5 Point Contracting Ltd. - v. -, 2015 SKPC 174

IN THE PROVINCIAL COURT OF SASKATCHEWAN CIVIL DIVISION Citation: 2015 SKPC 174 Date: December 8, 2015 File: SC#48 of 2014 Location: Melfort _____________________________________________________________________________ Between: 5 Point Contracting Ltd. - and - J & S Hospitality Ltd. Mr. Ben Rakochy For the Plaintiff Mr. Andre Memauri For the Defendant _____________________________________________________________________________ JUDGMENT L.

MATSALLA , J _____________________________________________________________________________ [ 1 ] Since February of 2009, the plaintiff company has conducted business as a general contractor in Melfort and the Melfort district. Employees of the firm do carpentry and related construction work. Mr. Steven Schmale is the principle shareholder. The defendant operates a small hotel in Hudson Bay known as Desrochers Hotel. Mr. Harrison Hong and Ms. Claire Hong are equal shareholders in the company. Both individuals testified in Court and, while Mr.

Hong’s facility with the English language was limited, I am satisfied that he understood the proceedings and that his wife not only played a prominent role in the matter before me but also

assisted him in the court proceedings. [ 2 ] It is common ground that the defendant retained the plaintiff to conduct renovations of the hotel in 2014. However, the plaintiff claims the sum of $20,000.00 as the amount left owing due to it as a result of the renovations. The defendant takes the position that the plaintiff had agreed to complete the work for an agreed sum and neglected to complete its obligations under the contract. At the end of the day, the defendant says there is no money owing due to the plaintiff.

The defendant initially gave notice to the plaintiff that it intended to raise a counterclaim in the proceedings but at the conclusion of argument, withdrew its counterclaim. The issue in this case is essentially to determine the nature of the agreement between the parties and consequences, if any, of any breach. The Position of the Plaintiff [ 3 ] Mr. Schmale was approached to provide an estimate for major renovations to the hotel and, on April 11, met the Hongs at the hotel. As discussions continued, it was clear that significant improvements were needed to the building since is was over 100 years old.

No formal plans or specifications were provided to Mr. Schmale. According to him, he advised the Hongs that he was a general contractor, that it was not possible to provide a specific price for the work and that the plaintiff’s time for work done would be billed at an hourly rate. He agreed to prepare a rough estimate that was not to be taken as a final price. The next day he prepared a quote for labour and materials that included demolition, framing, new windows, internal and external doors, painting, carpentry, metal work, altering the pitch of part of the roof as well as putting shingles on the roof.

The total quote was in the sum of $78,036.00. In a covering e-mail, dated April 12, he said that the plumbing work and fixtures that were not included in the quote would require another estimate from a separate trade. He went on to say: Also please note that while I have tried to give reasonable consideration to time required for the renovations, given the lack of specific details required the time and materials are ESTIMATES ONLY. Work will be billed by the hour. $55/hr per foreman and $45/hr for others. Materials will be charged as used.

Time sheets can be provided along with materials invoices. (Emphasis in the original) (Exhibit P-1, Tab 2) [ 4 ] On April 16, Ms. Hong replied to the e-mail (Tab 3) advising that the quote was helpful and that they had planned to spend a maximum of $100,000.00 including improvements to the boiler system. She said that the estimate seemed reasonable but that they might have to only complete the most important work at an estimated cost of “around 70,000.00 including plumbing”.

She then went on to suggest that perhaps the windows and painting should not be done but she went on to say that an additional item - the eavestroughs, should be replaced. The e-mail went on to say that some rooms may have to be combined and that bathroom upgrades would have to be done to as many as three bathrooms. She referred to the payment of the deposit before work was to start. Mr. Schmale (Tab 5) said he would have to get a cost from someone who installed eavestroughs. In the end he said that in light of the changes “we should fit in your budget”.

In court he said that he had advised them that the project would take longer to complete and would be more costly. [ 5 ] Significant work started on April 22 and initial demolition work, the removal of some walls, and some drywall work was done. Mr. Hong originally asked that three windows be replaced but he then added two more windows. A $10,000.00 deposit was paid.

An invoice dated May 1 in the amount of $8,134.88 was provided to the defendants. [ 6 ] An invoice dated May 16 set out the labour charges to May 9 and the cost of some materials for a total of $24,133.68 less a payment of $11,865.12 for a balance due of $12,268.56. A payment in the amount of $15,000.00 was made. An invoice dated June 2 in the amount of $26,611.78 for labour to May 10 and for materials to May 14 was provided to the defendant. After credit for a payment in the amount of $2,731.44, the amount of $23,880.34 was owing due. [ 7 ] The plaintiff last attended at the site on May 28.

Two windows and locks were yet to be installed when available. Mr. Hong had told Mr. Schmale that he would not pay the amount owing due and so the plaintiff did not return to the job site. [ 8 ] In an e-mail to the plaintiff sent in the late evening of May 28, Ms. Hong enumerated the work that was to be done. Some of the items, namely replacing two doors and a window, the eavestroughs and a new roof on part of the building were new items. Siding on part of the building could not be done until the windows were installed.

She said her husband would leave notes in each room describing the extra work that was to be done (Tab 10).

[ 9 ] On June 12, Mr. Schmale recalled meeting with Mr. Hong at a coffee shop at which time Mr. Hong requested the plaintiff to return to the job site and complete the work. A further payment of $10,000.00 was made. Mr. Schmale intended to return but Mr. Hong said he would not make any further payments. Later that day Mr. Schmale e-mailed Ms. Hong in which he proposed resolving the issues between them, however the plaintiff did not return to the site. On June 21 the plaintiff obtained the windows and locks that had been ordered and they remain in the plaintiff’s possession.

The company is prepared to provide them to the defendants however it billed the defendant on June 30 for materials in the amount of $7,018.56 and it claims that amount from the defendant because it was required to pay the sum at the time the material was ordered for the defendant. The hours worked by the foreman and other employees were billed to the defendant and while Mr. Schmale had been on site he did not bill for all the time that he was on the job. [ 10 ] He said that his firm did not install the carpet that the defendant argued was poorly installed but the defendant did not express any concern about it.

In any event, he estimated that it would cost $220.00 (2 hours at $55.00/hour) to correct any deficiency. [ 11 ] The foreman who worked on the job testified that the work was done and the material supplied. He said that he frequently talked to Mr. Hong about the work who referred to those items that he wanted to have completed. He seemed pleased with the work but he was concerned about cost. For example, a sink was removed leaving a hole in the wall where the drain had been but Mr. Hong was content not to cover the hole. In another instance, visible conduit was surface run to an overhead light. Mr.

Hong told the foreman not to change it. The Position of the Defendant [ 12 ] Ms. Hong told the court that the hotel had 26 rooms and that it required a total renovation. She said that Mr. Schmale agreed to provide a free estimate for the work that was to be done and he did not indicate that he would be charging a fee for the estimate. She said that the initial quote was reasonable and that she had expected that all of the work would be done at that cost. Schmale was not in attendance on all of the days that the employees were on site. She sent Mr.

Schmale an e-mail (Tab 9) in which she expressed satisfaction with the invoice dated May 16. However, she requested time sheets and further information about the status of the job. No time sheets were provided by the plaintiff but work continued. She admitted in an e-mail sent on May 28 (Tab 10) that the Hongs had requested some additional work however she considered most of the work to be minor in nature and she acknowledged that she knew that the plaintiff would have the eavestroughs and the roof work done by another sub-trade. The employees left the work site about mid-day on May 28. On May 30 Mr.

Schmale responded to each of the requests in Ms. Hong’s e-mail (Tab 11) and implied that the plaintiff would return to work. Ms. Hong commented in an e-mail sent on June 6 (Tab 14), that she wanted an assurance that the rest of the work would be completed for a total of $55,000.00. It should be noted that the plaintiffs had, prior to that date, provided the defendant with invoices totalling $58,880.34 and on June 4 Mr. Schmale had advised that further materials were outstanding. Further discussions between the parties continued by e-mail but the plaintiff did not do any further work. [ 13 ] Ms.

Hong testified that after the plaintiff left the work site the defendant retained other trades to replace the shingles on most of the roof, install metal siding, install windows and doors, and remove and replace drywall. The eavestroughs and shingles on part of the roof was not completed. She testified that a carpet seam in room 15 was coming apart and she complained that other work was not completed, including covering a hole that remained after a plumbing drain was removed and replacing surface run wiring to an overhead light. [ 14 ] Mr. Hong gave evidence.

He said that he was prepared to pay $70,000.00 for the renovations, but after receiving the second invoice (May 16), he considered the bill to be “nonsense” in that it was too high and he asked his wife to request time sheets from the plaintiff. He did not see the time sheets until July 17 when he met Mr. Schmale at a coffee shop in Melfort. At that time he paid Mr. Schmale the sum of $10,000.00 believing that the plaintiff would complete the work at a price satisfactory to the defendant but Mr.

Schmale had requested payment in full. [ 15 ] Evidence was provided by other tradespeople from the area who attended at the hotel after the plaintiff had left the site. Mr. Ferguson, who completed the shingles, said that some work had been started by the plaintiff, but not finished. Other work was not finished properly i.e. the drain pipe hole and electrical box were not covered. He said that the carpet seam was poorly done and his estimate set out the cost to remove and install new carpet to be about $600.00.

He could not say whether the labour that the plaintiff said had been expended on the project was or was not justified. Mr. Fecyk noted the problem with the carpet seam. He thought the work was substandard although his major criticism was the carpet installation. He thought that it seemed to him that the amount of time that it had taken to do the work was excessive although he said that there can be unforseen problems that can arise in this kind of work once renovation work commences.

Arguments [ 16 ] The plaintiff takes the position that the agreement between the parties was for the completion of the renovations at a cost that depended upon the hours worked. The parties did not have an agreement to do the work for a set price since additional work was requested from time to time while the project was ongoing. The plaintiff had advised the defendant that it would require certain work (the plumbing, the eavestroughs, and the roofing) to be completed by a separate trade at a price to be determined by that trade. Mr.

Hong had asked that certain work (the hole in the wall from the removal of the sink and the surface run wiring) be left as is. It was argued that a significant amount of money remains owing and due to the plaintiff. [ 17 ] The defendant takes the position that there was an agreement to do the work for a set price although what that price was is not clear. In any event, the cost was not to exceed $70,000.00. The plaintiff breached the contract by neglecting to complete the work and some of the work was not done in a workmanlike manner. There is no money owing due to the plaintiff.

Analysis [ 18 ] Undoubtedly, the parties had an agreement to complete renovation work at the Desrochers Hotel. However, a written agreement was not prepared. In deciding this case I have considered the case of Sprung v Ceh [1] and AYE Services Ltd. v Leduchowski [2] . The circumstances in both cases are similar to the circumstances in this case. As Agnew J succinctly pointed out in Sprung at para 1 : . The task at hand is to determine what exactly the contract was between the parties, to what extent it was carried out, to what extent it was paid, and how the latter two factors balance out.

Carter J in Northern Collections Agency Ltd v Homelife All Sask Realty Ltd [3] referred to Fridman, The Law of Contract , (2d ed) at p 16 where it was said: Constantly reiterated in the judgments is the idea that the test of agreement for legal purposes is whether parties have indicated to the outside world, in the form of the objective reasonable bystander, their intention to contract and the terms of such contract.

It is not what an individual believed or understood was the meaning of what the other party said or did that is the criteria of agreement; is whether a reasonable man in the situation of that party would have believed and understood that the other party was consenting to the identical terms. It can be said that there is a meeting of the minds where it is clear to an objective bystander that the creation of a contract was intended and that the terms thereof can be ascertained. [4] [ 19 ] In this case, the e-mails that passed between the parties do not in themselves establish contract or the terms of that contract.

Rather, all of the surrounding circumstances ought to be considered. [ 20 ] The defendants sought an estimate to do significant renovation work. The plaintiff’s e-mail and estimate of April 11 was provided to the defendant as an estimate only as to the apparent cost of the work that the defendant wanted to do to the hotel. The communication set out the work that the plaintiff believed was to be done, the cost of doing that work on an hourly basis at a specific rate, that the cost of material was in addition to the cost of labour and that the method of payment was to be on a biweekly basis.

A specific deposit was proposed. In response, Ms. Hong, on behalf of the defendant, stated that the estimate appeared to be reasonable but that the amount of work might be reduced. The defendant was prepared to pay a deposit when work commenced. The plaintiff responded saying, in part, that with some changes the work would likely fit within the defendant’s budget. The proposed deposit was paid and well into the project additional invoices were received by the defendant and significant amounts were paid. Mr. Hong was present and apparently actively involved at the work site. Mr.

Hong told the court that after he received the May 16 invoice, he

considered the amount billed as “nonsense” yet Ms. Hong advised the plaintiff that Mr. Hong wanted more work to be done. The additional work was not trivial or insignificant and there was no reference as to how that work was to relate to any specific costs anticipated by the defendant. I can only conclude that a reasonable objective person observing the communication between the parties and their conduct throughout would conclude that the defendant had agreed to pay for labour at the rate set out by the plaintiff and for materials as billed to do whatever renovation work as requested.

That being said, the defendant owes the plaintiff for the cost of unpaid labour and materials. [ 21 ] It is implied term of the agreement that work under a contract must be “done in a good and workman like manner”. [5] It is not good work if a carpet seam is seen to unravel in a short period of time. As far as I can determine the plaintiff was responsible for the proper installation of the carpet. I think it unlikely that the carpet can be properly repaired for $220.00 or that the solution to the problem is to replace all of the carpet at a cost of $600.00.

I conclude that the cost of repair would likely be about $400.00. I am satisfied that the hole in the drywall and the surface run wire was left “as is” by the plaintiff at the request of Mr. Hong. [ 22 ] The two additional windows that were ordered by Mr.

Hong along with related hardware are the property of the defendant and the plaintiff will be required, at its cost to deliver the items to the defendant in Hudson Bay as soon as possible. [ 23 ] I cannot find an agreement between the parties that the defendant was to pay the plaintiff for the time spent by the employees of the plaintiff to attend in Hudson Bay to provide the defendant with an estimate or for the time spent on April 11 and 21 (see Tab 17). The evidence indicates that work on the project started on April 22.

Therefore, the defendant is not responsible to the plaintiff for the payment of 12 hours at $65/hour or $660.00. [ 24 ] The amount owing by the defendant to the plaintiff exceeds the monetary jurisdiction of this court. Therefore, the plaintiff shall be entitled to judgment in the amount of $20,000.00 less the sum of $400.00 (for carpet repair) and the sum of $660.00, for additional labour costs, for a total of $18,940.00. The plaintiff shall be entitled to judgment calculated under the Pre-judgment Interest Act from June 30, 2014 to the date of judgment which amounts to $200.35.

The plaintiff shall be entitled to costs in the amount of $100.00 for a total judgment in the amount of $19,240.35. ______________________________ L. Matsalla, J

[1] 2011 SKPC 135 [2] 2015 SKPC 30 , 2015 SKPC 030 [3] 2003 SKPC 35 [4] Picavet v Cloute 2012 [OJ No 1702] Healey J at para 10. [5] Maissoneuve v Burley 2001 SKQB 407, Dawson J, para 26.