G v. I CONSTRUCTION GROUP INC., 2023 SKKB 214

KING’S BENCH FOR SASKATCHEWAN Citation: 2023 SKKB 214 Date: 2023 10 12 Docket: QBG-SA-00867-2020 Judicial Centre: Saskatoon ___________________________________________________________________________ BETWEEN: G AND I CONSTRUCTION GROUP INC. Plaintiff - and - ACE BURGER LTD., 102072408 SASKATCHEWAN LTD., COLE DOBRANSKI, BRADLEY MILLER, and BLAIR VOTH MILLER Defendants Counsel: Marek S. Coutu for the plaintiff Candice D. Grant for the defendants ___________________________________________________________________________ JUDGMENT ELSON J.

October 12, 2023 ___________________________________________________________________________ Introduction [ 1 ] In the spring of 2019, the operators of a planned Saskatoon restaurant, now known as “Ace Burger”, entered into an oral agreement with the plaintiff contractor to renovate the premises in anticipation of the restaurant’s opening. It is agreed that the renovations were to be carried out on a cost-plus basis, but without estimates, quotations or a stipulated maximum price. [ 2 ] After the renovations were completed, the plaintiff rendered its invoice.

The restaurant operators expressed unhappiness with the amount charged, claiming that the costs claimed were exorbitant. They eventually agreed to pay some of the outstanding account but declined to pay anything further. Three revised invoices later, the plaintiff commenced this action for the balance it claims is outstanding. The restaurant operators remain unmoved in their opposition to the claim. [ 3 ] The parties now agree to resolve this litigation through

summary judgment. [ 4 ] It should be noted that as commercial construction/renovation contracts go, this matter does not involve a large amount of money. Even so, and as will be evident in this judgment, the underlying facts of the case are rather more complicated than one would have expected. I attribute this primarily to the absence of a written agreement, multiple versions of the plaintiff’s invoice and both parties’ rather casual approach when they entered into this arrangement. Background [ 5 ] The evidence relating to this application came forward through five affidavits.

The plaintiff submitted two affidavits, both deposed by its principal director, Rick (Ricky) Iula. His second affidavit was in reply to the defence evidence, which consisted of three affidavits. It should be noted that the affidavits exhibited a significant number of documents and photographic evidence. Notably, the exhibited documents included multiple versions of one invoice. [ 6 ] The plaintiff is a company that, since 2006, has engaged in building custom homes and carrying out both residential and commercial renovations, including tenant improvements and project management services.

As the plaintiff was not incorporated until July 17, 2012, some of these services must have been provided through a proprietorship or some other form. According to one of the exhibited corporate profiles for the plaintiff, its principals are Mr. Iula and Dustin Grenier. The Court also understands that Mr. Iula’s wife, Rhonda Iula, has been active in the plaintiff’s operations, but does not formally serve as a director. [ 7 ] As noted from the style of cause, there are multiple defendants named. This is somewhat misleading.

The evidence discloses that the principal defendant is 102072408 Saskatchewan Ltd., described interchangeably as [2408 Sask] or [the defendant], which owns and operates “Ace Burger”. The personally named parties, Bradley Miller, Blair Voth Miller and Cole Dobranski are the three principals and officers of the company [2408 Principals]. All three 2408 Principals deposed affidavits in this application. From my reading of the affidavit material, Bradley Miller and Cole Dobranski are the primary “hands-on” operators of Ace

Burger, with Mr. Miller playing a somewhat more leading role. Mr. Miller’s affidavit contained most of the evidence relied upon by the defendant. [ 8 ] The other defendant company, Ace Burger Ltd., has no direct involvement in the transaction that underpins the litigation. It is an associated company that previously operated a food truck in Saskatoon. 2408 Sask decided to take the name of the food truck for the new restaurant. [ 9 ] The Court received some evidence about previous business interactions between the 2408 Principals and businesses operated by Mr. Iula.

In this regard, the evidence disclosed that the 2408 Principals, through other business entities, have a history of operating restaurants in Saskatoon. Two of their operations are Thirteen Pies Pizza + Bar [Thirteen Pies] and the Congress Beer House [Congress]. The evidence suggests that Mr. Iula was involved in projects at both restaurants. [ 10 ] Turning first to Thirteen Pies, Mr. Miller’s affidavit states that certain leasehold improvements were required for the restaurant. The affidavit also suggests that at least some of that work was contracted to Decora Homes Ltd., a company in which Mr.

Iula has been directly involved. Mr. Miller deposed that after the work was completed in 2018, he and his colleagues were pleased with the services provided and paid the invoiced price without question. [ 11 ] I digress from the narrative to note that a copy of the invoice on the Thirteen Pies project was exhibited to Mr. Miller’s affidavit. From my reading of this invoice, it only referenced the supply of certain items and freight cost associated with that supply. No specific renovation or construction work is identified in the invoice.

Indeed, the total amount of the invoice, before sales taxes, is only $1,241.25. I also note that Mr. Iula did not reference his involvement on the Thirteen Pies project in either of his affidavits. In my mind, this raises doubt as to whether Mr. Iula’s business performed any renovation work at Thirteen Pies. [ 12 ] There is no similar doubt about the Congress project. Both Mr. Iula and Mr. Miller agree that the plaintiff carried out renovations at the Congress, serving as a general contractor. Mr.

Iula deposed that the renovations included flooring, painting, finishing work, provision and installation of a new countertop, electrical work, lighting, interior trim, demolition and garbage removal. He further states that the Congress contract, which was also not in writing, contemplated a management fee of approximately 20% of the total cost incurred. [ 13 ] Mr. Iula exhibited a copy of the plaintiff’s invoice for the Congress renovations to his first affidavit. As appears to be the plaintiff’s usual practice, the invoice did not set out subtotals for the costs, before adding the management fee or markup.

By my arithmetic, those costs amounted to $30,292.96. The invoice then added a $6,000.00 management fee and $3,992.23 in GST and PST, for a total of $40,285.19. [ 14 ] Mr. Miller’s evidence on the Congress renovations accords with Mr. Iula’s. In particular, he accepts that the invoice on that project complied with the parties’ oral agreement. Mr. Miller added that there was some urgency to this work and that it was carried out within a short window of time.

Accordingly, the invoice was promptly paid. [ 15 ] Around the same time that the Congress renovation concluded, the defendant secured space on Broadway Avenue for Ace Burger. The space had previously been used by another restaurant operation. Eventually, the need for renovations of the new space prompted Mr. Dobranski to initiate discussions with Mr. Iula about the Ace Burger project. [ 16 ] The work on the Ace Burger project was more formally discussed at a meeting attended by Mr. Iula, Mr. Miller and Mr. Dobranski in April 2019.

Unfortunately, there is no evidence of any written minutes or notes taken from that meeting. Given the factual dispute that later arose, this is unfortunate. [ 17 ] In his first affidavit, Mr. Iula deposed to his understanding of the agreement reached at the April meeting. He said the three men agreed that the work would proceed on a similar basis as the Congress renovations, with the plaintiff again serving as the general contractor. Mr.

Iula understood the parties had also agreed that the work would be done on a cost-plus basis, but with a 10% markup as opposed to the 20% management fee charged on the Congress project. [ 18 ] The affidavits of Mr. Miller and Mr. Dobranski reveal a different understanding. They said they did not contemplate that the plaintiff would be the general contractor. Mr. Miller deposed that, except for the Congress renovations, he and Mr. Dobranski had always acted as the general contractor for their restaurant opening projects.

The only reason they employed a general contractor on the Congress project was due to the time constraints on that job. [ 19 ] As for the renovation itself, Mr. Miller deposed to his understanding that Mr. Iula saw the Ace Burger renovations as “an easy project”. He understood this was attributable to there being no need for structural changes to the premises or changes to the kitchen. Mr. Miller and Mr. Dobranski both said they saw the changes simply as “cosmetic updates”. [ 20 ] A more particular description of the work on the Ace Burger project, not denied by either Mr. Miller or Mr.

Dobranski, is set out in Mr. Iula’s first affidavit.

He deposed that the work consisted of the following tasks: a. demolition and disposal of existing materials and fixtures; b. construction of a patio deck attached to the restaurant and provision of all materials pertaining thereto; c. electrical work, including (but not limited to) installation of outlets, light fixtures and audio equipment; d. plumbing work, including (but not limited to) installation of water service, sinks, bathroom fixtures and toilets; e. drywall work, including (but not limited to) framing, boarding, taping, patching and repairs; f. fabrication and installation of cabinets, slat walls, garbage cans and countertops;

g. provision and installation of countertops for serving counters, garbage cans and tables; h. flooring and subway tile; i. interior trim, including (but not limited to) a metal barn door and hardware, interior doors and handles, and other pine trim and MDF jamb and baseboards; j. painting throughout the restaurant; and k. provision of tables inside the restaurant and outside on the patio deck. [ 21 ] To complete the Ace Burger project, Mr. Iula said that the plaintiff, as general contractor, engaged the services of various subcontractors and suppliers, eighteen in all.

All the subcontractors and suppliers rendered invoices to the plaintiff, which invoices informed the final account rendered to 2408 Sask. Having said this, Mr. Iula’s affidavit evidence about the charges issued to the defendant came forward in a somewhat less than straightforward manner. I will explain. [ 22 ] In his first affidavit, Mr. Iula described, at some length, the costs charged by each subcontractor and supplier on the Ace Burger project. He did so by referencing the invoices the plaintiff received, all of which he said were paid in full. Those invoices were exhibited to Mr.

Iula’s first affidavit and totaled $143,018.21. The affidavit goes on to explain that to calculate the amount owing by 2408 Sask, the plaintiff simply added a rounded markup figure of $14,000.00 and applicable taxes, arriving at the figure of $158,113.66. In short, and as I read his first affidavit, the simple formula for the amount charged to the defendant is $143,018.21 (invoiced costs) plus $14,000.00 (rounded markup) plus $1,095.45 (taxes) equaling $158,113.66. Mr.

Iula said the plaintiff rendered its invoice, numbered 1835279, for this amount to the defendant (identified on the invoice as “Ace Burger”) on or about June 30, 2019. [ 23 ] There are notable problems with Mr. Iula’s evidence on this invoice. Aside from the obviously mistaken description of the sales taxes, Mr. Iula’s first affidavit says nothing about four other versions of Invoice 1835279 issued by the plaintiff. Moreover, the overall narrative of the evidence suggests that the invoice described in the first affidavit was never issued to 2408 Sask.

That narrative follows in the next several paragraphs. [ 24 ] The defence affidavit evidence suggests that the first version of Invoice 1835279 was for $154,431.27. Moreover, I accept Mr. Miller’s evidence that this invoice, while dated June 30, 2019, was not received by 2408 Sask until July 26, 2019. The first version of this invoice, a copy of which is exhibited to Mr. Miller’s affidavit, purported to itemize the costs incurred and added a markup of $12,100.00. I have totalled the itemized costs at $128,015.36.

The simple formula for this invoice is $128,015.36 (invoiced costs) plus $12,100.00 (markup) plus $7,005.77 (GST) plus $7,310.14 (PST) equaling $154,431.27. [ 25 ] The invoiced charges in the first version of Invoice 1835279 are further complicated by the plaintiff issuing an additional invoice to the defendant in the amount of $23,260.95. This invoice, numbered 1835286 and dated August 8, 2019, itemized additional costs and a further markup. By my arithmetic, the additional costs amounted to $20,955.81 and the added markup was $1,905.08.

The formula for Invoice 1835286 is $19,050.73 (invoiced costs) plus $1,905.08 (markup) plus $1,047.79 (GST) plus $1,257.35 (PST) equaling $23,260.95. Adding this amount to the first version of Invoice 1835279, the total claimed to be owing by 2408 Sask, as of August 8, 2019, amounted to $177,692.22. [ 26 ] In passing, I note that the combined total of itemized costs in Invoices 1835279 and 1835286 amount to $147,066.09, which is $4,047.88 more than the detailed costs described in Mr. Iula’s first affidavit. The combined markup from the two invoices amounted to $14,005.08. Neither of Mr.

Iula’s affidavits explained why the additional costs were not included in the initial invoice, nor did they explain the discrepancy between the sworn description of the costs and the combined amounts itemized in both invoices. [ 27 ] There is no dispute in the evidence that 2408 Sask was unhappy with the initial invoices it received. In their respective affidavits, Mr. Miller and Mr. Dobranski expressed their view that they had been “grossly overcharged” and repeated their understanding that the plaintiff would not be acting as the general contractor. [ 28 ] Having said this, both Mr. Miller and Mr.

Dobranski say that the renovation work performed at Ace Burger was consistent with the scope of work tasked to the plaintiff. They also said that they were present at the restaurant while the work was under way and had no concerns about either the work or the relationship with Mr. Iula. Interestingly, I note in passing that neither men deposed to whether the plaintiff or the defendant worked on the project as a general contractor. [ 29 ] Shortly after Invoice 1835286 was issued, Mr. Miller and Mr. Dobranski met with Mr. Iula to express their concerns about the charges.

Although the details of that discussion are not fully set out in the evidence, it is evident that 2408 Sask agreed to pay the plaintiff $50,000.00 and await Mr. Iula’s review and assessments of the defendant’s concerns. A cheque for this amount was sent to the plaintiff soon after. [ 30 ] Following this meeting, the plaintiff issued the second version of Invoice 1835279, totaling $155,528.05. Ms. Iula sent this version on behalf of the plaintiff through an email message. In the covering email message, Ms.

Iula wrote that the plaintiff added more detail to the invoice and corrected an error in the calculation of the PST. The second version of the invoice was also exhibited to Mr. Miller’s affidavit. The itemized costs listed in it amounted to $128,015.36, to which was added a markup of $12,100.00, plus $7,005.77 for GST and $8,406.92 for PST. Mr. Miller deposed that he informed Ms. Iula that the painting costs and other items were missing from the invoice she sent.

He also followed up with a few other questions in a subsequent email, dated August 21, 2019. [ 31 ] The next notable development occurred on August 27, 2019. On that date, Ms. Iula sent another email message with the third version of Invoice 1835279. In her message, Ms. Iula advised that the plaintiff had combined the two original invoices and added further details about the costs. The third version, also exhibited to Mr. Miller’s affidavit, amounted to $176,925.78. Again, by my arithmetic, the total of the itemized costs in it amounted to $145,392.59.

The plaintiff then purported to add a $14,000.00 markup along with $7,969.63 for GST and $9,563.56 for PST.

[ 32 ] In reviewing the itemized costs between the second and third versions of Invoice 1835279, I note that there are both similarities and differences. The differences are inexplicable. In part, I suspect this may be attributable to the different descriptions of the cost items, some of which appear to have been broken down into more specific amounts. A better explanation from Mr. Iula would have been helpful. [ 33 ] After receiving the third version of the invoice, Mr. Miller sent an email message to the plaintiff that summarized 2408 Sask’s concerns.

Rather than reciting that message in full, I will summarize it as follows: a. In the opening paragraphs of the message, Mr. Miller wrote about his experience and expertise in building restaurants. He stated that his expertise is “restaurant builds”. b. Mr. Miller explained that it was their business practice to obtain quotes on trade and contractor work but that this was not done in the present case because of the plaintiff’s work at Congress and Thirteen Pies. c. Mr.

Miller then questioned the numbers and details in the invoice, indicating that he did not see the support or understand the costs charged, which he regarded as “exorbitant. He listed the following examples: i. Cabinets and Countertops: Mr. Miller wrote that he measured the countertops and cabinets with another operation, where the price was less than half that charged to 2408 Sask. ii. Benches: Mr. Miller noted that the interior benches were charged out at a cost of $132.60 per foot while the exterior benches, which were identical, were charged at $106.00 per foot.

He also noted that the metal in the frame for the 30-foot bench at Thirteen Pies cost $60.00 per foot. iii. Plumbing: Based on the going rate for a high-priced plumber of $100 per hour, the amount charged worked out to 47 hours to install two sinks, three toilets, two faucets, a waterline and remove the same items plus installation of a mop sink with already existing plumbing. Mr. Miller suggested that the figures did not add up. iv. Finisher: Accepting that a good finisher charges $50 per hour, Mr.

Miller wrote that the charge of $16,200.00, by Knotty Woodworks Inc. [KWI] (described as Knotty Pine in the message), worked out to 324 hours. Mr. Miller wrote that this charge baffled him as he personally knew how long KWI took to perform the finishing work. v. Drywall: Mr. Miller noted that $10,510 was charged for a 7 x 9.5-foot kitchen wall, two 7.5-foot x 18.5-inch bulkheads, an 8 x 4-foot bathroom wall and a 5 x 9.5-foot wall. Mr. Miller wrote that with the additional costs for patching, etc., the costs seemed exorbitant. vi. Barn Door and Hardware: This item was charged at $3,263.75. Mr.

Miller noted that when Mr. Iula quoted the door to him, they pulled it up on the internet and noted that the price was less than $1,000. Mr. Miller questioned whether it was marked up more than three times. vii. Painters: Mr. Miller generally questioned the $15,000 charge for painting, which again he regarded as exorbitant. viii. White Oak for Patio Tables: Mr. Miller questioned the charge as to why it was double the amount paid for the solid thick oak for the interior counters and tabletops; ix. Garbage Removal and Disposal: Mr. Miller generally questioned the cost of this item. x. Tile and Flooring: Mr.

Miller questioned the lineal foot charge for the installation of tile and flooring. Mr. Miller concluded the message by noting that he still had questions about the lights and electrical, among other things. He also said he did not want to “drag this out” and wanted a resolution in which both parties were happy with the outcome. [ 34 ] I digress from the narrative to note that a number of the items referenced in Mr.

Miller’s email message were not the subject of substantive evidence in the bodies of any of the defence affidavits. [ 35 ] Communication between the parties carried on throughout September 2019, primarily by telephone. During this time, 2408 Sask made an additional payment of $25,000.00. Mr. Miller deposed that this payment was made as a gesture of good faith and with the expectation that Mr. Iula would meet with the subcontractors and suppliers to ensure fair and reasonable costs. [ 36 ] Near the end of September, Mr. Miller and Mr. Dobranski had a further meeting with Mr.

Iula to continue their discussions more directly. It is apparent that the central issue discussed in this meeting was the invoice from KWI. Mr. Miller deposed that he and Mr. Dobranski had noted the most recent version of Invoice 1835279 showed that KWI’s charge had been reduced from the original sum of $16,200 to $15,750, but without any explanation for the change. According to the undisputed evidence of Mr. Miller, Mr. Iula attempted to justify this account by stating his understanding that KWI had employed five workers for a week, at $60 per hour to perform the invoiced services. Mr. Miller and Mr.

Dobranski, who were on site while the renovations were being conducted, disputed this. Moreover, Mr. Miller’s affidavit exhibited photographs and video that depicted fewer workers than Mr. Iula described. To address this matter more specifically, Mr. Miller described a telephone conversation, by speakerphone, with himself and Mr. Iula speaking to KWI’s owner. During that conversation, the subcontractor’s owner advised that he and one other employee had performed the majority of his company’s work on the Ace Burger site. Mr.

Miller also deposed that KWI’s owner even offered to produce a timesheet, but no timesheet has been forthcoming. [ 37 ] In his reply affidavit, Mr. Iula dealt directly with the challenged KWI invoice. In it, he said that the scope of work KWI performed was much more substantial than the construction of the patio and a few other odd carpentry jobs. Specifically, the scope of work included:

a. wrapping the interior benches with oak plywood and fabricating and installing end gables on the interior benches; b. framing the patio structure; c. installing composition decking and vertical skirting on the patio; d. installing a privacy wall with horizontal aluminum slats; e. wrapping posts with aluminum and top caps; f. installing white oak strips on exterior tables and exterior doors; g. fastening tables to the patio; h. machining doors and a custom handle for a barn door, and installing interior doors and a custom metal barn door; i. installing baseboards and milling to floor with slanted concrete; and j. purchasing, transporting and delivering various materials and fasteners. [ 38 ] Mr.

Iula deposed that he did not receive a timesheet for the work performed by KWI employees, but he was advised of the total hours spent along with the breakdown of the hours each of the employees, including KWI’s owner, had worked on the Ace Burger project. According to the information received, five employees respectively worked 37.5 hours, 37.5 hours, 56 hours, 52 hours and 66 hours on the project, for a total of 249 hours. The KWI owner further advised Mr.

Iula that: (1) four of the five employees were Red Seal journeyman carpenters; (2) some employees worked overtime on the project; and (3) there was a “crazy time crunch” to get the job done. [ 39 ] Mr. Miller also elaborated on his criticism of the drywall costs charged to the defendant. As I do not regard this criticism as significant, it is neither necessary to address it, nor is it necessary to address Mr. Iula’s response to the criticism. [ 40 ] The fourth version of Invoice 1835279 was sent to 2408 Sask on October 11, 2019. The fourth version was for $144,961.45.

The costs itemized in the fourth version are identical to those described in the third version, except for two items, both related to lighting. The interior lighting cost was reduced from $8,895.38 to $3,593.69, and the canopy string lighting cost was reduced from $3,695.00 to zero. The invoice notations for these reductions simply indicated that the amounts were deducted or deleted. No other explanation was provided. With these reductions, the total amount of the itemized costs amounted to $136,395.90. From this amount, the fourth version describes a credit of $19,800.00.

The notation for the credit states “Deducted $19,800.00 as per Ricky and Brad’s discussion”. After allowing for the credit, the invoice added a $14,000.00 markup along with $6,529.80 for GST and $7,835.75 for PST, arriving at the total of $144,961.45. [ 41 ] The fourth version of Invoice 1835279 did not persuade the defendant to pay the plaintiff more than it had already paid. Mr. Miller so informed Ms. Iula of this after she called him to inquire about payment. In turn, this conversation prompted an email exchange between Mr. Miller and the plaintiff’s senior officers/employees.

The plaintiff’s message purported to itemize the discounts/credits that Mr. Iula had negotiated with the subcontractors and suppliers. While the calculation reflected in the email message is not as clear as it could be, the message states that the negotiated discounts/credits totalled the $19,800.00 credit shown in the fourth version of the invoice. [ 42 ] Returning to the version of Invoice 1835279, described in Mr. Iula’s first affidavit, I am satisfied that the plaintiff never sent this version to the defendant. I say this for two reasons.

First, I accept the defence evidence that the 2408 Principals did not see a copy of this invoice until they received the first affidavit. Secondly, after the issue was raised in the defence evidence, Mr. Iula’s reply affidavit did not address the issue directly. Rather, his response was curiously worded. Rather than reaffirming his earlier evidence or adducing further corroborative evidence, Mr.

Iula simply deposed that the subject invoice “is the only invoice which G&I claims compensation for in this action.” I do not regard this as a denial of the defence evidence on this point. [ 43 ] Further to this version of Invoice 1835279, it is noteworthy that the subcontractor and supplier invoices exhibited to Mr. Iula’s affidavit, which were intended to support the plaintiff’s claim, differ from claimed costs described in the fourth version of Invoice 1835279. There were 13 differences, which are described in Mr. Miller’s affidavit.

On a percentage basis, most of the differences vary between 0.84% to 8%, but two differences were shown to be up to 62% and 138%, respectively. The Pleadings [ 44 ] The plaintiff’s amended statement of claim is brief and straightforward. It simply pleads the nature of the renovation work it says the plaintiff was contracted to perform, along with a plea that the work was to be paid for on a cost-plus basis, with a 10% markup.

The claim then goes on to assert that it invoiced the defendants on or about June 30, 2019, in the amount of $158,113.66. [ 45 ] In its statement of defence, 2408 Sask asserts that the $75,000.00 it paid for the renovations constituted the full amount owing to the plaintiff. It further asserts that the work done was significantly less than that set out in the statement of claim and that the plaintiff failed or refused to provide details of its account. Notably, the statement of defence does not allege any deficiencies in the plaintiff’ work.

Application to Strike Affidavit Evidence [ 46 ] The plaintiff applied to strike portions of the affidavit evidence given by Mr. Miller, Ms. Voth Miller and Mr. Dobranski. The grounds for the plaintiff’s application vary. They include challenges based on relevance, improper expressions of

opinion evidence, argument, settlement privilege and hearsay. [ 47 ] Certain paragraphs in the affidavits of Mr. Miller and Mr. Dobranski are challenged on the grounds of inappropriate expressions of opinion and argument. One paragraph, similar in both affidavits, contained expressions of concern that 2408 Sask was “grossly overcharged” and that there were deficiencies in the work.

Other paragraphs, in both affidavits, expressed the view that certain cost entries were “3 or 4 times higher” then would have been expected or were “extremely high”. [ 48 ] To the extent the plaintiff’s challenge is based on expressions of opinion and argument, I am satisfied that the challenge has no merit. As I read the affidavits, the challenged expressions should be read more as statements of the defendant’s position rather than expressions of either opinion or argument.

While one could contend that, given the statement of defence, a position statement is superfluous, I am not persuaded that such a contention goes to admissibility. Accordingly, and except for one reference, the challenged words will not be struck. [ 49 ] The only exceptions I would make in this regard relate to the references to deficient work. The plaintiff is correct in noting that this is not an allegation asserted in the statement of defence. As such, I agree that the references to any deficiencies are technically irrelevant. That said, even without the challenge, I would simply have ignored this evidence.

Much the same can be said for the paragraph in which Mr. Miller purported to identify specific deficiencies. Such evidence is clearly irrelevant. [ 50 ] The question of relevance also arises about the passages in which Mr. Miller and Mr. Dobranski alluded to Mr. Iula asking for a shot of tequila from Ace Burger’s bar. This evidence clearly had no probative value in the litigation and must be struck. [ 51 ] A challenge based on hearsay arose over a paragraph in Mr. Miller’s affidavit where he compared the plaintiff’s work with an estimate he received from another contractor.

The contractor is specifically named in the relevant passage. [ 52 ] In considering this challenge, I must be mindful of Rule 7-3(3) of The Queen’s Bench Rules . Pertaining to

summary judgment applications, this provision expressly permits affidavit evidence to be deposed on information and belief. As noted in Kennett v Diarco Farms Ltd. , 2018 SKQB 61 at para 22 , 21 CPC (8th) 353 [ Kennett ] , this liberal application of the rules of evidence is consistent with the new approach to

summary resolution of civil actions, described in Hryniak v Mauldin , 2014 SCC 7 , [2014] 1 SCR 87 [ Hryniak ] . Kennett also recognized, correctly in my view, that Rule 13-30 gives this Court discretion to refuse to admit or consider such evidence. [ 53 ] In this case, I note that Mr. Miller did not depose this part of his affidavit on information and belief. While that, in itself, creates a problem, I must say that even if this expression were properly included in the passage, I would not admit the evidence. At the very least, I am satisfied it should be ignored.

In my view, the weight of this evidence is questionable and adds nothing to the litigation. Accordingly, because this evidence might properly be contained in an affidavit for

summary judgment, it shall not be struck. Instead, I simply exercise my discretion not to admit it. [ 54 ] The issue of privilege factors in the plaintiff’s challenge to the passages in all three affidavits where the deponents described the $19,800.00 credit/discount in the fourth version of Invoice 1835279. The plaintiff contends that this was subject to settlement privilege which the plaintiff did not waive. Accordingly, the plaintiff asserts that any reference to this credit/discount is inadmissible. [ 55 ] Respectfully, I disagree.

As noted in the described background, the plaintiff issued multiple versions of Invoice 1835279. Certain of these invoices were adjusted based on the negotiation of discounts from certain subcontractors and suppliers. The plaintiff’s email message of November 18, 2019, expressly states that the $19,800.00 credit was calculated on the basis of discounts the plaintiff had negotiated.

This suggested that the fourth version of Invoice 1835279 was exactly what it purported to be – an invoiced charge – not a without prejudice offer. [ 56 ] The plaintiff has also raised the ground of settlement privilege to challenge the passages of the two affidavits in which Mr. Miller and Mr. Dobranski described conversations with Mr. Iula’s brother. In my view, these passages should be struck, but not for the reasons asserted by the plaintiff. Rather, I am satisfied that the description of the discussions had with Mr. Iula’s brother had no probative value and were entirely irrelevant. The fact that Mr.

Iula’s brother may have had a view about the plaintiff’s claim does nothing either to prove or disprove its validity or reasonableness. Accordingly, the passages in question should be struck. Applicable Law

Summary Judgment [ 57 ] The parties in this action agree that this action can be determined, one way or the other, by

summary judgment. Of course, this Court is not bound by the parties’ agreement. As I observed in Melnick v Tapp , 2018 SKQB 163 , the Court, on its own analysis, must still be satisfied of four things. These are: (1) that the Court can make the necessary findings of fact; (2) that it can apply the law to those facts; (3) that

summary judgment is a proportionate, expeditious and economical means to achieve a just result between the parties; and (4) that there appears to be no genuine issue requiring a trial. Also see Hryniak ; Auchstaetter v Evolution Homes Ltd. , 2016 SKQB 360 ; and Tchozewski v Lamontagne , 2014 SKQB 71 , [2014] 7 WWR 397 . [ 58 ] As to whether there is a genuine issue that requires a trial, much of this will turn on whether there is enough admissible evidence to allow the application judge, on a

summary basis, to reach a fair and just conclusion on a given issue. Where this is not the case, the application judge is obliged to direct a trial on that unresolved issue. [ 59 ] In the present case, I am satisfied that, on balance, this action is appropriately resolved by

summary judgment. The amount of money involved shows that

summary judgment is certainly a proportionate means for resolution. As for the other requirements, there is little doubt that the evidence presented discloses a somewhat tangled and untidy set of facts. Even so, I am comfortable in making the necessary findings of facts and applying the law to those findings. I am also satisfied that, despite some curiously unanswered questions, there is sufficient admissible evidence to allow me to reach a fair and just conclusion on the issues in

the action. Cost-Plus Contracts [ 60 ] Simply defined, cost-plus construction contracts are arrangements whereby the owner or occupier of a property agrees to reimburse the contractor for expenses incurred and pay a specified fee over and above those expenses. Often the fee will be defined as a percentage of the expenses.

In written cost-plus contracts, terms and conditions are commonly included to set a maximum charge or to ensure that certain costs come close to an estimate for the work to be done. [ 61 ] For the most part, disputes in cost-plus construction contracts are fact specific, informed by circumstances and, where applicable, the particular provisions of the contract between the parties.

Having said this, both parties in this case recognize that some guidance on certain general principles can be drawn from the Ontario Superior Court of Justice decision in Infinity Construction Inc. v Skyline Executive Acquisitions Inc. , 2020 ONSC 77 [ Infinity Construction ] . In that case, the Court rendered judgment on a claim for outstanding invoices on individual cost-plus contracts for the construction of ten cottages surrounding a golf course. In her analysis, Healey J. considered various authorities and articulated certain guiding principles for deciding disputes over cost-plus contracts.

In this regard, she wrote the following at paragraph 114 (citations omitted): [114] It is fair to say that the body of case law arising from disputes connected to cost-plus contracts is fact specific. However, I draw the following principles from the authorities to which counsel has directed the court:

a) even in an open-ended, cost-plus contract, there is still an obligation on the part of the parties to exercise a degree of diligence in carrying out the work so that they do not incur costs significantly higher than the estimate without prior approval;

b) In open-ended cost-plus contracts, courts will imply terms preventing payment for wasteful or uneconomic use of labour and materials ;

c) Where there is an estimate that provides a guide-post, the final price should fall somewhere near the estimate. The degree of variance between the estimate and the final price is subject to the “bounds of reasonableness”, which will be circumstance specific ;

d) Factors that go into assessing the “bounds of reasonableness” will depend on the size of the project, its uniqueness, the number of different cost inputs, and whether each cost input was reasonably ascertainable. There will be a narrower band of reasonable variance where the project comprises numerous input costs where variability in each may offset each other to a degree, and a wider band of reasonable variance the more unique the subject matter of the project ;

e) In assessing the role played by the estimate in the parties’ agreement, various criteria should be examined.

These include the circumstances in which the estimate was given, whether the owner communicated that price was of overriding importance, the knowledge and expertise of the party providing the estimate, whether it was relied upon by the party requesting it, whether the owner required the contractor to design a project at a specified cost or seek assurances as to what the project will cost, whether the agreement provided for a percentage of the project cost as a fee to the contractor, whether the contractor made it clear that it was not assuming any of the risk that the estimate might be exceeded, whether the contractor provided the owner with information regarding rates for labour, equipment rental and materials, and whether the owner encouraged the contractor to proceed with the construction despite actual or constructive knowledge that the estimate would be exceeded;

f) The inclusion of a process in the contract for approving extras before they would be constructed implies that there would be a degree of certainty around an estimate;

g) The relative sophistication and knowledge of the parties is important in determining the degree to which the party should be required to adhere to the estimate;

h) A contractor is obliged to promptly notify an owner if there are cost overruns to a budget estimate in a cost-plus contract;

i) Alterations in the work directed while it is in progress by the owner or the owner’s agent are to be paid for on the cost-plus basis prevailing for the original contract if no special agreement is entered into for the price of such alterations;

j) Where a contractor is seeking to recover on a cost-plus basis the evidentiary burden of proving these costs is a heavy one ;

k) It is not necessary that the accounts be kept in any particular manner or to a high standard, but well enough to show proof of the contractor’s charges ;

l) Once a contractor proves that he has kept proper accounts and is able to show supporting documentation, the onus shifts to the opposing party to adduce evidence to show that the amounts claimed or the accounts are incorrect or unreliable ;

m) Once doubt is cast upon the accounts the onus shifts back to the contractor to satisfy the court that his accounts are accurate and support his claim. If the court is left in doubt, he fails ; and

n) As far as materials are concerned, so long as the building is in existence and the system of recording material is capable of providing a substantially accurate result, the court may find that the plaintiff has proved his claim upon evidence somewhat less conclusive. The records of the time of the workmen employed must be strictly proved since it is difficult to verify after the fact . [Emphasis added] [ 62 ] It is obvious that not all the above principles apply in this case.

For that reason, I have emphasized the principles that, either directly or indirectly, afford applicable guidance in the matter before me. [ 63 ] Where there is an issue about the reasonableness of the costs incurred, a frequently cited authority is the

longstanding decision in G.T. Parmenter Construction Ltd. v Sanders , [1947] OJ No 568 (QL) (Ont H Ct) , which was also cited in Infinity Construction . In that case, the Assistant Master of the Ontario High Court of Justice wrote about the favourable position enjoyed by a contractor in a cost-plus contract, as well as the responsibility associated with that position. This responsibility includes the obligation to maintain proper accounts.

In this regard, Marriott, Assistant Master, wrote the following at paragraph 10: [10] Before dealing with the evidence I think it would be helpful to state the position of a contractor who seeks payment for material supplied and for work done under a cost-plus contract. The contractor in such cases is in a favourable position. In undertaking the work he takes no risk of incurring any loss. He is assured payment of his costs and fee and is not under the anxiety of watching every item of expense closely in order to keep within the limit of his estimate, which he has to do when he is building for a firm price.

However, the responsibility he cannot escape is that he must keep proper accounts. This is a duty which the law imposes upon all persons in such a position that external parties have a legal interest in the payroll and records of materials used. Furthermore, in this case there is a definite contractual obligation to keep proper accounts: see art. 16 referred to above. The onus is of course upon the plaintiff to prove his claim by a preponderance of evidence. In a case where a contractor is seeking to recover on a cost-plus basis this burden is a particularly heavy one.

He prima facie satisfies this onus by filing an itemized statement of his account, by producing his books and records to support his account, by showing that he kept an account of the materials used, and the cost thereof supported by invoices, by producing receipts for labour, services and sub-contracts and by swearing to the accuracy of all these things. It is then for the defendant or person who has the liberty to surcharge and falsify the account to adduce evidence to show that the amounts claimed or the accounts are incorrect or unreliable. This burden is a very definite one : [citation omitted].

But when once doubt is cast upon the accounts the onus shifts back to the contractor, so that if he fails to satisfy the Court that his accounts are accurate and support his claim, or if the Court is left in doubt, he fails. It is not necessary that the accounts should be kept in any particular manner. It is sufficient if they are kept in such a way that they constitute proof of the contractor’s charges. The records of the time of the workmen employed on the particular job in question must be proved strictly, since after the work is done there is no manner in which it can be checked.

However, so far as materials are concerned, so long as the building is in existence and the system of recording material is capable of giving a substantially accurate result, the Court may find that the plaintiff has proved his claim upon evidence somewhat less conclusive, unless the defendants adduce evidence which casts doubt on the plaintiff’s method of recording material used, in which case strict proof may be required. [ 64 ] As I read the above passage, I discern that the described accounting for costs, particularly of time records, pertains principally to the contractor’s internal costs, which should be strictly proved – not the internal costs of subcontractors and suppliers.

This is not to say that the contractor has no duty to question subcontractor and supplier charges where they appear questionable. Even without the contract stipulating it, a court will imply such a duty. That said, a contractor will meet this duty as long as reasonable diligence is exercised. Analysis [ 65 ] At the outset of this analysis, I am compelled to observe that both sides in this matter bear some responsibility for the dispute between them. The casual way the parties entered into this arrangement, without written terms and conditions and without specific estimates or quotations, portended conflict.

The conflict was subsequently made worse by two factors: (1) the plaintiff presenting confusing and conflicting evidence of the costs it incurred; and (2) the defendant’s overscrupulous and somewhat pedantic scrutiny of the costs incurred.

These factors created significant distrust and precluded the possibility of an amicable settlement. [ 66 ] Setting aside this observation, the Court must now address the details of this claim and do so in accordance with the principles reflected above. [ 67 ] The first stage in this analysis is to assess whether the plaintiff has proved its claim on the preponderance of the evidence, including the presentation of proper accounts and related documentation. In addressing this stage, I am compelled to observe that the manner in which Mr.

Iula presented his account to 2408 Sask did little to inspire confidence in the business end of his company’s operations. Aside from multiple versions of one invoice – one of which I found was never sent – the evidence suggests that Mr. Iula’s casual entry into this arrangement carried on into his dealings with Mr. Miller and Mr. Dobranski. This was amply illustrated by the discrepancies between various versions of Invoice 1835279 and the invoices from subcontractors and suppliers. There was also no explanation for the lack of transparency in his efforts to support the claims for costs incurred.

This was particularly evident in Mr. Iula’s failure, before this litigation, to share copies of the various invoices he received. [ 68 ] Having said all this, the evidence persuades me that the plaintiff obviously incurred costs to carry out renovations that met the scope of work expected by the defendant. I am also persuaded that the costs and the fee or markup for the plaintiff’s services exceeds the $75,000 paid by the defendant.

As to the precise amount of the costs, the question arises as to which version of Invoice 1835279 is the most accurate, or whether it is necessary for the Court to parse through all the invoices and related evidence to determine a reasonable amount. [ 69 ] This question brings me then to consider the evidence presented on behalf of 2408 Sask. At the outset, I must comment on the suggestion, implicit in Mr. Miller’s affidavit, that this Court should rely upon his expertise in “restaurant builds” in determining the reasonableness of the costs charged.

In my view, it would be an error of law for the Court to rely on any such professed expertise. As articulated by the Supreme Court of Canada in White Burgess Langille Inman v Abbott and Haliburton Co. , 2015 SCC 23 , [2015] 2 SCR 182 , the admissibility and consideration of any expert evidence depends, inter alia , on the expert having proper qualifications. Those qualifications now include the willingness and ability of the professed expert to provide evidence that is: (1) impartial; (2) independent; and (3) unbiased.

These characteristics pertain not only to subjective opinions of a professed expert, they also speak to the objective appearance of partiality, lack of independence or bias. [ 70 ] In the present case, I declined to strike portions of the defence affidavits that described the views of Mr. Miller and Mr. Dobranski on the reasonableness of the plaintiff’s charges. I did so, however, solely on the grounds that they could be received as statements of the defendant’s position. This should not be taken as acceptance of those views as properly qualified expert opinion. As qualified as Mr. Miller and Mr.

Dobranski might believe themselves to be, that is of no moment for this Court in assessing the reasonableness of the costs incurred. Further, the fact that 2408 Sask put forward estimates of other contractors is of little significance. It would be a much different consideration if those contractors were properly qualified to express opinions on the reasonableness of the

plaintiff’s charges and went on to express those opinions through sworn affidavits. No such evidence was presented by either party. [ 71 ] Having said all the above, the concern about the evidence of Mr. Miller and Mr. Dobranski does not apply to deposition on matters of fact that are clearly distinguished from matters of expert opinion. For example, the observations of discrepancies between the invoices exhibited to Mr.

Iula’s first affidavit from entries in the fourth version of Invoice 1835279, are matters of fact which were properly brought forward through the defence evidence. [ 72 ] Returning to the plaintiff having proved its account, I am not persuaded that it has proved the amount put forward in Mr. Iula’s first affidavit. I say this for four reasons. First, I have already found that the plaintiff’s invoice for this amount was never sent to 2408 Sask. Second, the discrepancies and unanswered questions arising from the multiple versions of Invoice 1835279 simply preclude any such claim. Third, the cost reductions Mr.

Iula negotiated, which were incorporated in the fourth version of Invoice 1835279, are not reflected in the invoice upon which the plaintiff’s claim is now based. Fourth, a lack of transparency behind the multiple versions of the invoice leaves me uncomfortable in relying on the plaintiff’s assertion that the quantum described in Mr. Iula’s first affidavit reflects a fair and accurate description of the defendant’s liability. [ 73 ] I find that the better view of the defendant’s liability is reflected in the fourth version of Invoice 1835279. That version includes the discounts negotiated by Mr.

Iula and represents a reasonably fair picture of the account that the plaintiff expected 2408 Sask to pay in October 2019. Having said this, it must be remembered that, according to the plaintiff’s email message to Mr. Miller, the $19,800 discount was reflected in KWI’s willingness to reduce its charge to the plaintiff. This means that the costs reflected in the invoice, as well as the markup associated with those costs, must similarly be reduced. Before adding the $19,800 discount, the itemized costs in the fourth version of the invoice amounted to $136,395.90.

With the discount, the costs dropped to $116,595.90. The 10% markup would then amount to $11,659.59, which I round up to $11,660. [ 74 ] I appreciate that the defendant remains unhappy with the amount charged in the fourth version of Invoice 1835279. That said, I am not persuaded that their criticism of the amount charged, without further and better evidence, is sufficient to meet the burden of showing that the costs reflected in that version were incorrect or unreliable.

Moreover, the evidence does satisfy me that, as imperfectly as the plaintiff conducted itself in this transaction, it did what it could to negotiate reasonable terms with its subcontractors and suppliers. Conclusion [ 75 ] In the result, I find the plaintiff has proved its account charged for the renovations conducted at Ace Burger in the following amount: Itemized costs (including a $19,800 discount): $116,595.90 Markup 11,660.00 Total before taxes $128,255.90 GST 6,412.80 PST 7,695.35 Total $142,364.05 [ 76 ] Of this account, the $75,000.00 already paid must be deducted.

It follows that the plaintiff shall have judgment against 2408 Sask for the balance, consisting of $67,364.05. The plaintiff is also entitled to prejudgment interest pursuant to the provisions of The Pre-judgment Interest Act , SS 1984-85-86, c P-22.2 . [ 77 ] Although this case had a degree of complexity, I am satisfied that it is primarily related to the tangled and untidy facts – not complex questions of law. Under the circumstances, I think it appropriate that the plaintiff have its costs of this application and the action against 2408 Sask under Column 1. No other costs are awarded.

In particular, as the plaintiff enjoyed mixed success on its application to strike affidavit evidence, there shall also be no costs awarded on that issue. “R.W. Elson” J. R.W. ELSON