) ) MICHELE NEWTON v. PIERRE OZON, 2013 ONSC 7231

CITATION : Newton v. Evclare Holdings Limited, 2013 ONSC 7231 BARRIE COURT FILE NO.: 09-0250 DATE: 20131121 ONTARIO SUPERIOR COURT OF JUSTICE BETWEEN: ) ) MICHELE NEWTON and PIERRE OZON Plaintiffs – and – EVCLARE HOLDINGS LIMITED Defendant ) ) ) ) ) ) ) ) ) M. Adams, for the Plaintiffs J. Botelho, for the Defendant ) ) ) HEARD: September 9, 10, 11, 12, 13, and 16, 2013 REASONS FOR DECISION HOWDEN J.: OVERVIEW [ 1 ] In early 2005, the plaintiffs, Michelle Newton and Pierre Ozon lived at 130 Loon Ave. but they were having thoughts about a new home to be built on the waterfront.

They are a young professional couple, articulate and with ideas of their own but they had little knowledge of where they should start. Michelle Newton has an MBA degree. Pierre Ozon is a medical doctor, 44 years of age at the time he testified, who practises in Barrie. They have a young child. As far as I know, neither had any prior experience with house construction. [ 2 ] For purposes of these Reasons for Decision, I will refer to Pierre Ozon at times as Mr. Ozon so that all witnesses are seen to be regarded with equal respect; his MD and its knowledge base has nothing to do with the issues in this action.

It is not meant as any disrespect to him. [ 3 ] Michelle Newton and Pierre Ozon attended a local Home Hardware event in 2005 to learn more about contractors and construction. At one table sat Clare Boudreau, president of the defendant Evclare Holdings Limited (“EHL”). They spoke and later followed up with Mr. Boudreau by phone. [ 4 ] By October 1, 2005, the contract between them was signed and the waterfront planning process of Barrie and the local Conservation Authority had born fruit for development of their lot, municipally known as 68 White Oaks Rd.

It is a waterfront lot located near Minet’s Point in the City of Barrie. They obtained a minor variance to allow a house to be built served only by a private road. They had also obtained the approval of the Conservation Authority for the siting of the house on the lot which was in a fill or floodplain area. Building progressed through the winter and spring of 2005 and 2006. [ 5 ] On June 12, 2006, the plaintiffs took possession of the mostly completed home. Differences grew between the plaintiffs and Mr. Boudreau about the state of finish of various portions of the home though they continued communication and Mr.

Boudreau continued for a time well beyond the contractual warranty period to discuss the plaintiffs’ requests and complaints. Finally on February 20, 2009, this litigation began. The plaintiffs seek $158,000 in damages for the following work: • removal and re-installation of all siding and masonry veneer and proper installation of air barrier flashing system on all four walls as recommended by R. Koerth, P.Eng. • replacement of north wall drywall and insulation • removal and installation of all interior wood trim • adjust door frames

• repair drywall in second floor hall, stairway walls, foyer and Great Room • repaint house • remove trex deck and install new trex decking (labour only) • complete perlam bolts • removal and installation of soffits, fascia and trough • patio door cladding ISSUES [ 6 ] The issues in this case are as follows, as taken from the evidence as a whole and the closing addresses of counsel: Did the defendant breach the standard of “good and workmanlike manner, free from defects in material” in its construction of the house as agreed to in the contract, para. 18.2(

a) in relation to the following: (

i) the installation of siding, masonry, flashing and air barrier in all four walls of the home; (ii) the interior wood trim; (iii) the drywall in the upper hall, stairway wall to first floor, foyer walls, Great Room walls and the potlight installation in the kitchen ceiling; (iv) the installation of the Trex deck; (

v) installation of the soffit and fascia. [ 7 ] A further issue was introduced by Mr. Botelho in his final submissions. It was on the subject of the assessment of damages and whether, because the owners have “enjoyed the benefit of seven years of the material on their home (sic)...any possible award for damages should discount the seven years of use by the plaintiffs.” In this way, he appeared to suggest that, if damages were awarded, some allowance should be made for this period of use of the new home.

No authority or analytical approach was put forward, merely this bald assertion that the period of use required a discount of any damage award. I requested further submissions on this point. Both counsel provided those submissions. They raise two additional issues relating to any assessment of damages in the plaintiffs’ favour on account of the water penetration issue: (

i) should the principle of betterment be applied in this case if damages for re-cladding are awarded where seven years of the Cape Cod warranty covering 15 years have elapsed, assuming that the plaintiffs should have expected 15 years of use before re-cladding could be reasonably anticipated and not 22 years? (ii) there being no evidence to provide a basis for awarding damages for re-cladding the entire house beyond Mr. Koerth’s observations at one exposed location, are the plaintiffs limited to only nominal damages on this ground due to inability of the trier of fact to assess damages with any certainty? THE CONTRACT [ 8 ] The key sections of the contract appear to be the following: (

a) The contract includes the Agreement dated October 1, 2005 from

Article A-1 to and including

Article A-15 on p.6 where the parties signed, as well as Appendix A

definitions and The General Conditions from GC 1 to GC 18.

(

b) Article A-4 describes the scope of the project as including construction in accordance with 4 drawings designed by Custom Cadd and truss and floor design drawings from United Lumber Home Hardware, all permit applications, and demolition permit for existing dwelling if required. “All work and purchase orders and/or change orders to be pre-approved by Owners prior to commencement and as per

Article A-7” (A-7 requires pre-approval by Owners of use of the construction manager’s own forces and payment by the Owners for the cost of the work plus a fee at a rate that is unspecified). (

c) Article A-5 describes the contract fee including the stages when it is to be paid. This is not in issue in this case. (

d) GC2 Construction Manager’s Services provides an important limit on the construction manager’s responsibilities. It states that “he assumes no responsibility nor offers any expertise with respect to the design of the Project ...which shall be the responsibility of the Consultant and the Owner.” [Emphasis added.] (

e) GC 2.2 The Pre-Construction Phase requires the Manager, among other things, to assemble and analyze bid documents for the competitive hiring of the trade contractors and recommend awards to the Owners. (

f) GC 2.3.1 requires the manager to monitor and coordinate the work of the trade contractors. (

g) GC 2.4.2 requires the construction manager to assist the Owner in administering warranties of the trade contractors. (

h) GC 3 requires the manager, under the direction of the Owner, to arrange for contracts to be entered with the various trade contractors and the Owners, subject to the manager’s approval. (

i) GC 4 sets out the Owner’s responsibilities, one of which is to promptly notify the manager of any defective, faulty or nonconforming work of which he or she becomes aware. (

j) The standard of work required by the contract and the warranty of one year on the work are set out in Articles 18.1 and 18.2. The work done on the project shall “be complete (sic) in a good and workmanlike and timely manner, free of any defects in material and workmanship” (Article18.1)

Article 18.2 requires the manager to supply the Owners with the one-year warranty for work completed through “the Construction Manager’s OWN FORCES and the Construction Manager shall negotiate to the best of (his) ability with sub- contractors and sub-trades completing all other work and providing materials, the provision of related warranties acceptable to the Owners and provide Owners with all documentation relating to these warranties. The Construction manager ...shall manage all warranty related claims on behalf of the Owner.” [Emphasis added.] (

k) Then under (

a) ONE YEAR WARRANTY in para. 18.2, the one-year warranty from EHL begins on the date the Owners take possession of the home and ends on the day before the first anniversary of this date. The warranty requires that the home be constructed in a workmanlike manner and free from defects in material, fit for habitation, constructed in accordance with the Ontario Building Code, and free of major structural defects. [Emphasis added. No separation is made here, as there appeared to have been earlier in 18.2 between the “Manager’s own forces” and sub-trades regarding warranties. There is only one warranty and it sets the standard of all work and materials in 18.2(a). (

l) Two items listed in the General Notes to the building drawings bear attention as well because they seem to underline the Owners’ responsibility for design matters. Note 5 states that “All finish materials, types and colours shall be to the Owners’ requirements.” Note 33 reads: “All exterior and interior finishes as selected by the Owner.” [ 9 ] I believe that this is a fair

summary of the provisions of some applicability to this case. From the evidence of Mr. Boudreau, EHL neglected to carry out the express responsibilities in paras. A-7, GC 2.2, GC 2.4.2 and GC 3. He explained his avoidance of Para A-

7 by characterizing the three workmen used continuously by him as independent contractors. I know of no competitive bidding mentioned in para GC 2.2. Mr. Boudreau simply used men and sub-trades he was familiar and comfortable with. I know of no warranties from other trades that he negotiated or administered (para. 18.2). Ms. Newton said she and her husband signed a few contracts with sub-trades but there were no competing bids; one contractor was recommended for the foundation or the painting or excavation (para. GC 3). Mr.

Boudreau complained that at times he felt the plaintiffs left him out when selecting certain material or finishes; yet unlike many other construction contracts where the builder keeps for himself control over material ordering, in this case it is clear that the Owners were responsible for selecting all interior finishes. So we start with a contract which is represented by the defendant who proposed it to be a kind of management contract where the so-called construction manager acts as a kind of service manager coordinating bids and warranties with sub-trades for the owners as the contract portrayed EHL to be.

In fact, EHL acted more like the general contractor for the job, hiring or recommending those sub-trades he was comfortable working with and using his own small force of workers. [ 10 ] In accordance with the requirement of the warranty and GC 4 of the contract’s General Conditions, the Owners delivered their first list of alleged deficient work and/or material early on April 10, 2006.

This list covers such things as removal of construction-related dirt on neighbour’s property, French drain to clear water from sump pumps in basement, repair of brick mould on terrace door, cleaning, remediation of window jamb extensions of incorrect length supplied by Home Hardware, finish of fireplace, ceiling attached track lights for Great Room, drywall bulging, and staining of the staircase. [ 11 ] Other deficiency lists followed and meetings with Mr. Boudreau about them for over a year. They had already raised various matters on walk-abouts orally before this according to Michelle Newton.

Then, after possession was taken of the home, they found water leaking into the basement after rain storms starting in July 2006 and again in August, September and October 2006. According to the plaintiffs, they first emailed the defendant about the water leakage in October though the email was lost from the computer. The first documented report to the defendant was an email dated November 30, 2013. In its wording that email clearly refers to several instances of water penetration.

Pierre Ozon wrote: Realizing there are a few outstanding items for you and Glenn to take care of and us to pay I want to draw your attention to a major concern and that is the leaks in the basement. Michelle brought this to Glenn’s attention at his last on-site visit and we have not heard anything back regarding this. As it has rained the last 24-36 hours I decided to take some photos as you can clearly see where the leaks are coming from. I feel that this needs to be addressed promptly... [ 12 ] The most dramatic record of the water penetration into the basement was shown to Mr. Boudreau on March 22, 2007.

It is a video recording made by Mr. Ozon during the time of a rain storm that March showing water dripping repeatedly through and around a large beam called a perlam beam in the basement ceiling at the north wall. The video was shown in court and the disk marked [Ex. 1(16)].

Water is all around in this video recording, but definitely entering through and around the beam near the north wall. [ 13 ] The first post-possession deficiency list was provided to the defendant on May 4, 2007 in a power-point presentation shown by video disc [Ex. 1(18)] and provided in hardcopy [Ex. 1(19)] with photographs to illustrate their complaints.

Those complaints comprised periodic noise in the master bedroom (wind noise): trim separations and gaps throughout; door and door-frame issues in the ensuite, their child’s room, family room, and powder room; visible drywall seams and taping and nail-pops in various parts of the home; water leakage in basement on October 30 and November 30, 2006 and at other times; pot-light holes in kitchen ceiling cut too large, poor caulking and paint smudges; exterior red lines on fascia; exterior caulking blobs left; BBQ mortar needed work; terrace door upper corner cracked; and silicone use on trim and the accompanying issues.

The last meeting appears to have been on May 21, 2008, when the plaintiffs presented Mr. Boudreau with another list on which he left some written comments. [ 14 ] At trial, the list of outstanding repair items alleged by the plaintiffs comprises the following in Ex. 13: Water leakage; remediation recommended is removal and replacement of siding and masonry veneer and install air barrier and flashing as recommended by R.

Koerth; Removal and replacement of drywall, insulation, and vapour barrier in north wall; Removal and installation of new Trex deck (labour only); Removal and replacement of baseboards and trim throughout house, repainting house; trim issues include repair to trim in cabinet in mud room, correcting gap in door to son’s bedroom, framing powder room, correct sloppy caulking round track lights in kitchen, gaps round pillar in kitchen counter top, terrace door moulding, painting or replacement of soffit, reimbursement for same and for pocket door; and Repair drywall deficiencies. [ 15 ] I will deal with each of these items including the relevant evidence and my findings and reasons in each case.

1. Water Penetration and Remediation Including North Wall [ 16 ] This appears to be the major issue between these parties. Mr. Koerth estimates remediation by replacement of all four walls of the house and correction of flashing and vapour barrier installation. He estimates the cost at $55,880. Mr. Scarati, who was asked to estimate repair costs if his firm was to do the work, saw the cost of this first remediation item as $63,480. [ 17 ] Both Mr. Ozon and Ms. Newton testified to the inception of the water penetration problem as I have noted above. It was first noticed in July 2006. The photograph taken by Ms.

Newton in July 2006 shows water near the north or lake-facing wall and the west wall, north end. Water stains can be seen vertically on the floor near the north and west walls but mostly centred at the northwest corner. [Ex. 2(44)]. The photograph taken between July and October (no exact date was provided) shows a close-up of a large puddle of water. Ms Newton places it at and near the west and north walls of the basement (Ex. 45).

The fan in the photograph she identified as having been brought by the defendant’s people. [ 18 ] I have already referred to the video record showing the actual penetration by water of the basement near the north wall and the north end of the perlam beam in March 2007. Both Mr. Ozon and Ms. Newton stated that the water penetration has continued periodically after rain storms ever since. He recalls last seeing water in the basement on July 19, 2013. Ms. Newton recalled the latest episode as having occurred three weeks prior to the day she testified.

That would put the last leakage into the basement that she knew of at on or about August 20, 2013. [ 19 ] The professional engineer called by the plaintiffs described the two systems used in residential construction for dealing with wind-driven rain against exterior walls; one is a “face-sealed system” which repels the water directly at the face of the cladding, and the other is a “rain-screen system” which repels water partially at the face and partially behind the cladding system where properly installed ty-vek and flashing directs any water that has penetrated to the outside.

The rain-screen system has been found to be more satisfactory and therefore most frequently used. (Ex. 5, Koerth Report, p.25). [ 20 ] On the issue of the existence of a water leakage problem, Mr. Boudreau gave a lengthy explanation of the stages of construction and the inspections at each stage by the City. He described how after framing, he had the entire house ty-vecked or wrapped in a polyethylene membrane, except for the windows and doors, and it was inspected and passed. He referred to the placement of the polyethylene flashing inside the walls.

Near the grade level, it should come out to the edge of the masonry work so that water will be directed out. As well, there is exterior metal flashing placed on top of the sill above the stone veneer and beneath the siding. He said it is placed at a 1/4” slope out and downward at the corbel (i.e. the level above the stone) so that water penetrating the siding would be directed out. [ 21 ] Mr. Boudreau did not place any of this himself. He said he had Kap Masonry do all the masonry and polyethylene flashing.

He did not appear to reject the existence of the water problem; in fact at one point, according to my note, he said the basement floats like a boat and he could not say why. On September 29, 2009, he opened the siding for an expert inspection. On doing so, he found some moisture on the strapping. When asked if there was considerable moisture, not just some, Mr. Boudreau denied it and would accept that he saw only a small amount of moisture, not a considerable amount. On examination for discovery, Mr.

Boudreau was asked if he communicated to the plaintiffs that a possible source of water penetration was the split sill door. He did not answer the question directly but in the middle of his round - about answer, he said: ...but the other thing when we removed siding we found that there was considerable moisture that was sitting on the strapping which obviously indicates to us that the siding is not doing the job that it should. (Disc., p. 111, Q.498) [ 22 ] Mr. Boudreau mistakenly continues to see the siding as a failed ‘face-sealed system’. According to Mr. Koerth, it is not that at all.

The siding relies on a ‘rain-screen’ system that directs the water that penetrates the siding out of the building. Mr. Boudreau refused to accept his answer from discovery because he saw it as prejudicial to himself. But in refusing to adopt the prior answer he had given under oath and throughout his lengthy evidence, he showed himself to be a person who embroiders the evidence in his favour and doesn’t answer questions frankly and forthrightly when it is not in his interest and even on such a minor issue, where he sees a disadvantage to himself in doing so.

In addition, he simply could not see how leakage into the basement could be occurring in consequence of anything his company or the sub-trades did. The attempts by the defendant to seal the perlam beam, seal the weeping tiles and seal the flashing outside the window (Ex. 6, Ph. 18) confirms his and his forces’ continuing lack of understanding of the rain- screen system necessary behind the Cape Cod siding and the masonry to direct water to the outside. [ 23 ] No one from Kap Masonry testified. [ 24 ] Mr.

Boudreau’s people, whether he calls them contractors as he does, or whether they are employees, consisted of Glenn Watson whose only training came from a millwork course at Conestoga College (See Ex. 23, Refusals/Undertakings Chart), and Mike Church and Darryl Boudreau. The latter left the job on March 10, 2006.

It is not clear how experienced they were except that they had worked on construction before for EHL. [ 25 ] As to the cause of the water penetration into the house and remediation, the civil engineer, Ronald Koerth, and an engineering technologist, Steve Wasylenki were called as expert witnesses. [ 26 ] Mr. Koerth was called by the plaintiffs. He has an engineering degree and is a member in good standing in the Ontario Association of Professional Engineers. He did site visits on two occasions, February 20 and July 24, 2009. By July, one small

section of masonry wall had been removed randomly from the west wall in order to permit a view into a typical view of the interior of the wall. [ 27 ] In this case, the Cape Cod siding and masonry veneer does not attempt to seal the walls against water; it allows some water into the wall interior. It is clearly not a face-sealed system, nor does it pretend to be according to Mr. Rempel, the Cape Cod consultant.

There is a gap required between the siding and the frame of the house where water can run down and be directed out by the air barrier or ty-vek self-gluing tape and the flashing at both the corbel and the foundation levels provided the flashing/air barrier system is installed correctly. The poly flashing in this case was merely taped to the ty-vek air barrier and not inserted under the air barrier at the base so as to form a complete seal against water infiltration which is not dependant on tape coming loose. Mr.

Koerth saw evidence of the use by the defendant of silicone caulking or sealant where water was entering near the perlam beam at the north wall. He said that caulking is a completely wrong approach to the problem because what the caulker is doing is merely hiding the problem, not fixing it. [ 28 ] The evidence of Mr. Boudreau is that the Barrie building inspector passed the air barrier (ty-vek) installation. Mr.

Koerth found the following deficiencies below the standard required by the Ontario Building Code (“OBC”): polyethylene flashing joints are not water-tight contrary to ss. 9.20.6.4(2) and (9.20.13.7.(1); the flashing failed to extend up behind the air barrier or ty-vek sheathing material (s.9.20.13.6(3); the polyethylene flashing failed to extend past the face of the foundation wall (s. 9.20.13.5(1)(b); there were no flashings beneath the jointed masonry window sills and they failed to extend past the face of the lower wall

section contrary to s. 9.20.13.3(1) (

a) and 9.20.13.4(2); there is less than a 1” air gap at times between wall interior and the air barrier; in fact in places such as in Ex. 2(59) one can see no gap at all, the mortar has filled in at least the left side of the masonry opening in the photograph and appears to continue on in that direction beyond the photograph; in other places a mortar bridge or blob has filled a small part of the gap but not most of it. The failure to provide the gap of at least 1” is contrary to ss. 9.20.6.4 (2) and 9.20.13.10(1) of the OBC. [ 29 ] There was a similar finding made by Mr. Koerth in regard to the upper

section of wall behind the Cape Cod siding in the wood sections of the OBC, as follows: the flashing at the base of the siding abutting the masonry did not extend up beneath the air barrier sheathing material [s.9.27.3.2(3)]; and the silicone caulking was not the caulking required by the manufacturer, suggesting that it was not compatible with the siding, and if so, it was contrary to s. 9.27.4.2.1(c). [ 30 ] In Mr. Koerth’s opinion, both the siding and the masonry as well as the flashing system were deficiently installed.

A telling exterior sign of this was at the bottom of the Cape Cod siding most of the way around the house. The Cape Cod siding had been pushed down so that the metal flashing was sloped inwards and not outwards as it should have been. This condition was observed in the walls around most of the perimeter of the house. [ 31 ] The evidence of another witness has an important bearing on the Koerth recommendations concerning the replacement of all the walls. According to Peter Rempel, the technical sales consultant for Cape Cod siding, the siding had been installed without regard to the manufacturer’s instructions.

His site inspection on September 25, 2007 revealed that the wood strapping was installed at a separation of 24” and not 16” as required and the siding had been single, not double nailed. The installation guideline from Cape Cod, in effect in 2005 [Ex. 3(53)], required 16” between strappings and 16” was the known practice with Cape Cod siding then; there was no limitation on this instruction.

He also noted that the siding had been jammed onto the metal flashing at the stone corbel bending the flashing back and causing it to slope inwards resulting in water accumulation at the base of the siding and premature wood deterioration. The jamming of the flashing in particular went to the validity of the manufacturer’s warranty, as did other deviations from the installation guidelines. Instead of stainless steel nails, ordinary nails were used which have rusted. He said that Cape Cod requires and provides stainless steel nails in the package. [ 32 ] Under cross-examination, Mr.

Rempel was shown the Home Hardware invoice for the shipment of the siding and it lists the nails as “galvanized”, not stainless steel. Mr. Rempel stated that Cape Cod provides stainless steel nails, no matter how the hardware store described them. But he could not say that Home Hardware had or had not provided the correct nails except that the nails installed were not as required by Cape Cod’s guidelines. He repeated that the jammed flashing was in that condition for the majority of the perimeter around the house. In this, he corroborated Mr. Koerth’s finding in 2009.

Rempel was adamant, when shown the new guidelines [Ex. 3(56)] which speak of strapping on 16” separation as applying where the building is under 25m from open water, that the 25m limitation was not part of the instructions in 2005. [ 33 ] As matters turned out, the Cape Cod warranty had been voided as stated in the letter from Mr. Rempel on September 25, 2007 due to the defective way the siding had been installed. He set out the remedial work required in the letter [Ex. 1(25)]. Mr. Boudreau arranged the Cape Cod site visit so he was well aware of it.

He never took any action to remedy the defects as directed in Mr. Rempel’s letter. [ 34 ] Mr. Koerth continued with his conclusions regarding replacement of the walls. He found that the through wall flashing was not visible at the base of the masonry walls or beneath any of the jointed sills. Without that, water would be permitted to leak into the house. As well, the north wall has possibly suffered water infiltration into the wall structure, and so the drywall and insulation should be removed and the air barrier and new drywall and new insulation should be installed on that wall.

There is further indication of improperly installed walls in his observation that there was significant air leakage round most of the upper level windows, particularly on the north face. He attributed the “buzzing sound” heard by the owners in the master bedroom to improperly installed and poor sealing of air barrier to the window frames. [ 35 ] In his opinion, no one can say which of the improperly installed siding, masonry or flashing system is contributing the most to the water infiltration.

Using the OBC and his own view of what is good and workmanlike construction, he found that installation of those components do not meet the standard. The problem is that the continuation of leakage will eventually lead to deterioration of the wood framed wall and to structural failure. [ 36 ] Mr. Koerth recommended that the entire exterior cladding system be removed and reinstalled after rectifying the deficiencies. Water has likely penetrated into the north wall. Its components of insulation and drywall must be installed as new. A better air barrier seal would be permitted also around all windows.

When I asked him why not replace only the north and affected sections of the east and west walls at their north ends, rather than wholesale removal and reinstallation of all the walls, Mr. Koerth said: A. Good question, and that’s one of the things that I often look at is, you know, what other way is there of doing something to minimize the cost, whether I’m on one side or the other.

Q. And, by the way, I don’t mean just the north side which there may be some need to go up both the east and west to some extent, but I’m not sure about a total... A. Understood. Q. ...a taking off all the siding. A. The problem is that, again, the problems with the flashings and the air barriers and the gaps are in my view everywhere because it showed...just the way the flashings were installed in the various locations suggested that the people that were installing them didn’t follow proper practices and they didn’t really understand the way those items should’ve been installed.

So I can – I can be fairly confident that it’s going to be like that around the house. As I’d indicated earlier, the fact that we don’t have water entry on the south side doesn’t mean that we don’t actually have water entering the system, we can’t see it.

And I wouldn’t – I’m not going to take the risk, and I’ve told my clients this when the – when I had a contractor client just two years ago the exact same scenario, strip the entire house, and it was brick and it was a much more expensive endeavour, because I can’t be confident that in 10 years from now they won’t have wood rot on the south side because that water has been entering but not leaking past. And I’ve seen that evidence in other cases where it’s just not enough to make it past everything into the basement or into the house, but it’s enough to just keep wetting it, keep wetting it, and keep rewetting.

And once it gets wet in a wall system, it doesn’t dry out because there’s no – there’s no real opportunity for that water to escape. Q. Okay. When you say the deficiencies were throughout, I’ve forgotten now the - how do you say that? I know about the opening on one side. But why do you say that you think the same deficiencies are true for the parts of the house you have never uncovered? A. Well I’ve got – at the time of my report, I had had the evidence of the flashing problems beneath the siding in a separate location that was uncovered by the contractor. Q. Yes. A.

I have the area that I looked at which had problems that were not just one blob, but on all – the thing about an opening like that, it’s a one foot by two foot opening, everything around it was a problem. The flashings weren’t proper, the mortar blobs on all the sides, and we have water entry. I mean, the reason why I was called in is because we had water entry. There’s been no other logical explanation why we’re having water entry on so much of the house.

And it’s completely consistent with the types of failures I’ve seen in other cases which are to me then an indication that fundamentally the people who installed these systems didn’t understand what their purposes were. And I have pretty good confidence, particularly because we’ve got so much water entry around the house, that this is a systemic problem around the house not just in those areas. On re-examination by Mr. Adams: Q. His Honour asked you if you were recommending using new as opposed to the existing siding on your replacement... A. Correct.

Q. ...but he didn’t ask you why you’re saying new siding as opposed to just replacing the siding. A. Correct.

In my experience, when you – when you pull apart a system like that, you know, and you have to pull all the boards off, you’re going to have then – you would either have to re-categorize them and label them to say, okay, this board came from this spot on this wall, and then have to deal with all the nail holes and so forth, and then have to re-cut various things, it’s from the labour point of view you’re probably going to spend more on the labour side and then you’re not going to have the same finished product as if you were to put – put in new. If it was a board or two, it would be one thing.

But when you’re doing the entire system, it would be much more, in my view, economical. And from a finished product point of view, you’re going to be better off using the new versus reusing old.

[ 37 ] The defendant called Steve Wasylenki who was qualified as an engineering technologist. He works under the supervision of a professional engineer in the same office and that engineer signed off on the report under that engineer’s professional seal.

His report (Ex. 6) set out its purpose as “to investigate water infiltration into the ...basement area and at patio doors that occurred on the ... (lake side) elevation of the building as reported by the Owner.” He made a visual inspection on September 29, 2009 of the basement wall, floor, exterior wood siding, stone masonry, metal flashings and window and door openings. There were two openings for him to examine in the wood siding, two in the masonry and one made prior in the masonry by others. The latter was the randomly chosen

section of the masonry opened to allow Mr. Koerth’s inspection. (Though this report called the side fronting toward the lake west, to avoid confusion, I will continue to refer to it as the north elevation and the other walls will be referred to in conformity with this orientation.) [ 38 ] Mr. Wasylenki set out his observations which were unremarkable. In his conclusions, he accepted from the evidence of water staining on the northerly basement floor near the north wall and the northerly portion of the west wall that water infiltration had occurred at some other time or times.

No moisture or water was found in the basement or living room near the patio doors where sealant was observed to have failed between the jamb and the threshold. He recommended that the deck be lowered 6” to avoid the possibility of water infiltration between the through wall flashing and the top of the foundation wall during heavy rains. [ 39 ] He found that the wall systems were all intact at the inspection openings and “generally complied with” the OBC. He recommended some minor changes such as double nailing the Cape Cod boards as required by the manufacturer.

Also, the metal flashing corners above the stone sill should be fastened and sealed with caulking as well as correcting the sealant failures he noted by using “experienced tradesmen familiar with substrate preparation and sealant application”. In the end, Mr. Wasylenki had no explanation for the water infiltration. He believed that the ty-vek air barrier and flashing should contain and divert any water out. [ 40 ] Under cross-examination, Mr. Wasylenki was shown his photo 25 from his report. He conceded that the flashing should extend beyond the foundation wall and it plainly did not.

He was shown the video record [Ex. 1(18)] of water dripping into the basement and agreed that it would have been better if he had seen this. He also conceded that, unlike the evidence of Mr. Boudreau who swore that the entire exterior foundation wall had been parged, photo at Ex. 2(65) showed a bare unparged foundation wall. [ 41 ] More importantly, he had to admit that his photo 23 showed only the right side of the inspection opening on the west elevation where a gap showed between interior wall and the veneer.

The photo at Ex. 2(59) shows the same opening and the mortar bridging closing the gap on the left side. He agreed that he had not included that view in his report. This type of editing represents the most troubling aspect of Mr. Wasylenki’s evidence. [ 42 ] As a further example, he admitted that after the first draft went out, he added a paragraph at p.4 of his report where the first draft had ended with the statement that deck spacing did not meet manufacturer’s specifications thus allowing excessive water accumulation which could lead to discolouration and welling of the planks.

The added ten lines of text, he admitted, came from Mr. Boudreau. They start with the statement from Mr. Boudreau that proper spacing between the planks was provided by EHL during the installation of the deck. They go on to list various things the owners could do to maintain the deck surface in line with the manufacturer’s guidelines. In the middle, almost unnoticed, the original conclusion of Mr. Wasylenki regarding water accumulation and discolouration remains, contained within the reassuring words about proper deck maintenance.

The implication is that plank swelling and discolouration could be avoided or ameliorated. That implication and the statement as to how the planks were installed went well beyond any observation Mr. Wasylenki could make as an independent professional witness. In my view, this addition and the omission from Photo 23 make evident that Mr. Wasylenki lost his independence in favour of placating the client. His evidence will receive a corresponding downgrade in weight as a result. [ 43 ] I found Mr. Koerth to be a solid, forthright witness.

He was the only witness who understood and could explain the rain- screen system of handling water infiltration. To study only the infiltration side without understanding how water that will inevitably enter through the siding is to be diverted out by properly extended flashing and the lower flashing tucked under the air barrier instead of relying on taping it on is to miss a fundamental understanding of why water has been penetrating the north wall and the northerly portions of the west and east walls. [ 44 ] The troubling aspect of Mr.

Koerth’s conclusions is the recommendation that all the walls, the masonry and siding portions, must be removed and replaced while ensuring that the flashing/air barrier or Ty-vek system is installed properly and within the OBC regulations. The penetration of water is limited to the north wall and the northerly third of the west wall. He had considered alternate solutions but dismissed them because they failed to deal with the overall problems that the siding was installed so unprofessionally that the owners lost their 15-year manufacturer’s warranty.

Also, it is more economic in his view to replace the Cape Cod siding than to get into an exercise of re-using and re-placing each board in the place it was and repairing individual nail holes in the used boards. [ 45 ] This is a serious issue. I will therefore set out my findings on the water penetration issue based on Mr. Koerth’s evidence in

summary form: (

i) the flashing failed to extend up behind the air barrier sheathing material under the masonry veneer and the Cape Cod siding [OBC, s. 9.20.6.4(2),s. 9.20.13.7(1), and s. 9.27.3.2(3)]; (ii) flashing joints are not water-tight [OBC, s.9.20.6.4(2)]; (iii) the poly flashing failed to extend out past the face of the foundation wall [OBC, s. 9.20.13.5(1)(b)]; (iv) no flashing was inserted below the masonry window sills nor did it extend past the face of the lower wall

section [OBC, s.9.20.13.3(1)(

a) and s. 9.0. 13.4(2)];

(

v) no gap exists between parts of the wall interior and the air barrier and where a gap does exist it is reduced to less than 1” due to mortar bridges or blobs [OBC, s.9.20.6.4(2) and 13.10(1)]; (vi) the wood strapping beneath the Cape Cod siding was installed at 24”and not 16” centres which was the practise generally known for Cape Cod siding and which was required in 2005-6 by the manufacturer’s installation guidelines [Ex. 3(53)]; (vii) the Cape Cod siding was pushed down forcing the metal flashing near the sill inwards and not directed outwards as it should have been - the jamming of the flashing existed around the majority of the perimeter surrounding the house; (viii) the result of the continuing condition in item vii) above is premature deterioration of the siding due to water accumulation at the base of the siding; (ix) the nails used were not stainless steel as required by the Cape Cod guidelines and as a result the ordinary nails used had rusted and were unsightly; and (

x) due to the defects in the installation of the Cape Cod siding by EHL, the 15-year manufacturer’s warranty was lost to the plaintiffs and despite the remedies suggested by Mr. Rempel in his letter of September 25 2007, Mr. Boudreau did nothing to correct these defects. [ 46 ] I accept Mr. Koerth’s evidence on the need for replacement of the siding, the flashing system and the masonry veneer on the north wall and the northerly 20% of the west wall. I further accept that the siding portion of all four walls must be removed and replaced and the flashing/air barrier placement must be remedied in accordance with Mr.

Koerth’s Ex. 9 and the Cape Cod manufacturer’s guidelines. I find for the reasons given that these components have not been installed in a workmanlike manner and instead the installation by the defendant failed to have regard to the Cape Cod siding instructions, and failed to carry out the OBC requirements and the requirements of the rain-screen system when these requirements were known, or ought reasonably to have been well known, to the defendant as an experienced building construction manager.

Due to the incorrect installation of the siding, the defendant has caused the plaintiffs to lose the15-year warranty for the siding which has been voided according to Mr. Rempel due to installation deficiencies. 2. The Drywall [ 47 ] This house has a very imposing central room called the Great Room. It was obviously planned as a special place for social and family gatherings. It has wide and high expanses of wall space to show paintings or other items. Mr. Ozon made no secret of his desire to have the wall specially presentable and free of obvious problems with the drywall and finish. [ 48 ] Mr.

Boudreau assured the owners at the start that they would receive special treatment; that he felt like they were his children. Michelle Newton recalled that he told them when he wanted the contract that he would treat this house as his own. At the end of construction, he remembered that he and Glenn Watson and Ozon went through the house and ticked off every room. They finished the items by July 2006 and he recalls the owners as happy, like kids. He said he would have fixed any nail pops in the drywall and in fact he did so later. He saw no seams in the drywall. [ 49 ] Ms. Newton and Mr.

Ozon said that they were never happy with the drywall, especially in the Great Room. Michelle Newton included their complaints in the power point presentation of March 2007 to Mr. Boudreau. There, seams were visible, and the special lighting installed by EHL or one of its sub-contractors could not be used without showing them up. It was to be a place for them to show art but they have not done so due to the visible faults in the walls. [ 50 ] The defendant called as a witness Nick Marchese. He says he has been in drywall installation for twenty-three years.

He visited the house, and viewed the drywall in September 2009 for the defendant. He used what he called the Drywall Inspection Guidelines as a standard. He said that these guidelines were not in the OBC but were used as the industry standard. He looked at the walls Ms. Newton wanted inspected. He used a straight edge and showed to his own satisfaction that the walls were within the industry standard. He said that a seam could be visible and yet the drywall would be considered to meet the industry standard. He only saw the walls in daylight, never in the lighting they used at night.

He agreed that different lighting conditions could reveal visible seams more than others. [ 51 ] To the contrary, Mr. Koerth inspected the drywall and found visible dropped seams. The cuts for the potlights in the kitchen ceiling were too large, and roughly applied sealant failed to correct the defects. [ 52 ] Because it is singularly difficult to illustrate drywall issues through photographs where the walls are a standard bone or slightly off-white colour, I ordered a view to be taken. This was done at 7:30 p.m. on Friday, September 20. None of the parties were present, only the two counsel and me.

No submissions were made. I had told everyone this was only for me to view the areas of the home where there were drywall issues. Those areas were the Great Room, adjoining kitchen ceiling, the stairway walls to the second

floor and the hall walls on the upper level. I found that at times from one angle of viewing one could not discern a problem. But when one moved to view the walls from a different angle, which is unavoidable in a room like the great Room, not only unsightly seams were quite visible but some nail pops were obvious. As well, there was evident in at least one

section of each wall a horizontal bulge which was quite visible and unsightly in areas of the house such as those in question which are meant to impress. It was clear to me that this was not a drywall job done to the level of a good and workmanlike standard. It is not hard to produce a flat wall with a seamless look to it where the drywaller knows what he is doing and is a professional. What I saw, and I grant it was some seven years after the building of the house, was confirmation of Ms. Newton’s and Mr.

Ozon’s evidence from the time of taking possession in 2006 that the drywall was not up to an acceptable level of workmanship in the areas of the house I have referred to and in the lighting installed for use in those very areas. [ 53 ] It is clear that Mr. Marchese was using a test for other than drywall seam deficiencies and he conceded that his was a test for bowing. In my view, the drywall must be repaired to bring it to the required standard of good workmanship required by the contract.

It is to all accounts not an expensive exercise, between $3,200 and $4,500 plus an acceptable and proportionate contingency and management fee. 3. Trex Deck [ 54 ] This item is not something which I intend to deal with at length. As in all issues of liability and damages, it is the plaintiffs who have the burden of proof. That means that it is for them to show on a balance of probabilities that the defendant breached its contract or failed to meet the standard of care required of it resulting in damage to the plaintiffs.

In either case, whether the cause of action be breach of contract or negligence, the onus of proof is similar, and for the plaintiffs to meet. [ 55 ] In regard to the first two issues, there was no need to review this aspect of the law because in my view there is no question that the plaintiffs met the onus of proof.

That is not so on the issue of the deck. [ 56 ] First, the evidence of the plaintiffs, which on most other issues was clear, is in conflict both internally within the accounts themselves and externally with other evidence. [ 57 ] Second, I am far from convinced that the real problem with the deck, if indeed there is one outside Mr. Ozon’s mindset and expectation from his neighbour’s deck, is not defective material rather than improper installation.

Not that installation was perfect; as usual this defendant cannot seem to tackle one building module without making a stupid and ill-informed error - in this case, nailing the boards closer to the ends than they were meant to be. But I am not satisfied, after seven years of active use of the deck and the hot tub that was added late in the day quite successfully and installed by this defendant, that the plaintiffs suffered any damage arising from any short-coming committed by the defendant. [ 58 ] I will deal first with the problem with the two plaintiffs' evidence in this regard. Mr.

Ozon states that as early as 2004, his neighbour’s deck attracted him and when he was told it was a Trex, he remembered it. So much so that he says he told Mr. Boudreau of his (if not desire for, at least) his strong interest in a Trex deck for their new home. This was as early as August 2005, well before any contract and building had materialized. He saw a superior presentation by Trex at the Home Show they went to that fall.

He liked the durability of Trex and lack of splinters and the look. [ 59 ] As far back as August, 2005, when the new home appraisal was done for the mortgage financing, a Trex deck was listed as a significant part [Ex. 1(1)], Plaxton Appraisals, August 26, 2005). She said that she never changed her mind since then that Trex was to supply the deck. Yet on October 26, 2005, they had a lengthy and detailed conversation with Mike Smith of Home hardware about the finishes they were selecting.

Smith’s memo, entitled Ozon/Newton Home Hardware Package Specifications, lists the deck material as “Cross Timbers and sandalwood colour” [Ex. 1(5)]. Ms. Newton could not explain this at all; her memory is that she always wanted a Trex deck, never a Cross Timbers deck. [ 60 ] On November 15, 2005, a change order is filled out stating: We hereby agree to the change(

s) specified below: Addition- Deck material from P/T Wood to Cross Timbers - for deck surface as per dwg. Material $3,900.00 PST $312.00 GST $273.00 Total $4,485.00 There is a line in ink drawn across the “s” in “Timbers” and the word “TREX” is printed in ink under it but not initialled. The order is signed by Pierre Ozon. He confirmed that in the change order he was requesting Cross Timbers decking and the typed words and figures are unchanged, meaning that the increase in price is for Cross Timbers.

No changes in the figures are written in to correspond to Ozon’s evidence that they were paying a higher price for Trex. Neither could account for the request for Cross Timbers as late as November 15,

2005 and then the late change to Trex shows no pricing change written in for it. Their evidence, normally reliable and consistent, simply does not make sense on the Trex selection. On all other issues, they showed themselves to be careful and deliberate in their evidence, including some instances of difference in memory, but not inconsistency. [ 61 ] There is a photo taken as late as May 2006 by Michelle Newton when the sodding on the lake side had been completed. It shows no deck or framing for a deck but whether Mr.

Boudreau was unreliable in what he said about his framing for the deck in January is not the issue. By May nothing had happened about the deck. The evidence is that not until May 24, 2006 was the Trex deck package ordered from Home Hardware and it was scheduled for delivery on May 26, 2006. The owners were responsible for all finishes.

They did not order the decking until quite late, only weeks before they took possession. [ 62 ] Finally, I am not satisfied that, even given the nailing too close to the board ends by the defendant, that the plaintiffs would not have to replace the deck because of defective material. Mr. Ozon wrote Trex on March 24, 2008 complaining of two things: substantial colour variation and splitting ends. Trex seems to have accepted that its product was problematic; it offered to pay the plaintiffs $4,050.17, citing as a reason that the boards supplied were discoloured.

No further negotiation occurred and the plaintiffs did not push it to get labour reinstalling the deck paid for, nor did they take action against Trex so they never exhausted their remedies with regard to the issue of defective product. They accepted the first offer they got. [ 63 ] In these circumstances I am not satisfied that the deck would not have to be replaced anyway in time due to defects in the boards. Mr. Boudreau indicated that there had been other Trex problems around that time where decks had to be replaced.

In my view, even accepting that the defendant’s men did not install the deck as per the manufacturer’s instructions, no damage flows from it because the same expense of replacing the deck would have faced the plaintiffs now due to material defect. There will be no award against the defendant, given these findings. 4. Interior Wood Trim [ 64 ] As a professional engineer, Mr. Koerth’s experience and training with trim is limited but he has had extensive hands-on experience some years ago with installation and assessing of wood trim work in residential buildings.

He was a partner in a building firm where he learned the basics of all the building trades and he dealt often with carpentry work and with ensuring that wood work met the standard of good workmanship. He has also renovated three houses himself. He is aware of the standards of the new home warranty program. As a professional engineer in a firm in a smaller Ontario city like Barrie, Mr. Koerth has often had to evaluate trim work and drywall and estimate the cost of remediating defective work. However, he has no direct carpentry or framing credentials or work experience himself.

He was unable to define how he interpreted the contractual standard here of good and workmanlike. It does not require work to the fine cabinetry standard of craftsmanship. He just said he used his own

interpretation of the contractual words. [ 65 ] In Mr. Koerth’s opinion, the people who installed the trim at 68 White Oaks Rd. lacked the expertise to do so properly. Examples include his Photos 17 and 18 showing a corner of a main level window with sloppy caulking along the edge and smudged or marked woodwork. Photos 19, 20 and 21 show similar poorly installed trim and caulking on the stair to the second level and on a door upstairs as well as a door casing on the second level.

Photo 22 shows a gap and misalignment where the horizontal board meets the side door casing and unaligned door frame wood as well as a large gap between the edge of the door frame and back of the casing. Photo 23 shows another gap where two elements of wood work should meet on a second level door casing. Photos 24 and 25 show a similarly misfitting corner of a window casing and a large gap between casing and window frame, and the corner of a second level door casing caulked poorly along the edge with the wall to cover a gap. Much of this work was remedial work attempted by one Jennifer King whom Mr.

Boudreau hired to deal with the trim complaints. Unfortunately, her work merely compounded the problems, even according to Mr. Boudreau. [ 66 ] Under cross-examination, Mr. Boudreau conceded that the wood work and/or caulking in Photos 18, 19, 20, 21 and 25 was not acceptable. He explained the gaps in Photos 22, 23, and 24 as due to shrinkage or in the case of 24, warping of the wood after the trim was installed. He maintained that the owners were responsible for selecting all finishes and, against his strong advice, they opted for pine trim.

He stated that pine shrinks and this is what has happened where there are gaps and misalignments now showing. He said he never offers pine to clients. In this case he recalls telling them not to go to pine, that it shrinks. They chose pine rather than aspen which he says has less moisture content and more stability. He said pine shrinks 1” in three to four years, starting during the first winter. He suggested as soon as he heard they had chosen pine that they get a humidifier which they did but only in December 2007, after almost 18 months in the house. Mr.

Ozon explained that because of the HVAC invoice and manual which speaks of humidity control, he had thought that they already had control over excessive dryness. The HVAC invoice states in part: “Installation of Ventilation and Humidity Control as described above $2,820” [Ex. 1(9)]. He later learned that all the HVAC does regarding humidity is to replace inside more humid air with outside dry air in the winter when the air outside tends to be cool and dry.

In view of the explanation in the HVAC invoice and manual mentioning humidity control, this mistake by a new house buyer is understandable. [ 67 ] Neither plaintiff recalls any warning about pine from Mr. Boudreau. They were quite definite about that. Despite the profusion of written records of communications between the parties in this case, there is not one email, letter, or documentary record of any warning by Boudreau to not use pine for the interior trim. The only document where Mr. Boudreau mentions pine trim is Ex. 1(7), an email from Mr.

Boudreau which reads in the relevant part: 3. (about a question in the preceding Ozon email about Brazilian pine doors and Procore doors and whether they shrink too much) You are comparing a solid pine door (that does shrink a bit - we have them in our home and they have stabilized) to an insulated pressed laminate door. In my opinion the solid wood door is better value but as the customer the ultimate decision remains with you as to which you prefer. [ 68 ] The email from Mr. Ozon reveals that as of its date, November 15, 2005, Mr.

Ozon was alive to the issue of pine shrinkage because he asks specifically about it. It may well be therefore that Boudreau may have made some reference before this time to pine and

shrinkage. Yet where a direct question about pine and shrinkage is asked, Mr. Boudreau merely replies that, with the pine doors, they do shrink “a bit” but they have “stabilized”. Hardly a warning about the propensity for pine to shrink so much as to cause misaligned sections of trim and large gaps in the woodwork. I understand that this exchange was about doors, not trim, but it occurred well before any doors or trim would have to be installed and yet there is not one word of suggestion that pine shrinkage could cause the kind of problems evident to Mr.

Koerth and the plaintiffs since the trim was installed. [ 69 ] As to pine and shrinkage, Mr. Koerth said that the National Lumber Grading Rules (Ex. 3(43) at p.19) indicate that all lumber shrinks and expands within narrow limits with changes in moisture content. It is possible to obtain lumber of any type marked S-DRY or KD for 4”or thinner boards which has 19% or less moisture content. If 15% or less, it would be marked MC15or KD15. For lumber over 4” thick, the Lumber Rules leave it to special agreement. A builder like Mr. Boudreau should be taken to have been aware of the lumber grading rules.

This is particularly so here where Mr. Boudreau has volunteered much evidence of his knowledge about the proclivites and moisture content of different types of lumber. Mr. Koerth stated that if wood is susceptible to shrinkage, a humidifier should be used. He also clearly stated under cross-examination that a dry house did not necessarily mean wood shrinkage. And, he said, shrinkage and expansion usually balances out from the dry to the more humid seasons of each year. Mr.

Koerth attributed the interior trim problems to poor workmanship, not wood shrinkage. [ 70 ] In face of this evidence, no one was called by the defendant to give informed opinion evidence on pine shrinkage. Mr. Boudreau’s views are interesting and no doubt come from some experience in the past. However, he did not explain why or how shrinkage could be to such degree as to cause the kind of trim deficiencies apparent in this case. Mr. Koerth’s evidence came from his experience, knowledge, and training in construction and engineering and building and carpentry evaluation and it makes sense. Mr.

Boudreau’s opinions on pine and shrinkage came out as assumptions about unexplained supposed truths from experience, the source of which was never made specific. And when Mr. Ozon put the question specifically to him in the only documentary evidence we have on the subject, Mr. Boudreau says really nothing of a warning nature and even indicates that his pine doors have stabilized, no problem. [ 71 ] Nevertheless, unlike the other categories of deficiencies, Mr. Ozon and Ms.

Newton showed little interest in the trim condition in their deficiency lists after June 2007 and no expectations of further trim work being required. Mr. Koerth did not cover it in his evidence nearly to the degree that he did the other items of damage.

I am well aware of the several obvious deficiencies in the trim work pictured in the power point presentation of March 2007 but these represent no more than 50% of the trim work installed. [ 72 ] In this case, the evidence as a whole convinces me that the problems found with the interior trim on a balance of probabilities are due to shoddy workmanship by the defendant’s sub-contractors for which he is responsible. I do not accept that the problems shown to me in the plaintiffs’ power point presentation made less than one year after date of possession and the similar problems found and illustrated by Mr.

Koerth in 2009 are due to the plaintiffs’ choice of trim finish. I understand Mr. Koerth’s opinion that reusing the faulty trim after removal would be neither economic nor practical in view of the nail holes in the wood and the need to re-cut many of the pieces to fit properly for a properly aligned and competently finished carpentry job. However, it has not been proven to the required civil standard of proof that all of the trim was faulty. From what I have seen and Mr.

Boudreau’s own admissions, the failure to meet the contractual standard for some of the interior woodwork is clear and must be remediated to make the plaintiffs whole. In these circumstances, I would allow 50% of the estimate for replacing trim and reallocate it to trim repair, not wholesale replacement. The plaintiffs failed to meet the onus of proof beyond the need in the areas depicted for individual repair which will in my view consume no more than half of the cost attributed by Mr. Koerth to replacement of all of it. This includes door frame adjustments. 5.

Fascia Installation [ 73 ] I do not have evidence to meet the burden of proof that the cost of replacing fascia and soffits should be paid for by the defendant. Inn my view, I have only an indication of lines forming on it after a rain or spraying of water on lt. I simply cannot find any reason to find that this results from a failure by the defendant to meet the contractual standard in the installation of those elements particularly. 6.

Damages [ 74 ] The rule in contract law as to damages is that once a defendant has been shown to have breached the contract on a balance of probabilities, the plaintiff is entitled to all damages reasonably flowing from the breach. If the claim were analyzed in negligence using the contractual standard of care, the plaintiffs would be entitled to damages resulting from the breach of the standard of care.

They both amount to the same principle - a plaintiff who has been wronged is entitled to sufficient damages to make him or her whole. [ 75 ] I have found that the defendant failed to install the following in a good and workmanlike manner as he agreed to provide either through his own forces or the sub-trades engaged by him. For despite the contract which spoke of the defendant arranging contracts between sub-trades and the owners, the contracts to supply work and material were made with the defendant only.

I have found the following were supplied deficiently and remediation must be sufficient to pay for these items: (

i) Replacement of the siding and masonry veneer and the air barrier/flashing system in accordance with Mr. Koerth’s directions; (ii) Removal and replacement of the insulation and drywall of the north wall;

(iii) Repair all nail, surface bulges and seam deficiencies in the drywall in the Great Room, stairwell walls to second floor, and walls of upper hall; (iv) Repair of interior pine trim, stained not paint, and repainting house. [ 76 ] I have three repair cost estimates, one from Mr. Koerth (without any allowance for management fee and including a 20% contingency for unforeseen additional work and price volatility) in the sum of $105,312; one from Mr.

Boudreau totalling $76,473.92, and one from an experienced builder, Manny Scarati of The Design Build Corp. who will do the job if he is paid the amount he estimates, $157,915.57 which includes a management fee of $17,600, and a contingency fee of 20%. His estimate includes a 5-year warranty. I have no analysis from Mr. Boudreau as to how he reached his figures. He simply identified his estimate and it was marked as Ex. 21. It was supplied in answer to a request from me of both parties to supply a

summary of the issues and their positions on each. Ex. 13 is a list of outstanding items from the plaintiffs without any estimated costing as well as 6 minor items which have been addressed.

I will base my findings in damages on the only two assessments which were explained and tested at trial. [ 77 ] The Koerth estimate is broken down as follows: Estimated Allowed Remove siding and masonry $ 5,800 Install siding $30,080 Install masonry $17,360 Air barrier/flashing repair $ 1,000 Sub-total (walls) $54,240 $54,240 Remove/replace north wall drywall, insulation, etc. $ 2,600 $ 2,600 Repair drywall deficiencies Great Room, stairwell walls and upper hall $ 4,500 $ 3,200 Removal all interior wood trim $ 1,000 Install base, stained $ 3,830 Install casing, stained $ 5,980 Adjust door frames $ 500 Granite trim repair $ 200 Patio door cladding $ 100 Sub-total (trim) $11,610 $ 5,805 Repaint house $10,720 $ 9,600 Removal and install new deck $ 4,090 $ 0

Total allowed $75,440 20% Contingency $17,552 $15,100 7% Management $ 5,300 Total $105,312 $95,840 (Allowed) [ 78 ] Mr. Scarati’s estimate to repair the areas according to my findings are: Estimated By Category Removal and reinstallation of siding $50,880 Stone - 680 ft., sills 185 $12,600 Sub-total (walls) $63,480 $63,480 Removal and replace north wall (drywall and insulation) $ 5,360 $ 5,360 Repair drywall deficiencies $ 3,680 $ 3,680 (Kit. potlight ceiling repair incl’

d) Remove interior trim $ 1,920 Install trim $10,800 Casing - 884 ft. $ 716 Baseboard - 660 ft. $ 964 Adjust door frames $ 1,200 Sub-total (trim) $15,600 $ 15,600 Repaint, including stain, floor /furn. protection and touch-ups $ 9,600 $ 9,600 $ 97,720 20% Contingency $ 19,544 Management Fee $ 17,600 $134,864

ASSESSMENT: BETTERMENT AND ONUS OF PROOF ON THE PLAINTIFFS AND THE DEFENDANT [79] Both counsel were invited to make further submissions regarding the suggestion raised by Mr. Botelho specifically, thatbecause the plaintiffs have had the benefit of living in and enjoying the home for the last seven years, the assessment of damages musthave regard to the principles of betterment and the onus of proof where loss is established.

A further calculation is required in order toseparate the cost of re-cladding that would have been incurred in any event in, say, 15 years from 2006, i.e. 2021, from the amount thatis required to pay that expense in 2014 instead. [80] Mr. Adams submitted that the betterment principle simply does not apply in the circumstances of this case because nobetterment will be granted by an award of damages in favour of the plaintiffs. Secondly, Mr.

Adams argued that no credit should beassumed to be granted to the plaintiffs by the normal approach to the damage award whereby damages should be sufficient to put theplaintiffs in the same position, or as close as possible to that position, as they would have been in had there been no breach of contractand no negligence on the part of the defendant. In any event, there has been no evidence presented to this court on which a bettermentallowance could be arrived at. [81] On the latter damage issue, Mr. Botelho cited two cases: Robert McAlpine Ltd. v.

Byrne Glass Enterprises Ltd., (2001),7.C.L.R. (3d) 155, [2001] O.J. No. 403 (Ont. C.A.) and Toronto Transit Commission v. Aqua Taxi Ltd. (1956), (ONSC), 6 D.L.R. (2d) 721 (Ont. H.C.J.). The TTC case dealt with circumstances where the plaintiff proved that it had suffered a loss due topassengers using the defendants’ water taxi service rather than the TTC’s ferries. However, as Gale J stated, the plaintiff was required toprove facts from which a reasonable calculation could be made of the damages suffered and it failed to do so. The award of damages wasnominal only.

In McAlpine, an award of $262,000 for loss of rental income on account of delay in construction of a commercial buildingwas reduced on appeal to ”somewhat nominal damages” of $65,000 due to lack of evidence supporting the owner’s prospective tenantsclaim. The principle that was applied was that from the TTC case where Gale J. held that “the plaintiff must prove sufficient facts toenable the court to calculate the loss with reasonable certainty.” [82] On the application of the principle of betterment, the cases relied on by Mr. Botelho were North York (City) v.

Kert ChemicalIndustries Inc. (1985), 33 C.C.L.T. 184, 1985 CarswellOnt 818 (Ont. H.C.J.) and Carleton Condominium Corp. No.21 v. MintoConstruction Ltd., (2004), 15 R.P.R. (4th) 161 (Ont. C.A.). North York dealt with damages to replace a sewer line damaged due to thedefendant’s negligence. The City obtained a benefit by replacement of a sewer in 1974 that would last 14 years longer than the old onethat was replaced. The plaintiff provided actuarial evidence to establish a discount rate which would produce a present value whenapplied to the 1974 replacement cost.

In Carleton, a case of an award of damages for having to re-clad a condominium building in 1995instead of 2004 when re-cladding would normally have become necessary, the Court of Appeal upheld the trial judge’s assessmentwhereby the cost of re-cladding that would have been incurred in any event was excluded and the award included the cost associatedwith having to pay the expense of replacement in 1995 instead of 2004.

The evidentiary basis for the award was the evidence of anexpert witness called by the plaintiff which provided the necessary calculation to achieve the betterment exclusion. [83] Having considered the submissions by both counsel, I find that there is an important distinction that must be made betweenthis case and those cases cited by the defendant. In this case, the defendant contracted to build a new house for the plaintiffs to a certainstandard of workmanship for an agreed amount of money and the defendant failed to provide the level of workmanship required andagreed to by the defendant.

This is not a case where a sewer line is nearing its life expectancy and the cost of replacing it sooner includesa cost which is to be incurred within a finite period of time in any event. In this case, while the manufacturer’s warranty on the siding,which is only one component of the house, has a normal duration of 15 years, this must not be confused with the life expectancy of thehouse as an entirety or of the siding when properly installed. [84] Here there is no evidence of the life expectancy of the house or of the siding, because no such evidence is required of theplaintiff in this case.

The measure of damages in this case is the amount required to put the plaintiffs in the position they would havebeen in but for the breach of contract by the builder. That amount is the cost of correcting the deficiencies so that the plaintiffs wouldreceive a house built to the standard required by the contract, albeit seven years late during which time they have had to live with thedeficiencies I have found due to the failure of the defendant to meet its contractual obligations. As Mr.

Ozon described his lingeringdisappointment, the last seven years have been “like living in a house in a constant state of repair. I am always wondering about what ishappening in the basement.” CONCLUSION: DAMAGES [85] In my view, Mr. Koerth has provided an evidentiary base for a realistic costing of what is required to provide the plaintiffswith the repairs required to remedy the failure of the defendant to provide a good and workmanlike job. That failure has brought anemotional toll to the plaintiffs. Mr. Ozon stated, “I was disappointed. We never felt we were in a new home.

It feels like it is in aconstant state of repair. I am always wondering about what is happening in the basement.” [86] No doubt this law suit has taken a toll on both sides and will continue to. Mr. Boudreau did make efforts, unlike somebuilders, to remedy some of the lesser problems but the plaintiffs are entitled to be put in the position they would have been in but for thebreaches of contract. I find that Mr. Koerth’s assessment on the whole is reasonable and realistic. While I understand Mr. Scarati’sconcern about finding more to do once the remediation work starts, he proposed nothing more than Mr.

Koerth as a contingency againstthat happening, and no doubt it will. I find that Mr. Scarati’s costing is on the high side for the work required, and at times is double Mr.Koerth’s estimate for the same work. His management fee, which should contain no contingencies which are covered, is out of line withany range of management fees I have seen. He did not show a percentage, only a lump sum of $17,600, which comes to 15% of the totalcost including contingencies. Mr. Koerth’s costing was scarcely challenged nor should it have been in my view.

His estimate of 7% as amanagement fee is in line with the usual range and is fair. This court will not be dictated to by an ultimatum from Mr. Scarati that he

would accept nothing less. The assessment of damages cannot be subject to the arrogant whims of one person. [ 87 ] I award to the plaintiffs damages in the sum of $95,840 plus HST in compensation for the defective work and the remediation required to bring it to the contract standard plus pre- and post- judgment interest in accordance with the Courts of Justice Act. This figure includes a reduction of $6,000 for the repair, not replacement of the interior wood trim. So ordered. The plaintiffs owe the defendant the balance of the bill for installing the deck.

As I understand it, the defendant billed the plaintiffs $7,970.97 and the plaintiffs paid $5,000. Therefore the plaintiffs shall pay to the defendant $2,970.97 on this account, plus interest from the date of the invoice (June 5, 2006) in accordance with the Courts of Justice Act . This amount shall be set off against the amount owing the plaintiffs by the defendant. [ 88 ] If costs cannot be agreed, counsel may make submissions on costs and interest within 30 days, directed to me at my Barrie chambers. HOWDEN J. Released: November 21, 2013