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Klondike Contracting Corporation v. Abadian, 2021 BCPC 145 (CanLII)

Date:
2021-06-01
File number:
1963492
Citation:
Klondike Contracting Corporation v. Abadian, 2021 BCPC 145 (CanLII), <https://canlii.ca/t/jg6pj>, retrieved on 2024-03-28

Citation:

Klondike Contracting Corporation v. Abadian

 

2021 BCPC 145

Date:

20210601

File No:

1963492

Registry:

Vancouver

 

 

IN THE PROVINCIAL COURT OF BRITISH COLUMBIA

 

 

 

 

BETWEEN:

KLONDIKE CONTRACTING CORPORATION

CLAIMANT

 

 

AND:

EHSAN ABADIAN

DEFENDANT

 

 

 

 

 

 

 

 

 

 

 

REASONS FOR JUDGMENT

OF THE

HONOURABLE JUDGE W. LEE



 

 

Appearing for the Claimant:

E. Schapira

Counsel for the Defendant:

A. Hall

Place of Hearing:

Vancouver, B.C.

Dates of Hearing:

January 26-28, and March 31, 2021

Date of Judgment:

June 1, 2021


INTRODUCTION

[1]         This is a claim by Klondike Contracting Corporation for payment of a balance owing for construction work at a condominium owned by the defendant Ehsan Abadian, located at 1902-535 Nicola Street, Vancouver, BC.

[2]         The claimant says the unpaid balance is $69,807.28, and they claim the statutory maximum amount possible in Small Claims Court, which is $35,000 plus fees.

[3]         The defendant disputes the claim. In his Reply and Counterclaim, filed April 24, 2019, Mr. Abadian counterclaimed for amounts totalling $79,199, which was reduced to the Court’s statutory maximum of $35,000 plus fees. When this trial concluded, Mr. Abadian’s counsel gave me written submissions setting out a claim of $84,225.50. I then received further written submissions from Mr. Abadian and his claim grew to $86,546.39. At no time was the Counterclaim amended.

WITNESSES

[4]         I heard from the following witnesses:

1.            Eric Schapira, owner and president of Klondike Contracting

2.            Timothy Murray Keith, director of construction for Klondike Contracting

3.            Stathis Tsogas, owner of Figtree Contracting

4.            Ehsan Abadian, the defendant

5.            Arkadiusz Kosmaty, an expert in flooring installations and inspections

[5]         I also received the following:

1.            Inspection Report of Arkadiusz Kosmaty – Date of Inspection January 14, 2020

2.            Follow-up notes from Arkadiusz Kosmaty dated April 15 and May 20, 2020

3.            Inspection Report of Wayne Laforet – Date of Inspection June 19, 2020

4.            Rebuttal Opinion from Arkadiusz Kosmaty dated December 12, 2020

[6]         After the trial, I received written submissions from the parties.

THE ISSUES

1.            Are the terms of the agreement between the parties only those set out in the CCDC-5B Agreement?

2.            What is owing pursuant to the agreement between the parties?

3.            Were there any deficiencies?

4.            Did Klondike Contracting have a contractual right to repair deficiencies?

5.            Was there a Release of Claims?

6.            If compensation is owed on the Counterclaim, how is it applied?

BACKGROUND

[7]         Mr. Abadian purchased the property at 1902-535 Nicola Street, Vancouver, BC, (the “Apartment”) in early 2017. Prior to the completion date, he viewed the Apartment with an interior designer named Jenna McBride and Tim Keith, the director of construction for Klondike Contracting. Mr. Abadian said his plan was to open the Apartment up and Mr. Keith was present to advise on how realistic Mr. Abadian’s plan was.

[8]         Mr. Abadian and Klondike Contracting entered into a written agreement dated November 9, 2017. The form of the agreement used was a precedent document called a CCDC-5B Agreement (the “Agreement”).

[9]         According to the Agreement, work was to commence January 8, 2018. No completion date was set out.

[10]      According to Mr. Abadian, the initial project manager for Klondike Contracting was Ryan Saunders. He left after two months and was replaced by a person named Soledad. Two to three months later, Jag Hundal became the project manager. Neither party called Mr. Hundal as a witness at the trial although he had the most direct contact with Mr. Abadian and would have provided useful information.

[11]      On September 12, 2018, Mr. Abadian and Mr. Hundal had an exchange of emails. Mr. Abadian first emailed Mr. Hundal to say that he had been away for two months and upon his return, he saw that the painting at the Apartment had not been done, the doors still needed handles and the laundry had not been installed. Mr. Abadian said that the bathroom shower grout looked old and that there was no garburator.

[12]      Mr. Hundal told Mr. Abadian that he had already been given an explanation for the delays and said that “Klondike have put our best foot forward since.”

[13]      Mr. Abadian responded that he realized this was not Mr. Hundal’s fault but that Mr. Abadian was frustrated by the delay.

[14]      On October 4, 2018, Mr. Abadian emailed Mr. Hundal to report an issue with his shower. Mr. Hundal responded that he contacted the plumber to “get someone out right away.”

[15]      On October 6, 2018, Mr. Abadian emailed Mr. Hundal with two pictures, one showing scratches on part of the showerhead and the other showing small scratches on what appears to be the hardwood floor.

[16]      On October 17, 2018, Mr. Hundal emailed Mr. Abadian to provide an update on the following issues, which I paraphrase as follows:

Floor repair – A person named Ted would be coming to do the repair and that a type of oil was required for refinishing the floor.

Blinds – A person named Terry would be making a new blind.

Mirror trim – Mr. Hundal asked Mr. Abadian for a picture of the desired trim, and then Mr. Hundal would find a source for the trim and schedule an installation.

Glass replacement – Glass was to be installed October 25, 2018.

Plumbing – Mr. Hundal discussed an option of waiting for a replacement showerhead or refinishing the existing showerhead.

Balcony – Drywall repairs would be completed after the removal of a sprinkler head.

[17]      On October 22, 2018, Mr. Abadian signed a Certificate of Completion in Form 3 under the Builder’s Lien Act, SBC 1997, c. 45.

[18]      On November 19, 2018, Mr. Hundal emailed Mr. Abadian to provide an update regarding the deficiencies, stating:

Window Covering: Photo sent of proposed solution, please let me know if this will work

Master Mirror Trim: Geometrix should have the material back from powder coat soon, they had estimated an install date of the first week of December

Flooring: I have followed up with Ted, waiting on an update for the floor oil

Tile: The tile guy should be out this week to fix the two small grout issues, he should have an answer for me tomorrow

Plumber: They have informed me it is difficult to find another tub filler that will match the finish and spec needed, I am contracting other plumbers as this delay has been extensive.

[19]      Mr. Hundal attached to his email what he described as a “final accounting for your review.”

[20]      Mr. Abadian responded on November 20, 2018, to confirm that Terry had called him and was bringing in samples. Mr. Abadian asked Mr. Hundal to confirm the amount outstanding as he found the invoices confusing.

[21]      Mr. Hundal replied that the outstanding balance was $61,570.47, which included a 10% holdback. He also provided a further update on the outstanding deficiency items. Mr. Hundal told Mr. Abadian that a replacement matte black tub spout was not available and that Klondike Contracting would have to open the drywall behind the shower to replace the water line so that the shower could work.

[22]      The sum of $61,570.47 is set out in a client statement dated November 15, 2018. That statement showed total invoices of $423,017.91 and total payments of $361,447.43, leaving a balance owing of $61,570.47.

[23]      Mr. Abadian responded later that day, stating:

Well we are definitely on different mindsets if that’s the total.

As for the shower who is covering the cost of repairs? Can moen not give a complete different set of fixtures?

I can’t explain all the dents and scratches on the floor. When he comes in I can show him. Ted has already seen them and I have mentioned it to him last time I was there.

[24]      In an email dated December 12, 2018, Mr. Hundal asked Mr. Abadian if there was a time they could meet. Mr. Abadian responded that he still does not have two working showers. He said, “As mentioned before when we are done I’m happy to meet as many times as you like. Until then, I have continued to be patient so I think you can be patient as well.”

[25]      Tim Keith answered Mr. Abadian’s email saying he understood that one shower was working and the other needed the head tightened. Mr. Keith asked to schedule a meeting and that he would repair the showerhead himself when he was there. Mr. Abadian replied that someone named Aaron was coming the next day. He said, “Hopefully we are almost finished and we can arrange a mid to late week meeting next week.”

[26]      There were later emails between Mr. Abadian and Mr. Keith discussing a meeting date.

[27]      On December 20, 2018, Klondike Contracting issued a client statement summarizing the amount due. The total of all invoices was $431,254.72 and Mr. Abadian paid $361,447.43, leaving a balance of $69,807.28. The difference between the November 15 and the December 20, 2018 client statements was an increase of $8,236.81.

[28]      On December 27, 2018, Mr. Hundal emailed Mr. Abadian to ask him to confirm a January 8 meeting date. Mr. Abadian said he was out of town.

[29]      On January 9, 2019, Mr. Keith emailed Mr. Abadian to ask if he was back in town. Mr. Abadian responded that same day to say he was in town but may leave for a couple days. Mr. Abadian asked for an explanation why the costs set out in the November 15, 2018 statement increased by approximately $8,000 to the amount set out in the December 20, 2018 statement.

[30]      Mr. Keith responded on January 11, 2019. He said that because the discussion was mainly financial, he would ask Mr. Schapira, as the owner and president of Klondike Contracting Corporation, to become involved.

[31]      On January 13, 2019, Mr. Schapira told Mr. Abadian he would review the request with his controller and respond within a few days. There followed some further emails about Aaron coming to the Apartment to finish certain unspecified work.

[32]      Mr. Schapira said he spoke to Mr. Abadian by phone to try to agree on a deficiency list and to seek payment of the outstanding invoice. Mr. Schapira suggested that Mr. Abadian could hold back double the estimated deficiency costs but Mr. Abadian did not agree. Mr. Abadian also declined to give Mr. Schapira access to the apartment to inspect the work.

[33]      In an email to Mr. Abadian dated January 28, 2019, Mr. Schapira summarized the issues. The email referred to Mr. Abadian as “Sean” and set out the following:

1.            Drywall & Painting Waviness and Flashing – Sean to email pictures (KC Proposal – If not remedied this week 2x cost of repair to be retained by Sean)

2.            Hardwood Floors Creaking – Sean is dealing directly with manufacturer (Sean to advise KC if their assistance is needed; No funds to be retained by Sean)

3.            Explanation for 8K increase in project cost between Nov & Dec 2018 reporting (See explanation below)

4.            Extra cost for sub-trades returning to correct deficiencies or due to length of time of the project

a.            Majority of sub-trades were on fixed subcontracts so multiple visits or length of project would not affect their prices

b.            KC Project Management are variable and affected by length of the project (KC Proposal – Goodwill discount of $1,250 per month x 4 months = $5,000 & GST)

[34]      Mr. Schapira explained in his email that the cause of the approximately $8,000 increase in costs was due to a late invoice, a further approved invoice and additional labour and management costs.

[35]      Regarding the repair of deficiencies, Mr. Schapira said that the majority of subtrades were on fixed subcontracts and in those cases, there were no extra costs for correcting deficiencies. Mr. Schapira proposed to resolve the matter by reducing the amount owing to $64,807.28 after applying a $5,000 goodwill credit.

[36]      Mr. Abadian responded on February 2, 2019. He said, “Unfortunately it seems we do not see eye to eye on this matter.” Mr. Abadian reported having “huge floor issues” and the flooring installer Figtree was not responding to him. Mr. Abadian said he contacted another company, Europlex, to see how the problem could be resolved. Mr. Abadian went on to say he did not agree with the increased costs of the drywall.

[37]      Mr. Abadian said he was tired of having tradespeople coming to his Apartment and he felt that others could have done some of the work, presumably at an earlier time. Mr. Abadian expressed his frustration over the construction delays. He complained about the changes to the project managers, which he attributed to increased costs and delays. Mr. Abadian went on to say he would hire someone else to finish the drywall and ceiling work. He concluded with a suggestion that they part ways.

[38]      I take Mr. Abadian’s response to be a rejection of Mr. Schapira’s proposal to resolve the outstanding claim, whose proposal included the offer of a $5,000 credit.

[39]      Mr. Abadian’s February 2, 2019 email did not describe the nature of the flooring problem. Mr. Schapira testified that Mr. Abadian sent this email some five months after substantial completion, and that this was the first notice that the flooring was a “huge issue.”

[40]      On February 11, 2019, Klondike Contracting filed its Notice of Claim with this Court. A lien was registered against the Apartment although Klondike Contracting never pursued the Builder’s Lien Act action in the Supreme Court.

[41]      Mr. Abadian filed a Reply and Counterclaim on April 24, 2019. The Counterclaim listed alleged deficiencies in the construction. Mr. Schapira said this was the first deficiency list provided by Mr. Abadian.

[42]      On November 29 and December 11, 2019, Mr. Schapira wrote to Mr. Abadian’s legal counsel requesting to inspect the deficiencies. The December 11, 2019 letter stated that the type of flooring used in the Apartment may have been discontinued and Klondike Contracting had an opportunity to buy some of the flooring. There was no response to this letter. Klondike Contracting nevertheless went ahead and purchased some replacement flooring but did not charge Mr. Abadian for this cost.

[43]      I turn now to discuss the issues.

ARE THE TERMS OF THE AGREEMENT BETWEEN THE PARTIES ONLY THOSE SET OUT IN THE CCDC-5B AGREEMENT?

[44]      Mr. Abadian and Klondike Contracting entered into a written agreement dated November 9, 2017. The form of the agreement used was a precedent document called a CCDC-5B Agreement. Mr. Schapira said that Klondike Contracting uses the CCDC-5B form for both commercial and residential projects and that not all terms of the CCDC-5B apply to all contracts despite the presence of those terms in the written document. For instance, the agreement refers to a consultant but the parties never appointed a consultant for the project. At page 8 of the agreement, where the name of the consultant is to be inserted, the agreement reads: “N/A”.

[45]      Page 2 of the Agreement sets out a list of the services that Klondike Contracting would provide. Schedule B to the Agreement sets out hourly rates based on the work performed.

[46]      The CCDC-5B Agreement requires that any change orders be confirmed in writing. Mr. Schapira testified that the parties did not insist on this requirement. He said that Klondike would accept verbal approvals and that a signed confirmation of changes was not common for residential construction. Mr. Abadian did not dispute this.

[47]      In light of the evidence, I find that the agreement between the parties was not set out solely in the CCDC-5B document but included verbal changes to the agreement.

WHAT IS THE AMOUNT OWING PURSUANT TO THE AGREEMENT BETWEEN THE PARTIES?

[48]      Klondike Contracting seeks payment of $69,807.28. Mr. Abadian claims for a number of deductions though. I will review each of these claims in turn, using the same headings as set out in Mr. Abadian’s written submissions.

INVOICING AND COSTS OF THE WORK

Charging for Correcting Deficiencies: Invoices and Labour after September 13, 2018

[49]      Mr. Abadian signed a Certificate of Completion showing a date for substantial completion of September 13, 2018. Mr. Abadian submitted that any work performed after September 13, 2018, was for repair of deficiencies, which was to be performed at the expense of Klondike Contracting. Mr. Abadian referred to clause 2.5.1 of the Agreement in support of this claim. This specific clause refers to defective work as identified by the named consultant on the project. However, as set out at Article A-10 of the Agreement, there was no named consultant and so this clause has no application.

[50]      The Certificate of Completion is provided under the Builder’s Lien Act, which defines “completion” to mean substantial completion and not total completion. The certificate does not mean the work was completed. Without further evidence, I am not satisfied that these various invoices were for the repair of deficiencies as opposed to the completion of the work.

[51]      Mr. Abadian has also not proven to my satisfaction that the disputed invoices are for work performed after the date of substantial completion. The dates of the invoices are the dates that the invoices were issued. I do not accept those dates as evidence of when work was performed. In addition, the evidence of both Mr. Abadian and Klondike Contracting was that Mr. Abadian did not allow Klondike Contracting back to the Apartment to deal with deficiencies. Accordingly, I reject this claim.

Unauthorized/Improper Labour: Over 8 Hours a day, Working on Holiday

[52]      There was no evidence at trial on this point and little in the way of submissions. It appears that Mr. Abadian’s position is that any labour charges for anyone working over 8 hours a day or on statutory holidays should not be his responsibility. I fail to see any legal basis for this argument. The supporting Appendix submitted by Mr. Abadian did not even indicate premium charges for working over 8 hours a day or on holidays.

Unauthorized/Improper Labour: 2 or 3 Project Managers Working on Same Days

[53]      Mr. Abadian claims a reduction of the amount due to Klondike Contracting based on two or three project managers working on the project on certain days. In the initial written submissions, this amount was stated to be $7,651.30. In the later written submissions, this amount grew to $9,948.40. Mr. Schapira gave evidence that often more than one person will fulfil project manager duties on the same day. The Agreement calls for payment based on the services rendered. Mr. Abadian did not identify any Agreement terms that prevented more than one person performing the same category of services on a given day. If this proposition were accepted, then only one carpenter or one labourer could work on the Apartment on any one day and, no doubt, that would have been unacceptable. This claim is rejected.

Inflated Rates

[54]      Mr. Abadian claimed he was charged inflated hourly rates for work performed, totalling $4,615.00. He specifically referred to the workers Jordan Prosser, Aaron Drinkwater and Dan Pryce. I will look at each of these workers.

Dan Pryce Inflated Rate

[55]      Klondike Contracting prepared a summary of the invoices for this project dated December 20, 2018, which I will refer to as the “Client Bills List”.

[56]      According to the Client Bills List, Dan Pryce performed rough carpentry work Klondike Contracting charged him out at the rate of $75 an hour for 14 hours. Mr. Abadian argued that Mr. Pryce should have been charged out at the rate of $40 an hour as a labourer. His reason was that Mr. Pryce, under the name Danco Contracting, issued an invoice, dated February 25, 2017, for 14 hours of work totalling $560 plus GST, or $40 an hour.

[57]      The Danco Contracting invoice is dated before work started on Mr. Abadian’s apartment. Mr. Schapira contacted his office and was told that the invoice should have been dated 2018, and not 2017. I credit Mr. Schapira for his honesty in confirming that the invoice was from 2018. Mr. Schapira was also unsure whether Mr. Pryce’s time was in fact charged while he was an employee or a subcontractor.

[58]      The Client Bills List shows a charge for 14 hours of work, which is the same amount billed in the Danco Contracting Invoice. The invoice also refers to the project address as “Nicola”, which is the street name where the Apartment is located.

[59]      I am of the view that there was a billing error and rather than being charged out at the rate of $75 an hour, Mr. Pryce’s services should have been charged out based on his invoice for $560. Under the terms of the Agreement, Klondike Contracting was entitled to charge a 15% mark-up on subcontracts and so the proper charge should have been $644. Klondike Contracting billed $1,050 for Dan Pryce’s services, and this represents an overcharge of $406.

Jordan Prosser Inflated Rate

[60]      Klondike Contracting provided a summary listing of the persons who worked on the project, a description of the task performed and the hours worked. I will refer to this as the “List of Workers”.

[61]      According to the List of Workers, an employee named Jordan Prosser provided 22.05 hours of service as a project manager and was billed out at the project manager rate of $95 an hour. Mr. Abadian argued that Mr. Prosser should be billed out as a supervisor, which has an hourly rate of $85 an hour. Mr. Schapira testified that Mr. Prosser was performing the tasks of a project manager and that he was properly billed out. Mr. Abadian did not have any evidence to the contrary. I accept that Mr. Prosser’s services were properly charged.

Aaron Drinkwater Inflated Rate

[62]      The List of Workers shows Aaron Drinkwater performed many tasks, from site administration to general labour, all at different rates. Some of the tasks performed by him were categorized as “Finish Carpentry” and charged at the carpenter rate of $75 an hour. Mr. Abadian questioned why Mr. Drinkwater’s time was not charged as a skilled labourer ($50 an hour) or as administration/accounting ($45 an hour), two tasks that Mr. Drinkwater also performed on the project. As I have set out, hourly rates are charged based on the tasks performed and not on the individual. The List of Workers confirms this, given the different charges for Mr. Drinkwater’s services based on the task he performed on any given day. As there is no evidence that Mr. Drinkwater did not perform the carpentry work, this claim is denied.

Inflated Rates-Summary

[63]      Based on the above, I accept that there should be a reduction to the fees charged of $406.

Vendor Discounts/Credits/Refunds Received by Klondike but not passed on to Mr. Abadian

[64]      Mr. Abadian claimed a reduction in the Klondike Contracting invoice of $1,872.39, based on certain invoices where discounts were given by suppliers or subcontractors but not passed on to Mr. Abadian.

[65]      Article 7.4 of the CCDC-5B Agreement states:

All cash discounts shall accrue to the Construction Manager unless the Owner deposits funds with the Construction Manager with which to make payments, or where the Owner pays the costs of financing the Work, in which case the cash discounts shall accrue to the Owner.

[66]      The only evidence of a deposit paid by Mr. Abadian is a retainer of $1,000 paid by cheque, dated May 26, 2017. The retainer of $1,000 was clearly inadequate to pay the costs of financing the work, but Article 7.4 does not specify the amount of any required deposit. I am therefore not prepared to find that Article 7.4 entitles Klondike Contracting to the benefit of all discounts.

[67]      I turn now to compare certain items from the Client Bills List to the actual subcontractor invoices.

[68]      Invoice 292428 dated September 18, 2019, from A Plus Cleaning and Janitorial Ltd. is for $521.15 plus tax of $26.05, for a total of $547.20. The invoice included a discount of $54.85, which Mr. Abadian claims. The Client Bills List shows a charge of $576, a difference of $28.80. I find that Mr. Abadian is entitled to a credit for this price difference.

[69]      A Klondike Contracting Check Register Detail History Report with a date of 07/08/20 referred to an invoice from City Link Drywall dated June 22, 2018, for $13,440 less a discount of $768, for a balance owing of $12,672. This is equivalent to $12,068.57 plus GST of 5%. The Client Bills List listed the amount charged to Mr. Abadian as $12,800, a difference of $731.43. However, when I view the actual invoice issued by City Link Drywall, being invoice 0000038 dated June 21, 2018, it shows an amount due of $13,440 with no reference to any discount. Given this discrepancy, I am not satisfied that Mr. Abadian was entitled to a claimed discount.

[70]      A statement from Pacific Rim Cabinets Ltd. dated July 7, 2020, number 4614, showed a contract amount due of $34,002.01 plus GST of $1,700.01. The amount charged according to the Client Bills List is a total of $34,002.03, a difference of $.02. Mr. Abadian is entitled to be credited for this difference.

[71]      Invoice 12816 from Precision Stone Works Ltd. dated 05-07-2018, is for $13,325 after a discount of $325 is applied, plus tax. This is broken down into charges of $12,500, $700 and $450, less the discount of $325. The Client Bills List shows charges for $12,500 and for $1,150, which is the total of $700 and $450. The discount of $325 was not credited to Mr. Abadian.

[72]      A Klondike Contracting Corp. Vendor Activity Details Report for JJM Mechanical Group Ltd. refers to a “backcharge” of $934.50. There is no evidence as to what this relates to or if this was some type of discount. Invoices issued by JJM Mechanical Group dated March 15, April 6, July 26 and August 9, 2018, do not refer to any discount. I am not satisfied that Mr. Abadian is entitled to a discount in relation to JJM Mechanical.

[73]      Based on the above, Mr. Abadian is entitled to discounts or credits totaling $353.82.

No Supporting Documents or Proof of Internal Expenses provided to Mr. Abadian

[74]      Mr. Abadian argued that Klondike Contracting was required to keep all accounts and records for costs and expenses. He said that Klondike Contracting failed to do so and claims a reduction of $6,025.46.

[75]      Article 6.1 of the CCDC-5B Agreement states that reimbursable expenses must be supported by receipts or invoices. It goes on to say that if there are no receipts or invoices, then “the expenses shall be at rates prevailing in the area of the Place of the Work and supported with suitable documentation.”

[76]      The Agreement does not say expenses cannot be charged if no receipts or invoices have been provided.

[77]      Article 6.2 of the Agreement gives Mr. Abadian the right to ask for copies of the documents. There is no evidence that Mr. Abadian ever made such a request prior to the court proceedings, and there was little or no evidence in his testimony about missing documentation.

[78]      Mr. Abadian’s Reply and Counterclaim made no mention of a breach of Clause 6.1 of the Agreement. The issue of the supporting receipts or invoices only arose during the course of the trial. It is unfair to the Claimant for Mr. Abadian to raise this issue at such a late date, denying Klondike Contracting the opportunity to bring forth evidence on this issue.

[79]      For these reasons, I reject this claim.

Unauthorized/Unsigned Change Orders

[80]      As I stated earlier, Mr. Schapira testified that the parties did not insist on signed change orders and Klondike Contracting accepted verbal approvals. Mr. Abadian did not dispute this. If this were truly an issue, then Mr. Abadian should have raised this issue while the work was being done. I find that Mr. Abadian is still obligated to pay for work that was not set out in a signed or written change order.

Summary of Adjustments to Amount Owing to Klondike Contracting

[81]      Based on the above, Mr. Abadian is entitled to adjustments to the Klondike Contracting invoice of $69,807.28, as follows:

Vendor Discounts               $353.82

Dan Pryce overcharge        $406

[82]      This reduces the amount owing to $69,047.46, before I consider the claim for deficiencies

WERE THERE ANY DEFICIENCIES?

[83]      The evidence of deficiencies focused mainly on the flooring, although there were photographs and videos of other issues.

Flooring Deficiencies

[84]      Mr. Abadian commissioned a report from Arkadiusz Kosmaty, a certified flooring inspector. According to his statement of qualifications, he has worked in the flooring industry for over 28 years.

[85]      Mr. Kosmaty prepared an inspection report dated January 14, 2020. Mr. Abadian also called Mr. Kosmaty to testify as a witness for which Mr. Kosmaty was qualified as an expert in flooring installations and inspections.

[86]      The Kosmaty report set out the following observations:

On the 19th floor of high-rise apartment building located at 535 Nicola Street in Vancouver, in apartment #1902, the entire floor except the bathrooms was covered with engineered hardwood floor Coswick Chevron pattern parquet. Approximately 1200 square-foot. The floor was installed using glue down method on top of concrete slab over Durason acoustic underlay.

The flooring is installed through the entrance, kitchen, living room, bedrooms and dining room. From standing position gaps were observed between the flooring planks joints in many different places over the installed floor area. When walking on the installed floor, the squeaking noise amounting from the floor can be heard in many places of the kitchen, entrance, living room, dining area. The heating was on and working. (Photo # 1). The apartment ventilation system is not equipped with humidification system but during the inspection portable humidifier was on and working. (Photo # 2)

[87]      Mr. Kosmaty stated in his report and confirmed in his testimony that the flooring manufacturer Coswick recommended use of a “cork sound membrane” for the underlay when a parquet wood tile floor is installed. Mr. Kosmaty confirmed though that this was not a requirement.

[88]      Mr. Kosmaty set out his conclusions in the report as follows:

The issues found upon inspection are installation related. The installation did not meet the manufacturer’s installation guidelines as stated.

Improper underlayment used under the flooring and subfloor flatness not meeting the manufacturer’s requirement causing the squeaking and gaping between the flooring planks.

Glue was used to fill the gaps to try and stop the squeaks between the end joints of the flooring planks causing even more issues. Doing that bonded the planks together creating more cracks and broken joints when the wood wanted to move when the environmental conditions change.

[89]      Mr. Kosmaty said he learned on his second visit to the Apartment that the underlay was manufactured by Canadian Cushion and not Coswick. However, he said the two products were similar in nature.

[90]      Mr. Schapira complained about the Kosmaty report to the National Wood Flooring Association, which I understand is a governing body regulating flooring inspectors. The result of that complaint was a letter dated June 15, 2020, sent by the NWFA Certified Professionals Inc. to Mr. Kosmaty, with a copy to Mr. Schapira. The letter stated that Mr. Kosmaty’s report contravened the NWFACP Inspector Standards of Professional Conduct in failing to support certain conclusions. The specific violations were stated as follows:

The industry standards were selective and insufficient.

The misalignment of the flooring seemed to be ignored as a possibility of failure.

The third paragraph in the conclusion regarding filling cracks with adhesive, bonding the planks together creating more cracks and broken joints, was unsubstantiated. There were no testing, observations or industry standard to support that statement.

[91]      As a result, Mr. Kosmaty issued a letter dated May 20, 2020, replacing the second sentence in his conclusions with the following:

Improper underlayment used under the flooring, possible wrong application of the glue and the flooring flatness consistent with uneven substrate not meeting the manufacturer’s requirements are causing the squeaking, vertical movement. The gaping between the planks’ end joints are caused by the misplacement of the guide course causing wrong line alignment and possible wrong acclimation.

[92]      The NWFA letter also stated that the third paragraph of Mr. Kosmaty’s conclusions was not substantiated. Mr. Kosmaty did not withdraw that conclusion in writing. In his testimony though, Mr. Kosmaty confirmed that he did not know with certainty that glue was used as a filler, as this required further testing.

[93]      Mr. Kosmaty remained of the view that there was likely improper installation of the flooring. Mr. Kosmaty said that without further destructive testing involving the removal of the flooring, he could not say if there were other installation issues, such as underweight rolling of the hardwood floor. He explained that use of a properly weighted roller on the hardwood floor would have ensured proper adhesion between the underlayment and the substrate and between the flooring and the underlayment.

[94]      On March 9, 2020, Judge Harris granted an application by Klondike Contracting to access the Apartment for a flooring inspection. The actual access to the Apartment did not occur until June 19, 2020. Mr. Abadian attributed the delay to concerns over the COVID-19 pandemic. On June 19, 2020, a flooring inspector named Wayne Laforet inspected the Apartment flooring.

[95]      Mr. Laforet’s written report was submitted into evidence as a rebuttal to Mr. Kosmaty’s report. The Laforet report set out certain information as follows:

Adhesive System Used (type/brand): Mapei 975

Trowel Used (type): V 15 mm

Installed Floor Measured for Flat: Yes

Method Flatness Measured: laser

[96]      The Laforet report identified the flooring manufacturer as Coswick Hardwood Flooring. The supplied flooring featured a chevron pattern, which displays floorboards in a continuous zigzag design. The report went on to say that a ProSol Crumb Rubber Pad was used for the underlay.

[97]      The report quoted from an email from Rachel Galang of Europlex International Importing Ltd., as follows:

As per your inquiry for Coswick Chevron Installation Guideline, Coswick recommend installation by a certified installer following guidelines by the NWFA.

[98]      I am mindful that this is hearsay evidence. Mr. Laforet was not called as a witness so I do not know how Europlex International Importing Ltd. was involved or the extent of Ms. Galang’s knowledge about this flooring type. I was also not told what the NWFA guidelines specified for this type of flooring.

[99]      The report went on to say there were no audible noises at the time of the inspection. Mr. Laforet stated:

There was no noise when I walked across the subfloor.

From a standing position, there are no large gaps or bowing of the hardwood.

[100]   Mr. Laforet went on to say:

The transitions at the bathroom/laundry room entries are not flush to the hardwood.

There are random gaps ranging between .203mm/.008” up to .355mm/.014”.

There is one plank with a sliver on the edge that has no wood filler.

Planks at the door casing area, in the master bath, have a proud edge of 1.27 mm/.050” and deflect. When tapped with a sound hammer, there is a hollow sound.

There are random planks where the point of the Chevron pattern runs out a maximum of 1/8” and then corrects within a few feet.

[101]   In response to Mr. Laforet’s report, Mr. Kosmaty provided a Rebuttal Opinion dated December 12, 2020. I summarize his conclusions as follows and provide my comments after each conclusion:

1.            There is no documentation to show that the flooring was properly acclimatized before installation, or that the site was properly prepared to receive the flooring.

There is also no evidence to show that the flooring was not properly acclimatized before installation, or to show that the floor was not properly prepared.

2.            The Laforet report suggests that the subfloor was flat except for the areas around the kitchen island but Mr. Kosmaty disagreed based on his testing results.

The Laforet report included the comments from the installer Figtree, who stated that the subfloor had to be ground down and could only be filled up to a certain extent because additional levelling compound would interfere with the ability of doors to open.

Mr. Laforet went on to say he used a laser to measure floor flatness and found that all areas were flat to 3/16” over a 10’ radius, except for the two sections by the kitchen island. Mr. Kosmaty referred to a required standard of 3/16” in 10’, the same as Mr. Laforet. Mr. Kosmaty said his measurements using a straight edge and a ruler showed that the floor was “outside of manufacturer requirements,” although he did not specify to what degree.

Both reports appear to agree that in some areas, the flooring was not flat. What is not clear is whether this was due to installation or a pre-existing substrate that was not flat. Mr. Kosmaty testified that the contract terms between Mr. Abadian and Klondike Contracting and between Klondike Contracting and the flooring installer Figtree, would determine who was responsible for providing a flat substrate. Unfortunately, that evidence was not given to me.

3.            Both experts discussed the possibility of the Green House Effect affecting the flooring.

There is no evidence that a Green House Effect actually had any effect on the flooring.

4.            Mr. Kosmaty said that the underlay used is approved for installation by way of the “double-stick” method but not for the installation of a chevron pattern hardwood floor.

This contradicts Mr. Laforet’s report. In his testimony, Mr. Kosmaty clarified that the flooring manufacturer recommended use of a cork underlay but that it was not a requirement.

5.            The adhesive used was called Mapei 975. Mr. Kosmaty said that a square-notch trowel was needed to properly install this flooring using the Mapei 975 adhesive. In this case, the installer used a “V 15 mm” trowel. Mr. Kosmaty said the incorrect use of the trowel could affect the ability of the floor to expand, causing creaking noises in the floor.

Mr. Laforet did not comment on whether the incorrect trowel use would affect the ability of the floor to expand.

6.            The Laforet report suggested that the subfloor was flat except for the areas around the kitchen island, but Mr. Kosmaty disagreed based on his testing results.

Mr. Laforet’s report does not say there are no deficiencies in the flooring. He in fact lists a number of them.

[102]   Mr. Laforet did not witness any sounds when walking on the floor. He stated, “Noises that occur once in a while and cannot be replicated with each footfall is considered normal. All hardwood makes some noise depending upon the humidity, temperature of season.” Mr. Laforet does not rule out the possibility of noises occurring at other times.

[103]   Mr. Kosmaty also said that noises in hardwood floors will occur and that sometimes they disappear. He said that it was not normal to hear noises all the time. He also said that although he heard noises on the two occasions he went to the Apartment, he could not say if the noises were in the same location.

[104]   Mr. Abadian’s video evidence confirmed the presence of squeaking floors.

[105]   Stathis Tsogas, the owner of Figtree Flooring, acknowledged that squeaking was common for hardwood floors, which is affected by humidity and other environmental factors. I note that Mr. Kosmaty went to the Apartment in January while Mr. Laforet went in June, when the weather would have likely been warmer.

[106]   Mr. Tsogas also testified that it was proper to use rubber underlay for the installation. He also said that he has installed some 100,000 square feet of the same herringbone design flooring in a tower using rubber underlayment without any issues.

[107]   Mr. Tsogas understood that the only issues with the floor were scratches and dings.

[108]   Given all the evidence, I am satisfied that the floors do squeak. I am not satisfied that this occurs every day, given that Mr. Laforet did not witness this. Both experts also confirm, at least to some extent, that there were deficiencies in the flooring.

[109]   Klondike Contracting asked to submit a rebuttal report from Mr. Laforet, but I did not allow its admission as it was only given to defence counsel a day before the trial started.

[110]   I asked Mr. Kosmaty if the entire floor had to be replaced or if it could be repaired. He said that without further destructive testing, he could not be sure if repair was an option. Klondike Contracting did purchase some replacement flooring and so the materials for repairing the floor do exist.

[111]   Having compared the two reports, I am not prepared to prefer Ms. Kosmaty’s report over that of Mr. Laforet for the following reasons:

a)            Mr. Kosmaty said that a cork underlayment was preferred by the manufacturer, but it was not required. Mr. Tsogas testified that he normally used rubber underlayment. There is no evidence that a cork underlayment would have prevented any floor noises compared to the actual rubber underlayment used.

b)            Mr. Kosmaty referred to a possible incorrect application of glue. He also said that flooring flatness might be due to an uneven substrate. This can only be confirmed by a destructive test involving removal of a larger portion of the flooring. Since that did not occur, I am left with speculation of the cause of the problems.

[112]   The evidence of both expert witnesses confirms that there are deficiencies with the floor. The primary concern is that the floors make noises when walked upon, although I am not convinced this occurs every day.

[113]   Mr. Abadian submitted a cost estimate from Yaletown Floor dated April 30, 2020, for the total replacement of the floor and underlay at a cost of $46,636.02 plus GST $2,331.80, totalling $48,967.82.

[114]   Mr. Abadian bears the onus of proving on the balance of probabilities that the entire flooring must be replaced. In my view, he has not met that burden. Mr. Kosmaty said that without further destructive testing, he could not be sure if repair was an option. As a corollary, I find that Mr. Kosmaty cannot be sure that total replacement is the only option.

[115]   There are clearly issues with the flooring though. Without any estimate for repair costs, I am left to estimate repair costs to the best of my abilities with little available information. I have some guidance though from the wood flooring invoices from the installer, Figtree Ventures Inc., totalling $23,500. These invoices are referred to in the Client Bills List, which listed the following:

8/23/18 for wood flooring   $17,400

9/21/18 for wood flooring   $6,100

[116]   The Yaletown Flooring estimate was for $46,636.02 plus GST of $2,331.80, totalling $48,967.82. Part of the cost difference between this and the Figtree costs would be because the Yaletown estimate included removal of the existing flooring. The wide differences in these two amounts remains a concern though. I also do not accept that a total floor replacement is required. I will set the amount for repair of the flooring at $15,000.

Other Deficiencies - Ceiling, Paint, Baseboard and Cleaning

[117]   Mr. Abadian provided photographs that included the following:

1.            Unfinished drop-down ceiling which is also shown in a video

2.            Crack in kitchen ceiling

3.            Separation or crack in a vertical beam

4.            Separation where the kitchen ceiling meets the kitchen cabinets

5.            Separation or crack where the walls meet the floor

6.            Crack in the baseboard

7.            Floor panels not flush or flat

8.            Scratch on floor panel

[118]   Mr. Abadian’s video evidence, taken in September or October 2018, showed the following:

1.            A gap between shower tiles showing uneven installation

2.            Some unevenness in the kitchen drop down ceiling, located between the living room and the dining room

3.            Scratched floor in the office/den area

4.            Loose floorboards in the kitchen

5.            Cracking noise when walking on the floor

[119]   The photographs and the videos confirm that there are other deficiencies.

[120]   Mr. Abadian submitted an estimate from Lions Head Construction Ltd. dated March 10, 2019, for $14,175 inclusive of GST. The estimate was for the following:

1.            To level inter Living Room Concrete Ceiling between drop ceiling and Windows

2.            To repair the entire living room and Hallway Ceiling Approx. 900 Sqf

3.            To repair and paint Baseboards and window ledges in the living and bedroom

4.            To move out and move in back the furniture and cleaning

[121]   This estimate is for a repair of the entire living room and hallway ceiling. There was no evidence as to why such extensive repairs were necessary. The photographs and videos do show some deficiencies but they do not satisfy me that the extent of work set out in the Lions Head Construction estimate is necessary. Once again, Mr. Abadian has the burden of proof and in my view that burden has not been met. Considering the photographs and video evidence of deficiencies, I fix the repair costs at $10,000.

Other Deficiencies - Window Blinds

[122]   In Mr. Abadian’s written submissions, he referred to a cost to correct blind deficiencies based on a WindowWorks invoice for $3,702.36. This invoice amount is actually the sum charged by WindowWorks to Klondike Contracting for the installation of the blinds, as set out in the WindowWorks invoice dated March 27, 2018. It is not an estimate for correcting deficiencies in the blinds.

[123]   Mr. Abadian did provide evidence that at least one of the blinds would not remain closed. I have no evidence to show what was required to make repairs. I see no reason though why all the blinds should be replaced. I will fix the costs of repair at $250.

DID KLONDIKE CONTRACTING HAVE A CONTRACTUAL RIGHT TO REPAIR DEFICIENCIES?

[124]   The decision Lind v. Storey, 2021 BCPC 2, states that there is an implied warranty in all contracts for work and labour that the contractor will carry out work in a good and competent manner: see the discussion starting at paragraph 83 of that decision.

[125]   Where deficiencies exist, a contractor has a right to remedy the deficiencies and an owner has an obligation to permit the contractor an opportunity to make repairs. This principle is set out starting at paragraph 88 of the Lind v. Storey decision, which reads:

[88]      I find that on February 11, 2020, Mr. Lind had performed the work and supplied the material necessary for the substantial completion of his obligations under his contract with the Storey’s. Mr. Lind estimates he had one more day of work to complete the Project. Although there were deficiencies, none of them, individually or collectively, went to the root of the contract. A number of the deficiencies were attributable to the Storeys refusing Mr. Lind access to the worksite so he could finish the Project and address the deficiencies.

[89]      A contractor has the right to return to a worksite and repair deficiencies: see Meszarics et al v. Hart Modular Homes et al, 2020 BCPC 234 (CanLII), citing C.S. Bachly Builders Ltd. v. Lajilo,  2008 CanLII 57444(ONSC), at para.114, Rocksolid v. Bertolissi, 2013 ONSC 7343 (CanLII), Don Pocock Construction Ltd. v. Brady, [2004] O.J. No. 688, 2004 CanLII 13959 (ON SC) at para. 42; Longwell Enterprises Ltd. v. McGowan [(1989), 37 C.L.R. 13 (B.C. Co. Ct.)

[90]      In Connolly v. Greater Homes Inc., 2011 NSSC 291 (CanLII) at para. 48, the Court stated:

 . . . the governing legal principle is that wherever it is reasonable, a party has a positive obligation to afford to the party alleged to have caused a deficiency an early opportunity to examine and to rectify it. That is consistent with general principles of mitigation . . . [Citations omitted]

[91]      If an owner fails to provide the contractor with a reasonable opportunity to correct the deficiencies in its work, which do not constitute a fundamental breach of the contract and where there is no urgency, the owner is not entitled to claim damages based on his or her cost to have the deficiencies repaired by a third party contractor: Rocksolid v. Bertolissi, at para. 92.

[126]   I refer to an email sent January 28, 2019, by Eric Schapira to Sean Abadian, which discussed drywall, painting and creaking noises from the hardwood floors. Mr. Schapira confirmed that Mr. Abadian was dealing directly with the flooring manufacturer and Mr. Abadian would contact Klondike Contracting if he required assistance.

[127]   I find that Klondike Contracting acquiesced in allowing Mr. Abadian to deal directly with the flooring manufacturer. Klondike Contracting was not seeking to correct flooring deficiencies at this time.

[128]   It was clear from subsequent emails that Mr. Abadian made a decision not to allow Klondike Contracting access to the Apartment to inspect the claimed deficiencies or to make repairs. Klondike Contracting’s request to Mr. Abadian’s lawyer for access to the Apartment was also refused. Mr. Abadian’s lawyer did propose on November 27, 2019, that a joint expert be appointed at the expense of Klondike Contracting, but this proposal still did not permit Klondike Contracting to have access to inspect and repair the deficiencies.

[129]   Despite Mr. Abadian’s refusals to allow access to the Apartment, I do not find that Mr. Abadian was in breach of the implied agreement entitling Klondike Contracting to repair deficiencies. I come to this conclusion based on Klondike Contracting’s initial acquiescence in allowing Mr. Abadian to deal with the flooring issues on his own.

WAS THERE A RELEASE OF CLAIMS?

[130]   In its written submissions, Klondike Contracting argued that clause 12.2.3 of the CCDC-5B Agreement applied to release any claims by Mr. Abadian. The clause provides that as of the fifth calendar day before the expiry of the lien period, Mr. Abadian waives any claim against Klondike Contracting that Mr. Abadian has or reasonably ought to have knowledge of “arising from [Mr. Abadian’s] involvement in the Work” The agreement defines “Work” as the “total construction and related services to be performed by [Klondike Contracting].”

[131]   The lien period is set by the Builder’s Lien Act. Section 20 of the Act states that the time to file a claim of lien is no later than 45 days after the date the certificate of completion was issued. Mr. Abadian signed the certificate of completion on October 22, 2018. By my calculation, the lien period ended after December 6, 2018.

[132]   Clause 12.2.3 sets out certain exceptions to this release. Exception no. 4 states:

Damages arising from [Klondike Contracting’s] actions which result in substantial defects or deficiencies in the Work. “Substantial defects or deficiencies” mean those defects or deficiencies in the Work which affect the Work to such an extent or in such a manner that a significant part or the whole of the Work is unfit for the purpose intended by the Contract Documents

[133]   Given my assessment of the costs for repair of the flooring, I am satisfied that the extent of the flooring deficiencies are substantial and therefore are an exception to the release set out at clause 12.2.3 of the Agreement.

[134]   I am also satisfied that the items I have referred to as “Other Deficiencies” are substantial given the total costs of repairs. I find that these are also an exception to the release set out at clause 12.2.3 of the CCDC-5B Agreement.

Total Set Off

[135]   Based on the above, there will be set offs totalling $25,250 as follows:

Flooring Repairs                  $15,000

Ceiling and Other Repairs  $10,000

Window Blinds                     $250

IF COMPENSATION IS OWED ON THE COUNTERCLAIM, HOW IS IT APPLIED?

[136]   The next question is whether the set off amount of $25,250 is applied against the total claimed as owing to Klondike Contracting, or only as against the $35,000 statutory maximum amount.

[137]   I refer to the decision Ruttan v. Paterson, [1996] BCJ No. 354. The headnote summary of this case reads as follows:

Application for an interpretation of the monetary jurisdiction of Small Claims Court. The applicant, Ruttan, brought an action in Small Claims Court against the respondent, Paterson, for negligence. Ruttan was injured while riding a public transit bus. Paterson claimed that Ruttan was contributorily negligent. The maximum monetary jurisdiction of Small Claims Court was $10,000. Ruttan claimed that her total damages could be in excess of this monetary limit. She also claimed the Court could attribute the extent of her contributory negligence to the total damages and reduce her award to below $10,000. Paterson argued that the Court could only find damages up to $10,000 and reduce the award for contributory negligence from that point.

HELD: The application was granted.

Ruttan was at liberty to call evidence of damages in excess of $10,000. Reduction for contributory negligence was applicable against a total damages amount exceeding $10,000. However, any final monetary award could not exceed the Small Claims Court's monetary jurisdiction of $10,000.

[138]   The Ruttan decision referred to the decision Burkhardt v. Beder, 1962 CanLII 18 (SCC), [1963] SCR 86, which stated:

Rule 147 of the Ontario Rules of Practice requires that when damages are claimed the amount shall be named in the statement of claim, and the authorities are clear that judgment cannot be given for an amount greater than that claimed unless an amendment is allowed. The limit of $20,000 placed upon the general damages claimed by the plaintiff in this action was a limit upon the amount recoverable by the judgment of the Court. It was immaterial by what steps the amount due the plaintiff in respect of her cause of action was ascertained and fixed. When so ascertained, judgment may be given thereon but not in excess of the limit fixed by the amount claimed in the prayer for relief. Accordingly, even if no amendment to the statement of claim had been granted the plaintiff would have been entitled to judgment for $13,000 general damages, this being less than the $15,000 originally claimed in the prayer for relief.

[139]   The Ruttan decision was followed in Tyerman v. Bruce and Schwab, 2003 BCSC 1193, at paragraphs 6 to 8.

[140]   I have determined a set off amount that totals $25,250. Based on the caselaw, I apply this set off to reduce the total claim of $69,047.46, which I calculated earlier. This totals $43,797.46, which is above the statutory maximum. In light of this, I allow the claim at the maximum of $35,000.

SUMMARY

[141]   I order that the defendant Ehsan Abadian pay the claimant Klondike Contracting Corp. the sum of $35,000 plus the filing fee of $156 and the service fee of $20.

[142]   Klondike Contracting Corp. is also entitled to any other reasonable charges and expenses relating to the conduct of these proceedings pursuant to Small Claims Court Rule 20(2)(c). Within 14 days of the date of this decision, Klondike Contracting shall submit any claims for such charges and expenses, along with supporting documentation, to the Registrar for approval. At the same time, Klondike Contracting is to provide a copy of those submissions to Mr. Abadian’s counsel. If Mr. Abadian wishes to set out his position about the additional claim for reasonable charges and expenses, then he must file written submissions with the Court no later than 28 days after the date of this decision, with a copy provided to Klondike Contracting.

[143]   If required, the Registry may of course refer any submissions to me for decision.

 

 

_____________________________

The Honourable Judge W. Lee

Provincial Court of British Columbia