Narduzzi v. Richardson

2009 BCSC 1254 Narduzzi v. Richardson IN THE SUPREME COURT OF BRITISH COLUMBIA Citation: Narduzzi v. Richardson, 2009 BCSC 1254 Date: 20090914 Docket: S072538 Registry: Vancouver Between: James Bruce Narduzzi dba Ultimate Construction Plaintiff And David Richardson Defendant Before: The Honourable Mr. Justice Cullen Reasons for Judgment Counsel for the Plaintiff T. Goepel Counsel for the Defendant F.R. Eadie Date and Place of Trial/Hearing: March 9 - 13; 16 - 20, 2009 Vancouver, B.C. INTRODUCTION [1] In this builder's lien action, the plaintiff, James Narduzzi, a building contractor, filed a builders lien for $272,000 as the amount owed to him for renovations performed on premises at 3656 West 1st Avenue, Vancouver (the "Property") owned by the defendant, David Richardson. [2] The defendant resists the plaintiff's claim on the basis that there are deficiencies in the work done, which reduce its value, and that the work done without deficiencies does not have the value attributed to it by the plaintiff. [3] The defendant counter-claims for damages attributable to the deficient and incomplete work. He submits that the court should award him damages equivalent to his mortgage interest payments made between August 2007 when the renovation should have been complete, and March 5, 2009 when the house was sold. [4] The defendant is a real estate salesman. He and the plaintiff worked together on a number of development projects over the years and became friends. The defendant purchased the Property by Agreement dated November 24, 2005, which called for a completion date of February 15, 2006. The Property was financed in part by a first and second mortgage. [5] In January and February 2006, the defendant had a discussion with the plaintiff about renovating the Property. The defendant had purchased the Property for his personal use, rather than to re-sell or rent. At the time of the purchase, the Property had three rental suites. In the course of the parties' discussion, according to the plaintiff, the defendant told him he had a budget of between $250,000 - $300,000. According to the defendant, the amount discussed was $200,000 - $250,000. The defendant agreed that later on in the course of the year after the renovations started, the plaintiff told him that the costs may increase by around $50,000. [6] It was agreed that the defendant would put up $100,000 for the project and the plaintiff would finance the remainder, charging the defendant for his costs and 6% interest on the amount outstanding. The plaintiff testified that because the parties were friends, he did not propose to charge either a management fee or to otherwise make a profit on the transaction. [7] Work on the Property commenced in April 2006. No development permit or building permit was sought or acquired for the renovations and no plans were drawn until June or July 2006. The house had a basement level, main floor and upper level. Because of the three suites it had been converted into, it had several closed off areas on the main floor. The exterior cladding was asbestos shingle. The original plan discussed by the plaintiff and defendant, according to the plaintiff, was simply to remove the walls in the main floor, and to create a new open space with a kitchen, dining room and powder room. On the basement floor, the plan was to build a family room, study, storage area and bathroom, and on the top floor, the plan was to build a master bedroom and an en-suite bathroom and a second bedroom. On the exterior, the asbestos shingles were to be removed and the original cedar shingles under the asbestos were to be retained and patched where necessary. In addition, all the windows were to be replaced. [8] As the renovation progressed, certain changes were made to the original plan. The plaintiff claims that those alterations created delays and added to the cost of the renovations such that by February/March of 2007, the cost had escalated to $371,000 and there was further work to be done and costs to be incurred. The plaintiff was becoming concerned with the amount he was financing and he sought some security from the defendant to protect his investment of time and money. The defendant for his part was also concerned with the escalating costs and sought some confirmation from the plaintiff of the legitimacy of the cost relative to the nature and quality of the work done. In January 2007, the defendant retained an architect, a structural engineer and a builder to review the renovations done and remaining to be done to "get a handle" on the costs which were being incurred. [9] While it is clear that no permits were obtained for the work, the parties differ on whether the defendant was aware of the absence of permits and, indeed, whether he instructed the plaintiff to proceed without permits, or whether he was not aware until February 2007 that no permits had been applied for or obtained. [10] In support of his claim of lien, the plaintiff testified himself and called several of his employees or former employees who had worked on the property as witnesses. In particular, he called Tim Sas, a carpenter who was the foreman of the project and responsible for most of the carpentry work done; Darren Cleaver, a carpenter with about 25 years of experience in construction; Richard Hoover, a carpenter; and Royce Dawson, who did some of the tiling work on the premises. [11] In his case, the defendant testified and also called as witnesses various professionals he retained beginning in early 2007 when the issues related to the increase in costs which were being financed by the plaintiff came to a head between the parties. The defendant called Eric Stine, an architect, who acted for him in pursuing a development permit and building permit for the property renovation; Roger Artis, a civil engineer who prepared two expert reports, the first dated June 7, 2007 relating to a valuation of the work in place done by the plaintiff and the second dated November 25, 2008 relating to the cost of remediating the asserted deficiencies in the work to bring it up to code; Henry Hsu, a structural engineer retained by architect Stine to do structural drawings of the renovations for the permits and to do site inspections; and, Ben Keong, a contractor involved in the home renovation and building business who reviewed the plaintiff's work and identified what he asserted to be deficiencies requiring remediation and who also reviewed the plaintiff's costs, identifying some asserted errors. The defendant also called Adrian Cashato, a building inspector with the City of Vancouver and Sam Pellegrino, a plumbing contractor on the renovation. [12] In addition, the defendant called a friend of his named Valerie Neufer, who testified as to his apparent state of mind at the outset of the renovations with respect to the building permit issue. [13] In the result, the plaintiff, after conceding some of his claims against the defendant were not justified, sought damages of $229,776.30 plus interest of $27,913.07 for a total award of $257,689.37. [14] In contrast, the defendant asserted that the value of the plaintiff's work after adjusting for the $100,000 payment which he made was $82,099 and that the plaintiff was liable to the defendant for interest expenses for the mortgages on the Property from August 2007 to March 2009, amounting to $112,887. The defendant submits, based on those calculations, he is entitled to a net judgment in the amount of $34,326 from the plaintiff. THE PLAINTIFF'S EVIDENCE (1) James Narduzzi [15] Mr. Narduzzi testified he is 48 and had been building homes for 20 years. He described himself as self-trained and as having built two to three speculative homes per year and having done "lots of renovations." He is registered as a builder with the New Home Warranty Program and has been for five years. He met Mr. Richardson through business, 7 to 8 years earlier and also spent time with him socially. [16] In January or February of 2006, he had some discussions with Mr. Richardson about the Property. The house had three suites and Mr. Richardson wanted to renovate it to become a single family home for his own use. [17] He testified that initially, Mr. Richardson wanted to "gut" the inside and change the windows. He asserted the discussions started at taking out all the interior down to the studs and upgrading the heating, plumbing, and electrical. The asbestos shingles were to be removed to expose the cedar shingles underneath. Originally, the renovation was to be funded by Mr. Richardson paying the first $100,000 and Mr. Narduzzi financing anything over that amount - "cost, material, labours - everything." [18] He testified the figure that had been discussed between himself and Mr. Richardson was $250,000 - $300,000 and he did not remember any discussion about what would happen if costs increased. He described the agreement as "cost plus" but because Mr. Richardson was a friend, he would only charge interest on the money he spent over $100,000. He said he agreed to that because they were at that time friends. [19] Mr. Narduzzi asserted that Mr. Richardson told him that because the building was non-conforming, any building permit would require him to move the house one foot to the east. He said Mr. Richardson "realized he might not be able to get a permit and did not want to have to move his home." There was some discussion about the length of time involved in the renovation. He testified they were talking about 6 months. [20] Mr. Narduzzi testified that in May or June, as the demolition was proceeding, Mr. Richardson engaged his former wife, Linda Richardson, as a designer, and the plaintiff was to create a plan to reflect what she and Mr. Richardson wanted done to the interior of the home. [21] In June or July the plaintiff drew up plans and sent them to an engineer for his approval. The plans were approved but, because there were no permits, the plaintiff did not call upon the engineer to visit the site to approve the renovations in accordance with the plans. [22] Mr. Narduzzi testified that in the basement, some bearing walls had to be taken out and thus 3 new footings were poured for pillars to carry the load. The plaintiff poured the footings and built a storage area to support the upper deck. The footings were 36 by 36 inch pads. In addition to the storage room, a bathroom, and laundry room were added and a window was added to the family room. [23] On the main floor, the construction was quite extensive as the defendant wanted essentially an open space with no walls. After the floor was gutted, the plaintiff installed a parallam beam with a post in the middle to replace a bearing wall. A powder room was added, the stairs were reconfigured and a fireplace with two windows on each side was added. In addition, new closets and a new front door and a new window in the living room were added. The kitchen was re-designed, but using the same dimensions as existed previously. The decks were re-done, although they remained the same size as before. The porch on the front of the house was kept the same size but was re-furbished with architectural details added. On the top floor, the ceiling was vaulted with a ridge beam running north to south, and a master bedroom was added. The rear deck on the upper floor had been enclosed. It was opened up and French doors were added to provide access to it. A walk-in closet was added and all the interior walls were re-framed. [24] The plaintiff testified that discussions between himself and the defendant were ongoing as the project proceeded even after the plans had been created. During the renovation, the defendant retained Alannah Stewart to assist in the design and to choose some of the cabinetry and other finishing details. The plaintiff testified that Ms. Stewart told him that costs were not an object. However, he testified that Mr. Richardson did express concerns about costs and he had a figure he wanted to meet, but according to the plaintiff, he told the defendant it would cost more to give him what he wanted. [25] The plaintiff said that he was at the site regularly and the defendant did not express concern about the pace of the renovation until near the end in the latter part of 2006 or early 2007. The plaintiff testified that he explained to the defendant that the changes which had been made took time to incorporate and that other delays such as the designer's failure to order the kitchen cabinets also caused delay. The plaintiff explained that the kitchen cabinets were ordered by the defendant and the plaintiff could not install the flooring in the kitchen until after the cabinets themselves were installed. [26] The plaintiff also testified some delay was attributable to the defendant's ordering of tile in the bathrooms and the addition of an enclosed patio on the north side of the house. Further delay was caused when the defendant asked the plaintiff to remove all the shingles so that he could hire another contractor to finish off the exterior of the Property. The plaintiff testified that that added time and caused expense as well. The plaintiff testified he also did additional work to the garage by adding a new roof, new facia, a new window and a new entry door. [27] The plaintiff testified that the fireplace which had been added on the main floor in accordance with the defendant's request had to be removed because the adjacent neighbour complained because the fireplace would have vented directly toward to his house. As a result, the defendant directed the plaintiff to change the location of the fireplace and to have it vent through the ceiling. That added costs and caused delay. The plaintiff testified that the reason the defendant did not insist on venting the fireplace out the side in accordance with the initial plan was because he was aware that there were no permits. [28] The plaintiff testified several other changes were made including changes to the bathroom wall in the top floor bathroom, the location of the baseboard heater in the family room in the basement, and in the basement bathroom, the bathtub was changed to a shower. There were also changes to the front porch and front stairs, which were not finished at the time the defendant terminated the plaintiff's involvement with the project in February 2007. [29] In the basement area, where the plans originally called for the installation of a new window, the defendant changed the window to French doors opening onto a new sunken patio. Throughout the renovation, the tiles, cabinets and the appliances were chosen and ordered by Alannah Stewart and the plaintiff paid for them. Mr. Narduzzi described both Mr. Richardson and Ms. Stewart as "having good taste and expensive taste." [30] In his evidence, Mr. Narduzzi was shown two cheques drawn on the defendant's account payable to him for $50,000 each, dated April 28, 2006 and October 15, 2006 respectively. He testified the October cheque was delayed because the defendant was trying to get financing. Mr. Narduzzi identified some changes to the original plans; a skylight was added, the front stairs were changed from stamped concrete to scored concrete, the location of the baseboard heater in the media/living room in the basement was changed, and mouldings installed in the master bedroom were removed. [31] Mr. Narduzzi testified that some additional work was required due to his mistakes. There were cracks in the basement floor and the flashing on the new windows had to be painted black. [32] He said the tiles and the kitchen cabinets were chosen and ordered by Alannah Stewart in consultation with Mr. Richardson. As the project progressed, Mr. Narduzzi provided Mr. Richardson with summaries of his running total of costs for labour and materials. [33] The plaintiff testified that all the various changes that were made to the project were directed either by Alannah Stewart or by the defendant himself. The tiles, cabinets and appliances were chosen and ordered by Alannah Stewart and the defendant paid for them. [34] Mr. Narduzzi testified that there were some major changes to the project from the original discussions in January and February, 2006 when the timing and cost of the renovation was initially discussed. [35] In the basement, the French doors were substituted for a window on the north side of the house and a sunken patio was added. In the basement bathroom, a bathtub was installed then removed, in favour of a shower which necessitated modifications to the plumbing. [36] On the main floor, modifications were made to the front porch which were not originally called for. The powder room originally had a vanity sink and that was changed to a pedestal sink. [37] Mr. Narduzzi also testified delays were caused by a failure of the designer, Ms. Stewart, to order tiles or kitchen cabinets in a timely way. [38] On the top floor, the plaintiff asserted that the vaulted ceiling was not originally called for, the double French doors were added to provide access to the deck from one of the bedrooms and additional walls were to be removed on the top floor beyond what was discussed originally. [39] He testified as well there were unanticipated changes to the garage, where a new roof and a new door were added and the exterior of the garage was stripped. [40] In cross-examination, Mr. Narduzzi testified that the plans he drew up did not reflect the discussions he had before the commencement of work, but rather they incorporated the changes decided after the initial discussions concluded. [41] Mr. Narduzzi was cross-examined on his evidence from his examination for discovery where he testified as follows at questions 182 - 194: Q So you were going to do this for free for him? Obviously he was going to pay you for the costs but you weren't going to be charging for your services; is that right? A Correct. Q How did you know what to do on the project? There's no plans, I take it. You weren't given a set of plans as to what you were supposed to do; is that correct? A I drew up some plans. Q Are these part of this new production you produced this morning? A Yes. Q When were these plans drawn up? A I think they were done in June, I believe. Q Last year, 2006? A Correct. Q Did you provide a set to Mr. Richardson? A Yes. They were on site. Q So when he came back and looked at it you would have gone over the plans with him? A Correct. Q Do you have a record of any kind, either plans or pictures or anything, that would indicate what the state of the house was before you started work? A No. Q And how did you develop these particular plans? A I measured the house and did it on Autocad. Q I'm inferring from what you're telling me that you and Mr. Richardson get together and he tells you what he wants the house to look like; is that correct? A Yes. Q So you walk through the house and say, for example, we'd like to take down this wall, whatever? A Correct. Q And he verbally describes to you what he would like to achieve? A Yes. Q Then you take that information and you draw up these plans that are in your second supplementary list of documents? A Yes. [42] He agreed that he testified to that effect and that his answers were true, when he testified that the plans were based on discussions with Mr. Richardson when they went through the house in June. He said when the plans were done, the project was not the same as when the initial discussions involving a budget of $250,000 - $300,000 took place in January and February of 2006. He testified he could not recall if he told Mr. Richardson that the original figures were unrealistic in June 2006. [43] Mr. Narduzzi was also cross-examined as to whether he and Mr. Richardson discussed the issue of the building or development permits before the project commenced. He testified they had discussed the building permits. His evidence in his examination for discovery in questions numbered 209 to 218 was put to him as follows: Q Did you and Mr. Richardson discuss the issue of obtaining a building permit or development permit? A No. Q Why were you proceeding with work even though you knew a building permit was required and obviously one had not been issued? A Because of the time he wouldn't get a building permit. Q Did you discuss that with him? A Yes. Q What did you say to him? A The fact that he wanted to put extra windows on the side of the house you weren't allowed to do because of side yard setbacks; the fireplace he wanted to put in you couldn't do and he didn't seem to care. Q Did you tell him that before you started work somebody should apply for a building permit? A No. Q So as far as you know, Mr. Richardson may or may not have known that a building permit was required? A I'm not sure. Q Did he indicate in any way to you that he was relying upon you to obtain whatever was necessary in that regard? A No. Q There was just no discussion about it at all? A We both knew there was no permits in place when we started doing the house. Q You knew that a building permit was required; you've already told me that? A Legally, yes. Q And you don't know whether or not that information was passed on to Mr. Richardson? A I'm not sure. [44] Mr. Narduzzi acknowledged that he had given those answers to those questions, but testified he was not sure if it was true. He was asked if he was changing his evidence and he indicated he "could not answer that right now." He testified Mr. Richardson "knew there were no permits from day one", he added "he [knew] there was no permits from what I told him. If he understood or not, I'm not sure." [45] Mr. Narduzzi was asked whether he knew the city required a fire rated west wall on the building. He testified he knew glass would have to have wire in it, but he did not know the wall needed to be fire rated. He said without permits he had "no idea" of the requirements for a fire rated wall. He asserted that 99% of the building was to code. [46] Mr. Narduzzi acknowledged when he drew up the plans, he included on them an assertion that they were "issued for building permit application". He testified he put that on to "get the engineer to stamp the plans" and he agreed he deceived the engineer because he "wanted to get the home engineered properly". He understood that if a development permit was required to build or renovate a building, the city had broad discretion in the look of the building. [47] He was unsure whether the city told Mr. Richardson that he had to change the porch, the windows and the stucco on the exterior of the house. He testified that he never told Mr. Richardson of the need for a development permit or even mention the subject to him. He testified he had applied for four or five development permits before. [48] He acknowledged that the work done followed the plans he drew up, but denied being the designer of the home. He testified he drew the plans based on what he was told by firstly Mr. Richardson's ex-wife, and secondly, Alannah Stewart. [49] Mr. Narduzzi did not get the framing inspected before the drywall was installed. He maintained that there was an appropriate six-by-six inch post and foundation put in the family room in the basement to carry the load of the main floor, despite assertions by a building inspector and a structural engineer that there was no such post. [50] Mr. Narduzzi acknowledged the plans did not show space for the furnace in the basements or the hot water heater, but he said that they could go behind the stairs. He agreed he did not set aside specific space for the furnace in his plans. [51] Mr. Narduzzi agreed he put in no new footings for the stairs, but disagreed that they were needed. [52] He testified the ventilation of the soffits was to be by "puck venting", which had not been put in when the work terminated. He said his sub-contractor would ensure there was sufficient air flow into the attic from the venting. [53] Mr. Narduzzi testified that on the parapets around the decks, the parapet wall at the top was vented under the flashing and puck vents were to go on at the end. He said that there was adequate water-proofing membrane in the parapets. [54] He agreed the floor levelling in the basement was deficient and that the electrical panel in the basement did not allow sufficient access and would have to be moved. He said the electrical contractor would do that for free, but he acknowledged there was no hold-back in the payment to the contractor. [55] He agreed the bathroom in the basement had to be adjusted for the heating system which was not included in his plans, but he disagreed that that was why the tub was changed to a shower as he said they fit in the same space. [56] Mr. Narduzzi did not agree that there was nothing carrying the weight of the primary beam to the basement or that the main floor under the post was dished because of the lack of support. (2) The Evidence of Tim Sas [57] Mr. Sas is a carpenter who works for the plaintiff. He worked on the Property as a carpenter and as the foreman of the project, supervising the other employees and organizing the sub-trades. Mr. Sas testified he understood the original scope of the project to be an "interior upgrade project" with some exterior upgrades including changing the windows, adding trim, and patching cedar shakes as needed. On the interior main floor, the plans called for the replacement of a bearing wall with a post and beam, a kitchen update, installation of a fireplace and a new powder room. [58] The basement was to have a new laundry room, and a three-piece bathroom with a tub. Windows were to be added or changed. [59] On the top floor, the major renovation was a vaulted ceiling in the master bedroom, and a new closet and en-suite. A closed in deck was to be changed to a proper patio and the windows were to be changed on the upper floor. [60] Mr. Sas testified that as construction moved on, some changes were made to the scope of the project. In the basement, a family room was added from what was to be a media room, and a new sunken patio was added with French doors, providing access to the patio. The foundation was fixed and the stairs were reconstructed to maximize the head room. [61] In addition, an area for storage was built and a bar was put in the family room. An additional closet was put in under the stairs and space was provided for a mechanical room. A new window was put in the family room looking out the back of the house. There was some work done to level the existing cement floor. Mr. Sas estimated the changes from the original plan took about 6 weeks to accomplish. [62] On the main floor, the changes included altering a "flush window" to a box window in the dining room, and windows were added to either side of the fireplace and then they were removed when the fireplace was re-installed and vented through the roof. There were some plumbing changes to the powder room and some exterior changes to the porch and the front stairs were changed from wood to concrete. Mr. Sas estimated delays of approximately 4 weeks for those changes. [63] On the top floor he testified that skylights were added over the stairwell, the style of bathtub was changed and a new window was installed in the front wall, necessitating a beam which had been engineered to pick up the new joists for the vaulted ceiling to be picked up and transferred around the window using a header, taking the weight of the beam down to the floor plate. Mr. Sas testified he put in that header. He said those changes took approximately 4 weeks. [64] Mr. Sas also testified that the garage was in bad condition and the crew took out mouldy insulation, added a new roof window and facia and prepared the garage for new stucco. He testified the garage took about a week to complete. [65] On the outside of the house, once the composite shingle was taken off, it appeared that the old cedar shingles had extreme damage and had to be removed rather than patched, as was originally planned. He testified that took "a few days". [66] Mr. Sas testified that the defendant decided to go with stucco and he (the defendant) hired a contractor, Hard Rock Stucco, owned by a friend of the defendant, to complete that job. Mr. Sas testified that all the exterior paper and wire mesh was installed by the contractor, who had been hired by the defendant. [67] Mr. Sas testified that he was aware before he went on the site that there were no permits for the renovations. He said he had a conversation or conversations with the defendant about the risk of getting "caught by the City" in doing the exterior work - the front porch and the patio. He said the defendant was on site regularly, almost every other day. He testified that the parapet walls on the deck were vented and that he and the stucco contractor "came up with venting for all the parapet walls." [68] In cross-examination, he testified that the patio was dug out and expanded in November or December and he agreed with the suggestion that that was when he had the conversation with the defendant, that the City might notice. [69] He was asked about the installation of the header above the window in the north wall, and he explained he put in the header to transfer the weight of the beam supporting the rafters around the window and that he put in cripples to extend the header bearing weight to the floor plate. (3) The Evidence of Richard Hoover [70] Mr. Hoover testified that he was a carpenter and had been so, full-time, since 2002. He started working for the plaintiff in 2003 and worked at the Property, starting April 2006. He said his first job was to set up scaffolding for the exterior renovations, which involved taking off the asbestos shingles which were on top of cedar shingles, saving and patching the cedar shingles, and also changing the windows. [71] He testified that he knew Ray Heddles, who had done some of the original disposal work from the demolition of the interior of the house. He bought his truck from Heddles when Heddles returned to New Zealand and he used his truck to do some of the disposal on the site, which he did after work between 4:00 p.m. - 6:00 p.m. [72] Mr. Hoover said he saw Mr. Richardson numerous times on the site. He said he recalled at the beginning of the job that a building inspector came by. He said that he told the inspector what they were doing, and the inspector told him that permits were necessary if they were changing the foundation. Mr. Hoover said he explained that conversation to Mr. Richardson, who told him that he did not want to get a permit because his house was too close to his neighbour's and the City would want him to move the house. He testified that conversation occurred in April or early May, 2006. [73] He said that Mr. Richardson would make changes quite often "whenever he showed up to the house." [74] In cross-examination, Mr. Hoover was asked about when he had the conversation with Mr. Richardson about the permits. He said it was at the site. They were looking at the soffits and the rain gutter and they noticed that the rain gutter on the side of the roof was very close to his neighbour and Richardson was saying that the house would have to be moved. He reiterated that Mr. Richardson told him that for him to get a permit, he would need to move the house. Mr. Hoover said the neighbour did not complain at first. He said he had talked to the neighbour when he first put up the scaffolding and he did not appear to be upset, noting that it was a rental home before Mr. Richardson bought it. He said the conversation with Mr. Richardson about the permits was not at the stage when they were installing or re-installing the fireplace, it was early on in the job. He recalled it being a nice summer day and Mr. Richardson was wearing a red beret with white sunglasses. It was suggested to him that the conversation with Mr. Richardson was incorrect and it never took place. He responded it did happen, and he repeated that he remembered what Mr. Richardson was wearing at the time. He said the conversation arose because the inspector had stopped by and so he raised the issue with Mr. Richardson who told him that he did not want to move the house and wanted to get back in and live in the house. (4) Evidence of Darren Cleavor [75] He worked on a number of different projects for the plaintiff. He worked on the Property. In May, 2006 he worked on some of the disposal and preparation for the renovation work when the property was still in the demolition stage. He left after May and went to work in Alberta. He returned to British Columbia and began working on the property again in approximately mid-November. At that time, they were preparing to do the drywall and finishing and he worked on the mouldings, hanging doors downstairs, and stair work - mostly finishing work. While he was there, there were several changes that were made, firstly, to the fireplace, and secondly, to the stairs. He said the fireplace originally was built so it projected out and there was an issue with the neighbour and it had to be modified and brought back in the house and vented through the ceiling. He said he had some discussions with Mr. Richardson explaining that he was concerned about the neighbour and he told Mr. Richardson that he had better talk to the neighbour about the fireplace and the two adjacent windows. He said he was concerned about the neighbour because he was aware there were no permits for the building and he said at that point, he was instructed to change the fireplace to bring it inside and vent it through the roof. He said that was around the beginning of December. He wasn't certain if it was Mr. Richardson or Mr. Narduzzi, but that's what he was told to do. He said the changes took three to four days to accomplish, insofar as the fireplace is concerned. [76] The stairs went from the main floor up to the top floor, along an angled wall. He said the designer did not like that look, so they had to make some changes to the stairs. He said that was about a two day project. [77] There was also the need to remove a bathtub in the downstairs bathroom and install a shower stall instead. He said there were different drains needed, so it was necessary to jack-hammer up the floor. He said that was a slightly slower job and because they needed to install a membrane, it took about a week overall. [78] He testified that it took about a week with 3 people working on the installation of the double French doors downstairs and the new patio. [79] He said there were also some small moulding changes upstairs in the bedroom and bathroom and other design issues that took about a half a day to accomplish. [80] He said it was his understanding that Mr. Richardson knew there were no building permits and that was why he was instructed to change the fireplace. He said he stopped working on the site in early January of 2007. [81] He agreed in cross-examination that the kitchen cabinets arrived around the first week of December of 2006. (5) Evidence of Royce Dawson [82] He worked 6 years in construction for the plaintiff. He did the tiling at the Property in the basement bathroom and the main floor bathroom. He was supposed to do the master bathroom, but that was not completed. He testified that the basement bathroom took some time to complete because the designer wanted to select tiles and the tiles didn't come very quickly. He said on the main floor there weren't enough tiles ordered by the designer and that slowed the renovations down by a couple of days. He said he started the tiling in January of 2007. He identified an invoice that he submitted for payment to the plaintiff dated February 12, 2007 in the amount of $5,139. He said he had been paid cash earlier and that is why the invoice did not add up to the total cost of the tiles and the installation. [83] The informality of the arrangement between the parties was reflected in the lack of any comprehensive quotation or written communications chronicling the changes and progress of the project, although the plaintiff supplied the defendant with summaries of the expenditures being charged for the work done on an ongoing basis. The first summary was sent via email on July 10, 2006 showing work and materials costs amounting to $57,669.07 from May 1st onwards. On July 11, 2006, the defendant's secretary, Sarah Starling sent the plaintiff the following email: Hi Jamie: Thank you for sending over the cost break-down. Would you please break down the cost of the labour further so that David can see exactly how much that is costing and for what, i.e. does that include the cost of engineer's inspection and permit. If you can please have the cost break down ready for your meeting with David, if it's not ready by Friday, he'd like to postpone the meeting until you have something to show him. [84] Mr. Richardson testified that Ms. Starling sent that email on his instructions and it provides evidence of his state of mind regarding the permit issue. Ms. Starling did not testify. [85] The next summary of costs was sent on September 25, 2006 showing a total of $105,488.43. On December 16, 2006 in response to a request from Mr. Richardson, Mr. Narduzzi sent a summary of the costs incurred totalling $335,633. The defendant testified he "was floored" when he received the summary and thought it was a clerical error. Mr. Richardson was asked if he spoke to the plaintiff about the bill and said "I did, I don't know when, I'm not sure where he was at the time." [86] On December 29, 2006, Mr. Richardson, who was in Mexico at the time, sent an email to Alannah Stewart in response to an email from her reporting on adjustments that were being made to the basement stairs, and the cement floor in the basement which required levelling. Ms. Stewart also reported on her efforts to get tiling for the master bathroom and the main bathroom and for sinks that she was ordering for those bathrooms. In his email, the defendant thanked Ms. Stewart for "keeping on the crew" and told her he wanted "everything done right" and wanted to ensure he was not charged for the crew's errors. [87] On January 2nd, 2007, Ms. Stewart emailed the defendant to report on ordering the tiles and she referred to changes in the bathroom fixtures. She told Mr. Richardson she went by the house and noted "they were finished all the lighting changes." [88] On January 12th she emailed the plaintiff and told him she needed to discuss the stair design and the changes in the bathroom and new tiles that had been ordered. On January 17, 2007 she wrote the plaintiff the following email: Hey Jamie, 1. The moldings in the master bed room need to be removed they interfere with the stained glass window and the ceiling design. 2. Also the basement floors [sic] has a few cracks in it and it needs to be levelled off a bit more. 3. There was supposed to be a skylight installed in the main bathroom top floor. 4. The basement bathroom needs a little shelf cut out and I will meet you there to get the proper measurements so we only do this once. 5. Creekside Tile (Paul or Sara) are expecting you, I got the contractors discount and you just need to go there and set up the account ... all tiles have been picked and ordered. 6. Lets work out a fix it for the kitchen island so we can install a wine fridge there and change the basement to a bar fridge. I think that's it for now bit [sic] call me when you get in. Thanks, Alannah 604-614-8192 [89] On January 21, 2007 she sent the following email: Jamie, I will meet you @ the house around noon, A few things: 1. We have a stair design: I'm going to bring a sketch and a few pictures tomorrow ... basically we want it to look like giant cut stone on an off set pattern, similar to a subway but bigger, so the concrete will be scored but not stamped. Is it possible to have sand added to the mix so there is little tooth to the stair. Who's doing the stairs? 2. Creekside Tile on 2nd Ave is ready for pick-up for the main bathroom. What day is Royce starting so I can be there to help him. 3. Basement bath needs the cut-out for the shelf ... this we need to do together and make sure it gets done before the tiling begins. 4. I will bring the details of all the Splash's order and we will order it tomorrow when I see you. 5. Move the baseboard in the media room so it won't burn the sofa. 6. The half kinda gable in kitchen left of hood fan needs desperately to be fixed..That must be a Montalco thing. 7. Basement floor needs more levelling .. perhaps we should add sand to the mix so it settles? You tell me. The pockets of air that are being trapped underneath are a little disturbing, not to mention they are shattering the floor. 8. And lastly but most important, the fireplace needs to be moved and the most south window needs to be moved by 2' ... will bring fireplace mantle specs tomorrow too so we get it perfect. I realize you guys are really busy with other jobs and that there are times when you just can't get to this house...but would it be possible to have somebody there doing this like everyday so we can finish this deal up ... last week nobody showed up at all. See you tomorrow. We are so close to getting there. Alannah 604-614-8192 [90] On January 23, 2007 the plaintiff sent the defendant an updated summary of costs totalling $361,294.49. In the accompanying email, he wrote as follows: Hey Dave - here's your updated bill. I know it's getting big, I never really expected to have to finance this much money and between your place in Puget, I'm getting a little tight in the finance area. I'm not sure if there is anything you or your bank can do, but I don't have enough liquid cash to finish your place. Give me a call and we'll chat. Thanks. [91] On January 24th, in response, the defendant wrote as follows: I need copies of invoices that have been paid and copies of invoices for items that have not been paid. [92] In the basement area, the plans originally called for the installation of a new window, but the defendant changed the window to French doors and wanted to add a patio outside the French doors. [93] In his evidence, the defendant testified that the plaintiff had promised not to work on other projects, but was, and that was part of the problem with his liquidity. He testified he was feeling "sick to his stomach" when he saw the running total of $361,294.49. [94] The plaintiff responded on January 27th, explaining that all the bills in the running bill had been paid except the appliance bill, which had a 10% deposit on it and "the final payment for your cabinets ." He sent a running bill showing $368,377.38 in expenditures with that January 27th email. [95] The defendant emailed him back the same day, telling the plaintiff to bring "ALL original receipts and a labour report." [96] On January 29th the defendant emailed back to the plaintiff saying, among other things, "I saw your labour charges for last week. I was at the house every single day. Check your math please." [97] In the meantime, on or around February 1st, 2007, the defendant had a meeting with his neighbours who raised a number of issues about the renovation, including the venting of the fireplace out the side, the window additions, the extension of the roof and a drainage issue. According to the defendant, it was at this meeting that he became aware that there were no permits for the renovations. [98] Prior to that, he met with Ben Keong, a general contractor, on January 31st, 2007. They walked through the site and the defendant asked Mr. Keong for an opinion as to the value of the work done. Mr. Keong told him he would need to see all the invoices and documents from the plaintiff before he could give such an opinion. He said the defendant stated that his January 24, 2007 request to the plaintiff for invoices was made at Mr. Keong's suggestion during a telephone conversation before they met and went through the house. Mr. Richardson also testified that there was a meeting on February 7, 2007 in which he told the plaintiff he only planned to spend $200,000 - $250,000 for the renovation, and if he knew it couldn't be done for that, he would not have started. Mr. Richardson testified that throughout the month of February Alannah Stewart was attempting to get the cheapest materials for finishing in the house. [99] On February 15, 2007 the defendant sent an email to the plaintiff and to a woman named Angela at Montalco Cabinets. Alannah Stewart had ordered the kitchen cabinets from Montalco. Mr. Richardson wrote as follows, in part: Dear Angela and Jamie: At no time during our discussions of the kitchen design was I informed that a "spacer" would be installed next to the beam instead of the other cabinets being custom fitted. At no time was I told that a "stock" cabinet would be better than having the cabinets customized to fit the area affecting the overall appearance of the kitchen. There were no budget constraints that would have caused such a cost-cutting measure to be taken. I would have expected that a knowledgeable and reputable kitchen designer would ensure that any problems areas were brought to my attention so that I could decide if a custom cabinet needed to be built or a quick fix employed. [100] On the same day, the plaintiff sent the following email to the defendant and to Alannah Stewart: Dave its unfortunate that you're [sic] house is costing so much money but its pretty clear you're [sic] not to concerned about it or you would be trying to save money, instead all I see is you doing whatever you want and want me to pay for it, I have no guarantee that you are going to pay me, I had asked you in the past many times to have something drawn up for a lawyer which you have never done, Montaco wants the the [sic] cabinets paid to 90% and the countertop materials paid for which is about 25,000.00 I need to put my money I have left into my own projects, im [sic] not sure how you can get someone to audit my bill because you don't trust me but think I can trust you for 300,000.00 think about it would do what im [sic] doing, as of the end of Friday there will be no more work done on your house until we have some sort of agreement in place, im [sic] sorry its come to this but I don't have enough money to keep bank rolling your project until the end unless I borrow money to finish it and at this point that's not going to happen, you need to stop back and look at what ive [sic] done for you and if you think its no big deal go ask anybody you know to lend you 300,000.00 if you want to get this house done it be best you figure something out. So again me and all my subtrades are out of there tomorrow at four unless you can figure something out, im [sic] around all day tomorrow if you want to meet. [101] On February 19th, Mr. Narduzzi emailed Mr. Richardson with the following email: Dave after our conversation on Friday I thought about it on the weekend, I have contacted Tom and will get something drawn up hopefully this week, I will finish your house but I still don't have the available monies to finish the whole project out, why don't we meet with Denny like we originally planned and see what we can come up with, I really don't have enough money to do this I know you think otherwise but this is twice as much as I had thought I was going to need we need to calm down quit throwing out insults and figure a way of finishing this place, I think it doesn't help much when you keep bringing in outsiders to critique my work, like I said I will work with you to finish this, but we will have to work together. Let me know your thoughts Jamie. [102] The defendant wrote back to the plaintiff on February 20th, telling him that he had not decided what to do about finishing the house, that he was still going over all the paperwork he was provided with and that he would contact the plaintiff early next week at the latest. [103] The plaintiff emailed back to the defendant on February 20th informing him that he would give the defendant until noon tomorrow to contact him and try and make some arrangements or he would assume that the defendant would find someone else to finish the project. [104] On Monday, February 26, 2007 the defendant wrote to the plaintiff the following email: Jamie, The neighbours to the west went down to City Hall and gave them a list of grievances. I went to City Hall in person today and told them that I have voluntarily shut down all work on the house as of last Friday. I am meeting with the Planning Department on Thursday to get everything straightened and done with proper permits and inspections. There will be no further work done until further notice. If any of the sub-trades need their tools have them contact me direct on my cell .... The audit of your financial records with regards to your expenses for 3656 West 1st Ave will be completed this week and I will contact you immediately regarding further payments. [105] On March 1st, 2007, the defendant drafted a letter to the plaintiff with input from Ben Keong, the contractor he retained to review the work done to the house. The letter reads as follows: Jamie, Re: 3656 West 1st Avenue The reason I asked to have your invoices audited is because my original budget for having this house renovated was $250,000. Your billing has totaled [sic] $413,818.78 (including $42,500 in upcoming expenses to finish the project), which is $163,818.78 over that original budget of $250,000. An audit of the bills you gave me has been completed. Based on what was given to me there are some discrepancies between what you have charged me and what is actually owed. There is $35,000 in disputable bills. This means bills that were actually for another job site, for equipment, tools, interest charges, etc. There is also $25,000 in excessive labour charges. This is now considered a cost plus project. In order to verify the expenses I need the following documentation: 1. Final billing of all the subtrades, invoices not quotes. 2. Statements of all invoices for materials showing the job site address 3. Hourly rate of all your employees and their hours spent at the job site. 4. Your management fee and detailed expenses. 5. Invoices, cancelled cheques, or receipts showing what has been paid and which bills are still owed. Please provide the above mentioned documentation as soon as possible so that we can settle on what the final amount owed to you is. [106] Following receipt of that letter, Mr. Narduzzi emailed the defendant, telling him that he would meet with the auditor to go over the discrepancies as soon as it could be arranged. On March 3rd, 2007 the defendant wrote the plaintiff as follows: I'll set up your meeting and get back to you with a time ASAP. Also, I have a meeting with the Planning Department this week to acquiure [sic] renovation permits. They have asked for floor plans and photos before and after the renovation commenced ... etc. I will also need paperwork showing your engineer signed off on the beams. Please bring what you have to the Tuesday meeting. [107] The meeting took place on March 6, 2007. [108] On March 22, 2007 the plaintiff sent the defendant the following email, together with attachments: Dave here are the numbers. I removed everything that was a tool or what Ben thought shouldn't be in there, I can meet with Ben on Tuesday at four if that works... The attachments included the costs and projected for the Property. The projected costs still totalled $148,588.95. The costs to date amounted to $331,809.30. [109] On March 22nd, the defendant responded that he had received the material when the plaintiff had earlier sent it on the 18th of March and he was ready to meet with Mr. Narduzzi with Ben Keong when Mr. Narduzzi had "THE PROOF PAID INVOICES AS WELL AS ENGINEER'S DOCUMENTATION AS PREVIOUSLY REQUESTED." [110] The defendant sent another email on March 25th telling the plaintiff that "Ben will confirm meeting with us as soon as you confirm that you have ALL the requested paperwork". In the meantime, on March 21, 2007, the plaintiff had filed his claim of lien against the property, claiming that the sum of $272,086.19 was due and owing as of February 28, 2007. [111] In his evidence in chief, Mr. Narduzzi submitted a summary of the amounts he claimed based on the exhibits he tendered as proof of his loss arising from his payments to subcontractors for labour and for other costs for supply of services and materials. He identified $176,608.41 for subcontractor payments, $88,381.47 for labour costs, and $42,692.06 for his other costs. [112] To that he added a management fee of 25% of the labour cost or $22,095.36 for a total of $329,776.30. After subtracting for the $100,000 already paid, that left the sum of $229,776.30 with interest of 6% since March 2007 adding an additional $27,913.07 to trial for a total of $257,689.37. THE CASE FOR THE DEFENDANT (1) The Evidence of Ben Keong [113] Ben Keong is a general contractor involved in building and renovating houses. He met with the defendant on January 31, 2007 at the property because Mr. Richardson wanted an opinion on the value of the work that had been done and on how to get the project completed quickly. He subsequently obtained some information about the state of the house before the renovation and what was done and then met with the plaintiff and David Richardson on February 7, 2007. Mr. Narduzzi brought all the invoices and quotations that he had pertaining to the job to that meeting. He did not have a budget which Mr. Leong regarded as "pretty much standard" and thus there was no clear indication of where the money had been spent. As a result, Mr. Keong testified that it was necessary to go through all the paperwork. He testified that in discussions with the defendant, the defendant had mentioned a budget of $250,000. [114] After reviewing the documents, Mr. Keong found them to be incomplete. He couldn't reconcile labour costs for materials: there were no hourly logs for the workers and nothing was posted to a particular site. [115] After his review, Mr. Keong sent an email to the defendant on February 28, 2007 setting forth his conclusion that there were "$35,000 in disposable bills and $25,000 in excessive labour" built into the running summary of costs." He estimated that the total project costs of $353,818.78, which included the projected expenses of $42,500, less the $100,000 deposit, left $253,818.78 as the total amount owing. He testified that in his opinion, the project could never have been done for $250,000. [116] On the issue of the building permits, Mr. Keong testified that the defendant told him on February 26, 2007 that a neighbour was concerned about the building and that he then suggested to Mr. Richardson that he check and see if there was a building permit. He and Mr. Richardson went to City Hall and determined no permit was issued and that a neighbour had filed a complaint regarding the construction. [117] On March 6, 2007 Mr. Keong was at a second meeting with Mr. Narduzzi and expressed concern that the $42,500 projected costs might not be adequate to complete the job. It was left that Mr. Narduzzi "would come up with a figure that they could work with." [118] Mr. Keong testified that of the amount of $27,695.26 that the plaintiff alleges having paid to the electrical contractor, related in part to incomplete work. Mr. Keong assessed the incomplete work as $7,805. Mr. Keong also testified that the amount which the plaintiff paid to the tile sub-contractor is excessive by $3,123.60 and that the value of the work performed by the painting sub-contractor was $6,000 and not the amount alleged to have been paid by the contractor of $9,000. Mr. Keong also reviewed the $32,277 claimed by the plaintiff for plumbing, heating, and gas, concluding there were $1,016.50 billed as extras, which were included in the plumbing account of $15,290.50 and that in any event, only 80% of the work had been done in the amount of $12,900. It was Mr. Keong's conclusion that the plaintiff overbilled the defendant in the net amount of $2,580. [119] Mr. Keong went through the various invoices relied on by the plaintiff and conducted an audit of those invoices and concluded that on the basis of lack of proof of payment, incomplete work, work needing to be done, lesser amounts paid and missing materials, added up to a difference between what was alleged to be owing and what was demonstrated to be owing of $135,587.10. It was Mr. Keong's conclusion that the total amount paid by the plaintiff for materials and labour was $230,407.29 which, less the $100,000 paid by Mr. Richardson, left a balance owing of $130,407.29. [120] There was evidence that on November 7, 2008 Mr. Keong loaned the defendant the sum of $50,000 secured as a promissory note. (2) The Evidence of Eric Stine [121] Eric Stine is an architect who was approached by the defendant in early March, 2007 and retained by him on March 29, 2007 to deal with the City of Vancouver in connection with the need for permits to finish the renovation. Mr. Stine testified that there were two kids of permits required for buildings in an RT-8 zoning, which governed the Property: a development permit and a building permit. To obtain a development permit, the builder or owner needs to provide information about the configuration of the building inside and outside, set-backs to determine if it meets the requisite guidelines, a site plan, floor plans with elevations and cross-sections, and colours on material samples of exterior finishing. If the planning department approves a development permit, then the owner or builder needs to apply for a building permit to ensure that the construction or renovation complies with by-laws. [122] Mr. Stine testified that when he became involved with the project, the main concerns of the planning department with the Property were that the stucco exterior cladding and the vinyl windows were not acceptable. He also noted that the front porch was not similar to the original building. Mr. Stine testified that when the defendant first came to him, the defendant told him that his neighbour to the west said that his house was too close - it was an encroachment on the neighbour's property. Mr. Stine testified he had some communication with Marie Linehan of the planning department in mid to late March, 2007 and Ms. Linehan informed him that the planning department would not approve the stucco finish, vinyl windows or the front porch. On instructions of Mr. Richardson, Mr. Stine nevertheless applied for a development permit for the property, retaining those characteristics. He was eventually told that the planning department would not issue a development permit without making changes to the windows, stucco finish, and porch. Mr. Stine testified that it took between June 5, 2007 and November 7, 2007 to reach that conclusion, because there was a strike at City Hall from June 23, 2007 to October 11, 2007 and his application had been set for review just before the strike commenced. [123] In the result, rather than going to the Board of Variance to attempt to obtain the building permit without the changes required, Mr. Richardson instructed Mr. Stine to revise the design. The application for a building permit was resubmitted on March 7, 2008 together with an application for a building permit. Mr. Stine retained a structural engineer, Henry Hsu to review the plans. [124] A new rain screen requirement came into effect for the building envelope around openings in the structure - the doors and windows. That requirement had not been in effect prior to May 1, 2007. [125] Mr. Stine prepared a report on the building renovation dated December 9, 2008. He testified that when he first went onto the site, he noted nothing specific or unusual giving rise to concern, except that a structural post on the main floor was unsupported down to the basement floor. The plywood on the main floor around the post was "dished out". He also noted an apparent lack of venting to the roof or the deck over the kitchen. He said without proper venting, there would be a moisture build-up and rot setting in within one to two years. He also noted the electrical panel was not properly situated to permit necessary access and that it would have to be moved to comply with the building code. He noted no proper venting in the eaves of the house. [126] Mr. Stine reviewed Mr. Narduzzi's drawings and concluded that they were not adequate to get either a development permit or a building permit. He also noted that none of the structural work was reviewed by a structural engineer and that a 45 minute fire-rated drywall is required on the inside of the west wall of the entire building because of the non-conforming side yard. [127] Mr. Stine also opined that the parapet flashings (on the deck) were not properly sloped for drainage, the insulated areas above heated spaces were not properly vented to avoid moisture build-up (the ceiling over the kitchen under the upper deck floor). He asserted that the soffit venting on the primary roof was inadequate because of the new vaulted ceiling and "a series of screened, vented holes need to be drilled between every rafter space, and also through blocking if necessary to provide a clear path for venting the lower part of the roof." [128] In his report, he commented as follows: General comment: The standard of construction work that I've observed at this property falls below a reasonable or normal expected standard based on my experience as an architect. My impression is that the contractor proceeded with work, or allowed work to proceed with little regard to the long term quality or durability of the work in many cases. My initial impression of the house led me to be very suspicious of the quality of the work. In particular I noted that there was a column in the living room sitting on a 'dished' section of plywood indicating that there was nothing below the plywood supporting the column. Some of the other observations that confirmed to me that the overall work on this house was of very poor quality were: No permits, no preparation for proper building envelope, no venting or poor venting where venting is required, covering work without inspections from the structural engineer, the lack of the required rated west wall on the house due to the narrow existing sideyard. Given the above, I would have no confidence that I would find work properly done in areas that are covered up and no longer visible. [129] In cross-examination, counsel for the plaintiff elicited from Mr. Stine that there were two previous draft reports in his project file, one dated October 17, 2008 and the second December 2, 2008. In those earlier reports, Mr. Stine made comments about there clearly being "things that were done properly" with the construction, that the west wall could be fire-rated by adding drywall to it, that the delay in getting the building permits was because the defendant wanted to add a two-car garage and that there was nothing inpermissible about a stucco exterior. Mr. Stine testified the draft reports were changed after he sent them to counsel for the defendant. [130] Mr. Sine acknowledged that he was unable to say whether the porch could be vented using "puck vents" which the plaintiff had testified he intended to use. [131] Mr. Stine was also cross-examined about how the defendant's insistence on a stucco exterior delayed the permit process, and how converting a multiple dwelling to a single family dwelling could be treated as an exception to the requirement to apply separately for a development permit and a building permit. The plaintiff also relied on Mr. Stine's evidence that if he had submitted a combined permit application and there had been no strike, it was possible they could have obtained the permits in July of 2007. [132] Mr. Stine agreed with the proposition put to him by counsel for the plaintiff that it was the City's position set out in a document entitled "Development Services Information" that: The property owner or their authorized representative may apply for the building permit. The owner of the property is ultimately responsible for ensuring that all required permits are obtained. The building permit itself is the property of the applicant in the event of a legal dispute. (3) The Evidence of Roger Artis [133] Mr. Artis was a professional engineer with over 30 years in the construction industry. He prepared two expert reports through his company, B.T.Y. Group. The first report was dated June 7, 2007 and was titled "Valuation of Work in Place". In his introduction to that report, Mr. Artis noted that the valuation of work in place was estimated using second quarter, 2007 materials and labour rates from B.T.Y.'s data base and quotations from suppliers. He indicated that no allowance was made for "inefficiency, overtime premium, proprietary products and remediation of deficiencies during construction." It was his opinion that the total cost of work in place for the building was $256,900. The work in place was to April 17, 2007. Mr. Artis testified that the rate of variance he applied to his estimates was plus or minus 5%, 70% - 80% of the time, but that in 20% - 30% of the time, it could be plus or minus 10%; so it could be as high as $280,000, "or considered the other way" up to 10% less. [134] In his second report titled "Independent Opinion of Costs of Deficiency Remediation", Mr. Artis estimated the cost of remediating the deficiencies in the renovation work at $89,500. [135] As to the work in place, he testified that he based his estimate on a tour of the premises performed by a colleague of his, comments from Mr. Richardson, and a video that was taken of the renovation. He said that to arrive at his final figure of $256,900 he prepared a scope of work of the improvements, noted it in drawings, listed the items involved and applied unit rates of labour and material to the various component items. He then provided a total cost and added an allowance for supervision. He also included an allowance for demolition costs. [136] With respect to remediation costs, he set out the deficiencies and the scope of work in a letter dated October 7, 2008 to counsel for the defendant which he adjusted with comments he previously received from counsel. He used largely the same methodology to estimate the costs of remediation as he did in estimating the work in place, although in some cases where the repairs were difficult, as in the case of repairing an inspection hole in drywall rather than a whole wall, he would not estimate a unit price. [137] In his summary, he estimated drywall replacement for inspection holes, window surrounds, structural repairs and replacing the drywall on the west side of the house with appropriate fire-rated drywall at $11,700. His estimate for removal and replacement of windows and removal and replacement of interior and exterior trim around the windows and scaffolding rental was $7,300. For structural repairs involving repair of stairs, creation of access to the attic, adding two studs to support the beam at the family room, the provision of "cripples" to support the window at the ridge and the creation of a new opening for the electrical panel, Mr. Artis estimated $3,700. For repair and replacement of the entrance stairs and the front porch, he earmarked $18,700; for painting the patched and repaired drywall, and applying a finishing coat to the entire building and to the interior and exterior of all wood windows and the front door he estimated $8,100. For clean-up and removal of interior and exterior debris, he set aside $4,300; for repair of parapet flashings, replacement of soffit material and soffit vents, to remove and dispose of stucco wire mesh and to reinstall building paper, to replace existing floor, levelling materials, and to replace and reinstall upper perimeter drainage, he estimated $13,300 and for contractor's profit risk contingency including a supervisor's fee for 6 weeks, he allowed $22,400. [138] In cross-examination he agreed that he excluded a number of considerations from the scope of his assessment of the work in place that could be a cost, including professional fees and disbursements, equipment, and changes to the original plan. He also agreed that there was a significant variation in the cost of tiling as there is with cost of windows and that he did not factor in the cost of stripping the outside of the house, which he agreed would cost $10,000 - $12,000. He also agreed that there was a variation between what he estimated for the kitchen cabinets and their actual cost amounting to $1,000. He added $1,000 to the value of the garage roof and added $500 - $600 for the installation and re-installation of the fireplace. He agreed it might take as much as 5 days, but estimated 2 - 3 days if the gas needed to be changed. For the cost of changing from a tub to a custom shower, he added $500. [139] As for the windows, his estimate of $6,700 was $7,127 less than the actual amount paid and he did not account for installation costs of $2,500. [140] He also agreed that he had not accounted for the three support pads in the basement which he estimated at $1,200 each, or $3,600. [141] As to the tiling, Mr. Artis estimated a value of $2,100. The evidence given by Mr. Dawson, the tiler, was that the total cost was $11,841. Mr. Keong's evidence was that that was too high a cost for the tiling done. With respect to the vaulted ceiling, Mr. Artis did not include it in his estimate of the work in progress, but in his evidence, he estimated it would cost around $3,000. [142] Based on that evidence, the plaintiff submits that Mr. Artis' report omitted actual costs relating to the work in place of $48,398 which would bring the total estimate of the renovation to $304,398 to which approximately $12,000 for GST for sub-contractors and materials would need to be added for a total of $316,398. The plaintiff further submits based on Mr. Artis' evidence that a rate of variance of up to plus or minus 10% was applicable to the total value of the work in progress and it would be as high as $348,037. [143] As to Mr. Artis' report in relation to the cost of deficiency remediation, the plaintiff submits it should be given little or no weight. The plaintiff notes that Mr. Artis did not himself visit the property, but relied on an inspection and notes made by his associate. The plaintiff also relies on Mr. Artis' acknowledgement that between February 2007 when the plaintiff stopped working on the property and November 25, 2008 when Mr. Artis conducted his assessment, that there was a 12% increase in costs to fix the deficiencies. The plaintiff points to the apparent incongruity between allowing for a $22,400 management fee for a six week deficiency remediation job and the $25,200 he allowed for profit for the 7 months for the renovation project as a whole. The plaintiff contests the validity of Mr. Artis' evidence that to bring the west wall of the building into conformance with the building code calling for fire-rate drywall, it would be necessary to remove the bathtub and tiles. The plaintiff relies on evidence of the building inspector, Mr. Cachero, that the issue is whether the building is safe. The plaintiff submits that Mr. Artis' estimate of $11,700 for replacement of drywall on the west wall is accordingly significantly high. [144] The plaintiff also questioned Mr. Artis' estimate of the cost of demolishing and rebuilding the front porch and submits that much of the work could be done at significantly lower labour rates than the $45 an hour which he allocated for that work. [145] The plaintiff submits much of the painting is done and $8,100 is too high for what remains. As far as the debris removal is concerned, the cost of $4,300 is according to the plaintiff's submission "extremely inflated" and would involve a person paid at $40 an hour working two and a half weeks to clean up for a six week remediation job. Insofar as the repairs are concerned, the plaintiff submits that the wire mesh installed for the stucco does not fall at the feet of the plaintiff and in any event "would not require ticketed carpenters to do all the work" at carpenter's rates. It is the plaintiff's contention that Mr. Artis' remediation report relies on too many improper assumptions and should not be relied upon. (4) Henry Hsu [146] Mr. Hsu is a structural engineer who testified that he was retained by Mr. Stine to do the engineered structural drawings and to do site inspections. His drawings were marked as Exhibit 18. [147] Mr. Hsu went to the house and asked the builder to open up the drywall at various locations to inspect the framing. He found some deficiencies in the framing. He concluded the framing in the basement was not sufficient to pick up the load from the main floor. From the top floor he contended there should have been a header put over the window and it should have been supported by three studs taking the load down to the floor plate. He found only one stud and it was not continuous to the floor plate. [148] Mr. Hsu did not regard the fact that the stair stringer was not fully on the plate as being a problem. [149] He visited the property three times. He did not write a report, instead communicating with the builder about what the deficiencies were. He was to certify the deficiencies when they were rectified but the builder had not come back to him yet. (5) The Evidence of Adrian Cashato [150] Mr. Cashato confirmed that he was an inspector with the City of Vancouver and he inspected the property after a building permit was issued. He noted some structural concerns that required some finishings to be removed to check on the underlying structure. He also confirmed that the west wall of the house required 5/8 inch drywall on the inside to act as a fire retardant and that there were issues with the venting of the rear second floor deck and the roof. He testified that the plywood subfloor on the main floor was dished out because there appeared not to be adequate support carrying the load of the main beam on the main floor down to the foundation. He also noted some problems with the header over the window and the north wall on the top floor. (6) The Evidence of the Defendant David Richardson [151] Mr. Richardson testified that he was 51 years old and had worked as a realtor for 26 years. He met Mr. Narduzzi about 5 years previously through his business, as Mr. Narduzzi and his brother purchased properties to develop and used the defendant's services to sell the properties. [152] He was aware that Mr. Narduzzi did major renovations as a result of his previous dealings with him. [153] He recalled having discussions with Mr. Narduzzi after acquiring the Property in January or February. According to the defendant, he told the plaintiff that he wanted to convert the property from a multi-family dwelling into a single family dwelling if it was affordable. He testified that he told Mr. Narduzzi that he did not want to spend more than $200,000 or $250,000. [154] He testified that he and the plaintiff walked through the premises and he explained what he wanted to do with the floor plan. He testified that he wanted the master bedroom to view north and that at the time of their walk through of the property they had a discussion about a vaulted ceiling for the master bedroom and an open floor plan on the main floor. [155] According to Mr. Richardson, he and Mr. Narduzzi had a discussion about financing and it was agreed that Mr. Richardson would put up $100,000 and Mr. Narduzzi would carry the balance which Mr. Richardson would pay interest on. [156] He testified that the budget of $200,000 to $250,000 was mentioned several times. [157] Mr. Richardson said some time around the commencement of the renovation, he had an additional conversation with Mr. Narduzzi, in which Mr. Narduzzi told him that the budget may be around $50,000 "light" but Mr. Richardson testified that the conversation at that point was not about a budget of $250,000 - $300,000 but rather $200,000 to $250,000. [158] Mr. Richardson testified that at the very beginning he asked Mr. Narduzzi what architect he would be using and Mr. Narduzzi responded that an architect was not necessary because he could do plans that would satisfy the city. [159] Mr. Richardson agreed that the original agreement was that the exterior of the house would be stripped of the asbestos siding to expose the original cedar shingles which would be cleaned up. He testified that Mr. Narduzzi showed him that the cedar shakes were not in good shape and suggested that he use stucco instead. [160] According to Mr. Richardson, Mr. Narduzzi quoted around $20,000 so Mr. Richardson approached a friend of his who owned a stuccoing company and he decided to use his services rather than do it through Mr. Narduzzi. [161] Mr. Richardson testified that he was not aware that a development permit was necessary, nor did he know what a development permit was when he undertook the renovation. He was not aware that the city could dictate the exterior look of the house in the particular zoning covering the property. [162] He testified that Mr. Narduzzi told him when he agreed to do the work, that he would take care of the paperwork, permits, drawings, and so forth. [163] He denied having the conversation with Richard Hoover concerning the absence of permits. He also denied having any conversation with Tim Sas in December of 2006 concerning the permits. He testified the he first became aware that there were no permits in the first week of February 2007 when Mr. Narduzzi drew his attention to complaints from his neighbours to the west and he arranged a meeting. He said it was at the meeting with the neighbours that he first learned that there were no permits for the renovations being undertaken. That meeting took place on February 3, 2007. [164] Mr. Richardson said that as a result of learning that from his neighbours he called up Mr. Keong and told him what the neighbours had said and Mr. Keong suggested that he go to city hall and ask what permits had been taken out. [165] Mr. Richardson agreed that he instructed Mr. Narduzzi to change the location of the fireplace after hearing of the complaints from the neighbours, but he didn't recall when Mr. Narduzzi did that. [166] Mr. Richardson testified that he had agreed to provide Mr. Narduzzi with a $100,000 payment prior to the commencement of work, but did not pay the second $50,000 until October. He was asked why he gave it in October, and he said because Mr. Narduzzi asked for it. [167] He testified that the July 11, 2006 email from Sarah Starling to Mr. Narduzzi was sent on his instructions. He said Mr. Narduzzi did not respond to the email and he did not follow up. [168] Mr. Richardson testified he was planning to move into the house in October and he was becoming concerned with the pace of the renovations. According to Mr. Richardson, Mr. Narduzzi had assured him that he would not be working on any other projects. [169] According to Mr. Richardson, Alannah Stewart was "doing a lot of running around for Narduzzi and [him] self to save time." He thought she began her involvement around November 2006. He described Ms. Stewart as his "house-stager" on all of his listings. He used her to prepare a house to sell and he would pay her for a one hour consultation on each house. If the sellers wanted to use her, then they would hire her themselves to stage the house for sale. He asserted she did more work for the plaintiff than for himself. [170] Mr. Richardson testified when he received the third progress statement reflecting costs of $335,633.19 on December 16, 2006 he "was floored". He thought it was a clerical error. [171] He said he talked to Mr. Narduzzi about it but he didn't recall when he did or where Mr. Narduzzi was at the time. There was no email communication between Mr. Richardson and Mr. Narduzzi concerning the progress summary. Mr. Richardson agreed that he was in Mexico at the end of December 2006 and sent an email to Ms. Stewart on December 29th concerning her involvement with the renovations. [172] Mr. Richardson testified that on January 23, 2007 when he received the next progress summary showing expenditures of $361,294.49 he was "feeling sick to his stomach". He said his friendship with Mr. Narduzzi was strained. [173] He said in the meantime, he had contacted Ben Keong and he first met with him on January 31st. They walked through the site. According to Mr. Richardson, he asked Mr. Keong for his opinion as to the value of the work that had been done and Mr. Keong told him that he would need to see the documents from Mr. Narduzzi in support of the expenditures. He testified that there was a meeting with Mr. Keong and Mr. Narduzzi on February 7th and Mr. Narduzzi brought documents to the meeting, but there was a question whether the documents he brought all pertained to the renovation of the property. Mr. Keong took the documents away and they set up a subsequent meeting. [174] Mr. Richardson testified that he obtained a survey of the Property because he needed to refinance it as he was having difficulty in carrying it. He subsequently had an appraisal done so that he could borrow funds to finish the project. [175] He said throughout February and March the issue was whether Mr. Narduzzi would finish the Property. Mr. Richardson testified that Mr. Narduzzi said he would finish it if he could raise the money, but that they were arguing about the quality of the work going on and he was trying to figure out how to finish the renovation. [176] Mr. Richardson was asked about his email to Mr. Narduzzi of February 26, 2007 and said it was his intent at that time to stop work on the Property. He was asked about the letter dated March 1, 2007 in which he said, among other things, that there were $35,000 in disputable bills, and $25,000 in excessive labour charges. He also said "This is now considered a cost plus project". He said he sent that to Mr. Narduzzi, but there is a question mark missing from the sentence "This is now considered a cost plus project". Mr. Richardson testified that on March 18th he received an email from Mr. Narduzzi setting out the total costs incurred of $331,809.30 with an estimate of $148,588.95. He testified the last estimate for work yet to be done was $42,000 and he had not expected such an increase. [177] Mr. Richardson testified that in March of 2007 he was informed by Mr. Stine that if he would agree to make a number of changes including the exterior cladding on the windows, he could apply for a development permit, but he decided to attempt to persuade the planning department to approve the use of stucco and the vinyl windows to "save time and money". [178] That effort was not successful and he eventually obtained his development and building permit in the spring of 2008. Eventually he sold the Property in March of 2009 for $1.325 million, without completing the renovations. He testified that he provided the purchaser with the development permit, the building permit and the plans. [179] Mr. Richardson testified that between August 2007 and March 2009 when the Property was sold, he made a total of $62,081.15 in interest payments on the first mortgage and $50,806.47 on the second mortgage, for a total of $112,887.62. Earlier, on December 5, 2006 he refinanced by increasing the size of the second mortgage on the Property (also registered against a rental property he owned on West 3rd Avenue) from $223,571 to $300,000 and received the sum of $66,407.99 as a result of that refinancing. [180] Mr. Richardson testified that by the time he acquired the necessary permits for the renovation, he could not proceed because there was not sufficient market value in the Property. [181] He testified the changes he made to the original plans consisted of replacing a window on the north wall of the basement from the family room with French doors to go to a sunken patio and changing the bathtub in the basement bathroom to a shower. On the main floor he asserted that the powder room was so small the door could not be opened without banging into the vanity cabinet, so a pedestal set was installed instead, necessitating a change in the plumbing. [182] He testified other changes made were a result of errors by the plaintiff including removing a pony wall between the basement stairs and an adjacent wall, widening the stairs, changing the height of some of the kitchen windows, and replacement of the basement floor skim coat two times due to disintegration and chipping. [183] He testified that the $66,407.99 he received from the December 2006 refinancing was "not directly" spent on the renovation. [184] When the house was sold in March 2009, the net proceeds of the sale amounting to approximately $187,000 were set aside to cover the claim of lien. [185] In cross-examination Mr. Richardson denied knowing the effect of RT-8 zoning or the need for a development permit to renovate the Property, despite his credentials and experience as a realtor. He agreed that he spent over $1 million on the Property and intended to renovate it, but did not look into the zoning requirements or the cost of renovations before he purchased the Property. [186] He agreed that some time in 2007, he moved into one of his rental suites on the property he owned on West 3rd Avenue. He also agreed that he would have had to pay the mortgage interest on the Property, whether it was finished or not. He testified the rental for the suite on the West 3rd home he occupied was $1,541 per month. [187] Mr. Richardson was shown a statutory declaration he swore on December 5, 2006 in support of the December 6, 2006 loan, which was secured by the mortgage against the West 1st and West 3rd property. In the statutory declaration he swore as follows: All accounts due for work done and materials furnished or used for or in connection with the Property have been paid for, and no monies are owing in respect thereof, either to any material men, contractor, or workmen, or anyone whomsoever. No person or persons or corporation has or have any right to any lien or liens against the Property. [188] Mr. Richardson expressed some uncertainty whether the statutory declaration related to the West 3rd or the West 1st property, but acknowledged that the loan was to be secured by a second mortgage lodged against both properties and the first mortgages against both properties were referenced in the statutory declaration. Mr. Richardson also acknowledged that he swore as follows in paragraph 8 of that statutory declaration: I/Neither one of us have ever committed an act of bankruptcy nor made an assignment of proposal under The Bankruptcy and Insolvency Act and no bankruptcy petition has ever been filed or presented against either one of us. [189] He was asked whether paragraph 8 was true and he responded that he had not been bankrupt but was involved in a "orderly payment of debts" in 1996. [190] Mr. Richardson was referenced to the evidence he gave of his initial discussions with Mr. Narduzzi and he was asked about the answers he gave questions 17 - 29 at his examination for discovery on July 24, 2007 as follows: 17 Q. At some point in time you entered into discussions with Mr. Narduzzi about him performing construction on the property? A. Yes. Q. And when was that? A. I don't recall at this time. Q. So when you purchased the property in January had you spoken to anyone about building --- constructing --- or doing the renovations on the property? A. No. Q. Did you have any idea what it would cost to renovate the property when you purchased it in January? A. No. Q. Did you have a ballpark idea of what it would cost when you purchased the property in January? A. No. Q. So you spent a million dollars purchasing this property and you're going to renovate it at an unknown cost and then live in it? A. That's correct. Q. So at some point you had a discussion with Mr. Narduzzi about him performing the construction on the property? A. Yes. Q. Did you speak to anyone else about performing construction on the property? A. No. Q. And where did these discussions with Mr. Narduzzi take place? A I don't recall. Q You don't recall where any of the discussions took place? A. No. Q. Did you approach Mr. Narduzzi or did he approach you? A. He approached me. Q. And what did he say to you? A. I don't recall. Q. Do you recall what you said to him? A. No. [191] Mr. Richardson agreed that he gave those answers and testified that at the time he could not specifically recall his discussions with Mr. Narduzzi. Mr. Richardson also agreed that he testified as follows in his examination for discovery at questions 69 to 74: 69 Q. Did you have any input into the design? A. In what way? Q. Did you say, I want the kitchen to be X size or I want the living room to be Y size or I want the front porch to look like X? A. Yes. Q. Did you have this involvement from the beginning? A. Explain yourself. Q. What I'm saying is when you entered into this agreement in May, what involvement did you have in dictating the original design of the property? A. I told Mr. Narduzzi I wanted to have a three-bedroom house, single-family dwelling. No basement suite. Q. Did you say anything else to him? A. I'm sure I did. Q. Can you remember what that was? A. Not at this time. [192] Mr. Richardson said he couldn't recall if the renovations to the porch or the garage were part of the initial discussions with Mr. Narduzzi or not. He agreed that the first time he mentioned that the plaintiff Mr. Narduzzi suggested stucco for the exterior of the home in replacement of the cedar shakes was when he testified at trial. [193] He repeated that he was given an assurance by Mr. Narduzzi that the budget of $200,000 to $250,000 could be met, but he agreed that in his examination for discovery, he said as follows: 52 Q Did you seek any assurances from him in relation to costs? A There were no assurances. There was a discussion in that my budget was approximately $250,000 for the project. If the project could be done for that amount, I would hire him. If the project would cost more, I would not do the project. [194] He testified that Mr. Narduzzi told him he could do it for $250,000 and later he added another $50,000. He agreed that the discussions were quite informal. He testified he agreed to pay interest on the amount financed by the plaintiff. [195] Mr. Richardson disagreed that the job was to be done on a cost plus basis, but agreed that he testified as follows at his examination for discovery: 230 Q. Do you understand what a cost-plus arrangement is? A. Yes. What's your question? Q. What's your understanding of what that is? A. That he would bill me his cost plus. Q. And you agree that you were working on a cost-plus arrangement with Mr. Narduzzi? A. That was supposed to be the arrangement. [196] When Mr. Richardson was asked if his answers were true, he responded: I don't know if it's true or not. He disagreed with the suggestion that the change to the powder room was Alannah Stewart's idea despite an email she sent to Angela at Montalco Cabinets on December 5, 2006 which seems to suggest that the changes were made before the cabinet was installed or even built. [197] He also denied that Ms. Stewart was the person picking out the kitchen cabinets. Mr. Richardson agreed that he picked the tile for the bathroom and it was expensive high end tile. He testified that despite his concern about costs, he put in the sunken patio because he wanted it, and it wasn't too expensive. He testified he didn't realize there would be alterations to the garage and couldn't recall when he realized that there was a new roof going on the garage. [198] He was asked if he was concerned with expense, why he did renovations to the front porch. He responded "maybe he was being generous, the porch needed repair". [199] Mr. Richardson agreed the choice of tiles and kitchen cabinets was his, not the plaintiff's and he agreed that he and Alannah Stewart designed the interior stairs and told the plaintiff what they wanted. [200] Mr. Richardson was asked how he expected the plaintiff to control the budget when he was not selecting the products and he responded that the plaintiff sent him to the suppliers from which the products were chosen. [201] He agreed that there were some increased costs to the project and he did not offer to finance any of them. He agreed he increased the second mortgage on the property in December 2006 without informing the plaintiff or offering any security for his financing or paying him any of the proceeds of the refinancing to offset his costs. [202] He was unable to adequately explain why he swore in the statutory declaration in support of the new second mortgage that no monies were owing on the property. He suggested that his lawyer, who drew up the statutory declaration, should be questioned, not himself. [203] Mr. Richardson was questioned about the email to Mr. Narduzzi on February 26, 2007 when he informed Mr. Narduzzi that he went down to City Hall to tell them he voluntarily shut down the work on the house and that he was going to meet with the planning department "on Thursday" to get everything straightened out and done with proper permits and inspections. He testified he "couldn't recall" why he waited three and a half weeks after learning about the permits to go to City Hall. [204] It was suggested to Mr. Richardson that he knew there were no permits and that's why he did not pursue the fireplace issue with his neighbour. His reply to that suggestion was not responsive. He agreed that he never expressed surprise or "outrage" to Mr. Narduzzi in any emails concerning the absence of permits. [205] He agreed that in December of 2006 he borrowed the sum of $50,000 from Ben Keong which was secured by a promissory note dated November 7, 2008. THE POSITION OF THE PARTIES (1) The Position of the Plaintiff [206] The plaintiff bases his argument on six issues: 1. Whether there was a contract between the parties; 2. How much the plaintiff is entitled to claim for his construction costs; 3. Whether the plaintiff is entitled to contractual interest; 4. What amount is the defendant entitled to for deficiencies; 5. What amount the defendant is entitled to for the delay in completion of the construction; and 6. What effect, if any, does the estimate have on the plaintiff's claim. [207] The plaintiff contends that despite the absence of an agreement for a price or a formula for determining a price, there is a contract between the parties. The plaintiff relies on Fairwood Construction Ltd. v. Lin, [1997] B.C.J. No. 1123, 33 C.L.R. (2d) 111 at para. 33 (QL) where Satanove J. found a contractual relationship existed between a builder and a home owner despite there being no agreement as to price. The plaintiff also relies on Greenhill Properties (1977) Ltd. v. Sandcastle Recreation Centre Ltd., [1998] B.C.J. No. 1123, 39 C.L.R. (2d) 205 at para. 92 (QL) where Burnyeat J. found a contract between the parties while finding that an estimate given for the work was not "a fixed quote" and did not constitute their contract. In that case, Justice Burnyeat found evidence of a contract "in the various invoices". [208] The plaintiff takes the position that there was a contract between the parties for the plaintiff to do the renovation work on the house and be paid his costs plus a mark up to be determined at a later date. He contends that he is thus entitled to "a contractual quantum meruit claim". [209] As to the amount the plaintiff is entitled to claim, he takes the position that the proof of loss documents show that he incurred construction costs of approximately $330,000 which, less the $100,000 paid by the defendant represents a claim of approximately $230,000 together with a management fee consisting of 25% of the labour costs. The plaintiff submits that there is some confirmation of his construction costs in that when the costs which Mr. Artis left out of his calculation valuing the renovation at $256,000 are added in, and when the standard variance is added to the estimate the resulting figure is a little more ($348,037.08) than what the plaintiff is actually claiming. [210] On the issue of the plaintiff's entitlement to contractual interest, the plaintiff submits that although the evidence on the agreed upon rate of contractual interest is unclear, it is clear that there was an oral agreement for interest. He submits that having resort to s. 3 of the Interest Act, R.S.C. 1985, C. I-15, the plaintiff is entitled to pre and post judgment interest of 5% per annum. The plaintiff submits that if he is not entitled to interest then he is entitled to a management fee and it should be to the maximum scale of "15% of the total project". [211] The plaintiff submits that the defendant is not entitled to a claim for deficiencies. It is his position that Mr. Artis' report on the deficiencies should be given little weight and Mr. Stine's and Mr. Keong's reports "are inadmissible in their entirety". The plaintiff says there is no evidence relating to the appropriate standard of care that would allow deficiencies to be claimed. [212] It is the plaintiff's contention that the selected nature of Mr. Stine's and Mr. Keong's evidence, and in particular Mr. Keong's financial interest in a successful outcome for the defendant in light of his $50,000 loan to the defendant, renders the evidence of both of them akin to advocacy by presenting "argument in the guise of expert evidence". The plaintiff quotes Yewdale v. Insurance Corporation of British Columbia, (1995), 3 B.C.L.R. (3d) 240 (S.C.). The plaintiff submits that Mr. Stine's report was shaped by input from counsel for the defendant, and amounts to simply the argument of counsel. [213] Further with respect to Mr. Keong, the plaintiff pointed to inconsistencies, inaccuracies, and changes in his evidence and reports, including his inaccurate assumption that there was no header over the upstairs window, that one of the porches was not vented when it was, and whether or not there was adequate attic space for proper venting. The plaintiff also questioned the relevance of Mr. Keong's experience. [214] As to Mr Artis' deficiency report, the plaintiff noted that there was a 12% increase in costs since the plaintiff stopped working on the project. He further contends that there is a logical inconsistency in Mr. Artis providing for a $22,400 management fee for six week of deficiency work and only $25,200 profit for a contractor doing a six or seven month major renovation project. [215] The plaintiff also contests Mr. Artis' $50 an hour estimate for labour (which included $5 for materials) for the deficiency work and his cost of fire rating the west wall given it was not proven that the tub and tiles would have to be removed and replaced. The plaintiff also questioned why he should not be paid for the windows he paid for and installed and then have to pay for new windows to be installed instead. The plaintiff questions the cost for painting estimated by Mr. Artis given what had already been done and the cost of debris removal which he calculated to mean that a person earning $45 per hour would spend about 100 hours cleaning up on a six week job. [216] The plaintiff further submits that the cost of removing the wire mesh installed for the stucco is simply not something that should be attributed to the plaintiff as he did not install it or participate in the decision to do so. [217] The plaintiff argues that in any event the defendant is not entitled to any claim for deficiencies as he has not actually incurred any deficiency costs and he is no longer the owner of the property. The plaintiff relied on 514953 BC Ltd. (c.o.b. Gold Key Construction) v. Leung, 2004 BCSC 1680, 39 C.L.R. (3d) 303, aff'd 2007 BCCA 114, 236 B.C.A.C. 19, which held that in the absence of evidence of diminution in value or of an intent to rectify the deficiencies, there is no loss giving rise to a claim. In dealing for the stucco mesh, the plaintiff submits on the basis of Foyer Valade Inc. v. Red River Construction Co. (1999), 46 C.L.R. (2d) 289, 138 Man. R (3d) 60 (C.A.) that he is not liable in negligence for the acts of an independent contractor. [218] So far as the delay in construction is concerned, the plaintiff submits that "at most the $541 per month in rent which the defendant incurred from losing income for moving into the West 3rd property" is a proper consequence. As to the length of the delay, the plaintiff submits that there was no fixed agreement on the completion date and at most the delay would be computed to July 2007 by which time the defendant could have obtained a permit if he did not choose to seek an accommodation for the stucco exterior or the vinyl windows. The plaintiff submits he should not be liable for losses resulting from decisions made by the defendant which protracted the permit acquiring process beyond that date. [219] As to the claimed estimate, the plaintiff submits it did not have contractual effect, as there was no basis upon which the plaintiff could rest his estimate at the time it was made. Plans were not created until after the discussion of the estimate and the specifications were similarly developed later. The plaintiff had no control over certain of the project's costs, and he submits that in any event there were changes to the project that increased the costs contemplated when the estimate was made. The plaintiff also argues that even if the estimate had contractual effect, he was entitled to charge a variance of up to 25%. [He submits from the value of the changes including the vaulted ceiling, removing all the interior walls, creating the new sunken patio, the change of plumbing in the main floor powder room, the changes to the front porch, stripping the exterior cladding, the addition of expensive tile and the new roof for the garage, adding $40,000 to $50,000 according to the plaintiff's estimate, then the net contractual amount given a 20% variance would be in the realm of $425,000 of which the defendant has paid $100,000.] [220] In the result, the plaintiff seeks a declaration of builder's lien and personal judgment against the defendant for $250,000 and a declaration that the monies held in security be paid out to the plaintiff. (2) The Defendant's Position [221] It is the defendant's contention that the issues arising from this claim are three-fold: (1) Is the plaintiff to be compensated on a quantum meruit basis for the work performed, and if so, how is the amount of such compensation to be determined? (2) Was there wastage from the plaintiff's negligent performance of the work? (3) Given the budget constraints of the defendant, was the plaintiff negligent in producing a set of plans that were inconsistent with the budget and by proceeding with the work without the benefit of permits? [222] The defendant says that a claim in quantum meruit can arise under an express agreement to pay a reasonable sum, when there is a contract with no fixed price, and in a quasi contract situation. He cites Stephen Furst Q.C. et al., eds., Keating on Construction Contracts, 8th ed. (London: Sweet and Maxwell, 2006), at 4-019. The defendant contends that this was a quasi contract situation although "there is no practical difference (among) the alternatives". [223] The defendant concedes that the plaintiff is entitled to compensation on a quantum meruit basis. [224] The defendant submits however, that the issue of quantum "is to be determined not by assessing the costs incurred by the contractor although (they) may be some indication of the value of the work, but rather on the basis of the value of the work to the party that has requested the work to be performed". In support of that submission, the defendant relies on Ketza Construction Corp. v. Mickey, 2000 YTCA 4, 139 B.C.A.C. 161. [225] The defendant contends that "a good deal of the work" performed by the plaintiff was incorrectly performed either because it was not compliant with the City of Vancouver planning department's requirements, or because it was inadequate from a construction perspective. The defendant refers to the front porch renovations, the vinyl windows and the wire mesh prepatory to the application of stucco to the exterior and the need for 5/8 inch drywall on the west side of the house as falling in the former category, and the inadequate venting as an example of the latter. [226] The defendant says these inadequacies created the need to stop the construction and required re-doing or altering the work done. The defendant submits that in the present case, the contractor undertook the role of the designer and hence had a duty to design the work to come reasonably within the defendant's budget. The defendant says in the present case the plaintiff made no effort to accurately estimate the cost of the work or to perform it in a way that met his budgetary expectations. [227] The defendant contends that the plaintiff failed to consider the implications of the zoning by-law and hence "as designer and contractor proceeded at his peril without the benefit of the development permit". The work implicated by the failure to obtain a development permit was the look of the front porch, the vinyl windows and the wire mesh on the exterior of the home. The defendant says the plaintiff had a duty to advise him that the stucco may not be acceptable to the City of Vancouver planning department. [228] Additionally, the cost of fire rating the west wall is a product of the plaintiff's failure to know or observe the by-laws affecting the property. The defendant submits the need to cut holes in the drywall to inspect the framing and the need for a 6x6 post to be added to carry the load of the beam on the main floor down to the footings are costs properly assessed against the plaintiff. The defendant also identifies the need for "appropriate framing" around the enlarged window on the top floor of the north wall, framing repair in the area of the stairs from the main floor to the top floor, and venting of the soffit area of the house and the deck over the kitchen as matters requiring remediation. The defendant says the work is significant and will require scaffolding for some of it and in the case of the soffit removal of enough of it to permit drilling through blocking between the roof joists to permit proper venting. [229] The defendant also relied on evidence that the deck over the kitchen had no air flow from the openings on the parapet walls into the joist area and would require re-building. [230] The other areas of deficiency which the defendant relies on as diminishing the plaintiff's claim are the improperly installed electrical panel, the deficient levelling of the basement floor, damage to some drywall in the media room due to improper installation of the drainage system and the need to rebuild the front stairs because of the use of an improper membrane located between the stairs and the wood structure. [231] In relation to the over-billing alleged, and referred to in Mr. Keong's evidence, the defendant submitted that the remaining electrical work required to be done under the quotation from Power House Electric amounted to $7,805, and that there was double counting for some of the plumbing work in the amount of $1,016.50 and some work left undone, amounting to $1,564.50 for a total of $2,580. In terms of the tile work, Mr. Keong estimated an excess of $3,123 and for the painting he estimated an over-billing of some $3,000. [232] In terms of the value of the work done, the defendant relies primarily on the evidence of Mr. Artis but conceded that GST should be added to his estimate of $266,900. He conceded as well that certain other costs which Mr. Artis neglected to include should be added in. Those costs consist of the removal of the siding ($10,000 - $12,000) construction of the vaulted ceiling ($3,000) the cost of the footing pads ($3,600) and the cost of the garage roof ($1,600) for a total value of between $18,200 - $20,200. The defendant submits however that the cost of the vinyl windows of $13,870 should be deducted as they will have to be replaced. In the result, the defendant submits that the total value of the work done with all the adjustments is $279,510.74 based on Mr. Artis' assessment. [233] In the alternative, the defendant submits that the plaintiff's total claimed amount of $329,776.30 should be adjusted down to $295,188.07 based on the plaintiff's allegations of his costs and "after adjusting for billing errors, the cost of the windows and the over-billing of the plumbing and electrical accounts as well as other adjustments". [234] The defendant submits the calculation of value based on Mr. Artis' evidence is preferable in part because the plaintiff's accounting is "suspect", his crew's efficiency is "open to question", and he did not seek competitive tenders from sub-contractors. [235] As to the cost of repairs, the plaintiff submits the sum of $97,901 is an appropriate adjustment based in part on Mr. Artis' evidence that his original estimate of $89,500 could be discounted by $3,000 if the fire-rated drywall could be added to rather than replaced by existing drywall and his concession that $500 for structural repair materials should not have been included. The other cost of repairs, according to the defendant, flow from Mr. Keong's estimate of $11,901.06 for fines for no building permits, emergency service, a lost bathtub, the need for an inspection, plumbing repair and the need to move the electrical panel. The defendant submits the 12% fee which Mr. Artis built into his original estimate of the value of the work should not be applied to the $97,901 representing the deficiencies, resulting in a further reduction of $11,748. The defendant further submits that whatever interest was payable should only be paid on the money expended for which the defendant received some actual value. The defendant submits a figure of 5% interest would be appropriate. In the result, after all adjustments, the defendant contends that the balance of the plaintiff's claim, after deducting the $100,000 already paid and before the counter-claim is $78,561. THE COUNTER-CLAIM [236] The defendant bases his counter-claim on the footing that the plaintiff was engaged as a designer and contractor and failed to meet the legal obligations imposed on him in those roles to acquire the necessary permits and to properly estimate the costs of the work at it evolved in order to address the defendant's budget. The defendant submits that the plaintiff breached the standard of care he owed to the defendant and negligently provided his services and thus engaged the defendant's right to damages consequent on that negligent provision of services. The defendant relies on British Columbia v. R.B.O. Architecture Inc., [1994] 9 W.W.R. 317, 46 B.C.A.C. 108. It is the defendant's contention that by providing a budget amount to the plaintiff, he was relying on the plaintiff's skill as an experienced contractor to meet that budget and the plaintiff breached his duty of care that arose from that reliance. [237] The defendant relies on the evidence of Mr. Richardson, the July 10, 2006 email, the presence of an inspector on the property in May 2006, and the evidence of Valerie Neufer in support of the contention that Mr. Richardson was not aware of and did not acquiesce in the plaintiff's failure to secure the necessary permits. The defendant argues in the alternative that even if he was aware of and acquiesced in the failure to obtain permits, it does not relieve the plaintiff of his duty to build in accordance with the government's regulations. Further, the defendant contends that a concurrent cause of the cessation of work on the property was the plaintiff's failure to properly estimate the cost of the work. On either event, the defendant claims that the plaintiff was responsible and liable for the consequential damages that he has suffered. [238] The defendant claims as damages the interest cost on the Property from August 1st of 2007 (by which time the project would have been completed) until March 2009 when the property was sold. [239] In additional submissions filed on April 6, 2009, the defendant submitted that his interest costs of $112,887.62 representing $62,081.15 on his first mortgage and $50,806.47 on his second mortgage, less the sum of $27,000 for a net amount of $85,887.62 constitute his damages arising from the plaintiff's negligence. The $27,000 deducted from the interest costs represents the fact that had the project been finished on time (in August 2007) then the defendant, who proposed to live in the house would have carried the cost of financing the renovation as well as the cost of buying the house for the 18 months for which he is claiming damages. That additional amount is $27,000 according to the defendant's calculations. [240] In support of his contention as to damages, the defendant submits as follows: Prior to the work commencing, Mr. Narduzzi and Mr. Richardson walked through the existing residence and Mr. Richardson explained to Mr. Narduzzi the changes that he wanted made to the residence. These changes included extensive changes to the demising walls within the residence as well as the addition of new windows. Mr. Narduzzi, during his examination in chief, indicated that the opening up of the main floor area and the insulation of a vaulted ceiling and ridge beam on the second floor added substantial cost to the project. However, it is clear from the evidence that he was aware of those requirements of the owner from the outset and they are reflected on the plans that were used for construction from the commencement of the work. The Plaintiff's foreman, Mr. Sas, confirmed that this was the case. [241] The defendant submits that the fact that he sold the house without completing the construction "is not relevant to the calculation of damages." He submits the value of the work to him is less by virtue of the 18 month notional delay in completing the project and the measure of that reduction in value is the carrying costs for the home over that time. DISCUSSION AND CONCLUSION 1. The Estimate [242] I am not satisfied on all of the evidence that the initial discussions between the plaintiff and the defendant led to a firm quotation or estimate for the project or that the sums discussed reflected a budget which the plaintiff was obliged to work within. [243] In the first place, the defendant had already bought the Property which a view to converting it into a single family dwelling for his own use. The major portion of his investment was the $1,025,000 to purchase the house and his financing costs for that purchase. Had the defendant been unwilling to undertake the renovation if it were to cost more than $250,000 - $350,000 referred to by the parties as arising in the initial discussions, one would have expected him to have made that determination before he bought the Property in the first place. [244] Secondly, I accept that the discussions between the parties were undertaken at a very early stage before any plans had been drawn or decided on that would have allowed a reasonable estimate or budget to be arrived at. I also note that the defendant conceded that whatever figure was being discussed, the plaintiff at a later stage told him the costs were "a little weak." [245] In the third place, despite Mr. Richardson's evidence that he "was floored" when he received Mr. Narduzzi's summary of costs on December 16, 2006 showing $335,000 in costs with significant work left to do, there is no evidence that he took any steps to communicate with Mr. Narduzzi or seek some sort of explanation or assurance as to future costs. There was simply no reference in the evidence to any discussion of a budget or estimate that was in place for governing the development of the project. [246] Mr. Richardson's December 29, 2006 email to Ms. Stewart when he was in Mexico did not appear to evidence any concern with a budget or estimate that was being over-run. Moreover, his subsequent email of February 15th to the plaintiff and to Angela of Montalco Cabinets asserting that there were no "no budget restraints" does not reflect a state of mind governed by a specific budget. Similarly, the defendant's willingness to undertake changes without a clear indication of their impact on the cost and his willingness to order expensive tile and cabinets weigh against his assertion that he relied on his preliminary discussions with the plaintiff respecting a budget of somewhere between $200,000 and $250,000 in deciding to proceed. [247] In my view, it is notable that the plaintiff, and not the defendant, first raised the issue of the increasing costs of the project on January 23, 2007 when the costs totalled $361,294.49. In his response to the plaintiff's request to discuss the financing, the defendant said nothing about the existence of a budget or estimate, but instead sought to review the plaintiff's bills and thereafter engaged Mr. Keong to assist in reviewing the bills and the quality of work. [248] In those circumstances I am not satisfied that the preliminary discussions of the parties in relation to an estimate of somewhere in the range of $200,000 - $350,000 was anything other than a preliminary estimate and I am not satisfied on balance that it was a precondition to proceeding with the project. 2. The Role of the Plaintiff [249] I am similarly not satisfied that the plaintiff took on the role of the designer of the project in the sense advanced by the defendant. The plaintiff was financing the project. It is apparent from the email exchange between the parties that he became concerned with the cost of the project as it progressed and I conclude that was because the renovations unfolded in accordance with the desires and directions of the defendant acting initially through his former wife and subsequently through Ms. Stewart. I do not accept the defendant's evidence that Ms. Stewart was assisting Mr. Narduzzi. The evidence simply does not support that contention. 3. The Building and Development Permits [250] I am not satisfied that the defendant was unaware of the absence of a building permit for the property. In that regard, I do not accept his evidence but prefer the evidence of Mr. Cleaver, Mr. Hoover and Mr. Sas that they had discussions with him, specifically in late 2006 during which the defendant expressed his awareness of the absence of permits. I make that finding despite the evidence of the July 10, 2006 email and the evidence of Ms. Neufer as to Mr. Richardson's apparent state of mind regarding the permits. In my view, the fact that when the defendant claimed he found out there were no permits at the meeting with his neighbours in early February, he did nothing to raise the issue with the plaintiff or find out whether in fact there were permits is very telling. The defendant testified that instead, some three weeks later, he went down to City Hall to "find out" if there were permits and he gave no explanation for not simply asking the plaintiff. Thereafter, when the defendant wrote the plaintiff to tell him that he had voluntarily stopped construction and was going to seek the proper permits, he did not attribute the failure to obtain permits to the plaintiff. Given the state of their relationship at that point in the project, and the issues between them, I find it unusual that he did not attribute fault for the absence of permits to the plaintiff in order to advance his own position at that time. [251] While I generally accept the evidence of Ms. Neufer, given the lapse of time, she could not be expected to remember precisely what Mr. Richardson told her, and in any event, whatever he said may have been simply to gloss over or dismiss the subject rather than to accurately convey his state of mind. Although the July 10, 2006 email appears to reference an expectation of building permits, unlike other emails in evidence, it was written not by Mr. Richardson, but by his assistant who was not called to testify. [252] Mr. Richardson is clearly a sophisticated businessman who is familiar with real estate issues. I do not accept his denial of being aware of the absence of permits to be credible in all the circumstances. It is clear on the evidence that he swore a statutory declaration that he knew not to be true to obtain further financing on the property without telling the plaintiff and without using the funds to defray the plaintiff's mounting costs. I also find support for the defendant's knowledge of the absence of permits in his willingness to respond to his neighbour's complaint about the venting of his fireplace by moving the fireplace rather than by proceeding with the plan which he would have been entitled to do if he had a permit. [253] Those factors, taken with the evidence of Mr. Hoover, Mr. Cleaver and Mr. Sas, persuade me that the defendant was at all material times aware that the renovation was proceeding without the requisite building permits. 4. The Plaintiff's Damages [254] I am satisfied that there was an agreement reached between the parties that the plaintiff would undertake renovation work for the defendant and in accordance with his direction. I do not find there to have been a fixed quotation or price as part of the agreement and hence, the plaintiff is entitled to damages on a quantum meruit basis. [255] In Fairwood Construction Ltd. v. Lin [1997] B.C.J. No. 1123, 33 C.L.R. (2d) 111, at para. 32 (QL), Satanove J. discussed the law relating to contractual quantum meruit in the context of variations to a contract which the contractor was asked to carry out but for which no price was agreed. In that case, Justice Satanove observed as follows: From my review of the cases, the elements required to be proved by the plaintiff in a contractual quantum meruit action ....are 1. There was a contractual relationship between the parties; 2. The parties agreed that certain work was to be done but failed to agree on all aspects of the contract, for example, the price to be paid; 3. The defendants accepted the work; 4. Both parties had, or should have had in the circumstances, an expectation that the work was not being rendered gratuitously; and 5. The payment sought was reasonable remuneration for the work done. [256] In the present case I conclude there was a contractual relationship between the parties involving certain work to be done, but without an agreement on the price to be paid. I find that the defendant either directly or through Ms. Stewart, directed and accepted the work subject to some deficiencies and that there was never any expectation that the work would be done gratuitously. The principle issue as I see it is whether and to what extent the payment sought by the plaintiff in this claim of lien represents reasonable remuneration for the work done. [257] There is little doubt that there are aspects of the work performed by the plaintiff that are problematic. I find on the evidence that he failed to meet code requirement with respect to the header around the new window in the top floor, he failed to bring support for the beam on the main floor down to the foundations by inserting a 6x6 inch post, he failed to properly construct the front stairs, he failed to properly vent the soffit area of the house and the parapet walls on the decks, and he failed to ensure the electrical panel was properly installed. Those were all deficiencies requiring remediation under the building code. The vinyl windows and the porch renovation do not meet the requirements of the City of Vancouver planning department. I am not satisfied that the wire mesh installed for the anticipated stucco cladding which will have to be removed is attributable to the plaintiff. I conclude that it was the defendant's choice to clad the exterior with stucco and that it was done without reference to the plaintiff. [258] In addition, there were issues with the drainage system and the level of the concrete floor in the basement. As well, the plaintiff did not communicate effectively with the defendant concerning his costs or timing. It is notable that the claim of lien was filed claiming $272,000 but through the trial process the plaintiff has conceded that some $43,000 of what he was claiming was not justified and he has adjusted his claim to $329,776.30. [259] As to the work that was completed, I conclude that the best measure of its value is to take the claim advanced by the plaintiff at trial and discount it by an amount representing the over-billing and the cost to the defendant of not having the project completed in a timely way. As I see it, while the defendant may have been a cause of the delay in completion by not seeking building permits or a development permit, the plaintiff contributed to the state of affairs leading to the delay by his lack supervision of the crew, by deficiencies in the performance of the work, by not being alive to the requirement of a development permit and what that entailed, and by sloppy and inaccurate accounting and communication with the defendant over the progress of the renovation. In coming to the conclusion that the quantum meruit award to the plaintiff should reflect the shortcomings of his performance and its impact on the defendant, I have regard for the observations of Southin J.A. in Ketza Construction Corp. v. Mickey, 2000 YTCA4, 139 B.C.A.C. 161 at para. 18. In overturning the trial judge's award of 12% to the plaintiff contractor for overhead and fee on a quantum meruit claim she said: ...if one approaches the issue with "what it deserves" as the criterion, the respondent did contribute to this debacle by going about this transaction in a very unbusinesslike way and by failing to warn the appellants of the escalating costs very much earlier than it did in fact. [260] So far as the impact of the need for remediation of the identified deficiencies upon the value of the work done is concerned, as the defendant did not complete the renovation and incur the costs of repair, it is difficult to quantify a corresponding loss in value from the contractor's costs. I do not accept Mr. Artis' revised estimate of $86,000 for remediation of the deficiencies. I conclude his estimated management fee of $22,400 for remediation is unrealistic and the costs he allocated for fire rating the west wall is similarly excessive. I do not regard the removal of the wire mesh as a cost attributable to the plaintiff's deficiencies. Nor do I regard the $4,300 as a realistic assessment of rubbish removal for the remediation. The painting costs identified by Mr. Artis are largely a cost to complete rather than to remediate and would not thus affect the value of the work done by the plaintiff. On balance, I am satisfied that the need for some remediation of the work done likely had an impact on the sale price of the property and hence, lessened the value of the work done to the defendant, but I conclude that it is not a direct reflection of the cost of repair or completion. I conclude that the sum of $25,000 represents a fair assessment of the reduction in value of the sale price due to the deficiencies of the work done in the context of assessing a quantum meruit award in the circumstances of this case. [261] There is some further measure of the loss of value of the Property to the defendant and that is his loss of rental income, necessitated by him moving into his West 3rd rental property during the period in which the house was incomplete and unsold. That rental was $1,541 per month and in my view, it represents a reduction in value to the defendant, properly assessed against the plaintiff's claim in quantum meruit. [262] Accordingly, based on all the evidence, I conclude that the plaintiff's claim to costs of $229,776.30 should be discounted by over-billing of $1,016.50 and $2,580 by Avante Plumbing, $7,805 by Powerhouse Electrical, $3,000 by B. Kleamick, $2,588 by Dunbar lumber and $3,123.60 for tile labour. I am not satisfied that the $13,875 for windows should be entirely discounted as the defendant ended up with those windows and they have some intrinsic value. I would discount $6,000 for the windows on the footing that they were of less value to the defendant given that they would have to be removed and resold. In total therefore I would discount the quantum meruit claim by over-billing and other adjustments of $26,113.10. I would further adjust the plaintiff's claim by deducting the loss of value to the defendant arising from the notional delay in completion of 18 months between August 2007 and March 2009 when the property was sold. I do not find that the plaintiff is entitled to a management fee as that is not what was agreed to by the parties. [263] Rather, I conclude, that the plaintiff is entitled to the sum of $150,925.20 with interest at 5% per annum effective from the date the lien was filed. 5. The Counter-Claim [264] As I have concluded that the defendant acquiesced in the failure to acquire permits, that the plaintiff was not engaged as a designer of the renovation and that there was no fixed contractual estimate or quotation, I dismiss the defendant's counter-claim whether founded on breach of contract or on tort. [265] If I had found liability based on the counterclaim, I would not however have awarded him damages based on his costs of carrying the property. I conclude, given that he intended to live in, not live off the property, those are costs he would have borne in any event and are simply not attributable to the delay occasioned by the absence of permits or the unanticipated costs of the project. In my view, had the defendant been successful in his counterclaim, the measure of his damages would have been the rental income he lost by having to live in his rental unit on West 3rd Avenue, and the reduction of the sale price of his house due to the deficiencies of the work done. As I have already discounted the value of the quantum meruit award by an assessment of those amounts on the footing that deficient and non-compliant work has less value than complete and compliant work, the defendant would not be entitled to any additional off-set through his counter-claim in any event. [266] Accordingly, I award the plaintiff a declaration of lien in the amount of $150,925.20, contractual interest of 5% from the date of the filing of the lien and costs against the defendant, unless there is some matter of which I am unaware, in which case there is liberty to apply. "A.F. Cullen J." The Honourable Mr. Justice A.F. Cullen