Ljubisa Spasic - v. -, 2012 SKPC 150

IN THE PROVINCIAL COURT OF SASKATCHEWAN CIVIL DIVISION Citation: 2012 SKPC 150 Date: October 24, 2012 File: 82 of 2012 Location: Regina _____________________________________________________________________________ Between: Ljubisa Spasic - and - Varsity Homes Ltd. Self For the Plaintiff Mr. Robbie McCellan For the Defendant _____________________________________________________________________________ JUDGMENT M.

HINDS , J _____________________________________________________________________________ Facts: [ 1 ] The Plaintiff was the owner of Lots C & D, Block 351, Plan ET564, (hereinafter called the property) located on Ottawa Street, Regina, Saskatchewan. The Plaintiff was desirous of having a single home built on these two lots. On December 18, 2007, the Plaintiff and the Defendant signed a Land Sale and Building Agreement. In furtherance of the agreement, the Plaintiff transferred the property to the Defendant.

The agreement provided that the Defendant would construct an 1,844 square foot home on the property and sell it back to the Plaintiff for the sum of $293,187.00. The agreement also provided that the home would be substantially completed so as to be ready for occupancy on July 31, 2009, subject to a variety of delays.

[ 2 ] There were some delays in constructing the home. Prior to commencing construction on the property the Defendant submitted building plans and an application for construction of a single home on the property to the City of Regina. On April 1, 2009, Kelly Florek, an employee of the City of Regina, Infrastructure Services wrote a letter to the Defendant advising the City required the installation of new water and sewer service connections to the property before a building permit would be issued by the City.

In particular, the City required the homeowner or developer to install a 40 mm (1.5 inch) water service line and a 150 mm (6 inch) sanitary sewer service line on Lot D and the removal of the curb box and rod from the old 20 mm water service line on Lot C. The letter indicated that the cost of the installation was the responsibility of the homeowner or developer. [ 3 ] The City of Regina did the water and sewer service work and billed the Defendant. The Defendant paid the sum of $14,100.00 to the City of Regina and in turn collected the sum of $14,100.00 from the Plaintiff.

The Defendant obtained a building permit from the City of Regina. Construction of the home began in 2009 and it was completed and ready for possession in the month of July 2010. [ 4 ] Prior to taking possession of the home in June 2010, the Plaintiff arranged for and obtained his own mortgage financing in the total sum of $479,183.32 through CIBC Mortgages Inc. A mortgage in the sum of $479,183.32 was registered against the property on June 28, 2010. Mr.

Neil Tulloch a lawyer with the firm Willows Tulloch sent a statement of account dated June 30, 2010, to the Plaintiff in the total sum of $1,012.50 for professional services rendered in connection to the preparation and registration of a mortgage on the property. Mr. Spasic subsequently paid this account. [ 5 ] The building plan prepared by the Defendant called for two furnaces to be installed in the house. One furnace was situated in the basement of the home for the needs of the home.

A second furnace was to be installed in an enclosed space on the floor of the garage, for the purpose of heating a suite situated above the garage. During the course of construction of the home, the Plaintiff asked the Defendant to change the location of the second furnace. The Defendant agreed and the second furnace was hung from the trusses of the garage and enclosed, freeing up some parking space in the garage. [ 6 ] The Plaintiff entered into a three year maintenance plan with Dan Turgeon of Town and Country Plumbing and Heating Ltd.

Town and Country Plumbing and Heating charges $95.00 for the annual maintenance of the two furnaces provided by one technician. In 2010, Town and Country charged the Plaintiff the sum of $190.00 as two technicians were required to provide annual maintenance service. The Plaintiff is concerned he will incur additional costs for annual furnace maintenance in the future. [ 7 ] Three exterior wooden posts support the roof of the home. Each of these posts was to be made up of pressure treated lumber. The bottom portion of each post was situated on a concrete piling.

Several months after taking possession of the home the Plaintiff discovered that one of the three wooden posts was not made of pressure treated lumber. The Plaintiff took his concerns regarding the untreated wooden post to Mr. Colin Hanoski, site supervisor for the Defendant. The Defendant subsequently replaced the bottom 1.5 metres of the post with pressure treated lumber. The Plaintiff is concerned that the new post has shifted or twisted 1.5 inches from its original position. [ 8 ] The Plaintiff claims that the Defendant breached certain terms of the agreement with him including:

a) The term that the Defendant, Varsity Homes Ltd. shall pay for the cost of any building permits by charging and collecting from him the sum of $14,100.00 for the sewer and water service installation.

b) The terms that the Defendant shall pay legal fees and costs, as the Plaintiff was required to pay the legal fees and costs for preparing and registering a mortgage against the property in the sum $1,012.50.

c) The term that the exterior post which is supporting the roof of the house would be constructed in a good and workmanlike manner.

d) The term that the furnace room in the garage would be constructed in a good and workmanlike manner. Conclusion: [ 9 ] I found that the Plaintiff did not establish that the Defendant breached any of the terms of the parties’ Land Sale and Building Agreement.

Analysis:

a) Did the Defendant breach the term of the agreement that Varsity Homes Ltd. shall pay for the cost of any building permits by charging and collecting from him the sum of $14,100.00 for the sewer and water service installation? [ 10 ] Clause 7(

e) of the agreement states: THE BUILDER SHALL PAY: (

e) The cost of any Building Permits. [ 11 ] The Plaintiff also points to those portions of the agreement which refer to the service connection. Page 1 of the agreement provides a breakdown of the total contract price of $293,187.00 for constructing the house on the property which is calculated as follows: A. Land (service connection and GST paid) B. Basic House Price (GST paid) $269,397.00 C. Additions to Basic House (GST paid) 1)

Schedule ‘B’ 23,790.00 Total Price (net GST included) $293,187.00 [ 12 ]

Schedule ‘B’ sets out the Defendant’s building standards respecting certain exterior and interior work, upgrades selected by the Plaintiff and cabinet, lighting and flooring allowances provided for by the Defendant. This is followed by the following words: SUBJECT TO THE HOMEOWNER TRANSFERRING LAND TO VARSITY SUBJECT TO ELEVATIONS APPROVED BY THE CITY SUBJECT TO GAS, POWER, WATER & SEWER SERVICES ON PROPERTY NO TREE REMOVAL [emphasis added] [ 13 ] The Plaintiff takes the position that by virtue of the terms of the 2007 agreement the cost of any building permits were to be borne by the Defendant. This is true.

However, the Plaintiff takes the further position that cost of the new water and sewer connections required by the City of Regina in 2009 are the Defendant’s responsibility, being simply part of the cost of obtaining a building permit for the house . [ 14 ] The position advanced by the Plaintiff, in my view is not supported by a reasonable

interpretation of the agreement. At the time of entering the agreement in 2007, the parties did not reasonably foresee that in 2009 the City of Regina would require the installation of new water and sewer service lines to the property at the cost of $14,100.00 before a building permit would be issued. This is not an insignificant cost. Indeed, once this issue arose the parties contemplated their options.

The Plaintiff testified that he could not find another contractor to build the house and absorb the $14,100.00 cost of installing new water and sewer service lines for the price he had contracted with the Defendant for. [ 15 ] The Defendant approached the matter in a businesslike manner. It drew up a change order and asked the Plaintiff to sign it. On May 7, 2009, the Plaintiff and the Defendant signed a document entitled “Change Order #4” [Exhibit P-6] respecting the property. The change order stated as follows:

WE HEREBY AGREE TO MAKE THE CHANGE(

S) SPECIFIED BELOW; PLUMBING New Sewer and Water Service required by City of Regina $14,100.00. THIS CHANGE ORDER BECOMES PART OF AND IN CONFORMANCE WITH THE EXISTING CONTRACT. WE AGREE hereby to make the change(

s) specified at this price. [ 16 ] The Defendant did not breach a term of the contract by charging and receiving the additional sum of $14,100.00 from the Plaintiff for the new water and sewer service to the property. This is the very agreement the parties came to. I find no merit to this part of the Plaintiff’s claim.

b) Did the Defendant breach the terms of the agreement that it would pay for the legal fees and costs? [ 17 ] The Plaintiff paid legal fees and costs for preparing and registering a mortgage against the property in the sum $1,012.50 . The Plaintiff takes the position the agreement calls for the Defendant to pay these fees and costs. [ 18 ] The agreement addresses the topic of legal fees and costs as follows: 7. THE BUILDER SHALL PAY: (

a) Legal fees for the preparation of the transfer. (

b) The cost of discharging any encumbrance not assumed by the Purchaser. 9. LEGAL COSTS: Paid by Varsity Paid by Purchaser Preparation and Registration of FIRST Mortgage (whether construction or completion mortgage) X Interest during construction on Builder’s Mortgage X Transfer of Title to Purchaser (Registration) X In no case shall the Builder be responsible for legal fees of the Purchaser for any other lawyer than the Builder’s lawyer.

The Builder shall in no case be responsible for the cost to place a mortgage granted by the Purchaser if the Builder has already put a mortgage in place and Purchaser does not assume the mortgage . [Emphasis Added] [ 19 ] While page 1 of Exhibit P-3 “Varsity Homes Ltd. - Customer Information” indicates that the Plaintiff was assuming the Varsity Builder’s Mortgage for the property, this in fact did not take place. The Plaintiff obtained his own mortgage for the property in the sum of $479,183.80. Mr. Neil Tulloch registered this mortgage for the Plaintiff on the title of the property on June 28, 2010.

Accordingly the Plaintiff was responsible to pay his own legal fees and costs respecting his own mortgage in the sum of $1,012.50. The Defendant fulfilled the agreement by paying the legal fees for the preparation of the transfer of the title of the property to the Plaintiff, interest during construction on the builder’s mortgage and the cost of discharging the builder’s mortgage. I find no merit to this part of the Plaintiff’s claim.

c) Did the Defendant breach the term of the agreement that it would construct the exterior post, supporting the roof of the house, in a good and workmanlike manner? [ 20 ] To support this position the Plaintiff must prove that the exterior post was not constructed in a good and workmanlike manner. The evidence reveals that after the house was constructed the Plaintiff noticed that this exterior post was not made of pressure treated lumber. The Plaintiff brought this to the attention of the Defendant, who in turn replaced the bottom 1.5 metres of the exterior post with pressure treated lumber.

The Plaintiff testified that since the Defendant has changed the exterior post it has shifted and twisted. The Plaintiff wants the exterior post reinforced by SV Homes and Renovations at a cost of $1,200.00. In this case the Plaintiff did not call anyone from SV Homes and Renovations or anyone else to provide opinion evidence respecting the structural integrity of the exterior post as it exists. I am left with two photographs (Exhibit P-8) and the Plaintiff’s word the post is defective and requires reinforcement. In my view the photographs do not show the defect complained of.

While the exterior post may have moved somewhat, the evidence before me does not satisfy me on a balance of probabilities that it is defective and requires repair/reinforcement. I therefore find no merit to this part of the Plaintiff’s claim.

d) Did the Defendant breach the term of the agreement that the furnace room in the garage would be constructed in a good and workmanlike manner? [ 21 ] During the course of construction of the home, the Plaintiff asked the Defendant to change the location of the second furnace. The Defendant agreed and the second furnace was hung from the trusses of the garage and enclosed, freeing up some parking space in the garage. The Plaintiff testified he entered a three year furnace maintenance plan with Town and Country Plumbing and Heating Ltd.

The Plaintiff originally anticipated to be charged $95.00 per year for furnace maintenance. In 2010, Town and Country charged the Plaintiff the sum of $190.00 as two technicians rather than one were required to provide annual maintenance service. The additional cost was apparently necessitated by the somewhat awkward space in which the second furnace was located. The evidence reveals that the Plaintiff’s concern that additional furnace costs would be greater than anticipated, was not realized.

In 2011, Town and Country charged the Plaintiff the sum of $95.00 for the annual maintenance of the furnaces which was provided by one technician. The evidence reveals that Town and Country hopes to have the same technician do future annual furnace maintenance for the Plaintiff. [ 22 ] In this case the Plaintiff has not established that there was any defect in the manner in which the second furnace in the house was constructed. The evidence reveals the Plaintiff instructed the Defendant to alter the original building plan respecting the placement of the second furnace. The Defendant complied.

There is no evidence before the Court that the enclosure constructed around the second furnace is defective. Moreover, there is no evidence there will be ongoing additional costs to do annual maintenance on this furnace. As a result the Plaintiff’s claim is dismissed. [ 23 ] The tort of negligence is independent of the contract between the parties. The Defendant company clearly owed the Plaintiff a duty of care to properly construct the house, including the exterior post and the second furnace.

While negligence was not specifically alleged by the Plaintiff against the Defendant, I have considered this possible claim in negligence. I am of the view the Plaintiff has not proved, on a balance of probabilities, that the Defendant company breached the standard of care expected of a contractor building a house. The Plaintiff did not call an expert witness in construction to establish the deficiencies, if any, respecting the house.

Summary [ 24 ] I am of the view that the Plaintiff has not established: (1) that the Defendant company breached a term of the contractual agreement between the parties, or (2) that the Defendant company was negligent. [ 25 ] I therefore dismiss the Plaintiff ’ s claim against the Defendant company. The Plaintiff shall pay the Defendant the sum of $150.00 in costs. ________________________

M. Hinds, J