) ) Rick Stewart Construction Ltd. Plaintiff – v. –, 2013 ONSC 3166

CITATION : Rick Stewart Construction Ltd. v. Donovan and Toronto Dominion Bank, 2013 ONSC 3166 COURT FILE NO.: 10155/08 DATE: 2013-05-30 ONTARIO SUPERIOR COURT OF JUSTICE BETWEEN: ) ) Rick Stewart Construction Ltd. Plaintiff – and – Joseph Donovan, Anna Donovan and the Toronto-Dominion Bank Defendants )) ) ) ) ) ) ) ) ) Michael S. Stratton and Yaroslav O. Diduch, for the Plaintiff C. MacLeod and M. Singh, for the Defendants Joseph Donovan and Anna Donovan ) HEARD: December 4, 5 and 6, 2012 at Welland, Ontario THE HONOURABLE JUSTICE THERESA MADDALENA REASONS FOR JUDGMENT THE ISSUES: [ 1 ] The Court in this trial had the following issues for adjudication:

(1) Was there a contract between the plaintiff, Rick Stewart Construction Ltd. and the defendants, Joseph Donovan and Anna Donovan, and if so, when did this occur?

(2) What monies, if any, are owed by the defendants to the plaintiff?

(3) What monies, if any, are owed by the plaintiff to the defendants?

(4) Was the plaintiff’s claim for lien registered in a timely fashion, and if not, can the plaintiff succeed on a claim for breach of contract, quantum meruit or unjust enrichment?

THE POSITION OF THE PLAINTIFF, RICK STEWART CONSTRUCTION LTD. [ 2 ] The plaintiff states that the contract between the plaintiff and the defendants, Joseph Donovan and Anna Donovan, is the document dated July 6 th , 2007, executed by all parties stating the cost for the construction of the house at issue is $725,000 inclusive of GST together with extras commissioned by the Donovans. [ 3 ] The plaintiff states that the defendants, Joseph and Anna Donovan, still owe the plaintiff $103,647 as outstanding amounts under the contract for the construction of the defendants’ home.

The position of the defendants, Joseph Donovan and Anna Donovan [ 4 ] The defendants state the contract between the parties is $624,700 inclusive of GST as outlined in the quote of June 15, 2007, less credits to them for those items marked “omit” plus any extras commissioned by them.

[ 5 ] Both the plaintiff and the defendants agree that, based on bank draws, total payments to the plaintiff by the defendants’ bank total $663,754. [ 6 ] The defendants, Joseph Donovan and Anna Donovan, claim they have overpaid the plaintiff and if any money is owed, it is owed back to them.

INTRODUCTION [ 7 ] The plaintiff, Rick Stewart Construction Ltd., (hereinafter referred to as Stewart) is a custom home builder. [ 8 ] The defendant, Joseph Donovan, (hereinafter referred to as Donovan) is the owner of lands described municipally as 4990 Bluff Road, Ridgeway, Ontario. [ 9 ] The defendant, Anna Donovan, is the spouse of the defendant, Joseph Donovan. [ 10 ] The action as against the Toronto-Dominion Bank has been discontinued.

QUOTATION: NOVEMBER 30, 2006 - $590,000 INCLUSIVE OF GST [ 11 ] Donovan first e-mailed Stewart on or about October 27, 2006, requesting a quotation to build a home on vacant lands owned by Donovan municipally described as 4990 Bluff Road, Ridgeway, Ontario. [ 12 ] Donovan was aware that Stewart had built other homes in the area. [ 13 ] Stewart gave a first quotation, sent via e-mail November 30, 2006, for $590,000 inclusive of GST. This quotation was meant to be general without much detail and was based on a 3200 square foot home of the “Pasadena” style from the Viceroy book of plans.

This quotation was not based on a specific set of plans. [ 14 ] Further, this quotation was meant to give an idea only of items to be included in the home. The allowances were rough and, according to Stewart, were based on what others in the area had spent. This quotation included a list of items included and further items not included. [ 15 ] In this quotation Stewart advised Donovan that with the exposed basement there was a possibility that the house could exceed the maximum height restrictions for the area. [ 16 ] This quote of November 30, 2006, is attached hereto as

Schedule “A”. [ 17 ] It should be noted that neither of the parties is claiming the quotation of November 30, 2006, to represent the contract as between them for the construction of the house. QUOTATION: APRIL 16, 2007 – $609,000 INCLUSIVE OF GST [ 18 ] In March of 2007, Donovan obtained a quotation from another custom home builder, Pym and Cooper, for the construction of a house on the lands. [ 19 ] The amount quoted by Pym and Cooper was $751,387 (rounded) inclusive of GST.

This quotation was based on specific plans prepared by Edwards Designs Inc. for a house of approximately 3450 square feet. [ 20 ] The Edwards Designs Inc. plans were prepared March 23, 2007, for Pym and Cooper specifically for their quotation. [ 21 ] Further, on April 16, 2007, Donovan requested Stewart to provide a quotation to him for a home of approximately 3450 square feet based on the plans prepared by Edwards Designs Inc. for Pym and Cooper. [ 22 ] That quote given by Stewart to Donovan was $609,000 inclusive of GST and quoted also a number of “items not included in the price.” It should be noted that this quotation was based on the Edwards Designs Inc. plans.

This quotation is attached as

Schedule “B” to this judgment. [ 23 ] Stewart stated that this quotation gave a little more detail. The basement was partially out of the ground with finishings beyond just concrete. It had man-made laid stone as exterior finish as well as large cedar decks. [ 24 ] Stewart however advised Donovan again that the plan of the Edwards Designs Inc. situated the house too far out of the ground and would likely not pass the height restrictions and therefore approval of the Abino Dunes Committee for height restrictions.

It was a requirement that all plans for building be approved by the Abino Dunes Committee in addition to the building department of the Town of Fort Erie. [ 25 ] Stewart therefore suggested that Donovan sink the house into the ground and make a full basement. [ 26 ] At this time, it should be noted that all were working with the Edwards Designs Inc. plans that had been commissioned by Pym and Cooper for the Donovans.

[ 27 ] However, Pym and Cooper would not permit the Edwards Designs Inc. plans that had been commissioned by them to be released and to be used by Stewart in the construction of the house for Donovan. Donovan stated in his evidence that he preferred Stewart to construct the house for him since it was easier to deal with Stewart by way of e-mail correspondence. [ 28 ] As a result, Donovan asked Stewart to commission new plans for submission to the Abino Dunes Committee and to provide a quotation for a home based on those plans.

Stewart commissioned the plans from Quick Draw Drafting Service and on June 7, 2007, the plans were completed by Quick Draw Drafting Service. [ 29 ] On June 7, 2007 the Quick Draw plans were sent by Stewart to the Donovans and, based on those plans, a quote was provided by Stewart. [ 30 ] The plans provided for a home of 3570 square feet.

Stewart stated in his evidence that the increase in square footage was as a result of room size increases requested by the Donovans. [ 31 ] It should be noted at this stage that neither party is claiming that the quotation of April 16, 2007, based on the “Edwards plan design” of $609,000 inclusive of GST represents of the agreement between the parties herein. QUOTATION: JUNE 15, 2007 - $624,700 INCLUSIVE OF GST [ 32 ] This quotation, provided by Stewart, was based on the Quick Draw design plans and a copy of this quotation is attached as

Schedule “C” to the judgment. The quotation of June 15, 2007, listed three items marked as “omit.” [ 33 ] The “omit” items included: (

i) Basement exposed as per plan complete with frost walls and styrofoam; (ii) Man-made laid stone on all exposed basement walls ($5.50 per square foot); (iii) Main floor cedar decks (to waterproof with Duradek); There were a number of items in the quotation of June 15, 2007, included in the quotation and there were also a number of items not included in the quoted price. [ 34 ] Stewart stated that the price was not based on square footage, but rather on specifics ordered in the home, from which the square footage could be later ascertained.

Stewart further stated, at the time of this quotation, that he did not know the specifics with respect to the cabinets, what flooring or light fixtures the Donovans would choose. In addition, after the quotation herein the Donovans requested on June 15, 2007, via an e-mail, two separate heating and air conditioning zones which would clearly impact on the price, according to Stewart. [ 35 ] On June 18, 2007, at the request of Donovan, the Quick Draw design plans were submitted by Stewart and approved both by the Abino Dunes Committee and the building department of the Town of Fort Erie.

On June 18, 2007, Donovan instructed Stewart to commence construction of the home and on June 19, 2007, Stewart commenced digging. [ 36 ] Stewart also stated that between June 15, 2007, and July 6, 2007, Stewart provided the Donovans with a sample building contract document marked in red with the word “typical” on it. Stewart maintains the document he is relying upon was based on his “typical” contract. [ 37 ] Stewart further stated that between the time of digging on June 19, 2007, to July 6, 2007, there were a number of discussions between him and Donovan.

A number of extras were added by the Donovans, allowances were increased, and many items previously not included were now included as choices were made by the Donovans and prices became known. [ 38 ] Thus, as a result of a July 4 th , 2007 meeting between Stewart and the Donovans, and discussions referred to above, Stewart prepared on July 6, 2007 a final document incorporating all the costs known to date. That final document set the price for the construction of the home at $725,000 inclusive of GST.

QUOTATION: JULY 6, 2007 -- $725,000 INCLUSIVE OF GST [ 39 ] Stewart indicated that by July 6, 2007, a decision had been made by the Donovans on some of the additional items such as the elk shingles, the plywood for the roof sheeting was changed from one-half inch to five-eighths inch, the septic system cost was now known, a second furnace and air-conditioning unit were included, cabinets and vanities allowances were increased, flooring allowance was increased, and these were all additional costs added to the $624,700 quote.

Ultimately Stewart stated that he prepared a document on July 6, 2007, and sent it to the Donovans for signature. This document sent out by Stewart on July 6, 2007, is attached as

Schedule “D” to this judgment. This document followed the “typical” document provided to Donovan earlier. [ 40 ] The document came back to Stewart on July 12, 2007, signed by Anna and Joseph Donovan with amendments made to

Schedule “A” including amendments to allowances for kitchen cabinets, vanities and appliances from $44,000 (rounded) to $74,000. It also amended the flooring allowance from $25,000 to $35,000 and changed the plywood roof sheeting from one-half inch to five-eighths inch. Pursuant to

Schedule “A”, the only item not included in the purchase price was “fill if required”. [ 41 ] It should be noted after both Joseph and Anna Donovan signed this document, Donovan e-mailed Stewart on July 12, 2007, stating via e-mail on July 12, 2007, “Here’s the contract.”

ANALYSIS [ 42 ] Firstly, Donovan’s position is that the building contract with Stewart is the $624,700 quote inclusive of GST less credits of approximately $65,000, plus their extra’s. [ 43 ] Donovan states that he understood the credits were: 1) $45,000 for the exterior wall and frost protection and stone finish that was to be omitted; and 2) $20,000 for the wood cedar decking that was not needed as the house was sunk into the ground. [ 44 ] Donovan claims with this credit of $65,000 he extended the floor allowance by $10,000 and increased the cabinet allowance from $44,000 to $74,000 and this should all be without increasing the price of the house.

Stewart disagrees and contends that the actual contract is the document prepared by Stewart on July 6, 2007, and executed by the Donovans July 12, 2007. [ 45 ] It should further be noted the document of July 6, 2007, includes a number of specific items not previously included in the June 15, 2007, quotation. [ 46 ] The inclusion of these items would have increased the price and indeed did so if one examines

Schedule “A” of the July 6 th , 2007, document. (Schedule “D” to this judgment). [ 47 ] Stewart claims that the June 15, 2007, quotation of $624,700 inclusive of GST has three items marked “omit”. Those items would not be approved by the Abino Dunes Committee and this was known to the Donovans. Stewart indicates that the price quoted of $624,700 did not include the “omit” items. It also did not include those items marked “not included in price”. [ 48 ] The Donovans state that “omit” means a credit of $45,000 to $65,000 as against the quotation of $624,700.

In other words “omit” to Donovan equates to a credit. [ 49 ] Donovan further states that he discussed this issue of credits for deletion at the July 4, 2007, meeting with Stewart. According to Donovan the price was $624,700 plus the flooring allowances of $10,000 cabinet allowances up to $74,000 and credits for the deletion of the items marked “omit”. Donovan states that Stewart recited and agreed at the July 4 th meeting that there would be credits for those items that were omitted and based on that, the Donovans decided to increase their allowances for cabinet and flooring.

According to Donovan, Stewart indicated that this was fine. [ 50 ] Donovan indicated it is clear that all had agreed that the price for the construction would be $624,700 with the increased allowances. [ 51 ] Donovan’s evidence was that he signed the $725,000 document in order for Stewart to get paid by the bank.

Therefore, according to Donovan, the $725,000 figure was “a big fluffy round number” and “made up” so Stewart would be able to get paid from the bank’s progress payments but all really knew that the basic price was $624,700. [ 52 ] The Court notes that, based on all the seven volumes of documents in court exhibit one, there is no documentation, despite voluminous e-mail communication between these parties, that would indicate that the words “omit” on the June 15, 2007, contract were intended to give a $65,000 credit or any credit to the Donovans.

There is no record anywhere of such a credit owing to the Donovans by Stewart. [ 53 ] The June 15, 2007, quotation is clear on what is included and not included. It has no reference with respect to additional credits provided to the Donovans as a result of the items marked “omit”. [ 54 ] Based on the evidence presented, the Court concludes that the items marked “omit” were marked as such to ensure compliance with the height restrictions for the Abino Dunes Committee and are not intended to provide a credit to Donovan.

The quotation of $624,700 inclusive of GST included all items marked in the quote, except those marked “omit” and did not include those items marked “not included in price”. There is no evidence leading to an alternate

interpretation. [ 55 ] The Court concludes that a “credit” as crucial as that proposed by the Donovans would have been referenced somewhere if not in the quotation itself, then in some other documentation. None has been produced. [ 56 ] Instead, the court finds the June 15, 2007 quotation clear as to items included and items not included in the price quoted. [ 57 ] By July 6, 2007, many of the items not included in the price quote of June 15, 2007 were now known and an examination of the

schedule in the July 6, 2007 document shows all the prior unincluded items as forming part of the price quotation on July 6, 2007. It is therefore not surprising that with the inclusion of these items the price rose to $725,000 inclusive of GST. [ 58 ] Based on all the evidence, I am not persuaded that the Donovans executed the document on July 12, 2007 as simply “a big fluffy number” that did not represent the real price of the construction of the home. [ 59 ] Given the specificity of the June 15, 2007 quotation and further given the specificity of the items marked in

Schedule “A” of the document dated July 12, 2007, and returned by the Donovans I am not persuaded that “omit” as referenced in the June 15, 2007, document could in any way imply credits to Donovan. Further, given the lack of any documentation, despite the volumes of e-mails, I am not persuaded that the $725,000 figure in the July 12, 2007, document is simply a “made-up” figure in order to satisfy Donovan’s bank or in order to obtain a larger draw from the Donovans’ bank. [ 60 ] The Court is not persuaded that Donovan is correct when he states, “We gave Stewart whatever he wanted, but this was not our agreement”.

[ 61 ] The Court finds, therefore, that the actual contract between the parties is the contract that was executed by the Donovans and returned to Stewart July 12, 2007. That contract has the full offer acceptance and consideration and, the Court finds, is intended to be the governing document between the parties. DEFICENCIES [ 62 ] Donovan has indicated that there are a number of deficiencies and has counterclaimed against Stewart for them. [ 63 ] For example, Donovan stated that a stainless steel bar and countertop were included in the contract.

Stewart claimed that a stainless steel countertop and bar on the porch were discussed but not part of the contract. The Court notes no mention of these items in the contract or prior quotations. [ 64 ] Further, Donovan indicated there was to be a mud room prior to entering the kitchen. Stewart claims that there was no mud room contemplated or ever part of the contract and therefore it was not done.

The Court notes similarly no reference to a mud room. [ 65 ] Donovan indicates that there were some other deficiencies with respect to a stippled ceiling, stone patio outside the barbeque area, and outside the master bedroom. He also indicated an outdoor shower and drain were not working and some gutters were not properly drained. Donovan further indicated some electrical outlets were not sealed and did not work. He indicated leaks occurred in the roof around the chimney area which damaged the kitchen ceiling.

Further Donovan complained that the air conditioner was not supported by a structure and there were no steps outside the master bedroom. [ 66 ] During the trial there was evidence that Donovan hired alternate contractors to fix the water leaks around the chimney at a cost of approximately $1,000 (rounded). Donovan also hired an alternate contractor to put drains away from the home and corrected some of the outlets at a cost of approximately $1,000 (rounded). Donovan also retained Royal Roofing to repair shingles around the chimney at a cost of $200 (rounded).

However, Donovan indicated that there was definitely to be a garage and a mudroom. Stewart indicated there were no plans for a mudroom or a garage. With reference to a garage, the Court has noted that there is an e-mail of November 15, 2006 from Donovan to Stewart indicating as follows: “… The style house that is appealing to us is the Pasadena under the viceroy website. We would make a few modifications … no garage (we will add a detached 2 car garage at a later date) ….” Based on this evidence – it is appropriate to provide Donovan with a credit owing by Stewart for $2,200.

TIMELINESS OF LIEN [ 67 ] Donovan challenges the timeliness of Stewart’s Construction Lien registered as Instrument #SN218579 on August 18, 2008. Stewart’s evidence to the Court was that his painter, Giura Painting and Drywall Limited, provided an invoice of July 17, 2008. That invoice was for a cost of $1,134 invoiced to Stewart Construction for painting on the property on July 17, 2008. This was the last time Stewart’s contractors were on the property.

I accept this evidence. [ 68 ] The claim for lien expires at the conclusion of 45 days following the date the contract is completed or the last work and supply is performed. I am satisfied based on the evidence that the last work performed was July 17, 2008. The claim for lien was issued August 18, 2008, and is therefore within the prescribed time period by the Construction Lien Act. [ 69 ] Therefore the claim for lien is timely and I need not address quantum meruit or unjust enrichment claims.

CONCLUSIONS AND JUDGMENT [ 70 ] I therefore find that the offer, acceptance and consideration is present in the contract completed or executed by all parties effective July 12, 2007. [ 71 ] There shall be judgment, therefore, in favour of the plaintiff as against the defendants, Donovan, for the amount of $101,447 ($103,647 minus $2,200 owed by the plaintiff to the defendants for deficiencies). COSTS [ 72 ] Unless otherwise agreed, the parties may make written submissions as to costs limited to two pages plus a bill of costs.

The plaintiff’s submissions are due by June 19, 2013 the defendants submissions are due by July 10, 2013. Maddalena, J. Released: May 30, 2013

ONTARIO SUPERIOR COURT OF JUSTICE Rick Stewart Construction Ltd. Plaintiff – and – Joseph Donovan, Anna Donovan and The Toronto- Dominion Bank Defendants REASONS FOR JUDGMENT Maddalena, J. CITATION : Rick Stewart Construction Ltd. v. Donovan and Toronto Dominion Bank, 2013 ONSC 3166 COURT FILE NO.: 10155/08 DATE: 2013-05-30

Released: May 30, 2013