Reddick Brothers Masonry Limited v. Hage Investments Limited, 2022 NSSC 89

SUPREME COURT OF Nova Scotia Citation: Reddick Brothers Masonry Limited v. Hage Investments Limited , 2022 NSSC 89 Date: 20220427 Docket: Hfx No. 506559 Registry: Halifax Between: Reddick Brothers Masonry Limited Applicant v. Hage Investments Limited Respondent DECISION Judge: The Honourable Justice C. Richard Coughlan Heard: February 15, 2022, in Halifax, Nova Scotia Counsel: Geoffrey A. Saunders, for the Applicant James D.

MacNeil, for the Respondent By the Court: [ 1 ] Reddick Brothers Masonry Limited (Reddick Brothers), entered into a contract with Hage Investments Limited (Hage Investments) to provide the masonry work for a building Hage Investments was constructing. A dispute arose over the

interpretation of the contract and the amount of money, if any, due to Reddick Brothers, pursuant to the contract. Reddick Brothers filed a Notice of Application in Court for an order Hage Investments pay it $49,443.95 plus interest and costs. Hage Investments opposes the application. [ 2 ] The facts are as follows: [ 3 ] Hage Investments owns land at 299 Gary Martin Drive, Bedford, Nova Scotia. Reddick Brothers is a masonry contractor whose principal work is commercial in nature including condominiums and apartment buildings.

[ 4 ] In 2013 Reddick Brothers provided a quote for a company with which Jamil Hage, the president of Hage Investments was associated, for the masonry work with respect to construction on Gary Martin Drive. The contract was awarded to Reddick Brothers and it provided the masonry work for one building which was built at the time. [ 5 ] In 2019, Jamil Hage approached Jonathan Reddick, Vice-President of Reddick Brothers, seeking a quote for the masonry work on a building to be constructed at 299 Gary Martin Drive. Reddick Brothers prepared a quote dated February 19, 2019, for $385,000.00, excluding HST. Messrs.

Hage and Reddick discussed changes to reduce the price, including reducing the amount of brick required. [ 6 ] The amount of bricks to be installed was reduced. Reddick Brothers prepared a new proposal or quote, which provided in part “Labour on bricks based on 50,000 bricks” with a price of “$180,000.00 plus tax”. [ 7 ] A Purchase Order Agreement was prepared by Hage Investments and signed by Hage Investments and Reddick Brothers in connection with the construction of a 60 unit apartment building at 299 Gary Martin Drive.

The agreement provided inter alia : Labour on bricks based on 50,000 bricks Labour the block (CMU) based on 5400 units … CONTRACT PRICE EXCLUDING HST: $180,000.00 HST at 15%: $27,000.00 TOTAL PAYABLE BY THE OWNER: $207,000.00 [ 8 ] In 2020 Mr. Hage told Mr. Reddick that Hage Investments wanted more brick on the building.

Hage Investments and Reddick Brothers entered into a new Purchase Order Agreement on the same terms as the previous agreement, except it provided: Labour on bricks based on 68,000 bricks Labour the block (CMU) based on 5400 units … CONTRACT PRICE EXCLUDING HST: $234,000.00 HST at 15%: $35,100.00 TOTAL PAYABLE BY THE OWNER: $269,100.00. [ 9 ] In both purchase order agreements, the provisions that the labour was based on a specific number of bricks or blocks was added to the purchase order at Reddick Brothers’ request and Hage Investments incorporated the provisions in both purchase orders. [ 10 ] Both agreements also contained the following provisions: • Any changes to this proposal will be signed by Hage Investments Ltd. and Reddick Brothers Ltd. • Work to be performed in accordance with the attached schedules including

Schedule A–General Conditions. [ 11 ] There was no

Schedule A attached to either purchase order. Jonathan Reddick who signed both purchase orders on behalf of Reddick Brothers, did not have

Schedule A–General Conditions, when he signed the purchase orders nor did he ask for the

schedule when he signed the purchase orders. The first time Mr. Reddick saw “Schedule A–General Conditions” was when he received the email from Mr. Hage on April 12, 2021. [ 12 ] Reddick Brothers commenced its work on the project in April 2020. [ 13 ] Jonathan Reddick testified that shortly thereafter he and Mr. Hage met at the construction site. Mr. Hage advised Mr. Reddick that a number of the corridor walls in the basement which were shown on the plans as constructed with drywall should be constructed with blocks. Mr. Reddick told Mr.

Hage that Reddick Brothers would change $7.50 per block for whatever blocks were required by the change. Mr. Hage said Hage Investments would not pay the additional charge as Reddick Brothers, with its experience, should have known the walls should be constructed of blocks not drywall. Mr. Reddick replied when he bid on the job the plans showed the corridor walls constructed with drywall. Mr. Reddick considered the additional blocks an extra. Mr. Reddick did not prepare a change order. He just spoke to Mr.

Hage and told him Reddick Brothers was going to charge Hage Investments for it. [ 14 ] Jamil Hage deposed as the work progressed and invoices were issued, he noted Reddick Brothers charged an “extra” for the basement block on a variety of invoices. Mr. Hage discussed this with Mr. Reddick on the telephone and in person as there was no agreement either verbally or in writing for the basement block to be an extra on the project. [ 15 ] I accept Jonathan Reddick’s evidence of the conversation he had with Mr.

Hage at the construction site shortly after Reddick Brothers commenced its work on the project in April 2020. [ 16 ] Reddick Brothers issued an invoice dated April 25, 2020, which shows: Approved charge Orders to Date: $ Extra blocks $7.50/piece

Total Revised Contract: $ 234,000.00 + blocks [ 17 ] The notation continued on the invoices of Reddick Brothers dated May 25, 2020; June 25, 2020; and July 25, 2020. In the Reddick Brothers invoice of August 25, 2020, it shows: Approved change Orders to Date: $ Extra blocks $7.50/piece $ 1544 blocks extra ($11,580.00) Total Revised Contract: $ 245,580.00 That notation continued on the invoice dated October 25, 2020. The invoice dated August 25, 2020, was paid on January 21, 2021. [ 18 ] In November 2020 Hage Investments requested Reddick Brothers to undertake work to repair a balcony.

The Reddick Brothers foreman made a note about the requested balcony repair. The note was not signed by Reddick Brothers and Hage Investments. The balcony work was completed in December 2020 and on December 21, 2020, Reddick Brothers sent a Note informing Hage Investments the cost of the balcony repair was $1,270.50 plus HST. [ 19 ] When its work was completed in December 2020, Reddick Brothers contacted Shaw Brick, from whom Hage Investments had purchased the brick and block which Reddick Brothers installed, to determine the total quantity of brick and block delivered to the construction site.

Shaw Brick advised Reddick Brothers the total number delivered to the site was 77,300 bricks and 7,635 blocks. This was 9,300 bricks and 2235 blocks in excess of the number of bricks and blocks set out in the purchase order.

On December 31, 2020, Reddick Brothers prepared a Note setting out the charge for the brick and blocks in excess of the amounts set out in the purchase order, totalling $33,082.50 plus HST. [ 20 ] Reddick Brothers Invoice No. 7 “REVISED” dated December 25, 2020, shows: Original Contract Amount: $ 234,000.00 Approved change Orders to Date: $ Extra blocks $ 7.50/piece $ 1544 blocks extra ($11,580.00) $ 1270.50 to fix balcony $ 33,082.50 Total Revised Contract: $ 279,933.00 [ 21 ] On February 25, 2021, Reddick Brothers issued an invoice for release of the holdback which, including HST, totaled $32,192.30. [ 22 ] On April 12, 2021, Mr.

Hage emailed Mr. Reddick concerning the subject: 299 Gary Martin Drive – Final Bill, in which Mr. Hage stated: Jonathan, I have mailed your final bill for $24,488.56 (Balance of original contract of $234,000 + tax) +$1461.07 for the additional work to fix #109 balcony. As you can see from

Schedule A of the original Purchase Order you signed, any changes to the original contract are to be agreed upon in writing. (

f) Change Orders The Owner will provide the Contractor with a written description of any proposed change in the work. The Contractor will provide a written description and quotation for the proposed change. If accepted, the Owner will provide a written Purchase Order for the change order. No change orders will be processed without a written Purchase Order, signed by the Owner, in advance of the work. The Balcony repair was an example of where additional work took place and I personally signed off on this change (see attached).

Everything else on this job was done according to the original plans and there were no additional change orders agreed to for this job. Thank you for your understanding. Jamil Hage-President Hage Investments Ltd 513-299 Gary Martin Drive Bedford NS B4B 2E9

[23] Reddick Brothers has received the following payments on the invoices it issued to Hage Investments: Invoice Date Invoice Amount Payment Date Payment AmountApril 25, 2020 $38,750.40July 9, 2020 $38,750.40May 25, 2020 $53,281.80September 23, 2020 $53,281.80June 25, 2020 $53,281.80September 23, 2020 $38,750.40 October 15, 2020 $14,531.40July 25, 2020 $60,547.50October 15, 2020 $38,750.40 January 21, 2021 $21,797.10August 25, 2020 $35,605.04January 21, 2021 $35,605.04October 25, 2020 $5,083.51January 8, 2021 $1,918.20 January 21, 2021 $3,145.36 April 15, 2021 $19.95December 25, 2020 $43,180.61April 15, 2021 $25,929.68February 25, 2021 $32,192.30 TOTAL $321,922.96 $272,479.73 [24] The approach to be followed when a court is involved in the

interpretation of a contract was set out in Sattva Capital Corp. v.Creston Molly Corp., 2014 SCC 53, where, in giving the Court’s judgment, Rothstein, J. stated at paras. 47-48: 47 Regarding the first development, the

interpretation of contracts has evolved towards a practical, common-sense approach notdominated by technical rules of construction. The overriding concern is to determine "the intent of the parties and the scope of theirunderstanding" (Jesuit Fathers of Upper Canada v. Guardian Insurance Co. of Canada, 2006 SCC 21, [2006] 1 S.C.R. 744, at para.27, per LeBel J.; see also Tercon Contractors Ltd. v. British Columbia (Transportation and Highways), 2010 SCC 4, [2010] 1 S.C.R. 69,at paras. 64-65, per Cromwell J.).

To do so, a decision-maker must read the contract as a whole, giving the words used their ordinary andgrammatical meaning, consistent with the surrounding circumstances known to the parties at the time of formation of the contract.Consideration of the surrounding circumstances recognizes that ascertaining contractual intention can be difficult when looking at wordson their own, because words alone do not have an immutable or absolute meaning: No contracts are made in a vacuum: there is always a setting in which they have to be placed... .

In a commercial contract it is certainlyright that the court should know the commercial purpose of the contract and this in turn presupposes knowledge of the genesis of thetransaction, the background, the context, the market in which the parties are operating. (Reardon Smith Line, at p. 574, per Lord Wilberforce) 48 The meaning of words is often derived from a number of contextual factors, including the purpose of the agreement and the nature ofthe relationship created by the agreement (see Moore Realty Inc. v. Manitoba Motor League, 2003 MBCA 71, 173 Man.

R. (2d) 300, atpara. 15, per Hamilton J.A.; see also Hall, at p. 22; and McCamus, at pp. 749-50). As stated by Lord Hoffmann in InvestorsCompensation Scheme Ltd. v. West Bromwich Building Society, [1998] 1 All E.R. 98 (H.L.): The meaning which a document (or any other utterance) would convey to a reasonable man is not the same thing as the meaning of itswords.

The meaning of words is a matter of dictionaries and grammars; the meaning of the document is what the parties using thosewords against the relevant background would reasonably have been understood to mean. [p. 115] [25] Justice Rothstein went on to say contractual

interpretation is an exercise in which the principles of contractual

interpretation areapplied to the words of the written contract, considered in light of the factual matrix (para. 50). [26] The use of surrounding circumstances and the nature of the surrounding circumstances was described by Rothstein, J. at paras.57-58: 57 While the surrounding circumstances will be considered in interpreting the terms of a contract, they must never be allowed tooverwhelm the words of that agreement (Hayes Forest Services, at para. 14; and Hall, at p. 30). The goal of examining such evidence isto deepen a decision-maker's understanding of the mutual and objective intentions of the parties as expressed in the words of the contract.The

interpretation of a written contractual provision must always be grounded in the text and read in light of the entire contract (Hall, atpp. 15 and 30-32). While the surrounding circumstances are relied upon in the interpretive process, courts cannot use them to deviatefrom the text such that the court effectively creates a new agreement (Glaswegian Enterprises Inc. v. B.C. Tel Mobility CellularInc. (1997), (BC CA), 101 B.C.A.C. 62). 58 The nature of the evidence that can be relied upon under the rubric of "surrounding circumstances" will necessarily vary from case tocase. It does, however, have its limits.

It should consist only of objective evidence of the background facts at the time of the execution ofthe contract (King, at paras. 66 and 70), that is, knowledge that was or reasonably ought to have been within the knowledge of bothparties at or before the date of contracting. Subject to these requirements and the parol evidence rule discussed below, this includes, inthe words of Lord Hoffmann, "absolutely anything which would have affected the way in which the language of the document wouldhave been understood by a reasonable man" (Investors Compensation Scheme, at p. 114).

Whether something was or reasonably ought tohave been within the common knowledge of the parties at the time of execution of the contract is a question of fact. [27] See also Canada (Attorney General) v. Fontaine, 2017 SCC 47, at paras. 42-47; IFP Technologies (Canada) Inc. v. EnCanaMidstream and Marketing, 2017 ABCA 157, at para. 84, 85 and 114. [28] Justice Rothstein went on to state the parol evidence rule does not apply to preclude evidence of the surrounding circumstances(para. 60).

[ 29 ] When interpretating a contract, courts will strive to give all provisions in a contract meaning and to avoid an

interpretation of one provision that would render another provision meaningless or redundant: Austin v. Bell Canada , 2020 ONCA 142 , at para. 26 . As Saunders J.A., stated in giving the Court’s judgment in Pass Creek Enterprises Ltd. v. Kootenay Custom Log Sort Ltd. , 2003 BCCA 580 , at para. 17 , “words in a contract are presumed to have meaning”. Issue [ 30 ] The issue before the Court is whether the contract between the parties (purchase order agreement) is a fixed price contract or permits Reddick Brothers to charge for all the work it completed on the project.

Positions of the Parties [ 31 ] Reddick Brothers submits the contract was changing so much that the contract price was based on an estimate of the quantity of the brick and block installed in the project and there was to be an adjustment of the price at the end of the project, whether more or less, depending on the quantity of brick and block installed. They say the amount billed to Hage Investments was within the terms of the contract or authorized by Hage Investments as an extra. [ 32 ] Hage Investments submits the contract is a fixed price contract.

The purchase order provides “Total Payable by Owner $269,100.00”. They say the provisions: Labour on bricks based on 68,000 bricks Labour the block (CMU) based on 5400 units are a reference to the amount of brick and block Reddick Brothers estimated and has no further meaning. [ 33 ] Hage Investments further submits there are no change orders for extras as required by the contract, except for the balcony repair.

Hage Investments says both “Schedule A–General Conditions” referred to in the purchase order and the provision “Any changes to this proposal will be signed by Hage Investments Ltd. and Reddick Brothers Ltd.” require certain procedures to be followed to create a change order and as the procedures were not followed, other than the balcony repair, there were no extras for which Reddick Brothers is to be paid.

All work performed by Reddick Brothers, other than the balcony repair, was performed under the fixed price contract. [ 34 ] In interpretating a contract, the court is to determine the objective intention of the parties looking at the contract as a whole. The purchase order provides the total payable by Hage Investments is $269,100.00 including HST. The purchase order also provides the labour on the bricks is based on 68,000 bricks and labour on the block is based on 5400 units.

Both provisions must have meaning, otherwise there would be no reason to include them in the contract. [ 35 ] If the total amount Hage Investments was to pay Reddick Brothers pursuant to the contract (purchase order), other than extras, was regardless of the number of bricks and blocks installed $269,100.00, then the provision that the labour on the bricks and block “was based on 68,000 bricks” and “5400 units of block” would be meaningless.

However, Reddick Brothers requested the provision that the labour was based on 68,000 bricks and 5400 block be in the purchase order, and Hage Investments agreed to put it in the purchase order. The provision must mean something. [ 36 ] Both provisions can have meaning. If 68,000 bricks and 5400 blocks were installed then the total amount to be paid to Reddick Brothers is the $269,100.00 set out in the purchase order. That

interpretation gives meaning to both provisions. Then the amount to be paid to Reddick Brothers would be adjusted to account for the quantity of bricks and block actually installed. [ 37 ] This

interpretation of the purchase order is consistent with the surrounding circumstances known to the parties at the time of the formation of the contract. The amount of brick and block to be installed changed a number of times. First there was Reddick Brothers’ quote of February 19, 2019, in the amount of $385,000.00. Then the amount of brick to be installed was reduced and the parties executed a purchase order based on 50,000 bricks and 5400 blocks with a total amount to be paid by Hage Investments of $207,000.00.

Then the parties entered into the current purchase order in which the only difference from the previous purchase order was the number of bricks, 68,000 instead of 50,000, and the total payable by Hage Investments, $269,100.00 instead of $207,000.00. At the time the parties executed the purchase order which is the subject of this proceeding they knew that when the quantity of the brick or block changed, the amount to be paid by Hage Investments to Reddick Brothers changed. [ 38 ] The surrounding circumstances set out above are consistent with the

interpretation of the contract (purchase order), which gives meaning to the whole contract, including the provision of the total amount to be paid by Hage Investments and the provisions that the labour is based on 68,000 bricks and 5400 blocks. [ 39 ] I find the objective intention of the parties at the time of executing the contract (purchase order) was that if 68,000 bricks and 5400 blocks were installed, then the total amount to be paid by Hage Investments to Reddick Brothers was $269,100.00 including HST.

If a different number of bricks and blocks were installed, then the amount to be paid to Reddick Brothers would be adjusted to account for the number of bricks and blocks actually installed. [ 40 ] The issue arises as to whether there were any “extras” in this project which were authorized by the contract. [ 41 ] The purchase order contains two provisions which affect any changes from the work contemplated at the time of the execution of the contract. [ 42 ] The first provision provides “Any changes to this proposal will be signed by Hage Investments Ltd. and Reddick Brothers Ltd.”.

There were no changes to work on this project which were signed by Hage Investments Ltd. and Reddick Brothers. [ 43 ] The second provision provides “Work to be performed in accordance with the attached schedules including

Schedule A–

General Conditions.”. There was no

schedule attached to the purchase order. The first time Reddick Brothers was aware of what HageInvestments said

Schedule A–General Conditions provided as to change orders was when Jonathan Reddick received Mr. Hage’s emailof April 12, 2021. At the time of the execution of the purchase order, Mr. Reddick did not ask for a copy of the

Schedule A referred to inthe purchase order. There is no evidence of any change order in this project executed in accordance with the procedure set out in thechange order provision of

Schedule A–General Conditions. [44] The document Mr. Hage deposed was the balcony change order does not comply with the change order provision. It was a notemade by Reddick Brothers foreman with no quote for the proposed change, which appears to set out the hours worked by certainemployees on November 27 and December 1, 2020. [45] Although there were no change orders which complied with the provision in the purchase order dealing with change orders,Hage Investments agrees there was at least one change order which dealt with the balcony repair.

The evidence shows, and I find, theparties did not follow the formalities set out in the contract when changes to the work to be performed by Reddick Brothers wasrequested by Hage Investments. In addition to the balcony repair, as stated above, I find Mr.

Hage on behalf of Hage Investments,instructed Reddick Brothers to install the block in the basement corridor walls which walls had been shown on the plans to beconstructed with drywall. [46] Reddick Brothers is entitled to be paid for the bricks it installed in excess of 68,000 and the blocks it installed in excess of 5400blocks, as well as the balcony repair. [47] The difficulty in fixing the amount of damages was addressed in Penvidic Contracting Co. Ltd. v. International NickelCompany of Canada Ltd., (SCC), [1976] 1 S.C.R. 267 where Spence J. in giving the Court’s judgment stated at page 279: When Wood v.

Grand Valley Railway Company, supra, reached the Supreme Court of Canada, judgment was given by Davies J. and wasreported in (SCC), 51 S.C.R. 283, where the learned justice said at p. 289: It was clearly impossible under the facts of that case to estimate with anything approaching to mathematical accuracy the damagessustained by the plaintiffs, but it seems to me to be clearly laid down there by the learned judges that such an impossibility cannot“relieve the wrongdoer of the necessity of paying damages for his breach of contract” and that on the other hand the tribunal to estimatethem whether jury or judge must under such circumstances do “the best it can” and its conclusion will not be set aside even if the amountof the verdict is a matter of guess work. [48] The evidence is that 77,300 bricks and 7,635 blocks were delivered to the site which is 9,300 bricks and 2235 blocks in excessof the amounts set out in the purchase order.

The August 25, 2020, invoice set out 1544 blocks were used in connection with replacingblock for drywall in the basement corridor. That leaves 9,300 bricks and 691 blocks in excess of the amounts in the purchase orderunaccounted for. There is no evidence of the number of bricks and blocks installed overall. Some of the bricks and blocks would havebeen damaged, wasted or for some other reason not installed. No evidence was presented as to any industry standard of such wastage. Inhis affidavit deposed to on September 29, 2021, Mr.

Reddick stated he estimated that some of the changes requested by HageInvestments at the corners alone would exceed the 9300 extra bricks. However there would be some wastage of bricks and blocks so thatnot all bricks and blocks delivered were installed. As a contingency to account for wastage the $33,082.50 charged for the extra bricksand blocks set out in the Reddick Brothers note dated December 31, 2020, is to be reduced by ten percent, that is $3,308.25, whichleaves a balance of $29,774.25. [49] The total of the invoices rendered by Reddick Brothers was $321,922.96. Hage Investments has paid $272,479.73.

Thedifference between the amount billed and the amount paid is $49,443.23. When the above mentioned contingency of $3,308.25 togetherwith HST on the $3,308.25 of $496.24 is deducted, a balance of $45,638.74 remains. Hage Investments Limited is to pay $45,638.74 toReddick Brothers Masonry Limited. [50] If the parties are unable to agree I will hear them on the issue of prejudgment interest and costs. Coughlan, J.