Anway Construction Ltd. v. Hunte

2020 BCSC 601 Anway Construction Ltd. v. Hunte

IN THE SUPREME COURT OF BRITISH COLUMBIA Citation: Anway Construction Ltd. v. Hunte, 2020 BCSC 601 Date: 20200421 Docket: S180383 Registry: New Westminster Between: Anway Construction Ltd. Plaintiff And Garth Stephen Hunte and Siobhan Cassandra McLachlan Defendants And Anway Construction Ltd. Defendant by Way of Counterclaim Before: The Honourable Mr. Justice Milman Reasons for Judgment Counsel for the Plaintiff/Defendant by Way of Counterclaim: R.S. Henderson Counsel for the Defendants: R. M. Morse J. Brook, Articled Student Place and Dates of Hearing: New Westminster, B.C. February 12-14, 2020 Place and Date of Judgment: New Westminster, B.C. April 21, 2020 Table of Contents I. Introduction.. 3 II. The Facts. 4 A. The Genesis of the Project 4 B. The RFP and Responding Bids. 6 C. The Contract 9 D. Performance. 19 E. Completing the Work. 28 III. The Evidentiary Issues. 29 A. The McLean Affidavit 29 B. The Naidu Affidavit 37 C. The Clisby Affidavit 39 IV. The Substantive Issues. 40 V. Suitability for Summary Disposition.. 40 VI. Discussion.. 41 A. Did the parties amend the contract to add a $925,000 GMP?. 41 B. Did Anway breach the GMP or any other term of the contract?. 51 C. Did Anway make one or more of the pre-contractual misrepresentations that the Owners allege?. 57 D. Liability and Damages. 60 VII. Summary and Conclusion.. 67 Schedule - Rulings on objections to Clisby

Affidavit #1. 69 I. Introduction [1] This is a case about a construction project gone awry. [2] The plaintiff, Anway Construction Ltd. ("Anway"), is a general contractor that specializes in the renovation of residential homes in the Lower Mainland. In 2013, the defendants, Garth Stephen Hunte and Siobhan Cassandra McLachlan (the "Owners"), hired Anway to demolish their original house at 4357 West 7th Avenue in Vancouver (the "Property") and to build a new one for them in its place. The Owners were attracted to the idea of a "passive house," an energy-efficient design distinguished by its ability to meet certain technical standards for air permeability. [3] It is not disputed that the parties signed a written contract calling for Anway to be paid for its work on a "cost-plus" basis. One of the central issues in dispute is whether the contract was subsequently amended to add a guaranteed maximum price ("GMP") of $925,000, as the Owners contend. Another area of dispute relates to the cost of meeting passive house standards and whether Anway had promised to do so within the confines of the alleged GMP. [4] Anway demolished the old house and began construction of the new one but did not complete it. At the end of 2015, while construction was underway and after having paid Anway nearly $1 million, the Owners refused to pay any more. Anway refused to continue working without being

paid. The Owners eventually hired another contractor to complete the work at an additional cost of $1,104,210.06. They were never able to achieve passive house standards. [5] On May 26, 2016, Anway commenced this action seeking, among other things, to recover from the Owners the sum of $132,989.37 plus interest that it claims to be owing under the contract for the work it had done. The Owners filed a response denying any liability. At the same time, they also filed a counterclaim seeking damages of $1.46 million (comprised of the cost of completing construction and certain associated expenses that they claim to have incurred due to Anway's fault), or alternatively, a refund of the nearly $1 million that they had already paid. [6] The counterclaim alleges, first, that Anway was in breach of various contract terms, including the alleged GMP. In addition, it alleges that Anway made various pre-contractual misrepresentations as to the anticipated cost of the project, its previous experience and its ability to do the work. Finally, it alleges that Anway is liable as a "supplier" that had, by its misrepresentations, engaged in a "deceptive act" contrary to s. 5 of the Business Practices and Consumer Protection Act, S.B.C. 2004, c. 2 [BPCPA]. [7] In its response to the counterclaim, Anway denies having committed any breach of contract or having made any misrepresentations. It asserts

that the contract was structured as an ordinary "cost-plus" arrangement with no GMP and no extra-contractual representations. It attributes the steep increase in the cost of the project beyond what was originally contemplated to what it says were the many changes that the Owners directed be made along the way. [8] The matter has not yet been set for trial, although the parties have conducted examinations for discovery. Both parties believe, for different reasons, that the action lends itself to summary disposition. Anway applies under Rules 9-5, 9-6 and 9-7 of the Supreme Court Civil Rules for judgment in its favour. The Owners apply under Rule 9-7 for judgment in their favour by way of a summary trial, or alternatively, for an order striking Anway's pleadings for its failure to comply with its discovery obligations under the Rules. [9] For the reasons that follow, I have concluded that the Owners are entitled to judgment in their favour. II. The Facts A. The Genesis of the Project [10] The Owners purchased the Property in 2004. After their children were born, they decided to renovate the original house that they had been living in on the site. One of their goals in the renovation was to improve the indoor air quality because Ms. McLachlan had recently been diagnosed with a lung condition. [11] In 2011, they hired an architect, Joe Muego of Hearth Architectural Inc., to assist

with the project. After considering various alternatives, they opted to demolish the existing dwelling on the site and replace it with a new one. To that end, they hired a firm of structural engineers and had several design and architectural drawings prepared. They drew up lists of finishes. [12] In early 2013, the Owners went on a skiing trip in Whistler. While there, they learned of a passive house that had been built at Lost Lake. They were intrigued by the concept. Upon their return to Vancouver, they raised with Mr. Muego the possibility of designing and building their new house to passive house standards, but he had little or no experience in that area. They sent their existing plans to Marken Design & Consult ("Marken"), the firm that had designed the Lost Lake passive house. Alexander Maurer at Marken reviewed Mr. Muego's drawings and told them they could not achieve passive house specifications with the current design. He suggested some changes that might work. The Owners forwarded the suggestions to Mr. Muego. [13] In the summer of 2013, the Owners sought Mr. Muego's help in finding a suitable contractor. Mr. Muego sent them a list of five contractors who might be invited to bid for the construction work. One of them was Anway, with whom Mr. Muego had worked previously. The Owners asked Mr. Muego to find out what experience each of the candidates had with passive

houses. On April 19, 2013, Mr. Muego replied with an email relaying what they had told him about their experience in that regard. None of them claimed expressly to have had experience with passive houses as such. With respect to Anway, the email stated as follows: Anway Construction has experience building these types, although not labelled passive per se, in the prairies. Definitely with the continuous out bound insulation. [14] Anway's principal, Mr. Clisby, testified on his examination for discovery about this conversation with Mr. Muego as follows: Q: Do you have any recollection of having a conversation with [Mr. Muego] in April [2013] about doing a passive-type house? A: It wasn't a passive-type house that - as what - we were never defined of what that was. Q: No - A: We still did not know what the passive house was. Q: Okay. Did you have any conversations with him in April of 2013? A: His conversation, which I remember, was, did I ever do an airtight or a house with extra insulation in it, and I said, 'yes, we did.' Q: And you were referring to the R-2000 - A: Correct. Q: -- and the EnerGuide home - A: And the EnerGuide home we did in the British Properties. Q: And that is the extent of your conversation in April of 2013? A: That's what I recall. B. The RFP and Responding Bids [15] On April 30, 2013, Mr. Muego issued a request for proposals ("RFP") to the five

candidates. It described the project scope as follows: - Demolition of existing single story house on basement. - Construction of new 2-storey on basement house with front porch, rear deck, grade deck and sunken rear patio + new single-car heated garage. [16] The RFP listed six "tender documents," including design drawings, several of which were not yet issued. They were eventually made available to the bidders via an online drop box. [17] The RFP made no mention of the need to meet passive house standards. Under the heading "12. Alternate Pricing," however, the RFP sought alternative pricing for various insulation options, as follows: Submit breakout price alternates for the following items: - Basement patio doors options - see ASK-01 attached to this document - Conventional batt insulation - Continuous outboard rigid insulation - Polyurethane spray foam insulation [18] Under the heading "13. Contract Type" the RFP stated as follows: The proposed contract to be used is CCDC 2 - Fixed-price contract. [19] The Owners received three bids in response to the RFP, one at $1,299,000, one at $920,340 and Anway's at $766,651.44. Anway's bid, dated July 16, 2013, concluded with the following notation: This should be considered an upper limit for the expected costs of your construction. It would be very hard to exceed this, as I based everything on a level of quality equivalent to my

house. I believe that this is a very complete and realistic cost expectation. I wouldn't be surprised at all if costs came in under budget, as I thought that it would be more beneficial to you to know what an upper limit number would look like. [Original emphasis.] [20] After receiving clarification from Mr. Clisby by follow-up email dated July 16, 2013 as to the pricing specified in the original bid, the Owners received a second quote from Anway on July 23, 2013, this time for $746,823. The line items in that document are prefaced with the following note:

THESE ARE BUDGET FIGURES ONLY All invoices from Subtrades and Suppliers are submitted. Mark up is applied to total of suppliers' costs and labour. HST is then applied to subtotal. [Original emphasis.] [21] Mr. Clisby acknowledged that the line items in his budget were guesses based on his experience rather than actual quotes obtained from suppliers. None of Anway's responding bid documents explained that Anway was not willing to enter into a fixed-price contract as the RFP had stipulated. [22] In any event, the Owners opted to follow Mr. Muego's recommendation, which was to proceed with Anway, as the lowest bidder. [23] The next day, Mr. Muego forwarded the July 23, 2013 document to the Owners with an email dated July 24, 2013 reporting on a conversation he had had with Mr. Clisby about the insulation to be installed in the new house. The email stated, in relevant part, as follows: You will note that the price is for spray foam insulation. I know that you would favour the outbound insulation. I have talked to him today about his willingness to work with Smallworks and have them do the pre-fab, and he was more than willing, as long as their price made sense. This would mean he would deliver them the foundations, and they would pre-make and assemble the walls and roof. He also told me that they are an Energuide approved builder, and in approaching the house with Smallworks and

with a Passive mentality you could net between $7,000 and $27,000 in rebates. Part of the rebate possibility comes from the City of Vancouver. Even if it costs a bit more, you will undoubtedly save time and have a higher quality (as you know), but may be able to offset some costs. I have notified and thanked the other builders, but told them you are rejecting all proposals, as you consider a different approach (being pre-fab) to the project. Smallworks is reviewing the project, we should hear from them by the time you get back [24] "Smallworks" referred to Smallworks Studios/Laneway Housing Inc., an energy consultant and prefabricated panel maker that was interested in doing passive house work. The Owners had sought quotes for prefabricated panels from BC Passive House (Marken's supplier) and Smallworks. [25] In his examination for discovery, Mr. Clisby testified that in July 2013, he had two 60-90-minute conversations with a representative from Smallworks, a company that Anway had not worked with previously, to discuss the passive house concept. [26] On August 1, 2013, the parties received an estimate for the production of panels and the supply of Optiwin windows, at a projected cost of $81,130. A further quote from Smallworks dated August 13, 2013 indicated that, to pursue the passive house option, the "wall panels, site materials, framing and forming, trusses,

framing/foundation for house shop and garage delivery and engineering" would cost $107,255.21, or approximately $24,000 more than contemplated in Anway's bid, as calculated by Mr. Muego in an email dated September 3, 2013. That calculation was subject to confirmation with Mr. Clisby, however. [27] Mr. Clisby met again with Smallworks and sent the Owners revised quotes on October 3 and 8, 2013, revising his budget to reflect the Smallworks alternative. The October 8, 2013 email from Mr. Clisby stated as follows: Here's the updated numbers that we have for the original quote. $746,823.00 Budget for PST 23,450.00 GST 37,500.00 TOTAL 807,773.00 Smallworks Price - Extra on Anways [sic] 18,728.00 (Exclusive PST/GST) Passive House - I've looked into this a little bit and what I can read off your quote - I would think that you are somewhere between $50,000 and $55,000 more than Jake's price from Smallworks which brings it to: $73,728.00 (Exclusive PST/GST) more. Hope this helps, Garth - we would really need a meeting with the passive guys like we did with Jake, so we understand some of their hidden fees and costs. [Emphasis added.] [28] The Owners appear to have been satisfied with this revised budget, despite Mr. Clisby's reservation, and opted to proceed accordingly. They asked Mr. Muego to prepare revised drawings on that basis, which he did on October 10, 2013. C. The Contract [29]

On August 12, 2013, Mr. Muego sent the Owners two forms of contract, a fixed-price and a cost-plus version, both for discussion. They had apparently not yet determined what form the contract would take. Although the Owners had followed Mr. Muego's suggestion in stipulating in the RFP that they wanted a fixed-price contract, they had, at that stage, not yet clarified what the full cost of pursuing the passive house option would be and therefore could not sign a contract with a fixed price. Mr. Clisby deposed that Anway never operates on a fixed-price basis. [30] By late October, the Owners' lender, the Bank of Montreal ("BMO") had decided that it was not prepared to finance the project with a homeowner line of credit, but would instead require the Owners to apply for a construction loan. On October 25, 2013, BMO sent the Owners an email advising, among other things, that it required the following items before the requisite financing could be arranged: (a) builder contact and the contract for this project; and (b) a current assessment of the total costs to have the house completed. [31] By email dated November 6, 2013, Kelvin Lee, a "mortgage specialist" at BMO, sent an email to Anway directly, seeking, among other things, a copy of the contract, "a cost estimate sheet verifying approximate cost to complete" and "supporting estimates from trades and suppliers (preferably

signed)." [32] In an email to Mr. Lee dated November 12, 2013, Mr. Clisby advised him, among other things, that: (a) the cost of the project was expected to be $746,823 (exclusive of GST and PST, which will be approximately $54,850); (b) since the original quote on July 23, 2013, there have been some increases in materials and concrete, of approximately $2,500-$3,000; and (c) if the Owners elect to proceed with a "Passive House style through Smallworks" his "best guess" was that the extra cost would be "$20,000 at this point more than budget plus taxes." [33] On November 19, 2013, Mr. Muego sent Dr. Hunte, but not Anway, an email stating as follows: I spoke to [Mr. Clisby] today; he mentioned your bank needs a signed contract. I think we can cobble it together as [sic] was, but including [Smallworks'] original number as an allowance. This will get the financing going. Once the construction technique and number is finalized we can adjust the allowance to a fixed price. [34] On November 28, 2013, Mr. Muego sent an email to both Anway and Dr. Hunte attaching a draft agreement bearing that date. The email stated as follows: Please find attached contract for the bank - it is a cost plus. We can make adjustments when we know more about the building technique and clear some of the variables of demo[lition]. It needs to be executed. [35] On December 5, 2013, the parties signed the

draft contract that had been prepared by Mr. Muego. On the following day, December 6, 2013, Mr. Clisby delivered it to the bank. [36] The contract, as signed, was prepared using a template known as CCDC 3 - 1998, created by the Canadian Construction Documents Committee. It was entitled "Cost plus contract (with guaranteed maximum price option)" but the GMP option was left blank, at least initially. Among the terms it contained were the following: (a) Mr. Muego's firm was said to be "acting as and hereinafter called the Consultant" (Article A-1, s.1.1); (b) the work was to be completed in ten months, commencing November 28, 2013 and ending by September 28, 2014 (Article A-1, s.1.3); (c) the contract was to supersede all prior negotiations, representations or agreements, whether written or oral, relating in any manner to the work, including the bidding documents other than those expressly listed in Article A-3 (Article A-2, s. 2.1); (d) the contract was capable of being amended "only as provided in the Contract Documents" (Article A-2, s. 2.2); (e) among the "Contract Documents" listed in Article A-3 were the following: (i) the Agreement between the Owners and Anway; (ii) the CCDC standard form definitions and "General Conditions of the Cost Plus Contract", which were attached; (iii) "Architectural Drawings prepared by Hearth Architectural Inc. dated April 30, 2013. Note: To be

superseded by COV [City of Vancouver] approved Plans"; (iv) "Structural Drawings prepared by Ennova Structural Engineers dated February 20, 2013. Note: To be superseded by COV [City of Vancouver] approved Plans"; and (v) the "Construction Budget prepared by Anway Construction dated July 23, 2013"; (f) the Owners were required to pay Anway for the "Cost of the Work" as set out in Article A-4, subject to the following provision in the last paragraph of s. 4.1: Notwithstanding the foregoing and any provisions contained in the General Conditions of the Contract, it is the intention of the parties that the Cost of the Work referred to herein shall cover and include any and all contingencies other than those which are the result of or occasioned by any failure on the part of the Contractor to exercise reasonable care and diligence in the Contractor's attention to the Work. Any cost due to failure on the part of the Contractor to exercise reasonable care and diligence in the Contractor's attention to the Work shall be borne by the Contractor. (g) Anway was to be paid a fee calculated at "ten percent (10%) of the Cost of the Work, earned as the Cost of the Work accrues" (Article A-5, s. 5.1.1); (h) Anway's fee was to be "subject to adjustment as may be required in accordance with the provisions of the Contract Documents listed in Article A-3" (Article A-5, s. 5.1.2); (i) the "Contract

Price" was to be the sum of the Cost of the Work listed in Article A-4 and the Contractor's Fee set out in Article A-5 (Article A-6, s. 6.1); (j) in Article A-6 ("Contract Price") there was a para. 6.2, entitled "*Guaranteed Maximum Price" with no figure inserted but s. 16 of the attached definitions stated that "[i]n the event, that no amount is stipulated in para. 6.2 the provisions pertinent to the [GMP], wherever they appear in the Contract, shall be individually inoperative and considered as deleted from this agreement" (the same definition also stated that any GMP was to be exclusive of value added taxes); (k) the body of s. 6.2 stated that the contract price was "guaranteed by the contractor not to exceed [the GMP], subject to adjustment as provided in GC 6.1 - Changes, GC 6.2 - Change Order or GC 6.3 - Change directive. Any amount, consisting of the sum of the Cost of the Work and the Contractor's fee, in excess of this [GMP] will be paid by the contractor without reimbursement by the Owner"; (l) Anway was to "keep full and detailed accounts and records necessary for the documentation of the Cost of the Work as in accordance with Article A-3" (General Conditions, s. 5.2.1); (m) the Owners were to be "afforded reasonable access to all of the Contractor's books, records, correspondence, instructions, drawings, receipt vouchers, subcontractor and supplier invoices, and

memoranda in relation to the Cost of the Work, and for this purpose the Contractor [was to] preserve all such records for a period of 1 year from the date of the final certificate for payment" (General Conditions, s. 5.2.2); (n) Anway was to do the following: (i) prepare and submit to the Owners and the Consultant prior to the first application for payment, a construction schedule that indicates the timing of the major activities of the Work and provides sufficient detail of the critical events and their inter-relationship to demonstrate the Work will be performed in conformity with the contract; (ii) monitor the progress of the Work relative to the construction schedule and update the schedule on a monthly basis or as stipulated by the Contract Documents; and (iii) advise the Consultant of any revisions required to the schedule as the result of extensions of the Contract Time as provided in Part 6 of the General Conditions - CHANGES IN THE WORK (General Conditions, s. 3.5.1); and (o) Anway was not to perform any change in the Work unless it received a "change order" (if the parties agreed on the need for the change) or a "change directive" (if they did not) (General Conditions, s. 6.1.2); and (p) interest would accrue at prime plus 3% on unpaid amounts should either party fail to make payments as required (Article A-7, s. 7.3.1). [37] Although the Owners believed that Mr.

Muego was assuming the role of the Consultant, as the contract he had prepared expressly stated, he deposed in his affidavit that he never did so. [38] It appears that the contract, although signed by both parties, was not yet understood to be in its final form. Mr. Clisby acknowledged as much in his examination for discovery. In any event, BMO was not satisfied with the form of contract that the parties had signed and refused to approve the loan until its concerns were addressed. Mr. Lee emailed Anway on December 11, 2013, describing those concerns as follows: I just spoke with Jane [Zhang, at BMO] who you have dropped off the contract with and I realize that the contract does not have a dollar amount. Do you by any chance have a written contract that includes the actual dollar amount it will cost to have Dr. Hunte's property built? We need that. Please let us know. You can send it to me electronically. [39] Mr. Clisby responded to that email 45 minutes later, stating as follows: The reason we didn't put the final figure on the contract was Garth [Dr. Hunte] hasn't decided on the Passive House option yet. Our figure which includes the Passive House option and GST/PST is $824,673. [40] Mr. Lee responded approximately 90 minutes later with the following note: Is there any way at all for us to get a contract with a dollar figure? Our credit department won't even respond to me

until they get that. This is crucial because this will differentiate this deal as self built vs. builder built. [41] The next message from Anway, sent the following morning, December 12, 2013, at 8:56 a.m., was apparently typed by Jacqueline Saran. In her affidavit, she describes herself as having been a part-time secretary at Anway at the time. She asked Mr. Lee: Are you not able to add the amount I sent to you yesterday, or does a whole new contract need to be submitted. [42] Mr. Lee responded at 9:02 a.m. with the following response: I can not simply add the amount on to the contract. The contract will need to be submitted to us again. [43] At 9:30 a.m., Ms. Saran forwarded the entire chain to Dr. Hunte and stated as follows: Hi Garth An amount needs to be submitted on the contract for the bank - can you pick up the contract from Kelvin [Lee] and add the amount of $824,673.00 so that Kelvin can take it to the next stage. [44] Dr. Hunte responded at 9:45 a.m., stating "will do." [45] Minutes later, he emailed Mr. Lee, stating as follows: Hi Kelvin, where is the contract now? I could come to the bank and put in the figure that Wayne [Clisby] has quoted if that will help you. [46] Mr. Lee responded to Dr. Hunte as follows at 10:03 a.m.: Hi Dr. Hunte. I got a chance to over look the contract but it only states the cost to the contractor and not the total cost of complete

[sic]. We are waiting on a contract stating the final amount it will cost you to have this property completed. It should be similar to the attached excel spreadsheet that was submitted to me earlier (see attached) The bank needs to ensure that this is the final amount and nothing more so we can approve you base [sic] on your need. I have also advised my manager regarding this file in particular because of its amount. I will do whatever I can to ensure this gets completed but in return, I need what is requested by the bank from you [47] Dr. Hunte followed up with another email to Anway at 11:15 a.m., stating as follows: Hi. Kelvin needs a MAX price, ie including appliances, landscaping and any reasonable item not included in the $825,000 estimate. We [sic] been given an estimate of $30000 for appliances from Midland, but I don't have a good sense for the landscaping. I'm figuring max price between 900-925 should do it. Your thoughts. Thanks [48] Dr. Hunte deposed that after sending that email, he spoke with Mr. Clisby on the telephone. Dr. Hunte described the conversation as follows in his affidavit: Although I did not receive an e-mail reply to this e-mail on the same day, I did speak with Mr. Clisby on the telephone after I sent the above mentioned email and he agreed on $925,000 as the guaranteed maximum price in the contract. [49] In his examination for discovery, Dr. Hunte

testified as follows about that conversation: Q: What did you talk about generally during that phone call? A: We talked about the number. Q: Do you remember anything else? A: That was the primary piece of the conversation. Q: So, you're just talking about the number. And was the conversation that, 'I want to go insert my signature on a guaranteed maximum price provision in the, in the CCDC contract'? A: No. Q: So you talked about 'the number'? A: Yes. Q: And it was what - how much it was anticipated that it might cost at that time? A: That is correct. Q: Did you say to Wayne in this telephone conversation, 'I'm going to go down to the bank and sign this document, so you have to sign it too'? A: No, I did not. Q: Did the bank ever say to you they needed a maximum price? A: Yes, they did. Q: They didn't just say the needed a reasonable current estimate of what the cost would be to complete everything? A: Kelvin Lee told me on the phone that he needed the maximum price. Q: And did that become part of the conversation you had with Wayne? A: Yes. Q: And when you said it was a maximum price, I think you have clarified, you didn't say a guaranteed maximum price under the contract? A: I don't recall the specific terminology, whether I said it was a guaranteed maximum price, but it was clearly a maximum price. [50] When asked about this conversation in his examination for discovery, Mr.

Clisby testified as follows: Q: you could have spoken to [Dr. Hunte] on December 12th? A: I very well could have. Q: Okay. And Mr. Hunte has also provided evidence, has also given evidence that you agreed to the guaranteed maximum price be inserted in the contract during the telephone conversation. A: I don't believe I would ever do that because we don't give guaranteed maximum price. We don't do fixed price contracts. Q: You say you don't believe you would have. Is that to say you don't recall? A: I don't recall. [51] Dr. Hunte deposed that he attended at the bank the next day, December 13, 2013. Awaiting him there, he says, was a contract with the figure of $925,000 already written into s. 6.2 of the document. According to Dr. Hunte, Ms. Zhang asked that he write the words "nine hundred and twenty fine thousand" beside the number and initial the change, which he did. [52] BMO has in its file a copy of the contract with the $925,000 GMP inserted at s. 6.2 in numbers and letters, with an accompanying signature by Dr. Hunte. It appears to have been faxed to the bank with other documents on December 27, 2013. Although Mr. Clisby could not say whether he sent that fax or not, he accepted that it was possible that he did. [53] Anway has also adduced an affidavit from Ms. Saran. She says that she was not involved with the contract negotiations and did not hold herself out as

representing Anway for that purpose. She states that in the email exchange quoted above: I would pass on any questions or comments to Wayne Clisby for his handling, and would respond in accordance with his instructions when received. [54] Ms. Saran adds that she understood the numbers under discussion in those emails to be estimates of the cost to complete the project. She asserts that she did not insert the number into the contract (and recently told counsel for the Owners so), that she does not know who did and that she does not recognise the handwriting that appears on the document. She has no memory, she says, of delivering a contract to the bank for signature. [55] The Owners have also adduced a responding affidavit of Vivash Naidu, a paralegal at the law firm acting for the Owners in this action. Mr. Naidu says that he was on a telephone call between the Owners' counsel and Ms. Saran to discuss these events. According to Mr. Naidu, Ms. Saran told them, among other things, that: she did not remember and could not say how the value '$925,000' was inserted into the contract and she really could not remember the details of this matter. [56] Regardless of how the GMP came to be added to the contract, BMO evidently believed that it now had a sufficiently firm commitment from the parties as to what the total cost of the project would be. On that basis, it approved the loan and

advanced the first instalment to allow construction to begin. D. Performance [57] The original house on the Property was demolished in December 2013. [58] Even then, the passive house option was continuing to present challenges. Mr. Maurer told the Owners in November 2013 that, in his view, it would be difficult and expensive to amend their existing design to meet passive house standards. [59] At around the same time, Smallworks took on a reduced role in the project. It referred the Owners to another consultant, Red Door Energy Design Ltd. ("Red Door"), to assist them in carrying through with the passive house option. Although Smallworks remained involved in the plans for a proposed laneway house, that feature was never built. According to Anway, the figures that it had relied on to price out the additional cost of a passive house had come from Smallworks and were therefore no longer relevant. [60] Dr. Hunte acknowledged in his examination for discovery that the nature and extent of the changes to the building envelope that needed to be made to meet passive house standards were still "up in the air" in January 2014. Red Door appears to have been somewhat more optimistic in that regard than Marken had been. But even Red Door told the Owners in December 2013 that it would be unreasonably expensive to convert the existing design to a passive house. Red Door's representative, Mr.

Paulsen, set out a number of options for the Owners to consider. Later Mr. Paulsen complained this was turning into a "very costly project" for both of them. He also asserted in an email of October 2014 that he was not responsible for the "repeated changes that have brought us to this crisis point." In an email to Dr. Hunte dated March 15, 2015, Mr. Paulsen referred to "the frequent changes that afflict this project." According to Mr. Paulsen, the passive house planning program (a spreadsheet that was used to guide the construction project) "continues to evolve to a remarkable degree." In his examination for discovery, Dr. Hunte described the cause of Mr. Paulsen's frustration as follows: I know that Monte [Paulsen] was frustrated with Joe [Muego] because he needed architectural details for particular junctions so that he could understand the movement of hot air, so-called ther modelling, and all of that had an impact on how the Passive House Planning Program needed to be inputted. [61] The Owners did not always share these concerns with Anway. They spent several months in discussions with Red Door about what passive house elements to incorporate into the plan. Those discussions delayed the start of construction by several months. Eventually, however, the design was refined so that it met passive house standards. [62] Anway contends, and the Owners do not dispute, that

construction did not begin in earnest until after the Owners had settled on a final design in consultation with Red Door. The project finally got underway again in the fall of 2014. Based on the timeline set out in the contract, it should have completed within ten months, or by the end of 2015. That did not occur, however. [63] According to Anway, the delays and ensuing cost increases were attributable to the Owners' many demands for changes while work was underway, sometimes after the affected work had already been done. For example, Anway says that the Owners chose more expensive options for the insulation, doors and millwork than those that were allowed for in its original budget. In some cases, the Owners selected options that had to be imported at much greater cost. Anway also attributes the following changes to the Owners: (a) the addition of a laneway house (although that plan was ultimately abandoned); (b) enhancing the interim power arrangement for the site; (c) new specifications for the drywall tape and supplies; (d) the adoption of a number of new environmental qualifications or restrictions; (e) opting for low voltage, which required re-wiring and new electrical hardware; (f) the installation of an exterior sump and an in-house sanitary sump pump system; (g) the installation of an exterior water storage tank; (h) new specifications for the hardwood flooring; (i)

the use of a tar-based spray; (j) construction of concrete window wells; (k) additional attic space; and (l) the installation of a vacuum system. [64] Anway says that these and other changes required Mr. Muego to revise the plans filed with the City on four separate occasions. [65] Anway has adduced an affidavit from Matt McQueen, who was the project manager on site. He too lists a number of changes that the Owners insisted on making to the plans as construction got underway. [66] The Owners dispute much of that evidence. They say that once construction began, they frequently sought but never received updates from Anway about how the project was progressing relative to the original budget. Some of the changes they made had the effect of reducing the cost of the project. It was not clear to them to what extent those two kinds of decisions offset each other. [67] The evidence suggests that as the cost of the project began exceeding the original budget, Anway did not keep the Owners informed of that fact, despite their ongoing requests for that information. [68] In an email to the Owners dated September 29, 2014, for example, Mr. Clisby advised the Owners that in light of the recent changes that had been made: I think in your best interest that we need to revisit the numbers so that you understand where this project cost will come in. It will be very difficult on our end because

prices and information will come when they come and will change. I will do my best to make you aware of the extra work that this will occur [sic] over your last quote. I am hoping to have a number for you early next week and I will be guessing at alot [sic] because we will not have quotes but it will give you an idea. [69] Mr. Clisby does not appear to have made any effort "to revisit the numbers," as he suggested he would, however. Instead, as the project progressed, Anway merely rendered regular invoices without describing the progress that was being made against the original budget. Although the Owners could tally what they had spent, they had no way of knowing how far along in the project they had progressed at any given point in time. Anway never produced a construction schedule as required by s. 3.5.1 of the contract. [70] On February 18, 2015, Dr. Hunte sent an email to Mr. Clisby reiterating his request for clarification on the progress being made as against the budget: Hi Wayne. Would you also be able to update the proportion of budget spent on the statement? [71] Mr. Clisby responded to that query on the next day, February 19, 2015 as follows: Re: % of completion, I'm not sure what you are asking for. Is this a question for the bank because they want to know % of completion at each stage? This is a tough one because we are paying for deposits for stuff we don't have.

Normally when a house is waterproofed and windows in we are approximately 50% completed. But I'm not sure if this is what you are looking for. I think what we need to do is add up the passive house requirements vs. our original budget. Would this be what you are looking for? If I know why you are asking I can get you what you need. Can we talk on Friday [72] Dr. Hunte responded that same day as follows: Thanks Wayne. Will bring cheque tomorrow. The proportion of budget is for us, not the bank. We're hoping to update and get a sense of where we are. [73] Again there is no evidence of any response, at least not in writing. [74] On May 5, 2015, Ms. McLachlan wrote to Mr. Clisby to convey the same request: Garth and I wondered if you have time this Friday afternoon or next Wednesday (May 13th) morning or afternoon to review the budget and the timeline? We'd like to get a handle on both of these issues as soon as possible. [75] On September 14, 2015, Dr. Hunte emailed Mr. Clisby raising the issue once more: Again may I request a running total and a proportion of completion so that we can stay on top of our budget. You were also going [sic] give us an updated budget estimate. We look forward to it. In addition, I think it would help if we had a weekly plan to completion. For example, we now have 12 weeks to the week of Dec 10. When can we expect to be at drywall stage (next bank

draft)? [76] Mr. Clisby responded on the next day, September 15, 2015, as follows: On Thursday I'll have your budget to complete. It will [sic] somewhat close but we are still not sure what you are planning for total millwork, wiring (which is still holding up the project) the electricians can not go forward until you decide how your [sic] controlling the lights. All that's left is vacuum rough-in, electrical and then insulation (which is mostly done) and then on to drywall. This week if you can give us some direct answers regarding how we are going to get the electrical to the house, either pole until laneway house is built or ?? landscape design, millwork. Is the paint on the outside of house trim ok? Then we can order the gutters. I'll have more detailed questions for you on th [sic] Thursday that you will be able to check off quickly. hopefully. [77] By the fall of 2015, the project should have been nearing completion. BMO began raising concerns about advancing the next instalment of the loan, given the extent of Anway's progress to date relative to the costs already incurred. It wanted to see a progress report before advancing further funds. On October 16, 2015, Mr. Lee wrote to Dr. Hunte, with a copy to Mr. Clisby, seeking the following information: We are working on the last request [for further funds] for you. I want to know at what percentage are we at with the

build. If Wayne [Clisby] can answer this then that'll be great. We need to get this submitted for the extension before we can order the progress report. [78] Mr. Clisby responded to that email on October 19, 2015, but to Dr. Hunte alone. The email conveyed his belief " that the house is approximately 70% complete for the bank " [79] The next day, October 20, 2015, Dr. Hunte responded to Mr. Clisby, as follows: Thanks Wayne. Is that 70% project completion or 70% projected costs? We need costs to date, projected costs and timeline [80] The next day, October 21, 2015, Mr. Clisby responded as follows: The 70% is building completion which runs hand in hand with construction costs. Eg. Building costs $1,400,000 x 70% is approximately $1,000,000.00. The cost to date is on the statement that I sent you yesterday. Every statement from now on will have an updated cost on the bottom. [81] To this, Dr. Hunte replied on the same day, October 21, 2015, stating as follows: By my calculation: Cost to date - $863,137.44 (70% of projected) Projected cost - $1,233,053.49 Is this correct? Does this include garage/laneway, landscaping, appliances? [82] One week later, on October 28, 2015, Dr. Hunte relayed Mr. Clisby's estimate to Mr. Lee, with the following note: Hi Kelvin. Thanks for talking with me yesterday. I received this email from Wayne last night, and it includes an email thread with his

written statement that we are approximately 70% complete. In short: Billed to date: $816,120.16 Payed to date: $795,811.34 Projected additional costs: $595,133 TOTAL : $1,411,253 By my calculation, with these figures, we are 58% complete. However, this does not include landscaping, garage, or appliances, so we may be closer to 50% complete. Current mortgage: $1,625,000 Current principal: $1,145,000 Last draw: $480,000 I wonder if we should proceed with the last draw and then consider our other options [Original emphasis.] [83] Dr. Hunte followed up later that same day with updated information from Mr. Clisby, now showing an even higher estimated cost of completing, at $1,489,647.04. [84] Two days later, on October 30, 2015, Dr. Hunte asked Mr. Lee for a copy of the contract containing the GMP. His email stated as follows: Hi Kelvin. Do you happen to have a copy of our original agreement with Wayne for a max price of $900-925K? We've moved and I can't put my hand on it. Meeting with Wayne and our architect next Friday to review the budget. [85] On November 12, 2015, Dr. Hunte sent Mr. Clisby an email conveying his request for more information on the status of the project, and especially the budget: A summary of requests to drive the bus.

1. Updated budget with projected costs to occupancy and completion.

2. Schedule to finish with key dates. Jen needs this ASAP.

3. Copies of all receipts.

4. Maintain humidity less than 40% 5. Thorough clean up/dust elimination needs to be complete BEFORE insulation, and DAILY thereafter. Non-negotiable. We cannot emphasize this enough.

6. Review /fix sprinkler in attic 7. Gas line to deck 8. Vents in roof 9. Frame/plumb/wire for mini-split 10. Update on fireplace [86] Mr. Clisby responded on November 23, 2015 with an email stating as follows: I have updated the cost to complete but it is not correct as we do not have the final decisions. I can guess at it but I could be $75,000.00 out which wouldn't be good. Copies of invoices. We have all copies of invoices, which I know you have some. We will bring the ones that we have not delivered to you that are sitting in the office [87] The issue appears to have finally come to a head on a telephone call on December 2, 2015, during which Dr. Hunte asserted that the contract contained a GMP, which Anway had now exceeded. Mr. Clisby conveyed his disagreement with that suggestion by email the next day (December 3, 2015), stating as follows: As per our phone conversation yesterday, I am concerned that you still do not understand the costs associated with the construction of your passive house. In the conversation yesterday, you referred to the 'cap', this is the first I am hearing of this. Is this the amount of mortgage that you expected to have at the end of this project? Because if it is, we could have informed you that just in your choices of finishes and product would never match your budget. The misleading of Monte [Paulsen] telling you 10% over and your personal

preferences of material will be proven in our change of scope from your original blueprint to what you have selected now. You have driven the bus with material you have chosen. Just a few things that you have [sic] should picked up on automatically. Your attic with was only a storage area with insulation originally is now a 425 sq ft finished area. I am guessing but $65,000.00 - $75,000.00 to make that area liveable. That is $176.00 a square foot. Your house is running $600.00 - $700.00 a square foot. An average house is $300.00 a square foot. I will be identifying this attic space in my provisions for you. I'll have an actual number then, not a guestimate. You are $100,000.00 over your millwork budget from original. You [sic] windows, doors, roof and associated costs are at least $85,000.000 over your original budget. As per our original budget, we have never allowed for landscape or appliances which is about $75,000.00 more. These are just 4 items that total $445,000.00 without GST or Mark-up. This alone puts you over the cap. So being said, we are identifying every cost from day 1 so you can understand where your balance has come from. We need to discuss this next week so both parties are clear on going forward, money and timeframe. One more item which I'll be identifying. We are back at the ensuite bathroom, we have already moved the plumbing and electrical twice prior to

now, due to your requested changes. The first time, costs were probably for electrical, plumbing, management, carpentry and material $800.00 - $1,000.00. Second time $1,000.00 to $1,400.00. Now $1,400.00 -$1,800.00 plus mark-up. Just so you know what changing your mind costs. Approximately $5,000.00 plus GST and mark-up. Sorry to make this blatant, but it's a fact. Please pick a day early next week so we can come to an agreement, so your project can continue to move forward. I am also very worried that due to the past history of the project where things are changed daily, we will not be able to remove Matt [McQueen] from the project. Matt is the only one who knows the full extent of your project and what changes have affect [sic] what other parts of the project we are dealing with now. This creates more of an expense than leaving him on the project, which is not allowed for. [Original emphasis.] [88] By January 2016, BMO realised that something was seriously amiss with the project. Dr. Hunte was told that it was the worst cost overrun the bank had ever seen. BMO refused to advance additional funds until the project was shown to be 75% complete. Although Mr. Clisby had estimated that the project was 70% complete, an independent appraiser retained in January 2016 concluded that a more accurate figure was 55%. [89] By then, the Owners were refusing to pay Anway's outstanding

invoices. In response, Anway eventually abandoned the site and did no further work. [90] In early 2016, Anway and certain of its subcontractors and suppliers filed liens against the Property. The Owners have since paid the funds claimed ($117,456.17 for Anway and $35,679.09 for the subcontractors and suppliers) into trust to clear the liens. [91] In addition, the Owners say that Anway billed them a total of $1,047,916.11, of which they paid a total of $924,541.56 ($895,405.22 directly to Anway and $29,136.34 to subcontractors and suppliers). Mr. Clisby accepts that the Owners paid Anway a total of $895,405.22, but he says that they paid the subcontractors and suppliers only $19,521.52. I prefer the Owners' tally of what they paid. The difference appears to be attributable to their having had to pay certain subcontractors and suppliers for amounts already invoiced by and paid to Anway. The Owners have reproduced the individual invoices supporting their claim. The lower tally in Mr. Clisby's affidavit, on the other hand, is unsupported by invoices and based entirely on dubious hearsay attributed to "various subcontractors working on the Project." [92] On May 6, 2016, the Owners sent Anway a notice of default, asserting various breaches of the contract, including exceeding the GMP. The notice demanded that Anway rectify the defaults within five days. Counsel for the Owners

followed up with a letter dated May 10, 2016 advising Anway that the Owners were electing to treat the contract as extant and insisting on Anway's performance. On May 17, 2016, the Owners sent Anway another notice advising that, in light of Anway's ongoing failure to rectify the alleged defaults, they will be correcting them at their own expense and looking to Anway for compensation. E. Completing the Work [93] With BMO refusing to advance further funds until the project had advanced to the requisite stage, the Owners were forced to refinance. They did so by taking the following steps: (a) fully drawing on their existing lines of credit; (b) obtaining an additional line of credit from National Bank; (c) taking out a new mortgage from Pacifica Mortgage Investment Corporation ("PMIC") in the amount of $1.05 million, at an interest rate of 8.9%; and (d) once the project reached the requisite stage to allow BMO to continue funding, increasing the BMO mortgage from $1.625 million to $2.4 million, and using the proceeds to pay out the PMIC mortgage. [94] In August 2016, the Owners hired another contractor, Markana Development Corp. ("Markana") to manage the project through to completion. In all, they paid Markana $120,250.78 for that work. They also made direct payments to subcontractors and suppliers totalling $830,824.02. [95] When the work resumed, the Owners retained yet another

consultant, E3 Eco Group Inc. ("E3"), to assist them in attempting to bring the new house into compliance with passive house standards. The primary problem they faced at that stage, according to Dr. Hunte, was in attaining a sufficiently airtight seal in the building envelope as it had been built to that point. The Owners ultimately abandoned that goal after E3 told them how much more it would cost to achieve it. [96] The Owners finally moved into their new house in April 2017, although it was not yet complete even then. The occupancy permit was not issued until May 2019. They had first moved out of the house they demolished in August 2013, nearly four years before. III. The Evidentiary Issues A. The McLean Affidavit [97] The Owners have adduced an affidavit from Euan Campbell McLean, a quantity surveyor with 30 years of experience, attaching an expert report that he prepared for this litigation. [98] By letter dated March 4, 2016, counsel for the Owners asked Mr. McLean to answer the following questions: (a) What is the fair market value of the work done by Anway on the Property; (b) Did the invoices that Anway rendered to the Owners accurately reflect the work that was done and the materials that were supplied; (c) Did Anway do any work beyond that which was contemplated in the contract documents, and if so, what was the value of that additional work; and (d) What is the cost

of completing the project in accordance with the specifications set out in the contract documents? [99] Mr. McLean reviewed the contract documents and visited the Property on March 8, 2016 to assess the state of the construction work that had been completed by Anway as of March 6, 2016. The resulting report is dated June 6, 2016. [100] With respect to the first question (value of work done to date), Mr. McLean's opinion was that: (a) the cost of building the new house, based on the plans and specifications he reviewed, should have fallen within a range of between $900,000 ($250 per square foot) and $1,030,000 ($400 per square foot); (b) it was reasonable to raise the estimate from $746,823 to $925,000 to account for the added insulation, building ventilation and control systems associated with constructing a passive house as well as the cost of landscaping and appliances; and (c) as of March 6, 2016, the house was 56% completed, which translates into a value of $516,720 (excluding GST), being about 56% of the GMP of $925,000. [101] With respect to the second question (value received relative to amount invoiced), Mr. McLean's opinion was that: (a) subject to minor irregularities (i.e., double billing on a $77.93 invoice for paint and an unexplained invoice for $893 from Mountain Equipment Co-Op) the invoices reflect work actually done for the project; (b) Anway charged the

Owners significantly more than would have been expected for a house of that size and a project of that scope, particularly with respect to the following: (i) building materials ($54,799), which were 299% over budget; (ii) exterior siding, soffit and rain screen work ($76,278), which were 766% over budget; (iii) insulation ($26,198), which was 330% over budget; and (iv) framing and labour ($154,363), which were 179% over budget. [102] With respect to the third question (value of as-built deviations from plans), Mr. McLean's opinion was that: (a) the following items were dropped from the plans: (i) kitchen skylights (a saving of $4,500); and (ii) sunken rear patio with retaining walls (a saving of $47,500); (b) the folding doors to the rear patio were replaced by a window; (c) the rear deck off the dining room was reduced in size; (d) there were minor changes to the size of the windows, without significant impact on the cost; (e) a powder room was added off the entry foyer, where the plan called for a closet and millwork, but this was offset by the elimination of a powder room in the basement; and (f) overall, the increase in cost of $178,177 from the original estimate to the GMP "reflects the added cost to the Passive House design as well as the cost savings for the elimination of the sunken patio." [103] With respect to the fourth question (cost to complete), Mr. McLean

estimated the cost of completing the project as falling somewhere between $503,000 - $549,000, in light of the following considerations: (a) the remaining cost to complete would be $408,280 if the Owners were using the same contractor and suppliers; (b) because a new contractor and suppliers must be found, the cost can be expected to increase by 10-20%; and (c) construction costs had increased by approximately 12% in the interim. [104] Anway objects to Mr. McLean's affidavit on two grounds. [105] First, Anway says that the Owners did not provide it with timely notice of the report, as required by Rule 11-6(3). That objection is without merit. Pursuant to Rule 11-1(1)(a), Part 11 does not apply to summary trials under Rule 9-7, except as provided in that Rule. There is no comparable notice requirement in Rule 9-7. [106] Second, Anway alleges that Mr. McLean is not a properly qualified expert because of an alleged bias. That bias is manifested, Anway argues, in the following ways: (a) his assumption that the contract contained a GMP; (b) his assumption that Anway had "abandoned" the project; and (c) his failure to take into account the changes to the original contract specifications that Anway says the Owners insisted on making while the project was underway. [107] The test to be applied in determining the admissibility of expert opinion evidence is set out in White Burgess

Langille Inman v. Abbott and Haliburton Co., 2015 SCC 23 [WBLI]. [108] As a preliminary matter, it is necessary to describe the nature and scope of the opinion proffered. Mr. McLean is a quantity surveyor. His expert opinion is offered to assist the Court in valuing the work that Anway had done as of March 6, 2016; the extent of any deviation in that work from the original contract specifications and its value; and the anticipated cost of completing the work that was still left to be done as of that date. [109] The first step in the WBLI test requires that I consider whether the following threshold requirements have been met: (a) the evidence must be relevant; (b) the evidence must be necessary to assist the trier of fact; (c) the evidence must not be subject to any exclusionary rule; (d) the expert must be properly qualified (including by having demonstrated his willingness to provide his evidence in a manner that is impartial, independent and unbiased); and (e) the evidence must be based on a reliable body of specialised knowledge. [110] First, with respect to relevance, I am satisfied that the questions that were put to Mr. McLean are relevant to the issues before me on this application, which include the question of the value of the work actually done and to be done on the project as of March 6, 2016, as compared to the original contract specifications. [111] Second, with

respect to necessity, it is necessary to receive opinion evidence from a quantity surveyor on those issues because the valuation of construction work, particularly on an incomplete project, requires knowledge and training that extends beyond the realm of ordinary human experience. [112] Third, there is no exclusionary rule that operates to prevent the receipt of Mr. McLean's report into evidence. [113] Fourth, with respect to qualifications, the only objection that Anway has raised is that he is biased. [114] In WBLI, Cromwell J., writing for the Court, reiterated at para. 45 that bias may justify excluding expert opinion evidence at the threshold stage: [45] Following what I take to be the dominant view in the Canadian cases, I would hold that an expert's lack of independence and impartiality goes to the admissibility of the evidence in addition to being considered in relation to the weight to be given to the evidence if admitted. That approach seems to me to be more in line with the basic structure of our law relating to expert evidence and with the importance our jurisprudence has attached to the gatekeeping role of trial judges. Binnie J. summed up the Canadian approach well in J.-L.J.: "The admissibility of the expert evidence should be scrutinized at the time it is proffered, and not allowed too easy an entry on the basis that all of the frailties could go at the end of

the day to weight rather than admissibility" (para. 28). [115] The test to be applied in determining whether an expert should be disqualified for bias at this stage was set out in paras. 46-50 of WBLI as follows: [46] I have already described the duty owed by an expert witness to the court: the expert must be fair, objective and non-partisan. As I see it, the appropriate threshold for admissibility flows from this duty. I agree with Prof. (now Justice of the Ontario Court of Justice) Paciocco that "the common law has come to accept . . . that expert witnesses have a duty to assist the court that overrides their obligation to the party calling them. If a witness is unable or unwilling to fulfill that duty, they do not qualify to perform the role of an expert and should be excluded": "Taking a 'Goudge' out of Bluster and Blarney: an 'Evidence-Based Approach' to Expert Testimony" (2009), 13 Can. Crim. L.R. 135, at p. 152 (footnote omitted). The expert witnesses must, therefore, be aware of this primary duty to the court and able and willing to carry it out. [47] Imposing this additional threshold requirement is not intended to and should not result in trials becoming longer or more complex. As Prof. Paciocco aptly observed, "if inquiries about bias or partiality become routine during Mohan voir dires, trial testimony will become nothing more than an inefficient reprise of the admissibility hearing": "Unplugging Jukebox Testimony in an Adversarial System: Strategies for Changing the Tune on Partial Experts" (2009), 34 Queen's L.J. 565 ("Jukeboxˮ), at p.

597. While I would not go so far as to hold that the expert's independence and impartiality should be presumed absent challenge, my view is that absent such challenge, the expert's attestation or testimony recognizing and accepting the duty will generally be sufficient to establish that this threshold is met. [48] Once the expert attests or testifies on oath to this effect, the burden is on the party opposing the admission of the evidence to show that there is a realistic concern that the expert's evidence should not be received because the expert is unable and/or unwilling to comply with that duty. If the opponent does so, the burden to establish on a balance of probabilities this aspect of the admissibility threshold remains on the party proposing to call the evidence. If this is not done, the evidence, or those parts of it that are tainted by a lack of independence or impartiality, should be excluded. This approach conforms to the general rule under the Mohan framework, and elsewhere in the law of evidence, that the proponent of the evidence has the burden of establishing its admissibility. [49] This threshold requirement is not particularly onerous and it will likely be quite rare that a proposed expert's evidence would be ruled inadmissible for failing to meet it. The trial judge must determine, having regard to both the particular circumstances of the proposed expert and

the substance of the proposed evidence, whether the expert is able and willing to carry out his or her primary duty to the court. For example, it is the nature and extent of the interest or connection with the litigation or a party thereto which matters, not the mere fact of the interest or connection; the existence of some interest or a relationship does not automatically render the evidence of the proposed expert inadmissible. In most cases, a mere employment relationship with the party calling the evidence will be insufficient to do so. On the other hand, a direct financial interest in the outcome of the litigation will be of more concern. The same can be said in the case of a very close familial relationship with one of the parties or situations in which the proposed expert will probably incur professional liability if his or her opinion is not accepted by the court. Similarly, an expert who, in his or her proposed evidence or otherwise, assumes the role of an advocate for a party is clearly unwilling and/or unable to carry out the primary duty to the court. I emphasize that exclusion at the threshold stage of the analysis should occur only in very clear cases in which the proposed expert is unable or unwilling to provide the court with fair, objective and non-partisan evidence. Anything less than clear unwillingness or inability to do so should not lead to exclusion, but

be taken into account in the overall weighing of costs and benefits of receiving the evidence. [50] As discussed in the English case law, the decision as to whether an expert should be permitted to give evidence despite having an interest or connection with the litigation is a matter of fact and degree. The concept of apparent bias is not relevant to the question of whether or not an expert witness will be unable or unwilling to fulfill its primary duty to the court. When looking at an expert's interest or relationship with a party, the question is not whether a reasonable observer would think that the expert is not independent. The question is whether the relationship or interest results in the expert being unable or unwilling to carry out his or her primary duty to the court to provide fair, non-partisan and objective assistance. [116] In my view, Anway has not raised a "realistic concern" that Mr. McLean is biased. His report contains the requisite attestation as to his awareness of his duty of impartiality and his willingness to comply with it. [117] Although Mr. McLean reproduced a list of his assumptions, the presence of a $925,000 GMP in the contract was not on it. The following was the closest he came: Anway provided a budget and estimated that the project would cost $746,823 on or about July 23, 2013 and later increased this estimate to $925,000 to reflect the fact

that the work would include building a Passive House, landscaping and purchasing appliances. [118] Later in the report, however, Mr. McLean refers to a "$925,000 GMAX Contract Sum" and a "$925,000 GMAX contract," suggesting that he has also assumed, tacitly, that the contract contained such a term. He used the $925,000 figure to prorate the value of the work done. Given that he expressly assumed that Anway had earlier given the Owners an estimate of $925,000 for the work, and his conclusion that the estimate was a reasonable one, his assumption that the contract also contained a $925,000 GMP does not appear to have affected his conclusions. In any event, even if he did rely on an unstated assumption that turns out to be incorrect, that fact would, at most, go to weight rather than threshold admissibility. I am not persuaded that it indicates a bias on his part. [119] Although Mr. McLean referred to the project as having been "abandoned," he did so only to explain why the Owners might have to complete it with a different contractor, at significantly greater expense. This was not an unreasonable description of what had occurred, in the circumstances. He did not comment on whether Anway's conduct in that regard was justified or not, so as to indicate a bias on his part. [120] I also disagree with Anway's suggestion that Mr. McLean improperly failed to account for the many changes

that Anway says the Owners insisted on making to the original contract specifications during the course of construction. The task he was given was to investigate the deviations from those specifications that were manifest in the work that was actually done, and to quantify their cost. The mere fact that the product of that investigation has turned out to be inconsistent with Anway's position does not indicate a bias on his part. [121] Finally, with respect to the integrity of Mr. McLean's field of expertise, it is not disputed that the discipline of quantity surveying is based on a reliable body of knowledge. [122] For those reasons, I find that Mr. McLean's affidavit meets the threshold test for admissibility under WBLI. [123] The second step in the WBLI test engages the court's so-called "gatekeeper function." At this stage, the question is whether the probative value of the proffered evidence outweighs its prejudicial effect, so as to justify its admissibility (at paras. 24, 54). [124] Anway argues that some of the conclusions in Mr. McLean's report stray close to the core of some of the central issues in the case. I accept that that is so and that I must, for that reason, be that much more careful in the balancing exercise to avoid the potential for unfair prejudice to the opposing party: R. v. Mohan [1994], 2 S.C.R. 9, at 24-5; R. v. J.-L.J., 2000 SCC 51, at para. 37; J.P. v. British Columbia (Child and Family Development), 2017 BCCA 308, at para.

232. Nevertheless, I am satisfied that the probative value of this evidence is high. On the other hand, Anway has not identified any unfair prejudice that might flow from its admission. [125] Having applied the WBLI test, I have concluded that Mr. McLean's affidavit is admissible. B. The Naidu Affidavit [126] Anway objects to the affidavit of Mr. Naidu, described earlier, on two grounds: first, that, as an employee of the law firm acting for one of the parties in this action, he is not a competent or unbiased witness and second, that his affidavit consists entirely of inadmissible hearsay. There is no merit in either objection. [127] With respect to the question of Mr. Naidu's competence as a witness, I appreciate that difficulties may arise where counsel for one of the parties seeks to rely on his or her own affidavit, particularly where the affidavit speaks to a contentious issue on an application such as this for a final order. In The Los Angeles Salad Company Inc. v. Canadian Food Inspection Agency, 2011 BCSC 503, Harris J. (as he then was), had occasion to consider an objection to the admissibility of an affidavit that had been sworn by counsel for one of the parties. Unlike in this case, the affidavit there had been adduced on an interlocutory application and went to a number of issue that were ultimately found to be uncontentious. In dismissing the objection, Harris J.

summarized the legal principles applicable in that context as follows: [15] No authority was cited to me in [sic] that establishes a binding general rule that solicitors cannot not [sic] swear affidavits in interlocutory proceedings in which they or their firm are counsel. To the contrary, even the professional guidelines support such a practice within limits. The case law also indicates that counsel is legally competent to swear an affidavit, even in relation to matters in dispute, although that practice is to be discouraged: see, National Financial Services Corporation v. Wolverton Securities Ltd. (1998), 52 B.C.L.R. 302 (S.C.) at para. 7. [16] The Canadian Bar Association Code of Professional Conduct qualifies its statement of principle about lawyers swearing affidavits by referring to local rules or practice authorizing lawyers to do so. In British Columbia it is the practice for counsel to swear affidavits, on occasion, particularly in respect to uncontroverted matters or matters relevant to the interlocutory issue before court. The practice obviously carries risks, not least that a solicitor may be cross-examined on the affidavit, waive privilege or may succeed inadvertently in putting his or her credibility in issue. There are many good reasons for counsel to take great care in swearing affidavits in cases in which they are counsel. [17] Nonetheless, there are occasions

when the use of counsel affidavits is justified as a matter of practice. Sometimes, at least in respect of interlocutory matters, the evidence of counsel may be the best evidence available. It may often be economical and timely to have counsel swear an affidavit in support of interlocutory application. Introducing a legal rule that upset this practice would defeat the object of the Supreme Court Civil Rules to secure the just, speedy and inexpensive determination of every proceeding on its merits including conducting the proceeding in ways proportionate to the amount involved in the proceeding, the importance of the issues in dispute and the complexity of the proceeding. [19] In my view, it would be a mistake to recognize or create a special rule requiring the rejection of affidavits sworn by counsel if those affidavits contain both admissible and inadmissible evidence. Insofar as admissibility is concerned, solicitors' affidavits are governed by the same rules as any other affidavit. Inadmissible content may be ignored or formally struck, but the affidavit as a whole need not be rejected. [128] The situation in this case is unlike the one that was before Harris J. in a number of important respects. This is an application for a final, as opposed to an interlocutory order. Mr. Naidu's affidavit goes to an issue that is clearly contentious. On the other hand, Mr. Naidu himself is

not counsel, but a paralegal. A paralegal's affidavit is not presumptively barred by any blanket rule of exclusion either: I.A.L. v. Y.C., 2019 BCSC 714. As a practical matter, there would be no other way for the Owners to contradict the account that Ms. Saran gave in her affidavit of her conversation with their counsel, with which they take issue. I am satisfied that Mr. Naidu is a competent witness for that purpose, despite his relationship with counsel's firm. Any bias that can be inferred from that relationship is a matter of weight, rather than admissibility. [129] As for the objection based on the hearsay rule, I am not persuaded that Mr. Naidu's affidavit is truly offered for a hearsay purpose. Mr. Naidu deposed that he heard what Ms. Saran said firsthand. It is open to a party to adduce evidence of a prior inconsistent statement by an opposing party's witness. Mr. Naidu's evidence is not offered to prove the truth of Ms. Saran's statement on the call but rather to cast doubt on the credibility of the account she later gave of it in her affidavit. The probative value of such evidence lies primarily in the fact that the prior statement was made, rather than in the truth of it. [130] For those reasons, I have concluded that the Naidu affidavit is admissible. C. The Clisby Affidavit [131] The Owners object to Mr. Clisby's Affidavit #1 on a variety of grounds, including that

it contains hearsay, opinion, argument and irrelevant passages. On that basis, they seek to have the affidavit struck in whole or in part. [132] I agree with the Owners that parts of the affidavit are indeed improper and should be struck. My specific rulings in that regard are set out in a schedule at the conclusion of these reasons for judgment. IV. The Substantive Issues [133] The outcome of this action turns on the following questions: (a) Did the parties amend the contract to add a $925,000 GMP; (b) Did Anway breach that or any other term of the contract; and (c) Did Anway make one or more of the pre-contractual misrepresentations that the Owners allege? [134] If any of those questions are answered affirmatively, then the final question becomes whether Anway is liable to the Owners: (a) for one or more breaches of contract; (b) in tort for negligent misrepresentation; or (c) under the BPCPA, and if so, in what amount. [135] If all of those questions are answered in the negative, then Anway is entitled to judgment in its favour. V. Suitability for Summary Disposition [136] Both parties seek to have the action resolved in its entirety by way of summary application. Nevertheless, the Court retains the discretion to refuse to grant final judgment at this stage if it appears that the matter should instead proceed to a full trial. [137] The test to be applied in determining

whether an action lends itself to summary disposition in this way was set out by the Court of Appeal in Inspiration Management Ltd. v. McDermid St. Lawrence Ltd. (1989), 36 B.C.L.R. (2d) 202 (C.A.). There, the question was said to turn on the following two factors: (a) Whether the requisite factual findings can be made on the evidence presently before the court; and (b) Whether it would be unjust, for some other reason, to decide the case by way of a summary application. [138] For reasons that I will set out below in my discussion of the substantive issues themselves, I have concluded that I am indeed able to make sufficient findings of fact on the record before me to dispose of the entire action at this stage. It is doubtful that the evidentiary record in this case would improve sufficiently to justify the additional expense and delay that a full trial would entail. [139] I have also concluded that it would not be unjust to render final judgment at this stage, considering the parties' jointly-stated preference for a final disposition of the action now in light of the need for efficiency and proportionality in judicial decision-making: Hryniak v. Mauldin, 2014 SCC 7. VI. Discussion A. Did the parties amend the contract to add a $925,000 GMP? [140] The Owners contend that the contract was effectively amended in December 2013 at the request of BMO to add a $925,000 GMP. They say

that, on December 12 or 13, 2013, Anway, probably in the person of Ms. Saran, delivered a revised version of the contract to the bank with that figure added in s. 6.2, which was previously left blank. On December 13, 2013, they say, Dr. Hunte attended at the bank and, at the request of Ms. Zhang, wrote out the amount in letters and added his signature to indicate his acceptance of the amendment on behalf of the Owners. [141] Anway responds that there was no valid amendment, for a variety of reasons. [142] First, Anway relies on the evidence of Mr. Clisby and Ms. Saran, both of whom emphatically deny having added the $925,000 figure into the contract as alleged. They depose they would never have done so, for their own reasons. Anway also relies on the affidavit of Mr. Muego, who deposed that he was not aware of any such amendment having been made. [143] Second, Anway argues that even if Ms. Saran had added the $925,000 figure as the Owners allege, she did not have the requisite authority to bind Anway, given her position in the company. [144] Third, Anway argues that, regardless of how the $925,000 figure came to be added, the addition did not satisfy the formalities that would have been needed to effect a valid amendment. For example, Anway never signed the amendment to indicate its acceptance. Nor, for that matter, did Ms. McLachlan. There was no corporate seal affixed. [145]

Finally, Anway argues that even if the parties had purported to amend the contract as the Owners allege, the amendment would not be enforceable against Anway for want of fresh consideration to support it. [146] On the face of it, there appears to be an irreconcilable conflict in the evidence on the question of how the $925,000 figure first came to be placed on the copy of the contract in BMO's file. Although no one now recalls (or at least is prepared to admit to) having added it, someone must have done so. [147] Mr. Muego deposed that he was unaware of any amendment to add a GMP to the contract, but he was not involved in the process of amending it. His evidence therefore adds little. On the contrary, it appears that Mr. Muego, in his emails of November 19 and 28, 2013, was anticipating that once the full costs of the passive house requirements were known, an amendment would be made to change the contract from a cost-plus to a fixed-price arrangement or something else. [148] The employees of the bank can, I find, safely be eliminated as likely suspects. Neither party attributes the change to the bank. The bank had no incentive to make it. In addition, the Owners have adduced an affidavit from Ms. Zhang, who confirms that the bank would have required a signed contract detailing the total expected cost of the project before advancing a construction loan, and that it would have

left it to the parties to insert the appropriate figure into the contract, rather than doing so itself. Indeed, if the bank employees involved would have been satisfied with a form of contract containing a maximum cost figure that they had added themselves, their many emails asking the parties to provide them with a new contract, containing such a figure, would have been unnecessary. [149] Although Mr. Clisby, in his affidavit, speculated that Dr. Hunte must have added the figure himself, that suggestion was not put to Dr. Hunte in his examination for discovery, at least not in any of the parts of it that were read into the record at the hearing, and that theory was not advanced in oral argument before me. [150] Nevertheless, it is possible that Dr. Hunte made all of the handwritten additions when he attended at the bank on December 13, 2013. On the previous day, the parties appear to have believed that they could satisfy the bank's requirements by having Dr. Hunte insert a maximum cost figure into the contract himself, and at 9:45 a.m. on December 12, 2013, he emailed Anway to convey his intention to follow Anway's suggestion that he do just that. When he asked Mr. Lee, minutes later, if the bank would be satisfied with that plan, Mr. Lee responded that the figure to be inserted in the contract had to reflect the total cost of the project as a whole, not just Anway's own cost.

Mr. Lee said nothing, at least in that email, about the need for Anway to sign the amended contract independently. [151] It was only then that Dr. Hunte felt the need to consult with Mr. Clisby by telephone. He did so because he was now unsure of what the appropriate number to insert into the contract should be, and he needed Mr. Clisby's input on it. It appears that he still planned to go the branch to add the number himself after consulting with Mr. Clisby on that issue. [152] Dr. Hunte expressly denies Mr. Clisby's suggestion that he inserted the number himself. His evidence was that it was already on the contract when he arrived at the branch on December 13, 2013. That was a surprise, however. There is no evidence of Anway previously offering or being asked to deliver an amended contract to the bank itself, rather than leaving the task of amending it to Dr. Hunte as previously agreed. [153] Another difficulty with Dr. Hunte's account is that it does not align neatly with the physical evidence on the face of the document. The purported amendment appears at p. 10 of a 36-page compilation of documents that Mr. Lee faxed to the Owners' counsel on February 12, 2016. The second and all subsequent pages of that transmission also bear a second fax header suggesting that a larger compilation (including the amended version of the contract) was previously faxed to the bank on December

27, 2013. The first 17 pages of that larger compilation are not in evidence. There is no indication that the amended version of the contract was faxed to the bank on December 12 or 13, 2013, as Dr. Hunte's account would suggest. It may be that Anway delivered the amended version of the contract to BMO in person or by email, rather than by fax, on December 12 or 13, 2013. If so, neither party has offered any explanation as to why the amended version of the contract appeared in a fax transmission sent to the bank on December 27, 2013. Regardless of the December 27, 2013 fax transmission, however, it appears clear that the GMP had already been added at the bank as of December 13, 2013, as Dr. Hunte asserts, because at 12:35 p.m. on that date he received another email from Mr. Lee stating that the bank was "looking at the deal now with the amended contract." [154] Although possible, it does not appear likely that Dr. Hunte added the number himself. It is doubtful that the bank would have been satisfied with an amendment added by only one of the parties to the contract. But if, as the Owners contend, Anway gave the bank a copy of the contract with the figure of $925,000 newly added in s. 6.2, that might explain why only Dr. Hunte's signature was sought on December 13, 2013. [155] On balance, it seems more likely that someone at Anway delivered to the bank an amended version of the

contract with the GMP inserted. [156] Mr. Clisby was adamant in his examination for discovery that he would never have done so, as a matter of principle, but he clearly was in discussions with the bank and Dr. Hunte in December 2013 aimed at putting a "final figure" into the contract. He wrote in his email to Mr. Lee of December 11, 2013 that the only reason the parties had not yet done so was that they were still waiting to see whether the Owners intended to proceed with the passive house option. He had no difficulty telling the bank, in the same email, what the number would be if they did. [157] Even more telling is the following piece of testimony from Mr. Clisby's examination for discovery: Q: You knew the bank needed to have a fixed price on this contract, didn't you? A: Yes, we did. Yes. Q: And I'll suggest to you that you gave it to them. A: Correct. [158] Anway now argues that the "final figure" that Mr. Clisby was referring to in his December 11, 2013 email was something other than a GMP. That is doubtful. It is not apparent where else in the contract it could have gone, if not in the paragraph contemplating a GMP. I accept that Mr. Clisby was genuinely surprised to learn in December 2015 that the Owners believed the contract contained a $925,000 GMP. He appears to have believed that the discussions that took place two years before, in December 2013, among Anway, the

Owners and BMO about inserting a "final figure" into the contract were aimed exclusively at satisfying the bank so that it would advance the loan, rather than actually amending the existing contract as between the parties themselves. If so, he was mistaken. In that context, he may simply have forgotten about having added the number and sending an amended version of the contract to the bank because he believed at the time that nothing turned on it. Alternatively, he may have authorised Ms. Saran to do those things and later forgot that he had done that. [159] Ms. Saran deposed that she would not have taken such a step on her own. She too may have forgotten about having done so, especially if the event was not particularly memorable for her, given that she was, at the time, acting on instructions from Mr. Clisby, rather than on her own initiative. [160] In any event, the effectiveness of the purported amendment does not turn on who physically made the change to the document, or the subjective intentions of the individuals involved, but rather on the parties' objective intentions, as manifested by their outward conduct. I find that the parties' manifested their common intention to add a GMP to the contract in the exchange of emails on December 11 and 12, 2013, before the amendment itself was physically made. Anway had, through Ms. Saran's email of 9:30 a.m. on December 12, 2013,

previously authorized Dr. Hunte to insert a GMP figure into the contract on both parties' behalf. Their subsequent communications, and the telephone conversation between Dr. Hunte and Mr. Clisby later that day, dealt only with the question of what that figure would be. [161] Although the parties had, as of December 2013, not yet ascertained the full cost of meeting passive house requirements, Mr. Clisby appears to have believed, based partly on the inquiries he had made with the other consultants by then, that it was safe to commit Anway to completing the entire project for no more than $925,000 and that is what he apparently did. I am satisfied that Mr. Clisby agreed on the call with Dr. Hunte that the appropriate number to insert into the contract was $925,000. The question of who physically added it thereafter is beside the point. [162] I am not persuaded by Anway's argument that Ms. Saran lacked the requisite authority to bind the company. Her evidence was that she acted throughout on Mr. Clisby's instructions. If so, she may have had actual authority to do what she did. Regardless of the extent of her actual authority, however, this case turns ultimately on her ostensible or apparent authority. [163] In CIT Financial Ltd. v. Gee Force Logistics Inc., 2020 BCSC 18, Russell J. held that a corporate employee who lacked actual signing authority had nevertheless bound his

employer with his signature on a bill of sale by virtue of his ostensible authority to do so. She summarized the relevant legal principles as follows, at paras. 49-53: [49] The meaning of an agency relationship was recently explored in Basyal v. Mac's Convenience Stores Inc., 2018 BCCA 235: [65] It may be useful to recall how an agency relationship may arise, and the meaning of "actual" and "apparent" agency. F.M.B. Reynolds, the author of Bowstead and Reynolds on Agency (17th ed., 2001) states succinctly: Agency is the fiduciary relationship which exists between two persons, one of whom expressly or impliedly consents that the other should act on his behalf so as to affect his relations with third parties, and the other of whom similarly consents so to act or so acts. Where the agent's authority results from a manifestation of consent that he should represent or act for the principal expressly or impliedly made by the principal to the agent himself, the authority is called actual authority, express or implied. But the agent may also have authority resulting from such a manifestation made by the principal to a third party; such authority is called apparent authority. (At 1.) [50] An agency relationship can derive from actual or apparent (ostensible) authority. Further, actual authority can be attributed to an agent by a principal through express or implied conduct. Thus, the

principal-agent relationship can manifest in three ways: express agency, implied agency, and ostensible agency. [51] The parties disagree on which form of agency is relevant to the facts at hand. The defendants cite Doiron v. Manufacturers Life Insurance Company, 2003 ABCA 336, an authority on ostensible agency which has been cited favourably by this Court: see Le Soleil Hotel & Suites Ltd. v. Le Soleil Management Inc., 2009 BCSC 1303 at para. 348; Vancouver Canucks Limited Partnership v. Canon Canada Inc., 2013 BCSC 866 at para.

156. In Doiron, the Alberta Court of Appeal states: [13] The doctrine of ostensible authority serves to give an agent the authority to bind a principal to agreements made with third parties in circumstances where the agent has no actual authority to do so. The requirements to establish ostensible authority are set out in the leading case of Freeman & Lockyer v. Buckhurst Park Properties (Mangal) Ltd., [1964] 1 All E.R. 630 (C.A.). They are: a) that a representation that the agent had authority to enter on behalf of the company into a contract of the kind sought to be enforced was made to the contractor; b) that such representation was made by a person or persons who had actual authority to manage the business of the company either generally or in respect of those matters to which the contract relates; c) that the contractor was induced by such representation to enter into the contract (i.e. that he in fact relied upon it); and d) that under its memorandum or articles of association the company was not deprived of the capacity either to enter into a contract of the kind sought to be enforced or to delegate authority to enter into a contract of that kind to the agent. [14] The test for ostensible authority has also been stated by Slade, J., in Rama Corp. Ltd. v. Proved Tin & General Investments Ltd., [1952] 2 Q.B. 147 at pp. 149‑50: "Ostensible or apparent authority which

negatives the existence of actual authority is merely a form of estoppel, indeed, it has been termed agency by estoppel, and you cannot call in aid an estoppel unless you have three ingredients: (i) a representation, (ii) a reliance on the representation, and (iii) an alteration of your position resulting from such reliance." [52] On the other hand, the plaintiff cites the law on implied agency. The question to be answered in determining whether implied authority exists "is whether it is reasonable for the party asserting an agency relationship to infer from the conduct of the other party that he or she consented to an agency relationship": Siemens v. Howard, 2018 BCCA 197 at para.

12. This determination is based on the conduct surrounding the relationship that allows for the inference of actual authority, rather than on a representation by the alleged principal which gives rise to an appearance of authority whether or not the authority actually exists. [53] The difference between the legal test for implied agency and ostensible agency is that the former requires conduct from the alleged principal and alleged agent which gives the reasonable impression to a third party that the agency exists. On the other hand, the latter requires specific representations pertaining to the agency, made to a contracting party. [164] Applying those principles to the facts of this case, I find that Ms. Saran had implied authority to speak for Anway in consenting to the amendment, insofar as that consent was communicated through her rather than Mr. Clisby. [165] During the critical email exchange that took place on December 12, 2013, Ms. Saran clearly purported to communicate with the Owners and BMO on Anway's behalf using the same email address that Mr. Clisby had, on the previous day, been using himself to speak for Anway. That exchange took the form of a seamless conversation, spread over two days, on what was clearly an important and urgent topic for each of the participants. They all knew, or should have known, that it required their immediate attention. There was no

suggestion from Anway that anything had changed overnight between December 11 and 12, so as to signal that the new author at that email address lacked the requisite level of corporate authority to say what she was saying. On the contrary, Mr. Clisby must have known about and approved of the outcome of that email exchange, because that was the topic of the telephone conversation he appears to have had with Dr. Hunte later that same day. Moreover, by confirming the number to be inserted into the contract on that call, Mr. Clisby can be taken to have ratified any commitment previously made by Ms. Saran, insofar as she may originally have made it without actual authority. [166] I am also not persuaded by Anway's argument that the amendment was ineffective for failure to follow the requisite formalities. Anway relies in this regard on Dr. Hunte's acknowledged failure to take further steps to formalise the amendment after signing beside the revised version of s. 6.2 himself. He testified as follows on his examination for discovery: Q: Did you feel that affixing your signature in the banker's office was sufficient to amend the contract? A: I felt that my agreement with Wayne on the phone was the agreement we had together, and that the bank was the documentation of that agreement. Q: And after you signed with the bank, what steps did you take, if any, to have your wife, the architect

and Wayne similarly initial the changes for the guaranteed maximum price? A: I made no steps. I left that for the bank to follow through on, and it's my understanding that they sent Wayne document to sign and he signed them and sent them back. Q: And you felt that the bank was going to handle processing of any other initials or - A: That is what I understood. Q: As far as that's concerned, you contacted Wayne because you knew that Wayne did the negotiations for Anway? He was the guy who ran the company? A: Yes, that's what I understood. Q: And, and when you came out of the bank, you didn't send anything to Anway about what you had signed? A: No, I did not. I left the document with the bank. [167] There is, however, no term in the contract setting out any particular formalities that had to be observed for a subsequent amendment to be effective. Although s. 2.2 states that the contract may be amended only as provided in the "Contract Documents," the contract documents contain no such restriction. [168] Anway also relies in this regard on the form of the signature block in the contract, beneath which the following words are printed: N.B. Where legal jurisdiction, local practice, or Owner or Contractor requirements calls for: (a) proof of authority to execute this document, attach such proof of authority in the form of a certified copy of a resolution naming the representative(s)

authorized to sign the Agreement for and on behalf of the corporation or partnership; or (b) the affixing of a corporate seal, this Agreement should be properly sealed. [169] Those words, whatever their significance, are not, formally speaking, a term of the contract. In any event, Anway did not follow any such formalities when Mr. Clisby signed the original contract on December 5, 2013, although Anway acknowledges that document to be binding. More fundamentally, the issue is not what the parties subjectively believed as to the formalities needed to effect a valid amendment, but rather whether they manifested through their outward conduct a common intention to be bound by it. I have already found that they did. [170] Finally, I also reject Anway's submission that the amendment fails for want of fresh consideration to support it. As authority for the need for fresh consideration, Anway cites Acme Grain Co. v. Wenaus, [1917] 3 W.W.R. 157 (Sask. C.A.) and David J. Harvey Holdings Inc. v. Hercules Food Equipment Ltd. (2004), 40 C.L.R. (3d) 105 (Ont. S.C.J.). [171] I agree with the Owners that the law that is binding on me is as recently set out by the Court of Appeal in Rosas v. Toca, 2018 BCCA 191. There, Bauman C.J.B.C., writing for the Court, held that, despite earlier authority in British Columbia and elsewhere to the contrary, a lack of fresh consideration will not be a bar to

the enforcement of a contractual amendment to which the parties have otherwise agreed, as I have already found they did here. [172] In summary, I have concluded that the parties did effectively amend the contract in December 2013 to add a $925,000 GMP. B. Did Anway breach the GMP or any other term of the contract? [173] The Owners allege that Anway breached the contract in the following ways: (a) neglecting to properly prosecute the Work (as defined in the contract); (b) failing to obtain substantial performance of the Work by the Completion Date (as defined in the contract); (c) failing to comply with the GMP; (d) failing to have total control over the Work and to effectively direct and supervise the Work so as to ensure conformity with the Contract Documents, including the Completion Date and GMP; (e) failing to be solely responsible for completing the Work; (f) failing to monitor the progress of the Work relative to the construction schedule, and failing to update the schedule on a monthly basis; (g) failing to keep a copy of the current Contract Drawings, submittals, reports and records of meetings at the place of Work; (h) failing to include with its application for payment receipted vouchers or other satisfactory evidence of payment for all items included in its proceeding applications; (i) failing to perform its obligations to complete the Project with due diligence,

reasonable care and skill and in a manner consistent with the objectives of the contracting parties; and (j) failing to adequately protect the Work and the Lands from damage. [174] In addition, the Owners allege the following breaches in relation to the passive house option: (a) failing to have total control over the Work and to effectively direct and supervise the Work so as to meet those standards; and (b) failing to perform its Work in a manner that would ensure they were met. [175] The evidence for the alleged deficiencies in Anway's work is set out primarily in the affidavit of Dr. Hunte. He described them as follows: (a) improper alignment between the roof truss and two windows; (b) departures from the original design, as identified by Mr. Paulsen; (c) use of mouldy wood; (d) poor alignment of concrete forms in the exterior stairwell; (e) incorrect installation of a window well, which prevented a window from being opened; (f) damage to three or four windows during installation; (g) incorrect installation of the insulation in a window well, leaving insufficient room for the wood casing and the window sill; (h) charging for a sewer and plumbing in the backyard that was never in fact installed; (i) ordering an insufficient number of shingles; and (j) failing to schedule the Owner's preferred cabinetry subcontractor when needed, necessitating a more expensive

replacement. [176] Dr. Hunte himself is not an expert. Many of his complaints depend on opinions or hearsay attributed to others. I am only prepared to accept the validity of his complaints about the quality of Anway's work where they are substantiated in the report of Mr. McLean. Mr. McLean compared Anway's billings to the original July 23, 2013 budget in an appendix to his report. In doing so, he was critical of Anway for not having carried out a similar comparison while the project was underway: Appendix B has been prepared to track the costs against the July 23, 2013 budget. Typically this is done by the Contractor as part of their cost reporting and invoicing procedure and is used to track variances from the baseline contract budget. Had this system been in place, it would have allowed the owner to react proactively to variances in the budget and costs. [177] Mr. McLean also found significant cost overruns in four areas: (a) building materials ($54,799), which were 299% over budget; (b) exterior siding, soffit and rain screen work ($76,278), which were 766% over budget; (c) insulation ($26,198), which was 330% over budget; and (d) framing and labour ($154,363), which were 179% over budget. [178] Anway denies any breach of contract on its part. Although it acknowledges that it billed the Owners far in excess of the original contract budget, it argues that the increase in

construction cost was attributable to the many changes that the Owners insisted on making during the course of construction, sometimes after the affected elements had already been built. [179] The Owners deny that they required Anway to make significant changes to the work that was contemplated in the original contract plans. They say that their unwavering objective from the beginning had been to build a compliant passive house, no more and no less. Alternatively, they argue that, to the extent it is found that they did insist on changes, Anway would still be in breach of s. 6.1.2 of the General Conditions for having implemented them without a corresponding "change order" or "change directive" in place. [180] Anway responds that the provisions in the contract dealing with "change orders" and "change directives" could not be followed because they depended upon the appointment of a "Consultant" who was supposed to take certain steps in initiating them. Because the Owners never appointed Mr. Muego as the Consultant, it is argued, those provisions were overtaken by the parties' practice. That practice saw the Owners demanding changes that increased the overall cost and then paying the associated invoices, which they must have known were in excess of the original contract budget. [181] Anway cites a number of authorities, such as Redheugh Construction Ltd. v. Coyne Contracting Ltd.,

(1996), 26 B.C.L.R. (3d) 3 (C.A.) and Martell Brothers Sheet Metal Ltd. v. Granwest Constructors Ltd., [1997] B.C.J. No. 2469 (S.C.), in which other owners were taken to have acquiesced to changes of that kind. Anway argues that this was a "fluid" contract, like the one before the court in G. Elmitt Construction Ltd. v. Kaplan, [1992] B.C.J. No. 428 (S.C.). There, Melnick J. described the situation the parties had created in that case as follows: 69. Thus, as at March 16, 1981, the Plaintiff and the Defendant were actually taking a giant step into the dark together as the Plaintiff had contracted to build, and the Defendant contracted to have built, a dwelling of which neither knew much more than the conceptual details. In fact, when the single family dwelling was actually built, it "grew like Topsy". Dyer, on behalf of the Defendant, virtually designed the house as he went along, moving walls, altering the plans on almost a daily basis as, I find, he got the feel of what the house would look like. Plans which had been approved by the City of Vancouver were adhered to in rough spirit only. To the knowledge of both the Plaintiff and the Defendant (either directly or through his agent) Dyer engaged in creative avoidance of some of the limitations that had been placed on them by the City planners. For example, the home was to have a central basement with crawl spaces under the

north and south wings. In fact, a full basement was constructed with styrofoam used to mark the location of future doors and windows when the walls were poured. False floors were built and skins of lightweight concrete poured over them so as to make it appear that the basement had the required crawl spaces. A large attic was in fact converted to unapproved living quarters with louvered vents being replaced with windows and french doors. At one point, work was stopped because of the fact that inspectors found the plans were not being followed.

70. Needless to say, the whole project took considerably longer to complete than contemplated in the written contract. It started late due to problems in the preparation of plans, the obtaining of approvals, and so on. It also took much much longer to build due to the ad hoc methods used by Mr. Dyer and his specification, on behalf of the Defendant, of ever more exotic materials. The last monthly progress billing submitted by the Plaintiff was on November 4, 1982, a considerable time after the completion date of October 16, 1981 originally contemplated in the written contract.

73. The written contract provided in Article 25 of the general conditions (subject to certain emergencies not here relevant) that no change should be made in the work unless in pursuance of a written order from the designer. Other than a few scattered "change orders" near the beginning of the project, no change orders were supplied by Mr. Dyer, nor were any demanded by Mr. Elmitt on behalf of the Plaintiff. One has to ask, however, what application change orders would have in a situation such as this. At the time of executing the agreement to construct the home, the plans had not been prepared and, in fact, the whole process of construction was a fluid one in which the design and subsequent construction of the home evolved as Mr. Dyer's concepts and plans for the home evolved. Thus, I find, it is difficult, if not impossible, to say that there were any "changes in the work" other than those specifically covered by change orders. [182] Justice Melnick refused to enforce the change order provisions of the contract that was before him in that case, for the following reason (at para. 94): I do not accept the Defendant's argument that written change orders were required for these "extras". As I have already stated, the construction process of this home was a fluid one, with the designer in fact creating the home as he went along. [183] I do not find Anway's arguments

persuasive. [184] First, Mr. McLean's evidence does not support Anway's premise that there was a significant discrepancy between the original contract plans and the work that Anway had actually done as of March 6, 2016. [185] Second, I disagree with Anway's premise that Mr. Muego's failure to act as the Consultant under the contract sufficed to render Part 6 of the General Conditions inapplicable. The form of contract that he prepared stated expressly that he was assuming that role. The fact that he now says that he never did so does not excuse Anway for having implemented changes contrary to s. 6.1.2, if that is what it did. [186] Third, I am not persuaded that the Owners truly acquiesced in Anway's failure to adhere to its obligations under the contract. The circumstances in which contractual terms of the kind in issue here can be superseded by the parties' practice during a construction project were discussed in Kei-Ron Holdings Ltd. v. Coquihalla Motor Inn Ltd. [1996] B.C.J. No. 1237 (S.C.). At para. 41, Levine J. summarised the authorities as holding that for such a waiver to occur, the following conditions had to be satisfied: (a) the work performed was, in fact, "extra work" and not covered by the terms of the contract; (b) the work was in fact authorized by the owner; (c) the owner was aware that the extra work would increase the cost of the project; and (d) the owner

waived the provision requiring changes to be made in writing or acquiesced in the fact that the parties were ignoring those provisions. [187] While it is possible that Anway might be capable of meeting one or both of the first two branches of that test (although a full trial would be required to resolve all of the conflicting evidence I have before me on those questions), I have concluded that Anway must necessarily fail on at least the last two. [188] It was Anway's responsibility under the Contract to monitor whether changes were being made, and if so, to raise their impact on the budget with the Owners in a timely and transparent manner. The Owners could not be expected to know when and how they were exceeding the budget, particularly when some of their choices appeared to be increasing but others reducing the overall cost. [189] Even on Anway's theory that this was purely a cost-plus contract and the GMP was nothing more than an estimate, it has been held that "[a] contractor is obliged to promptly notify an owner if there are cost overruns to a budget estimate in a cost-plus contract": Infinity Construction Inc. v. Skyline Executive Acquisitions Inc., 2020 ONSC 77, at para. 114(h). [190] It was not until late 2015 that Anway told the Owners unequivocally that the original budget was no longer achievable due to the changes that had been made, but that revelation came far

too late to allow them to address the problem. They had no real way of knowing what stage the project had reached at any time before then. In the event, it took them several more months, and a new consultant, to get a clearer picture. By then, there was no chance of completing the project within the budgetary limit of the GMP. [191] Mr. Clisby claimed in his email of December 3, 2015 that the Owners should have known long before then that the original budget was a dead letter. In fact, they had been asking all along for that kind of information, but to no avail. Rather than give it to them, as the contract required, Anway instead let the costs escalate to the point that complying with the terms of the contract became impossible and then blamed the Owners for not having kept on top of matters themselves. [192] For those reasons, I have concluded that Anway is in breach of the contract for having billed the Owners in excess of the GMP and for having failed to exercise reasonable care and diligence in its attention to the work as contemplated by the contract. C. Did Anway make one or more of the pre-contractual misrepresentations that the Owners allege? [193] The Owners allege that Anway made three representations to them before the contract was signed, thereby inducing them to retain Anway to carry out the project and to proceed with the passive house option. The representations

are alleged to have been false, inaccurate and negligently made. They were as follows: (a) that the project would cost $746,823 plus tax, including all building and construction work and Anway's fee, but excluding landscaping and appliances (the "First Cost Representation"); (b) that it would cost an extra $20,000 plus tax to meet passive house standards (the "Second Cost Representation"); and (c) that Anway had the requisite skill and experience to complete the project and meet passive house standards (the "Qualification Representation"). [194] Anway denies that it made any misrepresentations. [195] With respect to the First Cost Representation, it is not disputed that Anway responded to the RFP on July 23, 2013 with a bid of $746,823. Mr. Clisby acknowledged in his examination for discovery that he prepared that bid without seeking quotes from suppliers or subcontractors. [196] The Owners have not demonstrated, however, that Anway knew or should have known at the time that it was going to be unable to complete the project at that price. On the contrary, Mr. McLean concluded that the cost of the project should have fallen in a range of between $900,000 and $1,030,000. Anway's original bid was based on RFP specifications that did not include the cost of meeting passive house standards or the cost of landscaping and appliances. According to Mr. McLean, the increase in Anway's

estimate from $746,823 to $925,000 to account for those additional items was reasonable. Anway's ability to complete the project on time and on budget, but without the passive house component, was never tested. I am therefore not persuaded that the First Cost Representation was shown to be false, inaccurate or misleading, as the Owners allege. [197] With respect to the Second Cost Representation, the Owners have not proven that Anway represented to them that it would cost them no more than $20,000 extra (plus tax) to meet passive house standards, as they allege. [198] That allegation appears to be based primarily on Mr. Clisby's email to Dr. Hunte and Mr. Muego of October 8, 2013. What Mr. Clisby told them in that email was that he believed that it would cost an extra $18,728 (plus tax) over Anway's original budget to use Smallworks as the supplier of those specific items for which Smallworks had recently given them a quote. Mr. Clisby added that the Owners could probably expect the cost of meeting passive house standards to increase the original budget by another $50,000 - $55,000, for a total of approximately $73,728. He also told them that he had only "looked into this a little bit" and that his advice in that regard was based on "what I can read off your quote" (from another consultant). Mr. Clisby qualified his advice further with the following caveat: "we would really

need a meeting with the passive guys like we did with Jake, so we understand some of their hidden fees and costs." [199] Neither in that email or anywhere else in the evidence did Anway make an unqualified representation to the Owners as to the anticipated extra costs of meeting passive house standards. Anway did not profess to know what they would be. On the contrary, Mr. Clisby told them that, as far as he was concerned, at least some of the extra fees and costs associated with building a passive house were "hidden" and would have to be sought from other, more specialised, consultants. The Owners continued to seek advice on that topic directly from Red Door and others, and without always involving Anway, well into 2015. [200] Finally, with respect to the alleged Qualification Representation, while I accept that Anway represented, at least impliedly, that it had the skill and experience to complete the project apart from the passive house component, the Owners have not proven that that representation was false, inaccurate or misleading. The Owners argue that Anway represented that it had extensive experience with new builds, whereas its actual experience was mainly with renovations. The evidence did not go that far, however. Mr. Clisby testified on his examination for discovery only that Anway has done no new builds since this project. Anway was not shown to have

misrepresented its previous experience in that regard either. [201] Nor have the Owners proven that Anway represented to them that it had the ability to build a compliant passive house as such. Although Mr. Muego reported to the Owners that Anway was "an Energuide approved builder" with "experience building these types," it is clear from the context that Mr. Clisby had referred only to Anway's experience with "continuous outbound insulation." Mr. Clisby testified on his examination for discovery that he did not know at that stage what a passive house was. The conversation he had with Mr. Muego dealt, he said, solely with Anway's previous experience building "an airtight or a house with extra insulation in it." Although Mr. Clisby claimed to have that experience, that particular statement was not shown to be false, inaccurate or misleading. [202] In summary, I am not persuaded that Anway made any of the pre-contractual misrepresentations that the Owners allege. D. Liability and Damages [203] I have found that Anway breached the contract by billing the Owners in excess of the GMP and by failing to exercise reasonable care and diligence in its attention to the work as contemplated by the contract. [204] On the other hand, I have rejected the Owners' allegation that Anway made pre-contractual misrepresentations. With no misrepresentations in evidence, there can be no liability in

tort or under the BPCPA. [205] What remains to be determined is the amount of damages that will compensate the Owners for the two breaches of contract that I have found. [206] The Owners claim damages as follows: (a) Additional Construction Costs, including: Markana's fees: $120,250.78 Trades managed by Markana: $830,824.02 Anway's lien claim (paid into trust): $117,456.17 Other lien claims (paid into trust): $35,679.09 Total: $1,104,210.06 (b) Rental and Moving Costs $115,034.58 (c) Storage Costs: $12,361.06 (d) Laneway House: $135,000.00 (e) Financial Interest and Borrowing Costs: $94,177.11 Total: $1,460,782.81. [207] The Owners also seek orders: (a) dismissing Anway's claim; (b) compelling Anway to deliver the wood from a Douglas Fir tree that was removed from the Property and milled; and (c) compelling Anway to deliver a vacuum that they paid for but have not yet received. [208] With respect to the damages payable, the Owners are entitled to be placed in the position they would have been in had Anway properly performed. In that event, Anway would have completed the work according to the original contract specifications within ten months, at a maximum cost of $925,000, plus GST. The Owners acknowledge that Anway was not responsible for that part of the delay running from the demolition of the old house in December 2013 until the commencement of construction of the new one

in October 2014. It follows that the project should have been complete at that cost by no later than the end of 2015. [209] Mr. McLean concluded that $925,000 (excluding GST) was a reasonable pre-estimate of the cost of the project but that, as of March 6, 2016, the value of the work that Anway had actually done was worth only $516,720 (excluding GST), or about 56% of the GMP. [210] By then, the Owners had paid Anway and its suppliers and subcontractors a total of $924,541.56, which was nearly the entire GMP. Adding 5% GST to the $925,000 GMP yields a total budget of $971,250, leaving $46,708.44 that the Owners would still have had to pay to complete the project with Anway as their contractor, assuming Anway had completed the project on time and on budget. [211] Mr. McLean also concluded that the additional cost to complete the project with a replacement contractor could be expected to fall somewhere between $503,000 and $549,000. He arrived at that range by multiplying the remaining amount left in the pre-tax budget ($408,280) by 1.12 (to reflect an estimated 12% increase in construction costs that had occurred in the interim) and 1.1 or 1.2 (to reflect the estimated 10% to 20% in extra costs that could be expected to flow from having to engage a replacement contractor). [212] The Owners have not explained why it ultimately cost them so much more than that to get the job done

with Markana, let alone connected that extra cost to Anway's breaches. Without such a connection, the damages must be calculated on the assumption that the Owners should have been able to complete the project at an additional cost falling somewhere within Mr. McLean's posited range. [213] Using the midpoint of Mr. McLean's range ($526,000) and adding 5% GST ($552,300), I calculate the additional construction costs made necessary by Anway's breaches at $552,300 - $46,708.44 = $505,591.56. [214] In addition, Anway must compensate the Owners for the payments they made into trust to clear the liens ($117,456.17 and $35,679.09), payments that would not have been necessary but for Anway's breaches. The $117,456.17 held in trust to pay Anway's lien claim, which is without merit in light of my conclusions, should be returned to the Owners. [215] The additional construction costs I am awarding as damages are therefore $505,591.56 + $117,456.17 + $35,679.09 = $658,726.82. [216] The Owners claim the cost of rental payments they made for alternative accommodation from December 2015 to April 2017, totalling $113,748.33. Attached to Dr. Hunte's affidavit are receipts for the payments they made to rent the property on West 8th Avenue, as follows: Rental Period Amount December 13-31, 2015 $4,170 January 2016 $6,950 February 2016 $6,950 March 2016 $6,950 April 2016 $6,950 May 2016 $6,950 June

2016 $6,950 July 2016 $6,950 August 2016 $6,950 September 2016 $6,950 October 2016 $6,950 November 2016 $6,950 December 2016 $6,950 January 2017 $6,950 February 2017 $6,950 March 2017 $6,950 April 1-23, 2017 $5,328.33 Total $113,748.33 [217] Based on that evidence, I accept that those payments are recoverable in damages. [218] The Owners claim $1,286.25 for the cost of moving to new accommodations in September 2015, December 2015 and April 2017. Dr. Hunte deposed that the reason they had to move so frequently was that Mr. Clisby had promised them in September 2015 that they would be able to move into the new house by Christmas 2015. Relying on that promise, he says, they secured only a short-term rental from September to December 2015 and then had to move a third time in April 2017. [219] Had the project been completed by the end of 2015 as promised, the Owners would still have had to move into short-term accommodation in September 2015. They would also have had to make a second and final move into the new house when it was ready in December 2015. On that basis, they are entitled to be compensated only for one extra move. Attached to Dr. Hunte's affidavit are receipts for moving costs totalling $1,286.26. I am awarding the Owners one third of that amount in damages, or $428.75. [220] The Owners claim storage costs totalling $12,361.06, reflecting the sum of $6,037.31 (for the

rental cost of a Big Steel Box), $3,733.75 (for the rental cost of a FrogBox) and $2,590 (for the rental cost of a Tolmie Locker), that they incurred between September 2015 and September 2017, as follows: Date Big Steel Box FrogBox Tolmie Locker September 2015 $973.95 $100 October 2015 $207.24 $100 November 2015 $207.24 $100 December 2015 $207.24 $100 January 2016 $207.24 $100 February 2016 $207.24 $100 March 2016 $207.24 $638.62 $100 April 2016 $207.24 $100 May 2016 $207.24 $100 June 2016 $207.24 $100 July 2016 $207.24 $873.60 $100 August 2016 $207.24 $100 September 2016 $207.24 $100 October 2016 $207.24 $100 November 2016 $207.24 $100 December 2016 $207.24 $798.56 $100 January 2017 $207.24 $100 February 2017 $207.24 $100 March 2017 $207.24 $100 April 2017 $207.24 $100 May 2017 $459.24 $100 June 2017 $174.76 $100 July 2017 $174.76 $1,093.69 $130 August 2017 $174.76 $130 September 2017 $142.28 $329.28 $130 Totals: $6,037.31 $3,733.75 $2,590 [221] I have accepted that the Owners should have been able to move into their new house in December 2015 but were delayed in doing so until April 2017 due to Anway's breaches. On that basis, I am awarding the Owners their storage costs for that period only. The charges italicized in the table above fall outside of that period. After subtracting those, the remaining damages for storage costs are as follows: Big Steel Box: $6,037.31 -

$2,514.23 = $3,523.08 FrogBox: $3,733.75 - $1,422.97 = $2,310.78 Tolmie Locker: $2,590 - $890 = $1,700 Total: $7,533.86 [222] The Owners claim $135,000 to compensate them for the loss of the laneway house that they were unable to build, despite their plans, because of the budgetary constraints imposed on them by Anway's breaches. The award I am making will compensate them for the additional construction costs they had to bear to complete the project according to the original contract specifications, as calculated by Mr. McLean. It would be superfluous to compensate them, in addition, for the cost of building a laneway house or the lost rental revenues it could have generated. I am therefore awarding no damages in that category. [223] The Owners claim $94,177.11 to compensate them for the additional interest and borrowing costs that they incurred to complete the project. Although the Owners spent $1,104,210.06 in additional construction costs, I have awarded them only $505,591.56 + $117,456.17 + $35,679.09 = $658,726.82, or about 60% of the amount claimed in that category. Anway should only have to bear the additional interest and financing costs attributable to the additional construction costs that the Owners incurred due to its breaches. Applying that percentage to the amount claimed yields a net damages award of $94,177.11 x 60% = $56,506.27. [224] The Owners seek, relying

on s.7.3.1 of Article A-7 of the contract, to have pre-judgment interest added to their damages at the rate of 6.95%. The interest payable on this judgment is governed by the Court Order Interest Act, R.S.B.C. 1996, c. 79 [COIA]. With respect to pre-judgment interest, the relevant provisions are ss. 1(1) and 2, which state, in relevant part, as follows: 1 (1) Subject to section 2, a court must add to a pecuniary judgment an amount of interest calculated on the amount ordered to be paid at a rate the court considers appropriate in the circumstances from the date on which the cause of action arose to the date of the order. 2 The court must not award interest under section 1 (b) if there is an agreement about interest between the parties [225] I am not persuaded that there is "an agreement about interest between the parties", at least not one that is relevant to the Owners' claim. Paragraph 7.3.1 of the contract applies only where either party fails to make a payment after it had fallen due under the contract or by an award of an arbitrator or a court. The damages I am awarding now were not previously due in that sense. Interest will therefore be payable, both pre- and post-judgment, pursuant to the COIA. [226] Finally, I agree with the Owners that they are entitled to have the milled wood and vacuum retained by Anway delivered to them. VII. Summary and Conclusion [227] I am

making the following orders: (a) Anway's claim is dismissed; (b) the Owners are granted judgment on the counterclaim in the following amounts, plus interest under the COIA where applicable: (i) $658,726.82 in additional construction costs; (ii) $113,748.33 in rental accommodation costs; (iii) $428.75 in moving costs; (iv) $7,533.86 in storage costs; and (v) $56,506.27 in additional interest and financing costs, Total: $836,944.03; (c) Anway must, as soon as reasonably practicable, deliver the wood and vacuum belonging to the Owners to them; and (d) the funds held by the Owners' counsel in trust to secure payment of outstanding lien claims are to be paid to the lien claimants, except that the amount held in respect of Anway's lien claim shall be paid to the Owners in partial satisfaction of this judgment. [228] Subject to any further submissions the parties may wish to make, I am also awarding the Owners their costs for the entire proceeding at the ordinary tariff. "Milman J." Schedule - Rulings on objections to Clisby Affidavit #1 Objection Basis of Objection Ruling 1. para. 7 - reference to the email from Mr. Muego to Dr. Hunte dated July 24, 2013, attached as Exhibit "E" Hearsay The exhibit is not admissible through Mr. Clisby for the truth of its contents. Mr. Clisby's description of it is also inadmissible. 2. para. 9 - (entire paragraph) reference to email dated August 12,

2013 from Mr. Muego to Dr. Hunte, attached as exhibit "F" Hearsay The exhibit is not admissible through Mr. Clisby for the truth of its contents. Mr. Clisby's description of it is also inadmissible. 3. para. 11 (entire paragraph) - reference to email dated November 19, 2013 from Mr. Muego to Dr. Hunte, attached as exhibit "H" Hearsay The exhibit is not admissible through Mr. Clisby for the truth of its contents. Mr. Clisby's description of it is also inadmissible. 4. para. 12 (last sentence) - characterisation of email from Mr. Muego to Dr. Hunte dated November 28, 2013, attached as exhibit "I" Argumentative The impugned sentence is inadmissible argument rather than evidence. 5. para. 14 (entire paragraph) Hearsay, opinion and argumentative Admissible - the paragraph contains factual, first-hand observations. 6. para. 15 (entire paragraph) Hearsay and argumentative Admissible - the paragraph contains factual, first-hand observations. The last sentence may or may not be hearsay (it is not clear), so I have given it little to no weight. 7. para. 16 (entire paragraph) - summary of email chain between Kelvin Lee and Dr. Hunte, attached as exhibit "K" Hearsay and irrelevant Inadmissible hearsay. 8. para. 19 (3rd to last and last sentences) Argumentative Admissible as descriptions of Mr. Clisby's contemporaneous state of mind in sending the email. 9. para. 21 (last three

sentences) Argumentative Admissible as explanatory of his contemporaneous communications and Anyway company policy. 10. para. 22 (entire paragraph) Hearsay; argumentative Inadmissible argument. 11. para. 23 (entire paragraph) Argumentative Admissible as factual, first- hand observations about his lack of involvement in the creation of the document. 12. para. 24 (entire paragraph) Hearsay; argumentative Inadmissible argument. 13. para. 25 (entire paragraph) Hearsay; argumentative The statement that the Architect "was actively involved throughout the Project during the entire time the Plaintiff was working on the Project" is admissible as a first-hand observation. The rest of the paragraph is inadmissible argument. 14. para. 26 (entire paragraph) Hearsay; argumentative Admissible as to his own state of mind; inadmissible as to the state of mind of Mr. Muego. 15. para. 27 (first sentence) Hearsay; argumentative Inadmissible hearsay or opinion. 16. para. 28 (entire paragraph) Hearsay; opinion Admissible only to describe Mr. Clisby's contemporaneous state of mind, not for the correctness of his opinion. 17. para. 29 (entire paragraph) Hearsay; argumentative Inadmissible hearsay. 18. para. 30 (entire paragraph) Hearsay; argumentative Inadmissible hearsay and argument. 19. para. 31 (entire paragraph) Hearsay; argumentative Inadmissible hearsay. 20. para. 32 (entire paragraph) Hearsay;

argumentative Inadmissible hearsay. 21. para. 33 (entire paragraph) Hearsay; argumentative Inadmissible hearsay. 22. para. 35 (entire paragraph) Hearsay; argumentative Inadmissible hearsay and argument. 23. para. 39 (entire paragraph) Hearsay; argumentative Admissible insofar as the statements are based on direct knowledge, rather than his interpretation of the emails to which he was not privy. Given the uncertainty, I have accorded this paragraph little to no weight. 24. para. 40 (entire paragraph) Hearsay; argumentative; irrelevant Inadmissible hearsay and argument. 25. para. 42 (second half of first sentence and entire last sentence) Argumentative Admissible as a factual recollection of his experience working with the Owners. 26. para. 45 (entire paragraph) Hearsay; argumentative Admissible only insofar as he describes his own recollections, otherwise inadmissible. 27. para. 46 (last sentence) Argumentative Inadmissible argument. 28. para. 48 (entire paragraph), attaching exhibit "MM" Argumentative The exhibit is admissible. I have given little to no weight to Mr. Clisby's description of it. On the other hand, his statement as to the frequency with which invoices were issues is admissible as a first-hand recollection. 29. para. 49 (entire paragraph) Argumentative Admissible insofar as it reflects Mr. Clisby's first-hand recollection. 30. para. 50 (entire

paragraph) Argumentative Admissible insofar as it reflects his first-hand recollection, except for the last sentence, which is inadmissible argument. 31. para. 51 (entire paragraph) Argumentative Admissible insofar as it reflects Mr. Clisby's first-hand recollection. 32. para. 52 (last half) Argumentative Admissible insofar as it reflects Mr. Clisby's first-hand recollection. 33. para. 55 (entire paragraph) Argumentative; hearsay Inadmissible hearsay and argument. 34. para. 58 (entire paragraph) Hearsay; vagueness Inadmissible as unattributed hearsay.