Claim No: 292024
IN THE SMALL CLAIMS COURT OF NOVA SCOTIA
Cite as: Armsworthy v. Walton, 2008 NSSM 28
BETWEEN:
DEAN F. ARMSWORTHY
Claimant
- and -
SUSAN JANE WALTON
Defendant
REASONS FOR DECISION
BEFORE
Eric K. Slone, Adjudicator
Hearing held at Dartmouth, Nova Scotia on April 8, 2008
Decision rendered on May 16, 2008
APPEARANCES
For the Claimant - self-represented
For the Defendant - Terry Degen, counsel
Introduction
[1] The Claimant is suing for the sum of $9,520.00 for what he claims are unpaid amounts owing on a contract to provide project management services on a residential construction project.
[2] The Defendant disputes the claim, principally on the basis that the construction project took too long to complete. She counterclaims for $1,854.40 of additional childcare expenses that she contends were necessary because of the delays.
[3] The Claimant is an experienced project manager and sometimes building contractor. As I understand it, the role of a project manager in residential construction resembles the role of a general contractor, but differs in several respects. For one, the project manager does not enter into contractual relationships with the trades that are hired to perform the construction; the owners do. Furthermore, the project manager does not stand to gain or lose depending on the eventual cost of the project; essentially, he runs the project for a flat fee.
[4] The parties here had worked together before. The Claimant had helped the Defendant and her husband Charles Walton (who are hereafter collectively referred to as “the Waltons”) build a previous house.
[5] The Waltons are a busy, enterprising couple. They both have full-time careers. They have three young children. Mr. Walton moonlights as a handyman or carpenter. And they occasionally build houses for investment and capital appreciation purposes.
[6] The project that gives rise to this lawsuit is in the Portland Hills area of Dartmouth. The Claimant had earlier purchased a building lot from the developer, but decided to put it up for sale before embarking on construction. The Waltons were looking for a building lot in Portland Hills, but there were none available from the developer. They learned of the Claimant’s lot. As mentioned, they knew each other from a previous project that the Claimant had managed for them.
[7] The parties arrived at an agreeable price for the lot. He informed the Waltons that the current rate for his project management services was $15,000 per home. In the end, a written contract was signed that set the price at $10,000 for the Portland Hills home. The Claimant says, however, that this reduced price was only applicable in a “three-home deal.” Because those additional two deals never materialized, the Claimant seeks an additional $5,000 to match his original quote.
The three-home deal
[8] The Waltons acknowledge that when they were discussing the Portland Hills project in late 2006, there was discussion about other projects that they hoped to do together. One of those projects was the construction of a home on a piece of land that the Waltons owned in Mineville, which they were selling to a couple named Bernier. However, the Waltons say that there was no firm commitment to do other projects, and that the $10,000 was a negotiated price which recognized, among other things, that Charles Walton would be doing a lot of the work, thus relieving the Claimant of some responsibilities. The possibility of working on future projects appears to have ended, in part because of the conflict that plagued the Portland Hills construction.
[9] The parties entered into a written agreement dated January 3, 2007, which was on a standard form developed by the Claimant, and which set out all of the essential terms of the relationship. The actual $10,000 price for the project manager’s services is buried as a single line item amongst many other estimated costs in a Schedule A - “cost analysis breakdown.”
[10] For the Claimant to succeed in increasing his fee from $10,000 to $15,000, he would have to do one of three things:
a. Point to something in the wording of the contract that supports the claim,
b. Persuade me that the contract is incomplete, and should have some additional terms added to it, concerning the three-house deal, or
c. Establish that there was an enforceable collateral contract, i.e. some form of an oral “side deal,” that gave a $5,000 discount for the three-house deal.
[11] There is nothing in the express wording of the contract that mentions a three-house deal.
[12] As for possibly adding terms to the contract, that would normally not be done unless the contract appeared to be incomplete or unambiguous. In my view, it is neither.
[13] As for the possibility of there being a collateral contract, in my view this theory also fails. On the totality of the evidence, I am not convinced that there was a clear mutual understanding that these two other projects would occur, failing which the $10,000 price for the Portland Hills project would no longer apply. There were inherent uncertainties surrounding the two other projects, and I am not persuaded that the Waltons understood they would owe the Claimant $5,000 if one or both of those projects fell through.
[14] The onus is on the Claimant to prove that a collateral contract existed. Courts are inherently suspicious of evidence concerning the negotiation of a contract, since the contract itself is what governs the legal relationship. To establish that a separate and distinct collateral contract was entered into, alongside the written contract, the Claimant would have to establish on a balance of probabilities that there were agreed upon terms to which both parties agreed. The main problem with verbal contracts is often that the terms are vague and disputed, although the existence of a contract may be found in the very fact that the parties were involved with each other. The bigger problem with an alleged verbal collateral contract is that there is already a written contract that explains their dealings, and the existence of a second contract may be in doubt. In many cases written contracts have an “entire contract” provision that explicitly excludes collateral contracts, although that is not the case here.
[15] In the end, I am satisfied that the parties here had discussions about these other projects and hoped in good faith that they might happen. On the strength of those discussions and their assessment of what the future might hold, they made their contract. The Claimant would not be the first person to offer a discount on the basis of a hoped-for future business relationship. And this would hardly be the first instance when that future never transpired.
[16] I am not prepared to find that there was a collateral contract that entitled the Claimant to an additional $5,000.
Other moneys claimed
[17] The balance of the claim seeks moneys allegedly owing for fees and expenses under the contract, with one complicating factor concerning a landscaping deposit, which I will detail later.
[18] The Waltons’ main dispute is the fact that the originally estimated time for completion was not met, which resulted in additional costs for them. They place the blame on the Claimant for the delay.
[19] There is no doubt that there were documents shown to the Waltons that suggested that the construction would have been completed in 16 or 17 weeks, sufficient to allow for finish work to be started. It was the intention of the Waltons to have Charles Walton do much of that work himself during the time that he had arranged as parental leave time from his military employer. The question for me is whether the 16 or 17 week time frame was contractually promised or otherwise the responsibility of the Claimant to ensure.
[20] It is a fact that the construction schedule eventually fell behind by several months, with the result that Charles Walton’s parental leave time was over before the home was ready for the finish work that he was to perform.
[21] The main reason that the project fell behind schedule was that the framing contractor - who the parties had agreed would be hired - became seriously ill with cancer during the construction, and the crew was not able to pick up the slack and get the job done in a timely way. This was also being done during the worst months of the winter, and was at the mercy of the weather. According to the Claimant there were more days lost than might have been hoped for, and combined with the illness of the contractor this resulted in several weeks of delay.
[22] The Claimant testified that when it became known that the framer was ill, and that the crew was struggling, he went to the Waltons and gave them the option to bring in a different framer to complete the job, but they declined to do so.
[23] The foundation was complete and ready for framing as of February 5, 2007. Had everything gone right, the framing would have been complete by about the 5th of March. Instead, it was not complete until March 30th, at which time rough in of plumbing, electrical and other services could begin. This delay appears to have had a bit of a ripple effect and some additional time was lost. The Waltons blame the Claimant for having left on a scheduled vacation during March Break. They theorize that had he been there things would have moved more quickly.
[24] I am unwilling to place the blame on the Claimant for the delays. Certainly it was not his fault that the framer became ill. Nor can he be held responsible for weather. I was also not satisfied that his absence during March Break actually created any delay.
[25] Equally important is the fact that I do not believe that the Claimant undertook responsibility to meet completion milestones. That is not the way that the written contract reads. While other circulating documents referred to the time frame, I believe it is notorious that construction projects may take longer than originally planned, and the Waltons were experienced enough to know that delays might occur. It is difficult to believe that the Claimant would have placed his relatively modest project management fee at risk of being eroded or lost to claims that the project was delayed or over budget. I believe he is entitled to his fee, in full, so long as he performed in good faith and without negligence. I am satisfied that he did so perform.
[26] It is also far from clear that the Claimant understood that the timing was so critical to Charles Walton’s ability to work on the project. Even so, Charles Walton did perform the part of the work that he originally intended. However, he was already back at work and obliged to do much of it on weekends and in the evenings. It was for this reason that the extra babysitting expenses were incurred. The Waltons have a live-in nanny whose normal hours of work are during the day. Had the work on the house coincided with his parental leave time, he would have done that work during the day and been at home with the children in the evenings. With the change in schedule, it was necessary to pay the nanny considerable overtime.
[27] As the Claimant succeeded in establishing, Charles was not idle during his parental leave. He was able to pick up some paid outside renovation work to keep him busy. In a way he was able to mitigate any “damage” flowing from the delayed construction, which I have already found was not caused by any contractual breach by the Claimant.
[28] The Waltons further complain that the construction project suffered further delays at the end. By then almost all of the Claimant’s work was done, and relations were strained. I am not on the evidence able to place the blame on the Claimant for the fact that the construction kind of slowed to a snail’s pace while the last remaining items were being worked on.
[29] Absent any other credible defence, the Waltons are responsible for the balance claimed by the Claimant.
What is the balance?
[30] A side issue which intersects with the accounting concerns a landscaping deposit. When the Claimant originally bought the lot, he was obliged to deposit $1,500.00 with the developer, to stand as security in the event that the landscaping did not meet certain standards. The expectation normally is that the landscaping will be adequate, and the deposit will be returned.
[31] When the Claimant sold the lot to the Waltons, his deposit with the developer remained in place. His expectation was that when the project was complete, he would simply have that $1,500 returned to him. The Claimant testified, and I accept, that this was discussed at the outset with the Waltons, although I doubt that it occupied much time.
[32] Somewhere along the way, an issue arose between the Waltons and the Claimant. The Defendant appears to have misunderstood the genesis of the deposit and disputed that the Claimant had any entitlement to it. This dispute arose when relations were already severely strained. The Defendant at one point proposed that it was fair for she and the Claimant to share the deposit 50/50, and as a result she deducted $750 from moneys which were otherwise owing to the Claimant. Part of the claim of the Claimant is for the $750 wrongfully withheld.
[33] By the time the matter came to trial, the Waltons through their solicitor conceded that they had no claim whatsoever to the deposit. As such, I believe it is clear beyond any controversy that the Claimant will be free to claim the return of that deposit from the developer, and as such his claim may be reduced by $750.
[34] By my calculation, that leaves the following owing from the claim, as presented:
|
Claim as presented |
$9,220.00 |
|
$5,000 “three house deal” claim disallowed |
($5,000.00) |
|
deduct $750 on account of landscaping deposit |
($750.00) |
|
Balance owing on contract |
$3,470.00 |
Other issues
[35] The Claimant sued only the Defendant Susan Jane Walton, because he believed that she was the only proper party, notwithstanding that his contract was with both of the Waltons. The reason was that the Claimant placed a lien against the property and discovered that it was only owned by Susan Jane Walton.
[36] The Claimant did not appear to appreciate that if he was proceeding under the Builders Lien Act, he ought to have commenced an action in the Supreme Court of Nova Scotia. It has been my observation that many ordinary people do not understand the lien process and the demands that it makes on the Claimant to follow a particular procedure. I do not believe that he was in any way being malicious. He appears to have believed that he was fulfilling his responsibility by bringing the action in Small Claims Court. At the end of the trial I indicated to the Claimant that he ought to be discharging the lien unconditionally, in order that it not cause a problem for the Defendant. I take him at his word that he has done, or will immediately do that.
[37] The Claimant is entitled to his cost of filing which would have been $170.88.
[38] In the result the Claimant is entitled to a judgment against the Defendant for the sum of $3,470.00 plus costs of $170.88.
Eric K. Slone, Adjudicator