Small Claims Court

                                                                                                   Claim No: 342401

                   IN THE SMALL CLAIMS COURT OF NOVA SCOTIA

Cite as: Leverman Roofing Ltd. v. Future Inns Halifax, 2011 NSSM 15

BETWEEN:

                                          LEVERMAN ROOFING LTD.

                                                                                                                     Claimant

                                                          - and -

                                             FUTURE INNS HALIFAX

                                                                                                              Defendant

                                        REASONS FOR DECISION

BEFORE

Eric K. Slone, Adjudicator

Hearing held at Dartmouth, Nova Scotia on March 1, 2011

Decision rendered on March 9, 2011

APPEARANCES

For the Claimant              Jeff Leverman, President and Owner

For the Defendant Louis Wilby, Regional General Manager

BY THE COURT:

1                    The Claimant is in the roofing business.  The Defendant is the owner of a hotel in the Clayton Park area of Halifax.

2                    The Defendant had been experiencing leaking for many years in various parts of its relatively new building.  In late 2010 it retained the services of a firm, Janelli Thermal Imaging, which takes infrared images of a building to assist (among other things) in the locating of water getting trapped within the structure.  After Janelli had done some of its work, it reported its findings to the Defendant and recommended that a roofing company be retained to perform certain further investigations.

3                    The company that Janelli recommended was the Claimant, with whom it had worked in the past.  The Defendant agreed and a meeting was scheduled in or about October 2010 to discuss what needed to be done, and upon what terms.  Among those present at that meeting were Jeff Leverman, representing the Claimant, Louis Wilby and Jeff Appleton, the general manager and president respectively of the Defendant.  Nelson Brison, the president of Janelli was also present.  There may have been others.

4                    All of the above-named individuals except for Mr. Appleton testified at the trial.  They all agreed on some of what was said at that meeting.  On other aspects they differed.  There is no dispute that the Claimant was retained to do something of an open-ended job, the ultimate purpose of which was to help find the leaks that were creating such concern.  There is also no dispute that Mr. Leverman said that he could not quote a firm price because no one knew what was involved.  As a result, the agreement was that the Claimant would charge on a “time and materials” basis.  There was also an understanding that the Claimant would bill the Defendant “fairly.”

5                    What was less clear was whether the Claimant was able to take direction from Janelli, rather than go directly to the Defendant to receive authorization for every aspect of the job.  In the end, there is really no issue of whether work was authorized, so I do not need to resolve this difference.

6                    What is also disputed is what Mr. Appleton was quoted by Mr. Leverman as having allegedly said, which (in response to the acknowledgment that there were no set limits on the Claimant’s billing) was a statement to the effect “treat me like an ATM.”  Nelson Brison corroborated this quote, while Mr. Wilby of the Defendant denied that any such statement had been made.

7                    On a balance of probabilities, I find that Mr. Appleton made a statement to that effect, communicating (if nothing else) the urgency with which he viewed this problem and his desire to secure the Claimant’s help.  I do not believe it was meant literally.  I do not place a lot of weight on such a statement, and certainly would not use it as a foundation for an unlimited claim by the Claimant.  That statement was met with the promise to treat the Defendant fairly, and fairness is the ultimate touchstone.

8                    Shortly after this meeting Mr. Leverman assigned the task to his son, Greg Leverman, who together with a member of his crew began the process of investigation as they understood it.  A Zoom Boom was rented to allow for proper and safe access to the roof, at a cost which eventually totalled $2,325.00 plus HST.  The Defendant provided a $5,000.00 deposit in good faith, especially given the expected outlay for the Zoom Boom.

9                    The initial indication had been that there might have been a problem with the rain gutters, but after disassembling some sections of gutter Greg Leverman soon determined that this was not a likely source of the problem.  Other obvious possibilities were also dismissed.  Eventually, he focussed on the areas around air-conditioning units which appeared to have been flashed in a way that trapped water behind the brick walls, not allowing it to drain as it had been designed to do.  It is well-known that water which cannot escape normally will often find another way to move, often with destructive results.

10               After having satisfied himself that this was a real problem, and having demonstrated it to others, Greg Leverman proceeded to place an order for some new flashing to be custom fashioned by a sheet metal company.

11               At about the same time, Greg Leverman reported his hours to his father who caused an initial bill to be prepared and presented to the Defendant.  By then the work had been proceeding on an intermittent basis for about two weeks.  The bill was for $9,288.00 plus HST, for a total of $10,681.20.  This bill did not include the Zoom Boom charge, which appears to have been provided separately.

12               In a breakdown provided at the request of the Defendant, the following was said to comprise the charge:

13               If one adds the $2,325.00 Zoom Boom rental to this number, the total is $11,613.00 plus HST of $1,741.95 for a total of $13,354.95.  Deducting the $5,000.00 deposit paid, the amount claimed by the Claimant was (and is) $8,354.95.

14               This bill was not well received by the Defendant, and the Claimant was informed that its services were no longer needed and instructed to stop work.

The positions of the parties 

15               It is not obvious on its face of the invoice how the “overhead and profit” figure was arrived at.  However, upon closer examination it represents a 45% surcharge on the total of all of the other items shown on the invoice plus the Zoom Boom rental charge, which (as noted) did not appear on the invoice.

16               The labour component, $3,996, works out to an average of $51.23 per hour for the two men, and marked up by 45% represents $74.28 per hour.

17               The Defendant acknowledges that the Claimant did a good job, and takes no issue with its methods or conclusions.  It simply believes that it is being overcharged.  Specifically, it believes that the hourly rate is excessive and the amount added for profit and overhead is also excessive.  The Defendant also questioned some of the smaller charges, such as fuel for the truck which transported the workers to the job site.

18               The Defendant produced quotes by other roofers, as well as the Collective Agreement for unionized roofers, which suggests that the prevailing hourly rates in the industry are lower than the amount being charged by the Claimant.  Other companies also appear to apply a much lower mark-up to expenses, in the range of 10 to 15% rather than the 45% charged by this Claimant.

19               Mr. Leverman explained that his company mostly does residential roofing, which is quoted by the square foot or by the job, and which is more lucrative than hourly based work.  He testified that he only took on this job as a favour to Mr. Brison.  He charged what he thought was fair to the Defendant as well as to his company and to his son, who he believed could have earned a lot more doing residential jobs during the same time.

Legal principles

20               It is never easy to resolve a dispute over price when the agreement is so vague as to price as it is here.  In a contractual arrangement, the law will usually respect a contracted-for price if the parties agree to it, but where they have left it vague they will have to accept a court-imposed concept of quantum meruit, which is Latin for “what the thing is worth.”

21               Clearly the Defendant was anxious to have the Claimant take on the project, and it was not overly concerned with price.  However, it expected the price to be within the range of reason.

22               There is nothing to indicate that Mr. Leverman advised the Defendant that he could make more money doing residential work.  The agreement was that he would charge “time and materials” and there was an open-ended agreement as to how many hours would have to be spent.  There was also no discussion about the mark-up rate to be applied, or even that there would be one.

23               On the evidence, the hours actually charged are likely rounded up in the Claimant’s favour.  Greg Leverman testified that he only charged by the half day or full day, because of the amount of travel involved.  I took from this that even if he came and spent a couple of hours, he put in for a half day.

24               The billing rate of $51.23 per hour, while not broken down, appears to be a composite, in the sense that Greg Leverman probably bills at a higher rate than the assistant who worked with him.  In that case, the rate may be more like $65.00 for Greg Leverman and $38.00 for the assistant. 

25               I find nothing unreasonable about these rates as billing rates.  But the matter goes further than that, because of the additional 45% mark-up.  That raises the average rate to something more like $74.00 per hour - perhaps $90.00 for Greg and $60.00 for the other roofer.

26               On the evidence, these rates are outside the range of reasonable in the industry. 

27               It appears to me that the Claimant is building two profits into his bill.  Apparently, Greg Leverman operates as a subcontractor to the Claimant company, and Jeff Leverman was concerned that not only his company but also Greg or his company (if it is a company) should earn a profit on this contract.

28               There was no evidence to the effect that the Defendant was ever told that the Claimant would be subcontracting the job, or that two separate profits would be built into the price.  The notion of “time and materials” suggests that there would be a billing rate for the time spent, which would obviously be more than the amount paid to the people doing the work, in order for the company to make a profit.

29               This is not a science.  The Claimant is entitled to be generously compensated for the work, and the Defendant is entitled not to be taken advantage of.

30               I have concluded that an appropriate disposition is to reduce the profit and overhead component of the bill to something more modest.  I am not prepared to adjust any of the individual items.  I believe that a 20% profit and overhead charge is reasonable in all of the circumstances, and is likely on the high side of what is prevailing in the industry.

31               In the result, the Claimant is entitled to:

32               It is acknowledged that the Defendant paid a $5,000.00 deposit at the outset, so the further amount due to the Claimant is $6,052.29. 

33               The Claimant incurred a cost of $179.35 to commence the Claim.  The Claimant will have judgment for $6,052.29 plus $179.35 for a total of $6,231.64.

Eric K. Slone, Adjudicator