 5 W.W.R. 308 (Alta. S.C.); Taylor v. Helgeson (1910), 15 W.L.R. 273, 3 Sask. L.R. 461 (Q.B.); and Fridman’s Law of Agency, 4th ed. (1976), pp. 65, 109. and, in part, at paragraph 7: Where a person suggests that he is acting as agent for a disclosed principal and where that agent acts with actual orostensible authority and, as such, binds the principal to a contract with a third party, then the third party has a cause of action only againstthe principal.

The third party relies on the principal’s acts or representations and, as such, the law holds the principal and the third partycontractually bound by the ostensible agency created by the principal. [17] Applying the principles to this case, I must conclude that the plaintiff had good reason to believe that Ms. Pozniak was actingas an agent for Mr. Davis at the time that he undertook to satisfy the condition. Ms. Pozniak acknowledged that she offered to obtain aquote and the evidence points to her actively seeking out a trades person who could provide a quote. Mr. Davis admits that he spoke toMr.

Bender on at least one occasion and he was content to have Ms. Pozniak act on his behalf in respect of the condition. Mr. Davisadmitted that his daughter discussed the quote with him and that he approved the work. She then authorized the work on his behalf.Therefore, there can be no doubt that in law Mr. Davis held his daughter out as his agent, that she had his authority to so act and thedefendant is contractually bound by that agency. [18] Ms. Pozniak takes the position that she knew little about roofing and that she relied on Mr. Bender’s firm to do a properinspection and to make the appropriate repairs.

She asserts that the firm did not recommend that the roof be replaced. She does not takeissue with the fact that an inspection report was to be prepared. Mr. Bender and his son gave clear evidence that they advised Ms.Pozniak that the roof should be replaced and why it should be replaced. Their recollection is that she was not interested in the company’sadvice and that she instructed the employees of the third party to do a quick fix because the building had been sold. The recollections ofMr. Bender and his son, Scott, were detailed and their evidence was not shaken in cross-examination. Ms.

Pozniak testified that sherecalled some of the discussions but that she could not recall all of the details. The most significant detail – that the roof be replaced, wasnot a detail that she recalled although the Benders are clear on the point. It is more likely that she did not remember all of the details withprecision because her intention was not to seek advice as to the condition of the roof but to provide specific instructions on the work thatshe wanted done.

I believe that after she was advised about the significant problems with the roof, she instructed the third party to onlydo the work that was the most basic – to essentially complete a “quick fix”. I am reinforced in that view in light of Mr. Bender’stestimony that he strongly urged that the eaves be repaired as well and that Ms. Pozniak authorized the work but only with the greatestreluctance. I am satisfied that the cost of repair, not the status of the roof, drove the defendant’s actions.

[ 19 ] The onus was on the seller to obtain not only a quote but also an inspection report as to the condition of the roof and to satisfy any recommendations. The plaintiff had no such responsibility. A report was not requested but rather the seller directed particular work be done. The plaintiff had reason to believe that the quote was in the nature of an inspection report and that the proposed work was sufficient to repair the roof. It did not waive the benefit of the condition.

In the end result, I must conclude that the defendant breached the condition of the agreement by neglecting to obtain the inspection report that he was obliged to obtain and to satisfy any recommendations. As a result of the breach, I am satisfied that significant damages were done to the property for which the plaintiff was required to pay. It is obvious that a roof of a building must be properly repaired so as to protect the premises and that a failure to do so could result in damages that could be very significant.

It is trite to say that the parties to a contract are free to negotiate an agreement to the satisfaction of each of them. The parties can agree that a condition be fundamental to the successful completion of the contract. A breach of a condition of an agreement permits the aggrieved party to recover damages that arise naturally from the breach and the law intends that the injured party should be placed in the same position as he/she/it would have been in if the contract had been performed, see Interprovincial Concrete Ltd. v. Great West Construction Ltd ., [1987] S.J. No.23 (Grotsky J) .

Damages [ 20 ] A plaintiff must take all reasonable steps to minimize losses resulting from the breach. It may not claim any damages that arose as a result of neglecting to take steps to mitigate the loss, see British Westinghouse Electric & Manufacturing Co. Ltd. v. Underground Electric Rys. Co. of London Ltd. (1912) , A.C. 673 (H.L.) . I am satisfied that the plaintiff did all within its power to mitigate its losses. It promptly saw to the repair of the roof by the end of June and it retained a contract to repair the damaged drywall at the most reasonable price.

Even though there will be further costs to repair the water stains, the plaintiff has limited its claim for damages to the work that was completed in the fall of 2009. Conclusion [ 21 ] The plaintiff has established its claim. There is no evidence that the work done by the third party was in any way deficient. The defendant has not shown that the third party has any liability in this case. [ 22 ] There will be judgment in favor of the plaintiff as follows: a. Claim Roof repairs - $ 8,972.30 Drywall - $ 5,160.74 Stains - $ 892.50 $15,025.54 b.

Costs $ 100.00 Total $15,125.54 [ 23 ] There is no liability on the part of the third party. ___________________________

L.A.Matsalla, J