Small Claims Court OF NOVA SCOTIA
Citation: Navillus Properties v. Catsburg, 2023 NSSM 34
Date: 20230802
Docket: 521967
Registry: Halifax
Between:
Navillus Properties (Tom Sullivan)
v.
Cameron Catsburg and Kaileigh Van Den Berg
Adjudicator: |
Darrel Pink |
Heard: |
July 19,2023 in Halifax, Nova Scotia |
Decision |
August 2, 2023 |
Counsel: |
Claimant - Tom Sullivan, self-represented Defendant, Cameron Catsburg, self- represented |
By the Court:
[1] Home renovations are often fraught with challenges. There are many unknowns. They frequently defy precise budgeting. Time frames for completion often come and go. In this claim, these issues arose and created challenges and ultimately a falling out between the parties.
[2] The Claim is for the cost of completing a renovation the Claimant undertook on behalf of the Defendants. The Claim is for $18712.32 plus interest and costs. The Defendants before trial, applied to the Court and were granted permission to counterclaim for alleged losses resulting from the tardiness of the Claimant in completing the contacted work and some deliverables not completed by the Claimant. The Counterclaim is lost rent of $9400 and for $15094 for work not done. Before this hearing, no demand had ever been made by the Defendants for these sums.
[3] The Claimant, through its owner/principal, Tom Sullivan, managed properties and performed minor renovations for relatives of the Defendants. That is how the parties became acquainted. Prior to 2020, the parties worked together on a small project on Bellaire Terrace in Halifax that involved painting, bathroom repairs and some electrical work.
[4] The Claimant was not a contractor, who was in the business of major property renovations. This was the largest project he had ever done. He had no experience in undertaking a project of this scope, over the anticipated time it would take using sub-contracted labour and billing and managing costs over many months. He saw it as a learning opportunity, one that in the end was expensive for him. He knew he lacked experience but did not appreciate the type of financial and management systems required for a job of this magnitude.
[5] The three parties testified. There was general agreement on the intended work and the expected costs for it. Disagreements arose only when the project came close to completion; costs exceeded the initial estimates; and the work took longer than the Defendants anticipated it should.
[6] Near completion of the project, the parties, in the midst of a dispute on financial reconciliation purported to reach an agreement on all matters between them. Whether there was a binding agreement between them is the main issue to be determined.
The Evidence, the Dispute and the Purported Settlement
[7] In May 2020, the Defendants purchased a property on NovaLea Drive in Halifax, intending to convert it from a two unit building into three apartments. Following discussions between the parties the Claimant agreed to undertake the renovations required to transition the property. The work included general repairs, updating kitchens, bathroom renovations, addition of heat pumps, roofing and electrical work.
[8] To assist the Defendant to obtain financing the Claimant provided several estimates for the work. The estimated total cost for the project was $186,100. Work was to be charged on a time and materials basis.
[9] The Defendants knew the Claimant was not an experienced contractor. This became clearer as the project advanced. The Claimant’s billings and record keeping were not what the Defendants needed or expected to manage their finances and the loan they had taken to finance the work.
[10] There was no written contract. The work was to be done based on the estimates, which were supplemented by a fixed price for some electrical work. The Claimant hired two sub-contractors to work on the project. He charged for the time spent by these workers at $50/hr. He charged for materials used in the project.
[11] The Defendants intended to start renting the apartments in the fall of 2020; however, there was no agreement on the expected completion date of the work.
[12] Work started in the summer. Initial invoices in the $3000 - $4000 range were rendered every other week until the end of September. In October the invoices were 3-4 times the initial amounts. The Defendants became concerned about the costs they were incurring.
[13] The Defendants paid all invoices promptly.
[14] As the work progressed the parties decided on various matters that affected the renovation. The Defendants chose finishes, cupboards, and flooring, which affected the pricing. They gave detailed instructions on placement of items, as there were no detailed drawings or specifications governing the work. They deferred some work until later in the project, when they would decide if it was to be undertaken.
[15] By the end of October, the estimates for the project had grown slightly to $188,000. By December 4, 2020, when the parties met to discuss where the project stood, the estimates were $207, 604.
[16] At that point, $154, 276 had been spent by the Defendants, so they expected their future costs would be $53,329.
[17] The Claimant then sent them invoice 1117 for $19,018 to cover labour costs for November 2020. This increased the Defendants’ cash requirements to complete the project from $53,329 to $72,042, as they believed the December reconciliation included all sums that had been incurred, billed and paid. They were surprised and concerned by the arrival of the November invoice.
[18] Work continued through December 2020 and January 2021. The Claimant’s final invoices were in January 2021.
[19] The Defendants objected to the Claimant’s accounting and billing for the project. They disputed that the labour charged was correct, as the time records provided by the Claimant did not disclose details such as start and end times for labour, the work accomplished or other details. They could not reconcile the numbers and thus did not agree with the amounts charged.
[20] The relationship soured. What had been affable and cooperative efforts to complete the renovation became testy and pointed. Communications became formal, so that language such as ‘without prejudice’ began to be used as they looked for ways to address what was becoming a confrontation. The Defendant, who was paying the escalating costs, formalized all communications and everything was put in writing.
[21] The Claimant’s Exhibit Book (Ex 1/Tab F) contains copies of ‘invoices’ provided to the Claimant by his two sub-contractors (Paul Strople and Mark Pap). The evidence did not disclose if these were provided to the Defendants and if so when that occurred.
[22] On February 15, by email, the Claimant sent a summary of labour hours from November 30, 2020 – February 5, 2021. The Claimant apologized for not communicating fully with the Defendants and acknowledged he ‘dropped the ball on filling you in on the details’. He noted that his financial return on this project would be ‘break even’ if all outstanding invoices were paid.
[23] On February 19, 2021, the Defendants sent a detailed email that outlined their position and concerns about the project. The email then outlined a proposal for a ‘full and final settlement of all claims from Navillus Properties’. The proposal included a final payment amount of $20,586.17, work to be completed, provision of portfolio pictures and an agreement not to speak about the project.
[24] On February 22, Mr. Catsburg and Mr. Sullivan spoke. By follow-up email, Mr. Catsburg offered to pay $13,743.67 ‘within an hour’ to assist in addressing a cashflow issue for the Claimant.
[25] On February 23, 2021, the Claimant outlined his proposal to resolve the dispute. His proposal was – a lump sum settlement of $32,455.99 or an installment of $13,743.67 plus monthly payments of $1808.44. The difference between the parties’ positions exceeded $12000, though the evidence is not clear about what each party was including in their separate analyses/reconciliations. The figures presented to the Court created a confusion that was not dissimilar to what confused the parties.
[26] The parties spoke on February 24, 2021. The Defendants’ response to the Claimant’s proposal was ‘we decline your proposals and maintain our dispute of the unapprised budget overruns related to unjustified and unreconciled labour hour overages.’ The Defendant, Cameron Catsburg, indicated a cheque for $13,743.67 was being delivered that day and stated, ‘a cashing of said cheque confirms your acceptance of this proposal and would be complemented by a response to this e-mail indicating such.’
[27] Later that day the Claimant replied:
I have no choice but to accept these terms to avoid personal bankruptcy. I have sent you a text with the payment breakdowns as I need it in two different cheques.
Your decision to act immorally during the final months of the project by withholding payment when I had a high level of trust that you would pay have left me in a volition (sic) position which, in my opinion, you are leveraging for personal financial gain. It makes me sick to my stomach to accept this settlement.
[28] Cheques were delivered to the Claimant under his instructions. On March 18, 2021, following the final electrical inspection, the Defendant paid $4312.50, the balance owing.
[29] In March 2023, the Claimant commenced this claim. He seeks $18,712.32, described as the ‘unapproved budget’ in addition to what was paid previously by the Defendants.
Issues
[30] Did the agreement in February 2021 constitute a binding settlement?
1. If not, is the Claimant entitled to payment for all or a portion amount claimed?
2. Are the Defendants entitled to compensation for loss of rental income and those portions of the work, included in the original estimates, but bot completed.
[31] The Claimant asserts, because of the financial pressure, Mr. Sullivan was under duress what would vitiate the settlement.
[32] In Lukacs v. Dell Canada Inc., 2017 NSSM 6, Adjudicator Richardson outlined the basic elements of the settlement of a dispute. He stated:
Parties will be found to have reached an agreement where it would have been clear to an objective, reasonable bystander that the parties had intended to agree, and where the essential terms to that agreement could by that bystander be determined with reasonable certainty. An agreement may be found to include implied terms so long as that bystander would have concluded that such terms formed part of the agreement between those parties: see the discussion in Halifax Regional Municipality v. Canadian National Railway Company 2014 NSCA 104 at paras.56-60.
[33] Adjudicator Slone dealt with settlement by analysing the legal principles involved in ‘accord and satisfaction’, one means of reaching settlement of a contract or debt/financial dispute. In Construction Technologies (CTI) Inc. v. Harbour Vista Apartments Ltd., 2016 NSSM 45 he stated:
10 The basic principle of accord and satisfaction is met when a debt is settled, with an amount agreed upon, that puts and end to all obligations going in either direction. In most such cases it would be inequitable for the creditor to come back later and say, in effect, “you still owe me some money.” An accord and satisfaction settles the debt and all claims and counterclaims that may have existed at the time of the payment.
11 Not every payment will constitute an accord and satisfaction, even where the paying party writes a statement “paid in full” or some such language on the cheque. It depends on the true intention of the parties.
12 Justice Murray in the Action Management case recited two cases that set out important principles:
[103] In D&C Builders v Rees 1965, 3 All ER 837 Lord Denning included the following statement at page four:
“In applying this principle, however, we must note the qualification: The creditor is only barred from his legal right when it would be inequitable for him to insist upon them. Where there has been a true accord, under which the creditor voluntarily agrees to accept a lesser sum in satisfaction, and the debtor acts upon that accord by paying the lesser sum and the creditor accepts it, then it is inequitable for the creditor afterwards to insist on the balance. But he is not bound unless there has been truly an accord between them.” (Emphasis added)
[104] In Sears v Russell, 2006 NBQB 271 (CanLII) cited by the Plaintiff the Court discussed what constitutes a full settlement in the case of a lesser sum:
“11. Where a creditor cashes, certifies, deposits or otherwise negotiates with a cheque delivered on condition of full settlement, accepting receipt may be evidence of accord and satisfaction, but not conclusive evidence and no presumption of the kind should be drawn. The creditor is at liberty to cash and keep the funds and disregard the condition as long as he or she does not agree otherwise or communicate express acceptance of the condition.” (Emphasis added)
[34] The question here is whether the agreement, which both parties called a ‘settlement’, is an agreement that a reasonable and objective bystander would recognize as one the parties intended to resolve their dispute. Were the terms certain or easily ascertained? Were matters left for future negation or discussion? Was it intended to resolve all matters between the parties or did it leave items for future resolution?
[35] It is the application of the principles in ‘accord and satisfaction’ that draws into the purported settlement any possible claims the Defendants might have against the Claimant, for if there is a true accord and satisfaction the agreement ends all issues between the parties. Discussions leading to the settlement allowed the parties to address all outstanding matters stemming from their relationship and absent misrepresentation or fraud, resolving the dispute should settle everything between them.
[36] When the Defendants proposed the terms of settlement, they were aware the units had not been rented when they might have expected; they knew what work remained to be done and that they were foregoing. They had the opportunity to raise these matters, but they did not assert a claim either directly or as an offset. Another way to analyse the situation in February, when settlement was being discussed, is to see the Claimant was looking for more than the Defendants were prepared to pay, and that difference is what became the Counterclaim.
[37] The parties reached an agreement to settle their dispute. A reasonable person observing the communications between the parties would see.
1. there were negotiations about what was to be done to complete the job;
2. the Claimant was in a tight financial situation and wanted to be paid;
3. the Defendants disputed the claims of hours worked and because they saw the invoicing and record keeping as wanting, they determined there was an amount they would pay that would bring certainty;
4. the Defendants had an opportunity to assert a claim but did not do so as they hoped to finish the project and their relationship with the Claimant.
[38] I find there was a settlement between the parties, negotiated when both sides were forgoing potential claims. The Claimant was not making a profit on the project but was being paid quickly so his immediate financial issues were being addressed. The Defendants were later in leasing the units than they had hoped. They did not raise that as a specific reason for offering less than the Claimant demanded, but it is implied that they were forgoing claims to get finality of their financial obligations to the Claimant. Applying the principles of accord and satisfaction results in the conclusion the parties intended all matters that could have arisen from their relationship were covered by their settlement.
[39] The Claimant asserts the settlement should not be enforced as Mr. Sullivan was under duress when he agreed to it and that duress vitiates the agreement. In taking this position, he relies on this Court’s decision in Faulkner v. Nature Ridge Homes Ltd., 2023 NSSM 15. The decision was appealed, but as of this writing, no record of a Nova Scotia Supreme Court determination is available.
[40] In that matter, I addressed whether a contract might be set aside because of duress. The analysis was based on the Ontario Court of Appeal’s decision in Kawartha Capital Corp. v. 1723766 Ontario Limited, 2020 ONCA 763 where in para. 11 the Court states:
For a party to establish economic duress, it must show two things: first, that it was subjected to pressure applied to such an extent that there was no choice but to submit, and second, that the pressure applied was illegitimate. On the first prong of the test, the court considers four factors:
(a) Did the party protest at the time the contract was entered into?
(b) Was there an effective alternative course open to the party alleging coercion?
(c) Did the party receive independent legal advice?
(d) After entering into the contract, did the party take steps to avoid it?
If the party alleging duress satisfies those four factors, it must go on to satisfy the second prong, by showing that the pressure exerted was illegitimate: Techform Products Ltd. v. Wolda (2001), 2001 CanLII 8604 (ON CA), 56 O.R. (3d) 1 (C.A.), at paras. 31-34, leave to appeal refused, [2001] S.C.C.A. No. 603.
[41] Based on the facts in this matter, Mr. Sullivan, a businessman, embarked upon a project that by his own admission involved a substantial ‘learning curve.’ The Defendants, his clients, became frustrated because of his poor communication, his unconventional accounting and his billing practices. The settlement was a business decision, not one forced on him to the extent that he had no choice but to accept. The Defendants negotiated based on their determination of what was in their best interests at the point where they wanted the relationship to end. They applied no improper or illegitimate pressure on the Claimant.
Conclusion
[42] The claim and the counterclaim are dismissed as the issues involved in both were included expressly or impliedly in the settlement the parties reached in February 2021.
Darrel Pink
Small Claims Court Adjudicator