January 1, 2015
Case studies: Learning from others
BY ROBERT KENNALEYThis month, some case studies which provide us with something to think about.
In Tri-Gill Paving Construction Ltd. v. Maxim 2008 Inc. (2014 Carswell NB 305), a decision of the New Brunswick Court of Appeal, the general contractor retained one subcontractor to perform earthworks (excavation and rough grading) and a different subcontractor to perform paving. The contract documents required a three per cent slope in the roadway. The paving subtrade’s subcontract required it to perform “fine grading only.” After the asphalt was down, the Consultant determined that the proper slope had not been provided. Ultimately, the New Brunswick Court of Appeal agreed with the trial judge’s decision that the paving subcontractor had an obligation to ensure that the slope requirement was either met by the earthworks subtrade’s rough grading, by its own fine grading, or by the asphalt itself. In other words, the paving trade could not object that the failure of the grade is attributable to the earthworks’ subtrade. Consider the impact of this decision in relation to turf and other drainage installations, and to the requirement that underlying pads or other structural elements be sufficient to support your work.
In Doitte v. Consolidated Development Co. (2014 CarswellNB 410), which is also a case of the New Brunswick Court of Appeal, an owner claimed against its contractor because the contractor’s construction of a garage (which was only part of the overall project) was smaller than specified by approximately 70 sq. ft. The owner claimed for the full cost of rectifying the garage to fully conform with the specs (and make up the 70 sq. ft.). The Court declined, and only awarded “nominal” damages of $2,000. Consider, in thinking about this decision, where a Court might draw the line between awarding the cost of reinstatement to conform with the contract, and awarding based on the diminished fair-market value of the finished product where it doesn’t meet spec .
In Grianger v. Flaska, (213 Carswell-Ont 11171), in a decision by the Ontario Superior Court, the homeowner refused to pay the contractor, in part, by relying on Ontario’s Consumers Protection Act. In that regard, the owner argued that he was entitled to the benefits of the Act because the contractor had not provided the contract, as required, in writing. Interestingly enough, the Court held that the purpose of the Act was to protect innocent consumers from unscrupulous vendors of services and materials. In that case, the Court decided that the homeowner, who had in fact approached the contractor and agreed to pay for the contractor’s labour and materials, and who had negotiated the hourly rate, was not in need of such protection. While interesting – and perhaps available if needed for contractors in Ontario as a defence – we caution that consumer’s protection legislation provisions should not be ignored.
In Swift v. Eleven Eleven Architecture Inc. (2014 CarswellAlta 153), two homeowners (husband-and-wife) sued an architect in relation to the design of their home. Ultimately, the architect was found liable. The trial judge, however, found that the husband had signed the contract both on his own behalf and on his wife’s behalf. The plaintiff homeowners appealed this decision. The Alberta Court of Appeal overturned the finding. The Appellate Court held that while the wife knew about the agreement and was “on board” in that regard, marriage or cohabitation cannot give rise to an agency relationship. The Court said there was no clear evidence that the husband typically signed agreements on behalf of his wife and, without some evidence that the wife had agreed to be bound by the agreement, she could not be made a party to that contract. Consider this the next time you have a husband and wife team as clients – particularly given that only one of them might own the land in the event you need to consider a construction lien (or hypothec in Québec).
Boily v. Carleton Condominium Corporation 145, (2014 ONCA 574), a decision of the Ontario Court of Appeal, involves landscaping that was required at a condominium. Simply put, as a result of having to perform extensive garage repairs, the landscaping outside the mid-70s era condominium complex required restoration. The board of directors of the condominium corporation proposed a new landscape design with features different than the design that had been in place prior to the garage repairs. Several condominium owners opposed the suggested new design. They wanted the area restored to the way it was before the garage was repaired. A dispute arose. The dispute lead to litigation and a court order that the landscaping be restored to its original design.
In defiance of the order, the directors authorized the installation of landscaping containing some elements of the previous design and some elements of the new design they had selected. The work proceeded on that basis and the disgruntled members who wanted the original design went back to Court. As a result of the violation of the court order, the condominium corporation and directors were found in contempt of court. In sanctioning the contempt, the motion judge ordered that the area be restored to the original design and that the directors personally bear the substantial costs of the restoration. The directors appealed. Court of Appeal upheld the findings of contempt, but did not require the original directors pay for the cost of the restoration.
The lesson from this case lies not so much in what the directors did, but in that it re-confirms that individual board members of a condominium are just that: They do not, in and of themselves, speak for the Corporation. Suppliers of services and materials to condominium corporations need to be careful to ensure that, what an individual board member or property manager who purports to act on behalf of the Board is requesting, has been properly authorized by the Board. In Ontario, at least, contractors or suppliers might find themselves with no recourse against the actual condominium corporation if the “authorization” was made without actual authority.
Robert Kennaley has a background in construction and now practises construction law in Toronto and Simcoe, Ontario. He speaks and writes regularly on construction law issues, including on his blog: kennaley-on-construction.com. Rob can be reached for comment at 416-368-2522, at kennaley@mclauchlin.ca, or on LinkedIn. This material is for information purposes and is not intended to provide legal advice in relation to any particular situation. Readers who have concerns about any particular circumstance are encouraged to seek independent legal advice in that regard.