2000 SKQB 111 Q.B.G. A.D. 1996 No. 2061 J.C.S. IN THE QUEEN’S BENCH JUDICIAL CENTRE OF SASKATOON BETWEEN: CRAIG LORNE BAUN and HOMES LTD. and DENIS SLATER DEFENDANTS P.H. Loran for the plaintiff B.E. Nussbaum for the defendants JUDGMENT GEREIN J. March 13, 2000 [1] In 1994 the plaintiff engaged the defendant, D & S Homes Ltd., to construct a residence. It is alleged that the defendant failed to perform as agreed and in consequence the plaintiff seeks damages. The defendant resists the claim and by way of a counterclaim seeks judgment for extras requested by the plaintiff. have concluded that there is merit to both the claim and the counterclaim and after implementing set-off, judgment should be granted to the plaintiff, but for much lesser sum than claimed. The Background Facts [2] Late in 1993 the plaintiff was interested in having quality home built for himself. He contacted the defendant, Denis Slater, who is president of the defendant, Homes Ltd., company which builds custom homes. At the time the plaintiff was 24 years of age and had no knowledge or experience in the area of home construction. However, he was and is well educated and possessed of intelligence and common sense. He was well able to deal with Slater and events as they came to pass. [3] Mr. Slater recommended that the plaintiff retain one Andrew Wist, an architectural technologist, to draw blueprints of the proposed house. This was done and the blueprints were completed in March, 1994. The plaintiff and Slater then entered into discussions about the specifications and ultimately agreed upon them. On April 21, 1994, the plaintiff and corporate defendant entered into written contract which has several components. [4] It provided for the purchase of lot, which is municipally described as 918 Braeside Place, and construction of home thereon, its size being 2540 square feet. The total cost was stated to be $277,743.00. Specifications and list of miscellaneous items are part of the contract as is payment schedule. Within the document there is this provision. All extras which the owner requests will be treated as an extra over and above the contract price to be paid to Homes Ltd. on possession date. Completion date was fixed at September 1, 1994. [5] The work commenced in May and was completed at the end of December, 1994. Throughout that time the plaintiff was regularly and closely involved in the project. He ordered many and varied extras. Several were at significant cost. The ultimate charge for extras was $41,007.83, bringing the total final cost of the house to $318,750.83. [6] The plaintiff took possession of the house upon its completion and by April 24, 1995, had paid all monies charged except the sum of $4,007.83. This was withheld to ensure rectification of number of deficiencies. To date the money has not been paid and this has brought about the counterclaim. On May 1, 1996, the plaintiff moved to Calgary, Alberta. On April 1, 1997, he sold the subject house for $280,000.00, having listed it for sale in November, 1995. [7] Within the outlined scenario, there are several contentious matters which require determination and describe them as follows. (1) Whether the pillars at the front of the house are an extra; (2) Whether the entire cost of installing steam room was properly charged to the plaintiff; (3) Whether the plaintiff is liable to pay for any extras; (4) Whether the defendant is liable for any deficiencies; (5) Whether the defendant is liable for loss of rental income because of delay. (6) Whether the plaintiff is entitled to damages for diminution of value. will deal with each matter in turn. (1) The Pillars [8] On this issue the parties are diametrically opposed. The plaintiff swears that he instructed the defendant that round pillars were to be installed on the front of the house and that this was done prior to execution of the contract. Mr. Slater swears there were no such instructions. Rather, it was in June of 1995 that the plaintiff told him that he wanted round pillars. As result, they were installed as an extra at an additional cost of $5,900.00. [9] The plaintiff testified that he was in Phoenix, Arizona, in February or March of 1994, and there saw house which he liked. It had round pillars in the front and red tile roof. He hoped to use it as model for his house and therefore took picture of it. He showed the picture to Slater who told him that similar house could be constructed in Saskatoon. The plaintiff then took the picture to Mr. Wist who thereafter drew the blueprints. The photograph has been lost, but Mr. Wist testified and confirmed that he saw such photograph and understood the house was to have round pillars. Unfortunately, in the blueprints he drew square pillars. However, it is clear that picture showing round pillars was present in Saskatoon in March of 1994. [10] While he denies any knowledge of round pillars prior to June of 1994, Mr. Slater was aware that the roof was to be of red tile. This is set out in the specifications which form part of the contract of April 21, 1994. However, he says that he was shown picture of house with such roof, but it did not have round pillars. He suggests he was shown two different pictures at two different times. [11] When weigh the whole of the evidence conclude that the testimony of the plaintiff is the accurate account. He was in Phoenix only once in early 1994. He was struck by two things which were part of the Phoenix house: the pillars and the roof. It does not seem likely that he would then speak with his contractor about only the one. Furthermore, the plaintiff was obtaining advice from Slater from time to time and it makes sense that he would speak to him about both the pillars and the roof before speaking with Mr. Wist. [12] In the end, I am satisfied that there was a discussion about round pillars and it was intended that they would be a part of the contract. Mr. Slater simply forgot about the discussion. However, in the circumstances, he cannot now be heard to say the round pillars were an extra with the plaintiff to be responsible for the cost. Rather, the cost of $5,900.00 is that of the defendant. (2) The Steam Room [13] In the early fall of 1994 the plaintiff and Slater discussed building a steam room in the bathroom off the master bedroom. Slater suggested that this be done and he estimated that the cost would be about $3,000.00. The plaintiff adopted the suggestion and the work was done. [14] This construction was not a part of the contract, but was clearly an extra ordered by the plaintiff. As such he is liable to pay for the work. However, he also was entitled to rely upon the representations of the defendant as to cost and he in fact did so. Only an estimate was provided and some tolerance should be allowed. With this in mind, hold that the plaintiff is liable for $3,500.00. He in fact was charged $6,097.82 made up of the following. (a) supply and install steam unit and switch $1,847.58 (b) marble for steam unit $2,792.74 (c) labour and material to plywood steam area 82.50 (d) steam room shower doors and walls $1,375.00 Total $6,097.82 Accordingly, the plaintiff is entitled to credit of $2,597.82. (3) The Other Extras [15] The plaintiff submits that he should not be required to pay for the balance of the extras because the defendant has failed to provide invoices to substantiate the cost of the extras. find no merit in this position. [16] Throughout the construction the plaintiff ordered many changes, improvements and additions. They clearly were extras and it was understood by both parties that the plaintiff would pay for them. The contract contemplated that there would be extras, but it did not speak to their cost. However, both parties agree that the amount which was to be charged to the plaintiff was to be the actual cost to the defendant. [17] On February 3, 1995, the plaintiff and Mr. Slater met and discussed the extras. Each item was reviewed and some were deleted and others were changed. In the end, the cost was reduced from $57,969.81 to $41,007.83. Slater undertook to provide the invoices for the work, but largely failed to do so. Despite this neglect, the plaintiff paid $37,000.00 in April, 1995, holding back only $4,000.00 in respect to deficiencies. [18] In my opinion, production of the invoices was not a condition precedent to payment. accept the evidence of Mr. Slater that the plaintiff agreed that the sum owing was $41,007.83. Were it otherwise, would expect nothing to be paid on account of the extras or certainly sum much less than $37,000.00. On the whole of the evidence, I am satisfied that the charges were fit and proper and the plaintiff is liable for them. This is subject to an adjustment for the pillars and the steam room. (4) Deficiencies [19] In the summer of 1996 it was discovered that water would not run out of the basement drain because concrete was embedded in the drain. The only time this could have occurred was during construction when the floor was poured. This situation is the result of negligence on the part of the contractor and responsibility rests with the defendant. The cost to remove the blockage and repair the water damage was $764.62. The plaintiff is entitled to recover that amount. [20] There were several other deficiencies. These included large crack in the living room ceiling, an overhang which came loose, plugged eaves trough which overflowed and stained the stucco, paint peeling on the pillars, tiles which had fallen off, some missing soffits and screens, defective weatherstripping on the garage door, cracks around skylights and build-outs, and defective steam shower. Several of the deficiencies were corrected while the plaintiff was still in the house e.g. the eaves trough and stucco, the soffits and the painting of the pillars. An attempt was made to repair the crack in the living room, but was unsuccessful. Some other repairs were effected after the plaintiff moved out. In the end, aside from the basement drain, the plaintiff paid nothing for the repair of deficiencies. will return to this later. (5) Rental Income [21] The construction was completed four months late. There is disagreement as to what was the cause of the delay. I have concluded that it is attributable to both parties equally. [22] During the trial Slater testified that there was an excessive number of changes. Then he acknowledged that at the examination for discovery he had said that the changes were typical and what would be expected when building custom home. [Transcript Q. 49] In the end, have concluded that changes were to be expected, but also take note that they were being requested from the outset almost to the end. What is equally important is the nature of the changes. Some of them were very extensive; such as changing the interior wood to maple, creating steam room, and doing build-outs in the kitchen. The timing and the nature of many of the changes contributed to the delay. The plaintiff was responsible for this and must have been aware of it for he never objected to the delay. [23] At the same time, am satisfied that the defendant did not press on as he might have. He did not ensure that the program of construction was clearly defined and adhered to. This also contributed to the delay. [24] The plaintiff always intended to have two friends live in the house with him and pay monthly rental of $300.00 each. In addition, he was to be paid $100.00 month by his employer for the use of his garage for storage. Thus, he was to have monthly income of $700.00 from the use of the house. The delay postponed this and the plaintiff is entitled to recover from the defendant one-half of that loss or $1,400.00. [25] The plaintiff also made claim for interest he had to pay on his line of credit. Had the construction been completed on time he would have had to pay interest from the completion date on the full purchase price. As result of the delay he did not have to pay the balance of the purchase price until December, 1994. Payment for the extras was not made until April, 1995. Thus he enjoyed savings by way of not paying interest. In the end, allow nothing for interest costs. (6) Diminution of Value [26] The plaintiff claims $4,000.00 for diminution of value because certain deficiencies were present when the house was sold in 1997. In respect to this issue the plaintiff filed report of an appraiser in which she expressed the opinion that the deficiencies caused reduction of $4,000.00 in the sale price. However, do not have much confidence in the opinion. [27] The report is recent, being dated December 16, 1999. It was prepared some two and one-half years after the house was sold. Reliance was placed to some degree on pictures showing certain deficiencies. The pictures were taken long before the sale of the house in April of 1997 and several of the deficiencies had been repaired before the sale. This approach reflects adversely upon the opinion. [28] On the other hand, the appraiser speaks of the deficiencies as being only cosmetic and that knowledgeable purchaser would recognize them as such and adjust the price in accordance with the cost of repairs. However, she goes on to say that the presence of the deficiencies would cause purchaser to be wary and to reduce his purchase price to allow for other potential problems. have reservations about the latter, especially when the deficiencies are relatively minor in relation to the overall quality and cost of the house. In fact, the people who purchased the house made specific arrangements for the repair of certain deficiencies and for payment of those repairs. As to any other deficiencies present at the time of sale, accept that the cost of repairing them would not have exceeded $1,000.00. [29] There are two other factors which had bearing on the sale price. As pointed out by the appraiser, the house was “stale” listing and this would affect the price. Secondly, the house was custom built and something of luxury product. It is not uncommon for such properties to sell for less than their original cost. [30] Having considered all the evidence, it is my conclusion that the cost of performance would have been $1,000.00. The diminution in value is the same amount. In SEDCO v. William Kelly Holdings Ltd., 1990 CanLII 7822 (SK CA), [1990] W.W.R. 134 (Sask. C.A.) at p. 162, Cameron J.A. said this about valuing loss in building case. Setting aside for now issues of mitigation and avoidance and turning to the measure of the loss, am of the opinion this component fell to be valued on the basis of cost of performance (of bringing the system up to the standard originally intended) and not in the diminution in value of the building (the difference between the commercial value of the plant as built and as it ought to have been built). Though these may be seen, perhaps, as obverse sides of the same coin, and though the tests will often produce the same result, that is not invariably the case. On occasion, one or the other will prove inadequate to the task. But in the building cases, cost of performance is the prima facie measure of damages: see, for example, East Ham Corp. v. Bernard Sunley Sons Ltd., [1966] A.C. 406, [1965] W.L.R. 1096, [1965] All E.R. 619 (H.L.); Perry v. Sidney Phillips Son (A Firm), [1982] W.L.R. 1297, [1982] All E.R. 705 (C.A.); Nu-West Homes Ltd. v. Thunderbird Petroleums Ltd. (1975), 1975 CanLII 1009 (AB CA), 59 D.L.R. (3d) 292 (Alta. C.A.). However that is only the prima facie measure. Considerations of reasonableness are capable of displacing it, as for example they do when the cost of performance is disproportionately high relative to the value of what is or might be achieved through performance. This position has been adopted more recently in Paterson (N.M.) Sons Ltd. v. Rail Contractors Ltd. et al. (1997), 1997 CanLII 11230 (SK QB), 155 Sask. R. 156 (Q.B.) at p. 159. [31] Thus, cost of performance is to be preferred as the measure of damages, but reasonableness may require different approach including diminution of value. In this case, the two approaches produce the same result, namely: loss of $1,000.00. [32] recognize that the plaintiff never incurred the cost of repairs. However, it must be remembered that he demanded they be effected and withheld $4,000.00 to ensure compliance. He moved off this position only when he was forced to in order to effect sale. In such an instance he should not be precluded from recovering his loss, however it came about i.e. through lack of performance or diminution of value. [33] The final claim made by the plaintiff is for distress and inconvenience. can find no basis upon which to allow such claim and decline to do so. [34] For the reasons stated, hold that the plaintiff was wrongly charged for the cost of round pillars in the sum of $5,900.00 and for the steam room he was charged an excessive amount of $2,597.82. He incurred repair costs of $764.62 and lost rental income of $1,400.00. Finally, he suffered loss of $1,000.00 as result of deficiencies. The total entitlement of the plaintiff is $11,662.44. [35] The defendant, D & S Homes Ltd., is still owed $4,007.83 by the plaintiff. That amount should be set off against the plaintiff’s claim with the result the plaintiff should recover $7,654.61. [36] The claim against the defendant, Denis Slater, should be dismissed as there was no evidence that he was party to the construction contract or that he acted in any capacity other than that of an officer of the corporate defendant. Conclusion [37] In the result, the plaintiff shall have judgment against the defendant, D & S Homes Ltd., in the amount of $7,654.61. The claim against the defendant, Denis Slater, is dismissed. At the request of counsel, the matter of costs may be spoken to on date arranged with the Local Registrar.
The plaintiff claimed damages for failure to perform as agreed in constructing a residence. Deficiencies included a large crack in a ceiling, a loose overhang, a plugged eaves trough which overflowed and stained the stucco, peeling paint, tiles which fell off, missing soffits, defective weatherstripping, cracks around the skylights and build outs and a defective steam shower. The defendant counterclaimed for extras requested by the plaintiff. HELD: The plaintiff was awarded judgment for $7,654.61. The $4,000.83 withheld by the plaintiff was set off against this claim. 1)It was intended the round pillars would be part of the contract. They were not an extra that the plaintiff should be responsible for. 2)The steam room was an extra ordered by the plaintiff but he was entitled to rely upon the representations of the defendant as to cost. 3)The parties agreed the amount to be charged to the plaintiff was the actual cost to the defendant. Production of the invoices was not a condition precedent to payment. The charges were found to be fit and proper. 4)Aside from the basement drain, the plaintiff paid nothing for the repair of deficiencies. 5)The 4 month delay was attributable to both parties. The plaintiff enjoyed savings by way of not paying interest. He was entitled to recover one-half of the loss of potential rent and lost storage charges for the use of the garage due to the delay.  6)The deficiencies were relatively minor and the cost of repairing them at the time of the sale of the house in 1997 would not have exceeded $1,000. It is not uncommon for custom built luxury houses to sell for less than their original cost. 7)The claim against the individual defendant was dismissed as there was no evidence that he was a party to the construction contract or that he acted in any capacity other than that of an officer of the corporate defendant. 8)Costs may be spoken to.