Hickey's Building Supplies Ltd. v. Sheppard, (2014) 359 Nfld. & P.E.I.R. 27 (NLCA)

• Judge: Welsh, Harrington and Hoegg, JJ.A.
• Court: Court of Appeal (Newfoundland)
• Case Date: June 11, 2014
• Jurisdiction: Newfoundland and Labrador
• Citations: (2014), 359 Nfld. & P.E.I.R. 27 (NLCA);2014 NLCA 43

Hickey's Building v. Sheppard (2014), 359 Nfld. & P.E.I.R. 27 (NLCA);

    1117 A.P.R. 27

MLB headnote and full text

Temp. Cite: [2014] Nfld. & P.E.I.R. TBEd. NO.040

Hickey's Building Supplies Limited (appellant) v. Harvey Sheppard and Patsy Sheppard (respondents)

(13/15; 2014 NLCA 43)

Indexed As: Hickey's Building Supplies Ltd. v. Sheppard

Newfoundland and Labrador Supreme Court

Court of Appeal

Welsh, Harrington and Hoegg, JJ.A.

November 24, 2014.

Summary:

The Sheppards contracted with Hickey's Building Supplies Ltd. to have a home built for their retirement years that would accommodate Mrs. Sheppard's need, as a double amputee, to spend most of her time in a wheelchair. The completion date was set for February 2010. Due to a number of deficiencies, they did not take occupancy until March 2011. They refused to make the final payment under the contract because they were dissatisfied with aspects of the work, including the floor which they asserted was inadequate for Mrs. Sheppard's mobility in her wheelchair. Hickey's registered a mechanics' lien for the amount owing ($96,688.33). Hickey's sued for payment.

The Newfoundland and Labrador Supreme Court, Trial Division (General), in a decision reported at [2013] Nfld. & P.E.I.R. Uned. 12, held that Hickey's had failed to perform in accordance with the contract and calculated damages totalling $60,737.87, which included $15,000 for non-pecuniary damages. The court concluded that $35,950.46 remained owing on the contract and vacated the lien. The court awarded the Sheppards costs under column 5 of the scale of costs. Hickey's appealed.

The Newfoundland and Labrador Court of Appeal, Welsh, J.A., dissenting in part, allowed the appeal to the extent of reinstating the lien for $35,950.46

Building Contracts - Topic 3222

Liability of builder - Official building standards - National Building Code - The Sheppards contracted with Hickey's Building Supplies Ltd. to have a home built for their retirement years that would accommodate Mrs. Sheppard's need, as a double amputee, to spend most of her time in a wheelchair - The Sheppards refused to make the final payment because they were dissatisfied with aspects of the work, including the floor which they asserted was inadequate for Mrs. Sheppard's mobility in her wheelchair - Hickey's registered a mechanics' lien for the amount owing ($96,688.33) and sued for payment - The trial judge held that Hickey's had failed to perform in accordance with the contract and calculated damages totalling $60,737.87, leaving $35,950.46 owing on the contract - Hickey's appealed, asserting that the judge erred by applying the standard of "good construction practice" and, as a result, requiring level flooring, when the contract provided for compliance with the National Building Code which permitted the use of transition strips to accommodate differences of one-quarter inch - Hickey's also relied on the contract's entire agreement clause (clause 13(b)) - The Newfoundland and Labrador Court of Appeal held that clause 13(b) did not help Hickey's - Hickey's knew that there was potential for a conflict between what the Code permitted and what the Sheppards wanted - The Sheppards relied on Hickey's expertise and on clause 15(b) which provided that the house would be built in a workman-like manner - It was incumbent on Hickey's either to clarify that transition strips could be used or that there would be some extra expense if underlay was required to achieve a level floor - Hickey's could have addressed the matter in the contract, but did not - The judge did not err in relying on clause 15(b) - In the circumstances, workman-like manner involved the use of underlay - The trial judge did not err in concluding that the Sheppards had contracted for a level floor and Hickey's could not rely on the minimal requirements of the Code to permit the use of transition strips - See paragraphs 12 to 21.

Building Contracts - Topic 3420

Liability of builder - Defective workmanship or design - General principles - [See Building Contracts - Topic 3222 ].

Building Contracts - Topic 3545

Liability of builder - Duty to owner - Owner's reliance on skill and experience of builder - [See Building Contracts - Topic 3222 ].

Building Contracts - Topic 3546

Liability of builder - Duty to owner - Duty respecting price quotation or estimate - [See Building Contracts - Topic 3222 ].

Building Contracts - Topic 3566

Liability of builder - Damages - Measure of - General - The Sheppards contracted with Hickey's Building Supplies Ltd. to have a home built for their retirement years that would accommodate Mrs. Sheppard's need, as a double amputee, to spend most of her time in a wheelchair - The Sheppards refused to make the final payment because they were dissatisfied with aspects of the work, including that the house had eight-foot ceilings, instead of nine-foot ceilings - The trial judge held that Hickey's had failed to perform in accordance with the contract and calculated damages totalling $60,737.87, which included $2,500 to compensate for the failure to provide nine-foot ceilings - Hickey's appealed, asserting that Mr. Sheppard waived the requirement for nine-foot walls - The Newfoundland and Labrador Court of Appeal accepted that Mr. Sheppard's agreement to eight-foot walls was made under duress - There was a heated discussions between Hickey's and Mr. Sheppard and a demand that Mr. Sheppard agree to the eight-foot walls - Mr. Sheppard had no practical alternative but to accept the change - The change was not supported by any consideration from Hickey's - The Sheppards vehemently protested the variation and did not waive the requirement of nine-foot walls - As there was no evidence regarding the loss in value, the judge awarded $2,500 based on the difference in costs between constructing eight and nine-foot walls - The court affirmed the award - See paragraphs 27 to 39.

Building Contracts - Topic 3568

Liability of builder - Damages - Measure of - Reinstatement costs of defective work - The Sheppards contracted with Hickey's Building Supplies Ltd. to have a home built for their retirement years that would accommodate Mrs. Sheppard's need, as a double amputee, to spend most of her time in a wheelchair - The Sheppards refused to make the final payment because they were dissatisfied with aspects of the work, including the floor which they asserted was inadequate for Mrs. Sheppard's mobility in her wheelchair - Hickey's registered a mechanics' lien for the amount owing ($96,688.33) and sued for payment - The trial judge held that Hickey's had failed to perform in accordance with the contract and calculated damages totalling $60,737.87, which included $42,237.87 for remediation of the flooring - Hickey's appealed, asserting that the maximum that could be awarded in respect of the flooring was $11,500, the amount for flooring under the contract - The Newfoundland and Labrador Court of Appeal rejected the assertion - See paragraphs 22 to 26.

Building Contracts - Topic 3569

Liability of builder - Damages - Measure of - General damages for defective work - The Sheppards contracted with Hickey's Building Supplies Ltd. to have a home built for their retirement years that would accommodate Mrs. Sheppard's need, as a double amputee, to spend most of her time in a wheelchair - The completion date was set for February 29, 2009 - There were a number of delays - In March 2010, despite a number of deficiencies, the Sheppards moved in as Hickey's had removed insurance coverage on the home and they were unable to obtain their own coverage unless it was occupied - The Sheppards refused to make the final payment because they were dissatisfied with aspects of the work, including the floor which they asserted was inadequate for Mrs. Sheppard's mobility in her wheelchair - Hickey's registered a mechanics' lien for the amount owing ($96,688.33) and sued for payment - The trial judge held that Hickey's had failed to perform in accordance with the contract and calculated damages totalling $60,737.87, which included $15,000 for non-pecuniary damages - The Newfoundland and Labrador Court of Appeal affirmed the award for non-pecuniary damages - It was inherent in a home construction contract that the finished flooring would be hazard-free - The flooring that Hickey's delivered was far from hazard free - It was within the parties' contemplation that the purpose of the contract was to provide the Sheppards, in a timely fashion, with a safe retirement home accommodating Mrs. Sheppard's needs - Hickey's failed to deliver what it promised - It was therefore foreseeable that the breaches of the contract would cause mental distress to the Sheppards - The mental distress suffered by the Sheppards was serious, prolonged and far from trifling - It was sufficient to warrant compensation - There was no error in the award of $15,000 - See paragraphs 81 to 94.

Contracts - Topic 1586

Formation of contract - Consent - Duress - Defence of - When available - [See Building Contracts - Topic 3566 ].

Contracts - Topic 1587

Formation of contract - Consent - Duress - Defence of - Waiver - [See Building Contracts - Topic 3566 ].

Contracts - Topic 2116

Terms - Express terms - "Entire agreement" or "four corners" clause - [See Building Contracts - Topic 3222 ].

Contracts - Topic 2116

Terms - Express terms - "Entire agreement" or "four corners" clause - The Newfoundland and Labrador Court of Appeal held that a building contractor could not rely on an entire agreement clause in a contract as the contractor had conceded that there was an ambiguity in the contract - See paragraph 34.

Damage Awards - Topic 1007

Contracts - General - Breach of contract - Injured feelings or emotional upset - [See Building Contracts - Topic 3569 ].

Damage Awards - Topic 1365

Contracts - Building contracts - Defective work - [See Building Contracts - Topic 3566 ].

Damages - Topic 5703

Contracts - Breach of contract - Damages in reasonable contemplation of parties - [See Building Contracts - Topic 3569 ].

Damages - Topic 5706

Contracts - Breach of contract - Injured feelings or emotional upset - [See Building Contracts - Topic 3569 ].

Damages - Topic 6512

Contracts - Building contracts - Breach by engineer or builder Restoration costs - [See Building Contracts - Topic 3568 ].

Damages - Topic 6516

Contracts - Building contracts - Breach by engineer or builder - Measure of damages - [See Building Contracts - Topic 3566 and Building Contracts - Topic 3568 ].

Mechanics' Liens - Topic 5055

Obtaining a lien - Vacating registered lien - Grounds for - The Sheppards contracted with Hickey's Building Supplies Ltd. to have a home built - The Sheppards refused to make the final payment because they were dissatisfied with aspects of the work - Hickey's registered a mechanics' lien for the amount owing ($96,688.33) and sued for payment - The trial judge held that Hickey's had failed to perform in accordance with the contract and calculated damages totalling $60,737.87, leaving $35,950.46 owing on the contract - The judge vacated the lien without providing reasons for doing so - The Newfoundland and Labrador Court of Appeal stated that Hickey's had the right to register a lien under s. 6 of the Mechanics' Lien Act - Section 36 of the Act authorized the court, after the trial of the claim, to make any necessary order respecting the parties' rights to the lien - Where an amount remained owing to the lien claimant, absent an explanation from the trial judge, the lien should remain in place, with any necessary or appropriate adjustment - The judge erred in vacating the lien - The court reinstated the lien and varied the amount of the claim to $35,940.46, the amount owing under the contract - See paragraphs 47 to 51, 64 and 97.

Cases Noticed:

Creston Moly Corp. v. Sattva Capital Corp. (2014), 461 N.R. 335; 358 B.C.A.C. 1; 614 W.A.C. 1; 2014 SCC 53, refd to. [para. 8].

Fidler v. Sun Life Assurance Co. of Canada, [2006] 2 S.C.R. 3; 350 N.R. 40; 227 B.C.A.C. 39; 374 W.A.C. 39; 2006 SCC 30, refd to. [para. 22].

Rental Shop Ltd. v. Western Surety Co. (1992), 99 Nfld. & P.E.I.R. 238; 315 A.P.R. 238 (Nfld. T.D.), refd to. [para. 32].

Mitchell and Jewell Ltd. v. Canadian Pacific Express Co., [1974] 3 W.W.R. 259 (Alta. C.A.), refd to. [para. 32].

Burin Peninsula Community Business Development Corp. v. Grandy (2010), 302 Nfld. & P.E.I.R. 163; 938 A.P.R. 163; 2010 NLCA 69, refd to. [para. 35].

Greater Fredericton Airport Authority Inc. v. NAV Canada (2008), 329 N.B.R.(2d) 238; 844 A.P.R. 238; 2008 NBCA 28, refd to. [para. 35].

Hadley v. Baxendale (1854), 9 Exch. 341; 156 E.R. 145, refd to. [para. 66].

Jarvis v. Swan Tours Ltd., [1973] 1 All E.R. 71 (C.A.), refd to. [para. 66].

Watts v. Morrow, [1991] 4 All E.R. 937; [1991] 1 W.L.R. 1421 (C.A.), refd to. [para. 67].

Farley v. Skinner, [2001] 4 All E.R. 801; [2001] 3 W.L.R. 899; 278 N.R. 47 (H.L.), refd to. [para. 67].

Keks v. Esquire Pleasure Tours Ltd., [1974] 3 W.W.R. 406 (Man. Co. Ct.), refd to. [para. 69].

Weisgerber v. Zurowski, [1974] S.J. No. 151 (Dist. Ct.), refd to. [para. 69].

Wharton v. Harris (Tom) Chevrolet Oldsmobile Cadillac Ltd. (2002), 163 B.C.A.C. 122; 267 W.A.C. 122; 97 B.C.L.R.(3d) 307; 2002 BCCA 78, refd to. [para. 70].

Wilson v. Sooter Studios Ltd., [1988] B.C.W.D. 1572 (Co. Ct.), affd. (1988), 33 B.C.L.R.(2d) 241 (C.A.), refd to. [para. 71].

Downs v. Kaminski, 2010 CarswellOnt 11312 (Sup. Ct.), refd to. [para. 71].

Klaus v. Taylhardat, 2007 BCPC 21, refd to. [para. 71].

Turczinski v. Dupont Heating & Air Conditioning Ltd. et al. (2004), 191 O.A.C. 350; 246 D.L.R.(4th) 95 (C.A.), refd to. [para. 72].

Satara Farms Inc. et al. v. Parrish & Heimbecker Ltd. (2006), 280 Sask.R. 44; 2006 SKQB 229, refd to. [para. 72].

Vorvis v. Insurance Corp. of British Columbia, [1989] 1 S.C.R. 1085; 94 N.R. 321, refd to. [para. 73].

Mustapha v. Culligan of Canada Ltd., [2008] 2 S.C.R. 114; 375 N.R. 81; 238 O.A.C. 130; 2008 SCC 27, refd to. [para. 76].

McQueen v. Echelon General Insurance Co. (2011), 285 O.A.C. 64; 107 O.R.(3d) 780; 2011 ONCA 649, refd to. [para. 79].

Lumsden v. Manitoba (2009), 236 Man.R.(2d) 130; 448 W.A.C. 130; 2009 MBCA 18, refd to. [para. 93].

Fernandes v. Penncorp Life Insurance Co. (2014), 325 O.A.C. 79; 2014 ONCA 615, refd to. [para. 93].

Authors and Works Noticed:

Goldsmith, Immanuel, and Heintzman, Thomas, Goldsmith on Canadian Building Contracts (2009) (Looseleaf), pp. 6-10 to 6-11 [para. 23].

Swan, Angela, and Adamski, Jakub, Canadian Contract Law (3rd Ed. 2012), para. 6.75 [para. 22].

Counsel:

Keith Morgan, for the appellant;

Genevieve Dawson, for the respondents.

This appeal was heard on June 11, 2014, by Welsh, Harrington and Hoegg, JJ.A., of the Newfoundland and Labrador Court of Appeal. The decision of the court was delivered on November 24, 2014, with the following opinions:

Welsh, J.A., dissenting in part - See paragraphs 1 to 63;

Hoegg, J.A. (Harrington, J.A., concurring) - See paragraphs 64 to 98.