Craig Beckett v. Aline Beckett, 2017 SKPC 021

IN THE PROVINCIAL COURT OF SASKATCHEWAN CIVIL DIVISION Date: February 16, 2017 Citation: 2017 SKPC 021 File: SC # 140/16 Location: Regina _____________________________________________________________________________ Between: Craig Beckett and Aline Beckett - and - Patrick Thomas McCrimmon and Northwest Tile Inc. Self Represented For the Plaintiffs Dane Kostenuk For the Defendants JUDGMENT P. DEMONG, J Introduction [ 1 ] Craig and Aline Beckett seek damages against each of Northwest Tile Inc. (‘the company’) and Patrick McCrimmon.

The Becketts allege that they entered into a contract with the defendants for, primarily, the provision of flooring and tiling services and the installation of a steam shower for their residential property. They maintain that the goods provided were not fit for their intended purpose and that the services provided were not of a good and workmanlike quality. [ 2 ] The Becketts allege that there is uncertainty as to which defendant they contracted with.

They contend that they contracted with McCrimmon in his personal capacity, but in the alternative they say that if they entered into a contract with the company, then in any event McCrimmon is still personally liable for the deficiencies that they say existed following completion of the contract.

[ 3 ] The latter argument is predicated on the allegation that the company had been struck from the corporate register two days after the Becketts had been provided with a detailed description and quote for the work that was to be undertaken. Because the company had been struck from the corporate register the Becketts say that the company was, in law, unable to carry on business and any work ostensibly undertaken by the company after the date it was struck was undertaken by Mr. McCrimmon in his personal capacity. The Becketts allege that the company was simply operating as the alter ego of Mr. McCrimmon.

They say that Mr. McCrimmon was indiscriminate as to when he was and when he was not contracting personally or through the auspices of the company. [ 4 ] Each of the company and Mr. McCrimmon assert that the materials used were fit for their intended purpose and that the services provided were good and workmanlike. If, however, the Court concludes otherwise, they maintain that there was no contract between them and the Becketts; that no express warranty was ever given; and that in any event, Mr.

McCrimmon should not be held personally responsible for any of the deficiencies because if there was a contract, that contract was between the company and the Becketts. They allege that the company’s failure to keep the company from being struck may be unfortunate, but that does not afford the Becketts the right to seek judgment against Mr. McCrimmon personally. The defendants maintain that in law, the company continues to exist, and notwithstanding that it has been struck it can continue to carry on business.

If liability arises under the contract, they say that liability should be imposed on the company and not on Mr. McCrimmon in his personal capacity. Issues [ 5 ] There are five issues for consideration of the Court:

i) Was there a contract entered into for the provision of goods and services? ii) Did the parties agree that the goods that were to be provided and the services to be rendered would not be subject to the implied common law terms incorporated into a contract of this kind - that they be fit for their intended purpose and provided in a good and workmanlike manner?

Does the absence of an express written warranty vitiate the implied common law contractual obligation? iii) Were the goods provided fit for their intended purpose and were the services provided in a good and workmanlike manner? (iv) If the goods were unfit for their intended purpose and the services were not provided in a good and workmanlike manner, what is the measure of damages? (

v) If the goods were unfit for their intended purpose and if the services were not provided in a good and workmanlike manner is the company liable for the damages sought or is McCrimmon liable, or is the liability assessed on a joint and several basis?

Evidence, Facts, and Analysis [ 6 ] Except where specifically stated to be otherwise, and where the evidence conflicts, I prefer the evidence tendered by each of Aline and Craig Beckett and their expert Gordon Eckl over that of Patrick McCrimmon for the reasons set out later in this judgment. [ 7 ] In 2013 Craig and Aline Beckett were in the process of building a new home after having demolished an older home on a lot in Regina. Craig Beckett was acting as his own general contractor and as such retained subcontractors on an as needed basis dependant on the nature of the work that needed to be performed.

As the work progressed, Craig spoke to one of his subcontractors who was installing hardwood in the home. He was looking for someone who would be prepared to place tile in certain areas of their home, build a steam shower, and do other assorted flooring jobs. The hardwood subcontractor mentioned the name of Patrick McCrimmon and provided Craig with contact information . [ 8 ] Craig contacted Patrick in the latter part of 2013 and discussed his needs and provided some drawings for Patrick’s consideration. Patrick attended on site to review the scope of the work to be undertaken.

Patrick attended again, at the request of Craig,

towards the end of March, 2014. On this occasion Mr. McCrimmon drove to the property hauling a trailer which clearly displayed the company’s name. Patrick says that at this meeting he provided Craig with a business card which also displayed the company name, although Craig maintains that he could not recall obtaining a copy of it. I am satisfied that it is more likely than not that Patrick did provide the company card to Craig on his first attendance at the home.

After a walk through of the home and a conversation regarding the scope of the work to be undertaken and a preliminary verbal quote of $12,000.00 to $15,000.00 Craig agreed to engage the company to do the work. The parties further agreed that some of the materials would be supplied by the Becketts, as they had a particular type of tile in mind. [ 9 ] On March 29 th , 2014, and at Mr. McCrimmon’s suggestion, Craig provided a cheque in the sum of three thousand dollars made out personally to Patrick McCrimmon as an advance against the monies to be paid under the contract so that materials could be purchased.

The work commenced on April 15 th , 2014. Eventually Mr. McCrimmon provided a more formalized breakdown of the work to be provided and the estimate of the costs to be incurred. This document, entitled ‘Breakdown and Estimate’ was dated April 28 th of 2014 and it was provided to the Becketts at or around that date. It clearly identified the corporate logo of Northwest Tile Inc. and it disclosed the corporate name as well as the name of Patrick McCrimmon. This document clearly indicated that all cheques should be made out to Northwest Tile Inc.

It did not disclose an express warranty in relation to either the goods used or the services to be provided, nor did it expressly waive the implied common law warranty that the goods used would be fit for purpose and that the services provided would be of a good and workmanlike quality. [ 10 ] While there may have been some question in the minds of the Becketts about who they were contracting with, I am satisfied that upon receipt of this document, they knew, or ought to have known that their original agreement was with the company. [ 11 ] The estimate identified eight different job descriptions: - tile was to be installed in the ensuite at a cost of $2,100.00; - a mosaic tile floor was to be laid in the second floor bathroom at a cost of $800.00; -tile was to be applied in a sloping fashion in the laundry room at a cost of $250.00; - a pinwheel mosaic tile floor was to be laid in the main floor bathroom at cost of $350.00; - a cork floor was to be laid in the kitchen at a cost of $1,144.00; - tile was to be laid in the downstairs bathroom at a cost of $1,770.00; -laminate flooring was to be laid downstairs at a cost of $1,440.00; and -a steam shower was to be built in the ensuite at a cost of $6,572.00.

The subtotal on this original estimate totalled $13,733.00 exclusive of sales tax or additional costs. I am satisfied that this estimate was preliminary and that the parties understood that there might be some further adjustment to the prices quoted, and in fact that is precisely what occurred. [ 12 ] Work proceeded through until the end of May, 2014. The work was done by Patrrick McCrimmon with the assistance of Connor Oranchuk. Mr. Oranchuk worked for the company on an as needed basis. He was described by Mr. McCrimmon as a sub-contractor of labour.

He had no specialized training as a tile layer and acted at all times under the direction and supervision of Mr. McCrimmon at the stated rate of $13.50 per hour. He was not identified as an employee of the company for the purpose of worker’s compensation. Regardless of how his status was described by Mr. McCrimmon, I am satisfied that he is, in law, characterized more accurately as an employee.

There is nothing in the evidence to establish that he worked independently of the company; that he used his own tools and equipment; or that he could, in any way, be described as a formal subcontractor on this job. [ 13 ] During the course of the work the Becketts made two further interim payments and a final payment less a slight holdback for work that had not yet been completed. On April 30, 2014 they paid $3,000.00 by cheque payable to ‘Northwest Tile’ which they described as a deposit for the materials to be purchased for the shower.

On May 15 th , they paid a further $3,500.00 again by cheque payable to ‘Northwest Tile’ as a progress payment, and on May 30 th , upon being presented with a final invoice, they paid $5,557.55, again by cheque and again payable to ‘Northwest Tile’. In total the Beckett’s paid $15,057.55 against a final invoice that totalled $16,049.25.

[ 14 ] The Becketts assert, and I so find, that there were certain deficiencies that had to be corrected and some unfinished work. I am satisfied that at or about the time the final cheque had been delivered to Mr. McCrimmon, he was aware of some of the deficiencies that the Becketts noted and some of the work under the agreement was not yet complete. Mr. McCrimmon never returned to the work site to complete the unfinished work or deal with any deficiencies. [ 15 ] Contradictory evidence was given at trial as to how the final payment was made.

Craig Beckett asserts that he wrote the final cheque and presented it to Mr. McCrimmon in the yard outside the home and without first walking through the home to assess the quality of the finished product. Mr. McCrimmon says, however, that he and Mr. Beckett walked through the home that Mr. Beckett was effusive about the quality of the work and then presented him with a cheque. In my view nothing of consequence turns on when the cheque was actually presented to Mr. McCrimmon. I am satisfied that Mr. McCrimmon was aware that there were existing deficiencies and work left undone.

I am satisfied that following receipt of the final payment the Becketts became aware of a number of deficiencies and tried to get Mr. McCrimmon to come back to fix these remaining problems and complete the work as set out in a letter forwarded to Mr. McCrimmon on or about October 6 th of 2014. [ 16 ] This letter identified as exhibit P-21 lists a number of those deficiencies. It reiterates the Beckett’s several attempts since June of 2014 to have the work completed and the deficiencies corrected. As indicated, for reasons which Mr. McCrimmon failed to make clear at trial, Mr.

McCrimmon refused to respond to the letter or do any further work on the home. He refused to re-attend at the home to go through the deficiencies described to him in the summer and fall of 2014. Had he taken the opportunity to do so, and if necessary take photographs of his work at that time for eventual use at trial, I may have found some of Mr. McCrimmon’s evidence at trial more compelling. I will explain my concern in this regard shortly. [ 17 ] By correspondence dated January 29, 2014 [sic] the Becketts advised Mr. McCrimmon that in light of his lack of a response they had begun remediation efforts.

They also included an inspector’s report which identified the deficiencies, and the draft budget respecting the costs that would likely be required to remediate the work. Mr. McCrimmon stated at trial that he never received that correspondence. This is likely true, but not because he did not have the opportunity to review it when it had been sent. Rather, as evidenced at trial, the letter had been sent to his work and home address by registered mail and it had been returned unclaimed. In my opinion, Mr.

McCrimmon’s failure to take the Beckett’s several concerns, expressed to him on more than one occasion and with meticulous clarity, and his subsequent failure to even accept the registered letter sent to his home address displays a callous indifference which can hardly be called professional. This indifference extended to the operation of the company-something I will again speak to shortly. [ 18 ] In light of the lack of response by Mr.

McCrimmon, the Becketts brought this action. [ 19 ] Notwithstanding that the defendants have pled that there was no contract entered into between the parties, I find that there was. It is not the least bit unusual for contractors to come to this Court as defendants and attempt to argue that because there is only an estimate provided in the course of work being undertaken, and because the precise terms of the agreement are not spelled out in writing between the parties, no contract exists. This is simply wrong.

While it would certainly be considered best practices for contractors and customers to have a neat and exhaustive written agreement which identifies the exact terms and conditions of their agreement, this, unfortunately and inevitably to the detriment of both parties, is rarely seen in this Court. Instead, the parties operate on the assumption that the parties will, in good faith honour the oral understanding each presumably thought was in existence. There is no question that an oral agreement to provide goods and services has contractual force. It is no less a contract than a written agreement.

The problem which arises, however, is that in the absence of a written agreement, the Court is left to try to piece together the likely intention of the parties, guided by the evidence presented in Court and by the law as it applies to the

interpretation of contracts and those warranties which may be imposed by statute or implied under the common law. Issue [ 20 ] The first issue, is answered in the affirmative. Notwithstanding the defendants’ assertion that there was no contract, there was an oral agreement for the provision of goods and services . An oral agreement is no less a contract by reason only that the terms and conditions of that contract are not set forth in writing.

[21] The defendants have defended the action in part by alleging that there was no express written warranty given to the plaintiff, andin support thereof invites the Court to note that neither on the estimate, nor on the invoice, is there a specific warranty stated anywhere.Mr. McCrimmon asserted at trial that because of his concerns regarding the structural integrity of the gypcrete that had been poured, andthe fact that a number of the interior walls were, in his view, out of plane and bent and twisted, he chose not to offer his typical one yearwarranty. [22] I can come to no other conclusion but that Mr.

McCrimmon is unfamiliar with the law governing a breach of contract for workand materials. That governing law is set forth in Mack v Stuike (1963), (SK KB), 43 DLR (2d) 763 ( Sask Q.B.). It hasbeen cited countless times as authority for the general principle enunciated at page 771: ... a contract to perform any work, in the absence of any stipulation as to the manner in which it is to be done shall be done in a good andworkmanlike manner, and the workmen employed on the work must be possessed of the ordinary amount of skill possessed by thoseexercising the particular trade.

The test for compliance with the workmanlike standard is fitness for purpose. In other words, the work and the materials must bereasonably fit for the intended purpose despite minor deviations. [See Al Vogel Construction Ltd. v Forbes, (SKKB), [1998] SJ No. 696 (Sask. Q.B.) at paragraphs 8 - 9]. This warranty is implied into every contract for the provision of goods andservices, unless the parties, by agreement, choose to negate this implied contractual term.

Put another way, the defendants’ decision notto set forth, in his estimate and invoice, an express warranty as to fitness for the purpose does not negate the implied warranty. Theimplied warranty exists unless the parties by agreement acknowledge that they do not intend to be bound by that implied term. [23] It may be that Mr. McCrimmon did, on occasion, direct his concerns set out in paragraph 21 above to Mr.

Beckett, but CraigBeckett takes issue with those alleged concerns and, in any event, those expressed concerns in and of themselves do not constitute anagreement between the parties to the effect that the entirety of the work that the defendants provided would not be warranted to be goodand workmanlike. While Mr. McCrimmon gave evidence that he specifically advised Mr. Beckett that his work would not be warranted,I have no evidence before me to the effect that there was a meeting of the minds on this issue.

First, I would note that the onus of proofrests with the defendants to show that the parties agreed to waive this implied warranty. There is nothing in writing before the Court toshow that there was a meeting of minds on what I would consider to be an extraordinary decision ... waiving a contractor’s responsibilityto provide good and workmanlike services. [24] Second, Mr. McCrimmon asserts that he made Mr. Beckett aware of his decision not to warrant his work some weeks into thepartial performance of the contract. Mr.

Beckett presents to this Court as an intelligent, articulate and meticulous individual with somepast experience as a general contractor. He does not strike me as the type of person, who, when building what I conclude he consideredto be his dream home, would have agreed to such an arrangement. There is a difference between asserting that no warranty would beprovided and a specific agreement to that effect. [25] I take note that Mr.

McCrimmon never gave evidence to the effect that the Becketts agreed that this implied term would bewaived, he only gave evidence to the effect that he was not prepared to provide an express written warranty to that effect. I simply do notaccept, as credible, that Mr. McCrimmon explained to Mr.

Beckett that he would complete all of the work that was identified on theestimate, and that the parties thereafter agreed that under no circumstances could the Becketts complain about the quality of any of theservices that were provided. [26] Third, it is obvious that the entire reason that the Becketts brought this action was to seek damages arising from work that theBecketts allege to be less than good and workmanlike.

If one of the central tenets of the defence to this action is that the parties were inagreement that there was no warranty in relation to good and workmanlike services, I would have expected that the defendants, who wererepresented by counsel at trial would have spent considerable time in cross-examination dealing with this issue. Neither Aline nor CraigBeckett were cross-examined on the issue of waiver of this implied warranty. If, as pled, this issue is central to the defendants’ defence,why was this issue not dealt with on cross-examination?

The rule in Browne v Dunne (1893), 1893 CanLII 65 (FOREP), 6 R. 67 (H.L.)is applicable. Simply put, where a witness is not cross-examined on matters which are of significance to the facts in issue and theopposing party then leads evidence which contradicts that witness on those issues, the trier of fact may take the failure to cross-examineinto consideration in assessing the credibility of that witness. [27] I am inclined to do so.

In my view, the defendants’ assertion, or their invitation to have me infer, that the parties were inagreement that there was a waiver of the implied term that the goods and services would be fit for the purpose and be done in a good and

workmanlike manner has not been proven on a balance of probabilities. I simply do not find that assertion to be credible, or supported by the evidence. [ 28 ] In respect of issue (ii) I conclude that there was no agreement between the parties to negate the implied common law term that the goods and services provided would be fit for purpose and of a good and workmanlike quality.

I also conclude that this implied contractual term applies regardless of whether the defendants chose not to incorporate an express written one year warranty into the agreement. [ 29 ] The Becketts maintain that much of the work performed by the defendants was deficient. The defendants have denied this.

In the alternative, the defendants say that if deficiencies exist it is because the Becketts either consented to the manner in which the work was done, or that the framing and flooring were in a condition that made it impossible to ensure that the resulting finished work would present in a good and workmanlike manner.

They also assert that some of the problems which existed arose because of movement of the house which likely occurred because of the nature of the clay base upon which the home is built .... that is to say, the tendency of Regina clay to expand as weather conditions change. [ 30 ] The evidence of deficient work was presented by each of Aline and Craig Beckett, supported by numerous photographs; the evidence of Jay Wilker who did much of the remedial work and Gordon Eckl, a tile expert who was accepted by the Court as an expert and whose expertise went unchallenged by the defendants.

He not only attended the premises, but observed the work that had been done, and who not only testified but filed a report with the Court. [ 31 ] I am satisfied that the defendants understood that the scope of the work was something more than simply laying down standard tile and building a shower. The plans envisaged the application of a tile mosaic in many areas of the home which required the placement of hundreds upon hundreds of tiny back and white tiles. It anticipated the application of expensive marble, and required proper sloping in many of the areas to be worked.

In short, the job anticipated an aesthetic appeal as well as a simple application of product. I say I am satisfied that aesthetic appeal was one of the terms of the contract and that the defendants understood this in part, because the defendants actually took pictures of the work and appended these pictures to their website as an indication of the complicated and aesthetically pleasing work that they could do. [ 32 ] I do not intend to provide a comprehensive breakdown of each part of the work that was done and the deficiencies which were alleged to exist.

A review of the evidence and in particular the photographs and the expert evidence of Gordon Eckl satisfies me that much of the work was deficient. I am persuaded that in numerous areas, the grout that was applied was overfilled in some locations, and under filled in others. I am satisfied that following the application of the grout the tile was not, in many areas, properly washed, leaving an unsightly haze over tile that should have, if washed properly, sparkled. I am satisfied that there were numerous instances of the grout cracking instead of holding true which resulted in movement of the tiles.

I am satisfied that much of the tile was not properly bonded to the concrete sub-floor; that silicone was not properly applied or in some locations applied at all; and that where sloping was required, both in the ensuite shower and at other locations, the sloping was inadequate to the task of allowing water to run to the designated drains.

I am satisfied that the pencil nosing in the ensuite shower was poorly applied and that the installation of tile did not reasonably conjoin at the boundary of the walls or at the door frame. [ 33 ] While some of the deficiencies are best described as unpleasing in an aesthetic manner, this does not, in the instant circumstances, mean that they were nevertheless less than good and workmanlike services. I say this because the parties knew that aesthetics were a significant aspect of the contract.

Some of the other deficiencies were substantive in the sense that a failure to properly apply silicone affected the functioning of the goods provided, or that if the tiles failed to properly adhere to the sub-floor would allow for movement and eventual decay of the finished product.

I am further satisfied that according to Gordon Eckl, the only way of remedying the deficiencies were to remove and re-apply the tile which was not properly bonded to the sub-floor; that the master bedroom shower had too many deficiencies to be corrected without proper removal; that the tiles should be re-applied to ensure that they are extended to the walls or other transition points; and that where drains were located proper sloping would have to be employed. [ 34 ] Mr. McCrimmon’s assertion that the work was not deficient is not nearly as compelling as is Mr.

Eckl’s when combined with the evidence of the Becketts and the photographic evidence before the Court. While he did, at the time of the trial, provide tiling services for a living, he was not qualified as an expert. His opinions must be considered in the context of his limited experience and the fact, of course, that he has a decided interest in the outcome of this trial. Mr. McCrimmon is 36 years old with a grade eleven education. He has worked in various trades over the years, including as a labourer pouring concrete under the supervision of others, and general construction for a few years more.

He says that since 2007 he worked exclusively doing tiling in Alberta and then moved to

Saskatchewan to work in tile again, through Northwest Tile Inc., a company which he set up for this express purpose. He is not a journeyman nor has he taken extensive training in laying tile, at least not that this Court was made aware. While he claims to have extensive experience in tiling, he did not provide the Court with specifics, nor can he point to a full seven years of uninterrupted experience. As a case in point I would note that the Court did not have access to any of the books of the corporation which would show the nature and extent of his experience.

The only corporate documents which might provide some light on this was the tax return that was prepared for the year 2011- 2012. It identifies income for that year in the amount of $32,818.00. Were the Court to extrapolate, it is apparent that the Beckett job took approximately 6 weeks, for a job which generated about $16,000.00. Arguably, in the 2011-2012 years, to earn about $33,000.00, the company would have worked on two such projects or put in about 12 weeks of work. The Court has no information about 2013 or 2014 because the income tax returns were unavailable. When considered in it entirety, Mr.

McCrimmon’s allegation of professional expertise is found wanting. I cannot prefer Mr. McCrimmon’s evidence as to the quality of the work over that of the evidence presented by the plaintiffs and that of Mr. Eckl. [ 35 ] The plaintiffs have made out a prima facie case that deficiencies exist. It is therefore incumbent on the defendants to convince me, that it is more likely than not, that those deficiencies were either agreed to by the Becketts or that the deficiencies arose from factors outside of the control of the defendants. [ 36 ] I am not persuaded by Mr.

McCrimmon’s evidence that the Becketts agreed to have any of the work performed in a deficient manner. As I indicated earlier, where the evidence of the plaintiffs differ from that given by the defendants, I prefer the evidence of the plaintiffs. Aline Beckett struck this Court as a meticulous person. She actively worked with Mr. McCrimmon in deciding on tile and tile patterns and other goods to be used. She was, more so than Craig, actively participating in that portion of the build. She was expecting quality work. I simply cannot believe that she would have, or did, at any time indicate to Mr.

McCrimmon that she would accept deficient work. [ 37 ] I was particularly taken aback by Mr. McCrimmon’s bald assertion without more, that the Becketts had manufactured deficient work and photographed it and then lied to the Court when asserting that it was the deficient work of Mr. McCrimmon. This kind of allegation is serious. There is no evidence which Mr. McCrimmon can point to in order to substantiate it.

Arguably he could have obtained this information had he exercised the opportunity to attend back to the Beckett property to inspect their original concerns, but as I have said, he was callously indifferent to these concerns and took no opportunity to take advantage of their offer, an offer that was made again, following an order at case management directing the Becketts to allow him onto their property to view the work, something which Mr.

McCrimmon chose not to follow through on. [ 38 ] The Court is well aware of the amount of time and effort and money and the degree of frustration that goes into advancing a claim for deficient work in this Court, particularly without the assistance of a lawyer. I find it incredible, and I do not accept, as Mr.

McCrimmon would invite me to conclude that the Becketts would manufacture deficiencies, later complain about them and demand their correction, then hire someone to fix those manufactured deficiencies and then dedicate a prodigious amount of time and energy and money to prosecute an action to recover the cost thereof. [ 39 ] Mr. McCrimmon’s acknowledgement that some of the photographs provided indicate deficient work is accepted to his obvious detriment.

His suggestion that the evidence was manufactured and that the Becketts subsequently lied under oath is without any foundation whatsoever. [ 40 ] I do not accept that some of the work is deficient because of inherent defects in the structure of the home - alleged off plane door accesses or framing around the shower. If Mr. McCrimmon felt that these were problems he should have alerted the Becketts of this and refused to do the work. Mr. Beckett’s cross-examination on this point is well made. If the defendants knew the work would be substandard, why undertake to do the work?

More important, and I think more telling is that the remediation work that was done is perfectly adequate. How is it that Mr. McCrimmon’s work would be deficient because of the irregularities of the building but not that of the contractor who re-did that work? [ 41 ] Nor do I accept that some of the work may have failed because of the shifting of the building due to the expansion of the underlying clay soil. First, there is no evidence whatsoever that the building shifted after the work was done or that the architectural design would not accommodate and safeguard the tile work. In fact, the reverse is true. Mr.

McCrimmon has surmised that this would be a cause, or the cause of some of the deficiencies that existed but he has led no expert evidence in this regard. If, as he asserts this is likely a cause, is it simply good fortune that the remediation work that was done has no equivalent deficiencies? Shouldn’t that work also be subjected to the same shifting?

On the evidence before me I think it more likely than not that the problems with tile not adhering to the gypcrete is more likely attributable to a failure to properly apply or apply sufficient bonding material to the gypcrete in order for the tile to properly adhere. In so concluding, I take note of the fact that Mr. McCrimmon was not thoroughly familiar with the materials to be

used, or the manner in which bonding material was to be applied.

I note that he was obligated to seek advice from a retailer on theappropriate chemical to be used (Arpel -51); that the evidence disclosed a tendency for the tile to come off readily with little effortduring the remediation, when it should have held fast; and that there is a real concern based on the manner in which the evidence waspresented, as to whether or not the product used had been mixed with water (which strengthens its bonding ability) prior to itsapplication. [42] In relation to issue (iii) I am of the view that while the goods used were fit for purpose, the manner in which the work wasdone did not meet the test of good and workmanlike quality. [43] Following the Beckett’s attempts to have the defendants return to the property and correct the deficiencies, they proceeded toremediate the deficiencies.

This involved a thorough inspection of the tiled areas by a professional; removal of tile and grout; thereinstallation of tile and grout; the removal and re-installation of fixtures; the removal of and replacement of baseboards; removal andreinstallation of cabinets; re-alignment of the tub; removal and re-installation of the granite in the bathroom; the demolition removal andre-installation of the ensuite shower; drywall repair; and painting.

The costs incurred are identified on exhibit P-23 and they reflect thatwhile much of the work was contracted out, Craig and Aline with the assistance of a friend, Pat Klein did some of the work that did notrequire an expert. In total, their costs equated to the sum of $28,916.76. The work done by Craig and Aline and Klein costed out at therate of $25.00 per hour for a total of $1,801.50. [44] The balance of the work was performed by contractors and those costs included the additional materials necessary to completethe job after the used materials which were unusable were purchased new.

After set off of the amounts that they retained as a holdback,in the sum of $991.70, they say that they are owed $27,925.06.

This is significantly more than the amount that the defendants were goingto charge for the same work which equated to $16,048.25, but, they argue, the defendants had only to do the work while the cost ofrepair included the cost of demolition, removal, re-purchase and re-installation, and, they assert, the work is both good and workmanlike.The difference between the original invoiced amount and the cost to remediate the work equates to the sum of $11,876.81, which at firstglance seems high until, as the Becketts point out, it is not that they paid for some of the original tiles themselves, and the costs ofdemolition and removal and the re-installation of cabinets and plumbing together with the original inspection of the tiles, equated toapproximately $9,000.00 and therefore the reworking of the work previously performed is close to the original invoice price charged bythe defendants. [45] The defendants had the opportunity of course, but failed to lead any evidence by anyone other than Mr.

McCrimmon as to whatmight constitute reasonable costs for demolition and alternate methods or costs of repair. They have suggested in their brief of law that areasonable person, exercising sensible mitigation efforts would incur costs totalling $17,569.95. They do not provide any evidence as tothe reasonableness of this figure, they simply assert that it would be reasonable. They do not place into consideration the cost of the tileinspection identified at $1,680.00. If they had, this number would increase to $19,249.50.

This sum, about seventy percent of the amountactually sought, also fails to recognize the costs which would have to be incurred for the removal and reinstallation of cabinets, andfixtures for which the Becketts incurred the cost of approximately $1,600.00. Were these included, the parties respective comparison ofthe damages sought are within twenty-five percent of each other. [46] It is clear that the Becketts suffered damages as a result of breach of contract.

It is a rather trite statement of law to say that inconsequence they are entitled to damages in an amount sufficient to place them in a position that they would have been in had there beenproper performance of the contract. The legal corollary to this principle is that the Becketts had an obligation to mitigate their damagesrather than let them accumulate.

They did so and I am satisfied that while the mitigation costs exceed the amount suggested by thedefendants, and exceed the original contract price, the costs that they incurred are not so wholly disproportionate that they should bedenied the amount that they are seeking. [47] The law does not impose an exacting standard on innocent plaintiffs who, having suffered loss arising from a breach of contract,proceed to mitigate a loss. Mitigation efforts must, however, be reasonable.

That is to say, a plaintiff is not free to incur and then saddlethe party in breach with a cost of repair which is so inordinately high as to be unreasonable. But reasonableness is a question of fact, andnot law. [See: Yakimishyn v Manitoba Hydro (1985), (MB CA), 38 Man. R. (2d) 54 (C.A.)].

In the instantcircumstances the plaintiffs have attempted, in what I consider to be a reasonable manner, to mitigate the loss that they sustained as aresult of the deficient service provided, and while it is higher by about twenty-five percent than that estimated by the defendants’opinion, the defendants have led no independent and compelling evidence to support their estimate. [48] In relation to issue (iv) I assess damages in favour of the plaintiffs in the sum of $27,925.06.

[ 49 ] The Becketts maintain that it is uncertain who they were in fact contracting with. They maintain that if it is found that the original contract was with the company, this Court should nevertheless lift the corporate veil and conclude that Mr. Beckett was the party doing the work and deriving the entirety of the benefit of the compensation to be paid. In support of their position they suggest that Mr.

McCrimmon was indiscriminate in requesting periodic payments to either himself personally or the company; that company funds were regularly used for personal reasons; and that its lax bookkeeping and failure to keep and maintain records evidence that the company was simply a sham entity, acting as Mr. McCrimmon’s agent and set up for the express purpose of protecting Mr. McCrimmon against personal liability for the work that he does.

Most importantly, they say that the company had been struck from the corporate register fifteen days after the work had been started, and two days after they received an estimate and breakdown of the work to be done. Much of the work that was provided was provided after the corporation was struck. They maintain that a corporation which is struck from the corporate registry is not, in law, entitled to carry on business. They argue that Mr.

McCrimmon, in his personal capacity has effectively ‘stepped into the shoes’ of the corporation and, having gained the benefits of the payments under the contract, should be held accountable for the consequences of any finding that the work was deficient. [ 50 ] The defendants deny that Mr. McCrimmon should be held personally responsible for the deficient work. They allege that the company: was validly constituted, had its own bank account, and insurance policy to cover any potential claims that might be made against it, made WCB contributions in favour of Mr.

McCrimmon, and had credit accounts with various suppliers. They say that while it may have been an innocent oversight in not ensuring that the company remained on the corporate register, The Business Corporations Act in Saskatchewan, unlike other jurisdictions, has created a clear distinction between being struck from the register and ceasing to exist. They assert that in law: the company continues to exist even if it is struck from the register; assert that

section 266 of the Act authorizes a company to continue to carry on business notwithstanding that it has been struck from the register; and invites the Court to conclude that there is no express provision in the Act that stipulates that a company which is struck is prohibited from carrying on business.

They insist that the combined effect of sections 266(2), 278 and 291 of the Act envisage a scenario where a struck company can continue to carry on business in Saskatchewan subject to certain impediments to its full power to function. [ 51 ] On the evidence I am satisfied that the company was set up in November of 2011 for the purposes of carrying on the business of tile work and associated construction services. Mr. McCrimmon is the president and a director and the holder of fifty of the one hundred Class A shares issued by the company.

His wife, Jolene is the secretary-treasurer and a director and the holder of the remaining fifty Class A shares issued. Its registered office is located at the McCrimmon’s home. The company has almost nothing in the way of assets. The vehicle and trailer and most of its equipment is leased to it directly from Mr. McCrimmon who is the actual owner. Mr.

McCrimmon is the only employee of the company registered with WCB, but only because, in my view he has attempted to identify Connor Oranchuk as a subcontractor rather than a part-time employee. [ 52 ] It is clear to me that the company was struck from the corporate registry as at April 30, 2014 and was therefore registered for a period of slightly in excess of 29 months. No attempt whatsoever has been made by the company to bring itself back onto the corporate register. The company filed only one tax return. The tax returns for 2013 and 2014 have never been filed.

The company does not know if it ever paid the taxes that were assessed against it on its 2012 tax return. The company had paid monthly insurance premiums, but failed to remit any payments after February of 2014. The company does hold its own bank account, but the evidence reflects that monies are drawn from that account by Mr. McCrimmon as and when he requires. I am satisfied that on occasion monies are taken from that account for personal reasons, and while Mr. McCrimmon takes issue with this, I am hard pressed to conclude that grocery purchases were made expressly to feed himself and his worker Mr.

Oranchuk while they were on the job, or that life insurance payments were company-related or SaskPower and SaskTel payments made were exclusive costs incurred by the company. [ 53 ] Jolene McCrimmon gave evidence at trial. It is obvious to the Court that her position as secretary-treasurer of the company is little more than a title. She concedes that she has no real business, especially corporate, experience. She collates and then forwards the records of the company to a relative who is a bookkeeper, who, in turn, is presumably expected to file tax returns on the company’s behalf.

She says that the failure to locate much of the company’s records is because they were stored in their basement which sustained flooding resulting in the loss or destruction of many of them. She says that attempts to contact their bookkeeper have gone unanswered because the bookkeeper refuses to respond to their inquiries.

She says that the failure to remit insurance premiums and the failure to keep the company registered arose because of the loss of some of their corporate records as a result of the flood and in part because of a death of a close relative in March of 2014, which directed her mind away the operations of the company. [ 54 ] When I review the evidence of Jolene and Patrick McCrimmon, I am satisfied that neither of them are particularly familiar with the obligations of officers and directors of a company.

I am satisfied that this closely held company did in fact intermingle assets and that the primary purpose of creating the company was to limit the potential liability of Mr. McCrimmon in his personal capacity, and to create, for the world at large, an impression that the business had a professional air to it ... that people contracting with it would see an entity that was clothed with respectability. These things, in and of themselves are not unusual or wrong.

As noted in his text, Canadian Business Corporations Law , 2d ed (Lexis Nexis 2007), Kevin McGuinness, at p 48 and 49 notes that: ... the courts are generally unwilling to pierce the corporate veil and will normally do so only where required to do so by statute or where extraordinary circumstances exist. .... Taking advantage of the limited liability of a corporation per se is not improper. If a person

chooses to deal with a corporation, then he or she is limited in recourse to whatever assets the corporation may itself own. ... [55] In the instant circumstances, the defendants take the position that Mr. McCrimmon should not personally be held liable for thedeficiencies because it was the corporation and not Mr. McCrimmon who undertook to do the work, and they assert that,notwithstanding that the corporation was struck from the register, there is nothing in law which prevents the corporation from continuingto carry on business once it has been struck.

The defendants assert that ‘nowhere in the SBCA do we read that an unregisteredcorporation is prohibited from carrying on business in Saskatchewan. I disagree.

Section 262(1) of the Act clearly and unambiguouslysays otherwise: 262(1) Every corporation carrying on business in Saskatchewan shall be registered under this part and no corporation shall carry onbusiness in Saskatchewan unless it is so registered. [emphasis added] The defendants also assert that section 266(2) of the Act, when combined with sections 278 and 291 should be read as the legislatorsenvisioning a scenario where a struck corporation can carry on business. I disagree.

Section 266(2) simply indicates that registration orrenewal of a corporation under the Act authorises all previous acts of the corporation to the same extent as if the corporation had beenregistered at the time of those acts.

In the instant circumstances, the company did not, at any time up to trial renew its registration.Section 278 merely stipulates that no act of a corporation is invalid by reason only that the corporation was not registered under the Act.Put another way, it is making it clear that a corporation cannot, by failing to renew its registration, avoid accountability for those actions.Section 291 merely stipulates that if the name of a corporation is struck off the register, the liability of the corporation and every directorand shareholder shall continue and may be enforced as if the name of the corporation had not been struck.

My review of the law as itrelates to the

interpretation of these sections makes it clear the intent of the legislators was to ensure that a corporation could not takeadvantage of another party by simply failing to renew. Its liabilities continue, and, if it wishes the protections of the Act, it can do so byrenewal, thereby retrospectively adopting those actions it took when it was unregistered. [See generally, R v Chilton InsuranceConsulting Inc., (SKQB). [56] The Becketts are not suggesting that the company should not be held liable for the deficiencies. They argue that it should be, butalso that Mr.

McCrimmon, in his personal capacity, should be jointly and severally liable for some or all of the loss. I find merit in thatargument. [57] Under section 262(1) of the Act the company was, by law, precluded from carrying on business. Under section 299(1)(

a) of theAct persons are precluded from carrying on business under a name that includes, inter alia, the word ‘Ltd’ unless, pursuant to subsection10(2) the Director designated under the Act allows them to do so. There is no evidence before this Court that the Director has sodesignated. I would also note that section 299(4) of the Act indicates that any one doing so is guilty of an offence and liable on

summaryconviction to a fine and or imprisonment. [58] The defendants also urge this Court to pay no heed to the failure to keep the company registered because they simply overlookedthis obligation due to a flood in their home which damaged or destroyed some of their paper work and the death of a relative at or nearthe time it should have been renewed. [59] The Becketts are asking this Court to ‘lift’ or ‘pierce‘ the corporate veil and if not ignore the separate personality and liability ofthe company in this situation, hold Mr.

McCrimmon personally responsible for the deficient services provided to them on a joint andseveral basis. As Kevin McGuinness has noted, in his text supra, at page 55: As we have seen, if the corporation is not carrying on business, then there can be no liability of the corporation from which theshareholder can be insulated. This, however, is a question entirely separate from that of whether or not it is a sham.

The shareholder mayhave entered into liabilities of his or her own, but in such a case the shareholder’s liability is unlimited not because the corporation itselfis not effective, but rather because the corporation is not involved as a party to the transaction concerned. [60] In the instant circumstances I am satisfied that the Becketts either knew or ought to have known that they were entering into a contract with the company when the work first commenced in early April of 2014. On April 30th, 2014 the company was struck from the

register and nevertheless, Mr. McCrimmon continued to do work on the project and seek and obtain payment for that work. At no timedid he advise the Becketts that the company was struck from the register, and in fact, provided invoices and adjusted quotations for the work under the company’s letterhead. After April 30th, the company was not, in law, entitled to carry on business and it was technicallyan offence under the Act to continue to use that letterhead.

By continuing to do the work and by failing to advise the Becketts that thecompany was not, in law, entitled to carry on business, he derived a very real benefit, He obtained payment for those services and on theevidence I am satisfied that he would have derived that benefit personally. His suggestion that he should not be held accountable for hisdeficient work, but that the company should be, because he overlooked registration is not, in my opinion a compelling argument.

While itmay be that the failure to ensure that the company remained on the corporate registry was an oversight, that oversight is a negligentomission. It is part and parcel of Mr.

McCrimmon’s apparent disregard of his duties as an officer and director of the corporation, dutieswhich would include paying income tax (which apparently has not yet been done for the 2011-2012 year); and include a failure to fileincome taxes for each of the succeeding two years and a failure to maintain insurance payments, while the work was being undertaken.In my view, the decision to carry on business after the company had been struck and the decision to use the company logo and letterheadafter it was struck was wrongful. [61] I have read and I appreciate the case law in respect of a lifting of a corporate veil.

I am not prepared to go so far as to concludethat Mr. McCrimmon was using the company as a sham or a facade, nor am I prepared to conclude the company was being used toperpetuate an intentional fraud. However, in my view it is not open to Mr McCrimmon to assert the protection of a corporate personalitywhen in law that corporate personality had no right to carry on the business that was being done. In his text, supra, at page 55, KevinMcGuinness writes: As we have seen, if the corporation is not carrying on business, then there can be no liability of the corporation from which theshareholder can be insulated.

This, however, is a question entirely separate from that of whether or not it is a sham. The shareholder mayhave entered into liabilities of his or her own, but in such a case, the shareholder’s liability is unlimited not because the corporation itselfis not effective, but rather because the corporation is not involved as a party to the transaction concerned. In the instant circumstances Mr. McCrimmon is more than simply an innocent employee doing work for a company. He is the directingmind of the company, tasked with obtaining and personally fulfilling the contracts that the company enters into.

He either knew or oughtto have known of his obligation to keep the company registered in order to maintain the integrity of the corporate veil and the protectionit would otherwise have provided. In similar situations, the Courts have found people in Mr.

McCrimmon’s position personallyresponsible for debts ostensibly incurred by a company that had no legal authority to carry on business [See: Whittier Wood Products vVernon-Jarvis 2003 BCPC, or on the basis that, as noted in Kinex Industries Ltd. v Mann, [1987] BCJ 810, the individualshould be seen to be acting in his capacity as a sole proprietor when the company had no legal right to carry on business. [62] In answer to issue (

v) I conclude that in law, Mr. McCrimmon should be held personally liable for those deficiencies which arose by virtue of his defective work performed after April 30th of 2014. I conclude that the company is liable for those deficiencies which arose by virtue of the defective work that was performed prior to April 30th, 2014. In total, the Court awards the sum of $27,925.06 with prejudgment interest thereon to accrue from June 1st, 2014 in the further amount of $467.96 for a total of $28,393.02. [63] However, this does not end the matter.

It is clear to me that the plaintiffs, who were self-represented, are entitled to somethingmore than nominal damages but, there is an absence of evidence as to when the defective work occurred, and as such the Court is unableto make an accounting of how much each of the defendants must pay.

On my review of Syniuk v Kornberger, 2013 404 SKQB,I am satisfied that in such a situation, justice demands that the Court adjourn, to allow the parties to each lead evidence on this point,specifically, the amount of monies that were incurred to correct the deficiencies for the work performed both prior to and then after April 30th, 2014. [64] I direct the parties to present their respective positions to each other in writing on or before March 30th, 2017 and to provide a copy of those positions to the Court by the same date.

If the parties are unable to agree, on or before April 7th they are to so advise theCourt and an application will be heard in order to set a date for hearing further evidence on this issue. [65] The Becketts have been successful in this action and they are entitled to their costs. I have reviewed the costs estimates providedby the Becketts and they are entirely reasonable. I tentatively award them costs in the sum of $559.75. I say tentative because this sumwill be apportioned to each defendant to the extent of their respective liabilities and it may increase if this matter must return to trial.

P. Demong, J