2017 NLCA 47, 2017 NLCA 47

Coast to Coast Contractors Inc. (appellant) v. MillbrookDevelopment Company Inc. (respondent) (16/81) Indexed As: Coast to Coast Contractors Inc. v. Millbrook Development Company Inc. 2017 NLCA 47 2 C.A.N.L.R. 131 Court of Appeal of Newfoundland and Labrador White, Harrington and Hoegg JJ.A. July 26, 2017

Summary: The respondent, Millbrook Development Company Inc. (“MDC”) and the appellant, Coast to Coast Contractors Inc. (“CTC”) enteredinto a verbal agreement whereby they agreed that CTC would construct residences on building lots on an 18 acre parcel of land ownedby MDC in the town of Kippens, NL. A dispute arose as to the terms of the agreement. MDC claimed damages against CTC arising frombreach of contract, or unjust enrichment.

CTC counterclaimed against MDC for damages for breach of contract, or unjust enrichment.The trial judge evaluated the credibility of the witnesses testifying for the parties and found for MDC. The trial judge also ordered partyand party costs to MDC. CTC appealed arguing the trial judge made palpable and overriding errors in finding that the total cost of labourin respect of each building lot was $28,000 and erred in ordering party and party costs. Held: Appeal dismissed. White J.A. (Harrington and Hoegg JJ.A. concurring): The issue of labour costs is a question of fact.

Accordingly, CTC must demonstratethat the trial judge made a palpable and overriding error in that regard. An award of costs is discretionary and appellate review relates towhether or not the trial judge exercised that discretion judicially. The trial judge summarized the evidence provided by both parties in relation to labour costs and found that the evidence was conflicting.The trial judge determined that because of the conflict of evidence and the lack of any substantiating documentation, the issue of labourcosts had to be decided on the basis of credibility.

The trial judge addressed the issue of credibility at length and provided extensivereasons for preferring the evidence of MDC’s witness. The trial judge followed a proper approach in resolving the conflicts in theevidence. It is apparent from her extensive reasons that she engaged in an in-depth consideration of the relevant factors and did not err inrejecting the testimony of CTC’s witness in relation to labour costs. The trial judge also did not err in awarding party and party costs to MDC. Rule 55.02 of the Rules of Supreme Court, 1986 provides thatcosts are in the discretion of the Court.

Rule 55.03 provides that unless the Court otherwise orders, the costs of a proceeding or of anyissue of fact or law therein shall follow the event. Although, CTC submits that the trial judge should have apportioned costs based on thelevel of success and that MDC’s failure to admit certain facts lengthened the trial, case law invariably confirms that costs awards arediscretionary and should only be interfered with if the trial judge made an error in principle or was clearly wrong. Apportioning costsaccording to success is not a requirement.

The trial judge appropriately exercised her discretion to award costs after consideration of therelevant factors. No error in principle was demonstrated, nor was the costs award plainly wrong. The appeal was therefore dismissed. Cases cited: Ring v. Canada (Attorney General), 2010 NLCA 20, 297 Nfld. & P.E.I.R. 86 Faryna v. Chorny (1951), (BC CA), [1952] 2 D.L.R. 354 (B.C.C.A.) Finn v. St. John’s (1999), (NL SC), 186 Nfld. & P.E.I.R. 197 (Nfld. T.D.) Hamilton v. Open Window Bakery Ltd., 2004 SCC 9, [2004] 1 S.C.R. 303 House of Haynes (Restaurant) Ltd. v. Snook (1995), (NL CA), 134 Nfld. & P.E.I.R. 23 (Nfld. C.A.)

Hiscott v. Hall, 2015 NLCA 1, 361 Nfld. & P.E.I.R. 141 Counsel: Adam J. Crocker, for the appellant; David L. Hearn and Bryinne McCoy, for the respondent. This appeal was heard on May 18, 2017 before White, Harrington and Hoegg JJ.A.

The following judgment was delivered on July 26, 2017 by White J.A. for the Court. ______________________________________________________________ White J.A.: [1] Coast to Coast Contractors Inc. (“CTC”) appeals a decision of the Trial Division awarding damages for breach of contract andawarding party and party costs to Millbrook Development Company Inc. (“MDC”). [2] In the summer of 2009, MDC and CTC entered into a verbal agreement whereby MDC and CTC agreed that CTC wouldconstruct residences on building lots on an 18 acre parcel of land owned by MDC in the town of Kippens, NL.

A dispute arose as to theterms of the agreement. [3] MDC claimed over $230,000 in damages against CTC arising from breach of contract, or unjust enrichment, respecting thealleged failure of CTC to pay to MDC amounts owing under the agreement. CTC counterclaimed against MDC for damages for breachof contract, or unjust enrichment. [4] The trial judge found that CTC “fundamentally breached the agreement and ultimately wrongfully repudiated the agreement”(2016 NLTD(G) 86, at para. 101). She dismissed CTC’s counterclaims finding that MDC did not breach or wrongfully repudiate the agreement.

The trial judgefound damages for the loss of profit payable to MDC to be $15,241.21 and other damages totaling $11,818.02. MDC was accordinglyawarded a total of $27,059.23 in damages as well as party and party costs. Issues [5] CTC now appeals the decision of the trial judge on the grounds that the trial judge: (1) made palpable and overriding errors in finding that the total costs of labour in respect of each building lot subject to the relevantagreement was $28,000, arguing that such a finding was not reasonably supportable on the evidence; and (2) erred in law by awarding MDC party and party costs.

Standard of Review [6] The standard of review to be applied by an appellate Court was summarized by Cameron J.A. in Ring v. Canada (AttorneyGeneral), 2010 NLCA 20, 297 Nfld. & P.E.I.R. 86, at para. 6: The standard of review applied by an appellate court depends upon the nature of the matter being reviewed. A pure question of law isreviewed on a standard of correctness and an appellate court is free to replace the opinion of the trial judge with its own. Findings offact, on the other hand, cannot be reversed unless the trial judge has made a palpable and overriding error.

A determination of whether alegal standard was met involves the application of a legal standard to a set of facts which is a question of mixed fact and law. A questionof mixed fact and law is subject to a standard of palpable and overriding error unless it is clear that the trial judge made some extricableerror in principle with respect to the characterization of the standard or its application, in which case the error may amount to an error inlaw and the applicable standard is correctness. These principles are well established: Housen v.

Nikolaisen, 2002 SCC 33 ,[2002] 2 S.C.R. 235 (S.C.C.). [7] The parties agree that the issue of labour costs is a question of fact. Accordingly, CTC must demonstrate that the trial judgemade a palpable and overriding error in that regard. As an award of costs is discretionary, appellate review relates to whether or not thetrial judge exercised that discretion judicially. Labour Costs

[8] The trial judge found that the total costs of labour in respect of each building lot subject to the relevant agreement was $28,000. She summarized her findings as follows: 237 With the exception of labour costs, CTC's table provided the best evidence of costs incurred for each lot. Therefore, bysubstituting on CTC's table a reasonable estimate for CTC's labour costs for each lot, the profit share calculations can then be estimated. For that purpose, I have accepted Dennis Rowe's evidence that the total costs of labour for Lot 2, Phase 1 was $28,000.

I do not acceptthat there were other labour costs incurred by CTC with respect to that lot. 238 Further, just as CTC ascribed equivalent amounts for labour costs to each lot, so shall the Court, for the purpose of estimatingMDC's damages for loss of profits.

Therefore, the amount of $28,000 shall be substituted in CTC's table as comprising CTC's total costsof labour for each lot. [9] CTC argues that 1) CTC provided clear and cogent evidence with respect to labour costs in respect of all eight residences whichevidence was not rejected by the trial judge; 2) MDC adduced no evidence of labour costs other than for Lot 2, Phase 1; and 3) the trialjudge rejected the suggestion of MDC to base the calculation of all damages in respect of one residence as a template for damages inrespect of the other residences. [10] The trial judge summarized the evidence provided by both parties in relation to labour costs and found that the evidence wasconflicting: 172 With respect to CTC's labour and wage costs reflected on CTC's table, Shawn Simon provided evidence as to the process ofhouse building, as well as what labour was involved.

As noted in CTC's submissions, Shawn Simon's evidence was that to build aresidence on Orchard Lane, the time from start to finish was somewhere in the vicinity of 16 weeks. He also indicated that there couldbe five employees on site, but that there was always at least three. Shawn Simon's evidence was that the labour hours were about 11hours a day, Monday to Friday and possibly four to five hours on Saturday. Therefore, according to Shawn Simon's evidence, and CTC'ssubmissions, the range for calculating the cost of labour was based on about 60 hours per week, at a rate of $15 to $18 per hour.

Basedon this evidence, in its submissions, CTC calculated labour costs for three employees as being, at a minimum, in the vicinity of $29,700per house, (calculated as $15 per hour, times 60 hour weeks, times 11 weeks, times three employees). 173 With respect to the two additional employees, CTC estimated the wages to be $15 per hour, times 60 hours a week, times 11weeks, times two employees, for seven houses, in the amount of $138,600. 174 CTC submitted that the figures for wages would be subject to Workplace, Health, Safety and Compensation Commissionassessments.

CTC estimated these to be within the range of $1404.81 per residence, for the three employees, along with a global sum of$6555.78 for the two extra employees. As a result, CTC reflected labour costs for three employees, per lot, as totaling $31,104.81; andglobally, for seven lots, as $145,155.78 for the two extra employees. 175 By contrast, the evidence of Dennis Rowe was that the cost of labour with respect to Lot 2, Phase 1 was $28,000.

This was anumber he recalled with certainty from the profit share reconciliation for Lot 2, Phase 1. 176 The labour and wage costs contained in CTC's table are based on Shawn Simon's evidence. I note that these costs wereunsubstantiated by documentary evidence, such as payroll records. Further, CTC's estimate for wages for Lot 2, Phase 1 is much higherthan the figure of $28,000 which Dennis Rowe specifically recalled from the profit reconciliation meeting for Lot 2, Phase 1.

This is aconflict of evidence. [11] The trial judge determined that because of the conflict of evidence and the lack of any substantiating documentation, the issue oflabour costs had to be decided on the basis of credibility. In assessing the credibility of Mr. Simon and Mr. Rowe, the trial judge reliedupon the leading case of Faryna v.

Chorny (1951), (BC CA), [1952] 2 D.L.R. 354 (B.C.C.A.) in which O'Halloran,J.A. provided, at para. 11: The credibility of interested witnesses, particularly in cases of conflict of evidence, cannot be gauged solely by the test of whether thepersonal demeanour of the particular witness carried conviction of the truth. The test must reasonably subject his story to an examinationof its consistency with the probabilities that surround the currently existing conditions.

In short, the real test of the truth of the story of awitness in such a case must be its harmony with the preponderance of the probabilities which a practical and informed person wouldreadily recognize as reasonable in that place and in those conditions. Only thus can a court satisfactorily appraise the testimony of quick-minded, experienced and confident witnesses, and of those shrewd persons adept in the half-lie and of long and successful experience incombining skillful exaggeration with partial suppression of the truth.

Again a witness may testify what he sincerely believes to be true,but he may be quite honestly mistaken. For a trial judge to say "I believe him because I judge him to be telling the truth," is to come to aconclusion on consideration of only half the problem. In truth it may easily be self-direction of a dangerous kind. [12] The trial judge also referred to the factors to be considered in the assessment of witness credibility as stated in Finn v. St. John’s(1999), (NL SC), 186 Nfld. & P.E.I.R. 197 (Nfld.

T.D.), at para. 102: … As in all cases, assessment of the credibility of a witness, whether a party, a related individual, or a true "third party", must be carriedout by considering a number of factors. I will not review the principles here in detail; it is sufficient to say that credibility involves morethan an assessment of whether the witness is deliberately fabricating or otherwise.

Matters of opportunity to perceive, mental andphysical condition of the witness at the relevant time, ability to clearly communicate, power of recollection, opportunity for subsequentpersuasion - self-induced or otherwise - and the ability to set aside its effects, if any, when testifying, are also among the factorsnecessary to be considered in deciding whether statements of fact given by a witness represent a true, correct and objective picture ofwhat actually occurred. [13] The trial judge addressed the issue of credibility of both Mr. Rowe and Mr.

Simon at length and provided extensive reasons forpreferring the evidence of Mr. Rowe:

70 I have considered the above excerpt from Faryna , and the above described factors from Finn , when assessing the credibility of Dennis Rowe, Tobias Rowe and Shawn Simon. Particularly with respect to the power of recollection, there is no doubt that Shawn Simon's overall ability to recall, and ability to communicate, was not near as good as the ability of both Dennis Rowe, and Tobias Rowe, to recall and communicate the events over the period from the fall of 2009 to the fall of 2011. Mr. Simon could not recall, or did not know, numerous facts which I would expect him to be able to recall.

One, of many examples, includes that Shawn Simon could not recall for which lot CTC made the payment to MDC of $15,000 in a cheque dated May 27, 2010.

I would have expected him to recall such, given the size of the cheque, and given that there weren't a lot of cheques made out to MDC. 71 Further, in my view, after considering the evidence as a whole, Shawn Simon's evidence regarding the terms of the agreement is disharmonious with the "preponderance of probabilities", as described in Faryna , at paragraph 11 . … 78 I have referenced only a few of the many examples throughout Shawn Simon's extensive testimony, which I have reviewed in its entirety, in light of the whole of the evidence at trial.

To summarize, his overall evidence indicated an inability to recall facts he would be expected to remember, and further indicated contradictions, vagueness, confusing responses, implausible responses, and inconsistencies. It bears repeating that it stands to reason that a contractor in charge of overseeing what materials and labour are being put into the construction of houses, would likely not continue on with a venture, for the extent of time CTC did in this case, if the company was losing money. As stated, Mr. Simon seems to rationalize this by indicating that he was unaware that he was losing money.

I have not accepted this as a plausible explanation for his actions in this case. [ 14 ] Thus the trial judge found that Mr. Simon’s testimony lacked credibility and accepted Mr. Rowe’s evidence respecting labour costs over that of Mr. Simon: 177 As previously indicated, Mr. Simon's testimony lacked credibility. By contrast, Dennis Rowe was a credible witness. As a result, this conflict in evidence should be resolved in favour of MDC. MDC's evidence as to labour costs on Lot 2, Phase 1 is preferred.

I reject CTC's assessment of labour costs and I find, therefore, that the labour costs on Lot 2, Phase 1 totaled about $28,000. [ 15 ] CTC argued that because the trial judge accepted the evidence of Mr. Simon in relation to other aspects of construction costs, specifically framing, builder’s insurance and electrical work, so too should the trial judge accept the evidence of Mr. Simon in relation to labour costs. The trial judge, however, noted that there was no conflict in the evidence in relation to construction costs other than respecting labour.

There was no conflicting evidence from MDC regarding framing costs and costs of electrical work. MDC did not dispute CTC’s evidence on the costs of builder’s insurance. The evidence in relation to the other costs was either supported by documentary or affidavit evidence or the testimony of other witnesses. [ 16 ] The trial judge followed a proper approach in resolving the conflicts in the evidence. It is apparent from her extensive reasons that she engaged in an in-depth consideration of the relevant factors and did not err in rejecting Mr.

Simon’s testimony in relation to labour costs. [ 17 ] CTC’s argument that the trial judge should not have used the evidence of labour costs for Lot 2, Phase 1 as a template for the labour costs of the other lots cannot be reconciled with CTC’s own evidence of labour costs at trial. CTC provided a table detailing the construction costs which included the exact same cost of labour for each lot and, in his testimony, Mr. Simon also specifically provided a template for calculating the labour costs for each of the lots.

The trial judge noted this stating “just as CTC ascribed equivalent amounts for labour costs to each lot, so shall the Court, for the purpose of estimating MDC's damages for loss of profits” (at paragraph 238). [ 18 ] Additionally, t he trial judge provided detailed reasons for rejecting the approach of basing the calculation of all damages respecting each lot using Lot 2, Phase 1 as a template (at paragraphs 178 to 182): (1) with the exception of labor costs, MDC did not adduce better evidence than CTC regarding what the costs of construction actually were, or should be; (2) there was a lack of evidence on MDC's part respecting how to calculate profits with respect to each house; (3) the amount of the profit share cheque paid for Lot 2, Phase 1 was unreliable due to the erroneous inclusion of HST; (4) the profit from the sale of one residence is not determinative of the profit from another; and (5) there was no reason to ignore the evidence respecting what the costs of construction appear to have actually been and the damage assessment must be based on a reasonable estimate of profit, not anticipated profit. [ 19 ] The argument that MDC did not provide any evidence of the labour costs in relation to lots other than Lot 2, Phase 1 would not have had any impact on the trial judge’s findings on the labour costs generally, as CTC also ascribed equivalent amounts for labour costs to each lot.

Moreover, MDC was not in a position to provide further evidence regarding labour costs as MDC was not paying labour costs and had no other way of determining same. [ 20 ] The trial judge considered all of the relevant factors in weighing the evidence and in the assessment of damages and did not make any palpable and overriding errors. CTC’s appeal cannot succeed on this ground. Costs [ 21 ] The trial judge awarded party and party costs to MDC: 249 The general rule is that costs follow success in the cause.

In this case, MDC was indeed successful in establishing the liability of CTC, and CTC's counterclaim was dismissed. MDC was successful in establishing entitlement to loss of profits; however, the amount

awarded was significantly less than that which MDC claimed. 250 After considering the foregoing in light of the issues which had to be determined in this case, it is my view that MDC should beawarded party party costs, on a Column 3 basis. [22] CTC argued that 1) MDC was awarded damages of $27,059.23 rather than the claimed damages of over $230,000 and was thusonly partially successful; and 2) MDC failed to admit facts set out in the Notice to Admit prepared by CTC thereby increasing the lengthof the trial.

CTC submitted that the judge erred in principle by awarding party and party costs to MDC and therefore that the costs awardshould be set aside and the parties should instead bear their own costs. [23] Arbour J. set out the law pertaining to setting aside a costs award in Hamilton v. Open Window Bakery Ltd., 2004 SCC 9, [2004]1 S.C.R. 303, at para. 27: A court should set aside a costs award on appeal only if the trial judge has made an error in principle or if the costs award is plainlywrong (Duong v. NN Life Insurance Co. of Canada (2001), (ON CA), 141 O.A.C. 307 (Ont. C.A.), at para. 14).

InWilkins J.'s costs order I find no such error of principle, nor can I conclude that the award is plainly wrong. In light of the privilegedposition of the trial judge to assess first-hand the credibility of witnesses, and given the highly fact-driven nature of the analysis that wasrequired here, the costs order made by Wilkins J. must be restored. [24] Rule 55.02 of the Rules of Supreme Court, 1986 provides that costs are in the discretion of the Court.

Rule 55.03 provides thatunless the Court otherwise orders, the costs of a proceeding or of any issue of fact or law therein shall follow the event. [25] CTC argues that the trial judge erred by not apportioning costs based on the level of success. The issue of apportionment of costsbased on the level of success was addressed in House of Haynes (Restaurant) Ltd. v. Snook (1995), (NL CA), 134Nfld. & P.E.I.R. 23 (Nfld. C.A.). where Marshall J.A stated: 36 The rule permitting apportionment of costs is not a general one in the sense that is required to be immutably or rigidly applied.

Itis, rather, an option that may be considered by a judge in exercising his or her discretion when considering the issue of party and partycosts. This is borne out by a reading of R. 55 of the Rules of the Supreme Court, which confers wide latitude on a judge in exercising hisor her discretion respecting the award of such costs. 37 Rule 55 sets out the variety of options available in exercising judicial discretion with respect to costs.

These range from stating ageneral practice that costs of a proceeding shall follow the event, unless the court otherwise orders, to leaving the way open to relieve allparties of the responsibility for the costs of others. In between there is room for a judge to entertain such alternatives as awarding a grosssum, directing set-off, and allowing a percentage of taxed costs. 38 Thus, what counsel puts forth as a general fixed principle of apportioning costs is one of the optional choices of allowingpercentage recovery in exercising judicial discretion.

Her error, therefore, is in interpreting a permissive course of action as animperative one. [26] Case law invariably confirms that costs awards are discretionary and should only be interfered with if the trial judge made anerror in principle or was clearly wrong. Apportioning costs according to success is not a requirement. The trial judge indicated that shedid consider the level of success as well as the issues that had to be decided in the case. She then exercised her discretion. The costsaward should not be disturbed on the basis that the trial judge did not apportion costs. (See Hiscott v.

Hall, 2015 NLCA 1, 361 Nfld. &P.E.I.R. 141). [27] CTC further argues that because MDC did not admit to facts in the Notice to Admit thereby increasing the length of the trial, thecosts award should be set aside. MDC asserts that it made all concessions to efficiency it could reasonably make without sacrificing theintegrity of its case. The issue of the Notice to Admit and the subsequent consent order to admit the documents (but not for the truth oftheir contents) was dealt with by the trial judge at length. She did not find that failure to admit the documents was unreasonable or that itcontributed to any delay.

As the trial judge noted, her award of costs was made after considering “the issues which had to be determinedin this case”. The trial judge appropriately exercised her discretion to award costs after consideration of the relevant factors. No error inprinciple was demonstrated, nor was the costs award plainly wrong. I would not disturb it. Conclusion [28] I would dismiss the appeal with costs on column 3 of the scale of costs. Appeal dismissed.