Swanby v Tru-Square Homes Ltd

Court of Queen’s Bench of Alberta

Citation: Swanby v Tru-Square Homes Ltd, 2022 ABQB 215

Date: 20220318

Docket: 1301 10836

Registry: Calgary

Between:

Craig Swanby and Georgina Swanby

Plaintiffs

(Defendants by Counterclaim)

- and -

Tru-Square Homes Ltd. and James Frederick Metcalfe

Defendants

(Plaintiffs by Counterclaim)

_______________________________________________________

Reasons for Decision

of the

Honourable Mr. Justice M. David Gates

_______________________________________________________

Table of Contents

I. Introduction and Overview...................................................................................................... 3

II.

Facts.................................................................................................................................. 6

Issues .............................................................................................................................. 12

Evidence ......................................................................................................................... 13

III.

IV.

A. James Metcalfe ............................................................................................................. 13

B. The Plaintiff’s Experts.................................................................................................. 14

1.

2.

3.

David Matthews.................................................................................................... 14

Dana Bjornson ...................................................................................................... 14

Cameron Kraychy................................................................................................. 15

Page: 2

C. The Defendants’ Expert................................................................................................ 15

V.

Analysis .......................................................................................................................... 17

A. Concurrent Liability in Contract and Tort .................................................................... 17

B. Liability in Contract...................................................................................................... 18

1.

2.

3.

The Lock-Up Contract .......................................................................................... 19

Was the Lock-Up Contract Amended or Varied?................................................. 22

Breach of Contract ................................................................................................ 29

C. Liability in Tort............................................................................................................. 30

D. The Deficiencies ........................................................................................................... 31

1.

2.

3.

4.

5.

6.

7.

8.

9.

The Foundation..................................................................................................... 32

The Leaking Windows.......................................................................................... 33

Bonus Room.......................................................................................................... 40

The Garage............................................................................................................ 44

Door Threshold Cut-Outs ..................................................................................... 45

Interior Electrical .................................................................................................. 46

Foundation, Framing and Nail Floor Wall Connection ........................................ 47

Kitchen Floor ........................................................................................................ 49

Walk-Out Header.................................................................................................. 51

10. Missing Point Load............................................................................................... 52

11. Sound Proof Insulation ......................................................................................... 53

12. Roof....................................................................................................................... 54

13. Main Attic Insulation ............................................................................................ 58

14. Deck ...................................................................................................................... 61

15. Stucco.................................................................................................................... 66

16. Stone Work ........................................................................................................... 69

17. Building Envelope, Eaves & Soffits..................................................................... 71

18. Exterior Decorative Beams................................................................................... 72

19. Mechanical Room & Plumbing ............................................................................ 73

20. Other Deficiencies Identified by Bjornson ........................................................... 74

E. Other Possible Breaches................................................................................................. 74

1.

2.

Metcalfe’s Lack of Involvement in the Project..................................................... 74

Failure to Keep the Plaintiffs Informed ................................................................ 74

Page: 3

F. Application of Liability in Contract ............................................................................... 75

G. Application of Liability in Tort .................................................................................... 75

1.

2.

3.

4.

Inherently Dangerous Work.................................................................................. 76

Fraud ..................................................................................................................... 78

Piercing the Corporate Veil .................................................................................. 81

Inducing Breach of Contract................................................................................. 91

H. Alberta New Home Warranty Program (“ANHWP”) .................................................. 93

Damages ......................................................................................................................... 95

A. Quantification of Damages ........................................................................................... 95

VI.

1.

2.

3.

4.

Contract Price to Lock Up .................................................................................... 98

Extras and Upgrades ............................................................................................. 99

Amount Paid to Tru-Square................................................................................ 105

Amounts Paid to TGC for Remediation Work ................................................... 105

B. Consequential Damages.............................................................................................. 111

C. Non-Pecuinary General Damages............................................................................... 113

D. Punitive Damages ....................................................................................................... 115

E. Aggravated Damages.................................................................................................... 122

F. Contributory Negligence .............................................................................................. 123

G. Mitigation of Damages ............................................................................................... 125

H. Improvement............................................................................................................... 129

VII.

Counterclaim ................................................................................................................ 130

VIII.

IX.

X.

Conclusion.................................................................................................................... 130

Costs ............................................................................................................................. 130

Pre-Judgment Interest................................................................................................... 131

I. Introduction and Overview

[1]

The Plaintiffs, Georgina Swanby (“Ms. Swanby”) and her husband, Craig Swanby (“Mr.

Swanby”), seek damages from the Defendants, Tru-Square Homes Ltd (“Tru-Square”), and

James Frederick Metcalfe (“Metcalfe”) relating to the construction of their home west of

Carstairs, Alberta.

Page: 4

[2]

The Plaintiffs filed a Statement of Claim on September 13, 2013 and an Amended

Statement of Claim on March 12, 2014. In their Amended Statement of Claim, the Plaintiffs

allege breach of contract and negligence on the part of the Defendants, citing multiple

construction deficiencies, as well as material breaches of the construction contract and a failure

to follow the building plans. Further, the Plaintiffs allege that the Defendants failed to meet the

requirements of the Alberta Building Code (the “Code”) and employed methods and materials

that were sub-standard so as to render the property uninhabitable.

[3]

The Plaintiffs maintain that the Defendants’ construction deficiencies, and their failure to

correct these deficiencies, amount to negligence. As such, the Plaintiffs say that the Defendants

failed to meet the standards of a reasonably competent general contractor and home builder. In

the alternative, the Plaintiffs contend that the Defendants’ actions constitute a breach of contract.

[4]

As more fully discussed below, the Plaintiffs maintain that Tru-Square and Metcalfe are

legally indistinguishable and invite the Court to pierce the corporate veil.

[5] Further, the Plaintiffs allege fraud on the part of the Defendants. Specifically, the

Plaintiffs point to the Defendants’ concealment of construction deficiencies, misrepresentations

as regards the state of the construction project and diversion of funds from the Plaintiffs’ project

to another construction project underway at the same time (the “West Highlands residence”), as

amounting to fraud.

[6]

With respect to the West Highlands residence, the Plaintiffs seek pre-judgment injunctive

relief, an order tracing the funds paid by the Plaintiffs to the Defendants, restitution of any funds

that can be traced, an accounting and a declaration that the Plaintiffs hold an interest in the West

Highlands residence.

[7]

In addition to damages for negligence and, alternatively, breach of contract, the Plaintiffs

also seek aggravated damages for financial losses and increased costs incurred as a result of the

actions of the Defendants. The Plaintiffs cite emotional upset, distress and a diminishment in

their quality of life. Further, the Plaintiffs seek Punitive Damages as a result of the deliberate and

fraudulent actions of the Defendants.

[8]

Finally, the Plaintiffs seek pre-judgment interest pursuant to the Judgment Interest Act,

RSA 2000, c J-1, and costs on a solicitor-client basis.

[9] The Defendants filed a Statement of Defence on April 17, 2014 and a Counterclaim on

April 24, 2014. In their Statement of Defence, they deny any defects in their work and deny that

they at any time attempted to deceive the Plaintiffs or to hide defects or deficiencies in the

construction of the residence. The Defendants seek dismissal of the Plaintiffs’ action in its

entirety, as well as costs. In their Counterclaim, the Defendants allege that they paid a total of

$879,404.72 to suppliers of goods and services relative to the project. Further, the Defendants

allege that they are owed not less than $450,000 pursuant to the construction contract for work

completed. The Defendants state that this $450,000 includes lost profit for work that they were

not able to complete after they were denied access to the property. They seek costs in relation to

the Counterclaim.

[10] The Defendants say that Metcalfe never had a contractual relationship with the Plaintiffs.

Further, they maintain that the Plaintiffs have failed to establish any legal basis upon which the

Court can find Metcalfe liable for any alleged negligence on the part of Tru-Square. The

Defendants maintain that the Plaintiffs cannot prove the four required elements of fraud. They

Page: 5

also deny that any funds received from the Plaintiffs were directed to the construction of the

West Highlands residence.

[11] The Defendants contend that the work for which they are responsible is covered by the

Alberta New Home Warranty Program (“ANHWP”) Single Family Residence Warranty

Certificate that forms part of the contract between the parties. They say that all of their work is

free of defects or structural defects as defined in the Warranty Certificate. The Defendants also

maintain that the Plaintiffs are in default of the “Homeowner Obligations” set out in clause 4 of

the Warranty Certificate. In this regard, the Defendants allege that the Plaintiffs are in breach of

the Construction Agreement in commencing this action when some of the matters that form part

of the Plaintiffs’ claim should have been referred to arbitration in accordance with the

Arbitration Agreement.

[12] The Defendants further contend that the Plaintiffs failed to mitigate any damages for

which the Defendants may be liable and contributed to the damage to the residence.

[13] The Plaintiffs filed a Defence to Counterclaim on June 20, 2014, in which, amongst other

things, they denied owing $450,000 to the Defendants. The Plaintiffs maintain that the amount

claimed in the Counterclaim relates to work that was never performed and is based on an invoice

or invoices issued for the sole purpose of justifying the Counterclaim and set-off claimed by the

Defendants. The Plaintiffs say that the work performed by the Defendants was deficient and not

carried out in accordance with the requirements of the contract. Further, the Plaintiffs allege that

the amount claimed in the Counterclaim represents over - or double-charging insofar as it

includes invoices issued for progress payments, as well as for payments made directly to

suppliers and sub-contractors. The Plaintiffs seek dismissal of the Counterclaim and costs on a

solicitor-client basis.

[14] Initially, this matter was heard from April 8-18, 2019, the time scheduled for the trial.

However, significant additional time was required to complete the matter. The trial was

continued on April 23-25, 2019, May 8-17, 2019, October 15-18, 2019, and November 27-28,

2019. Instead of the 9 days originally scheduled, 26 days were required.

[15] The Plaintiffs called seven witnesses, including themselves. Three expert witnesses were

called to provide opinion evidence in relation to structural engineering, building envelope

engineering, and the standard of care associated with the construction and remediation of custom

residential homes.

[16] The Defendants called nine witnesses, including one expert, Metcalfe and various trades

who worked on the construction project. They also called a municipal building inspector, a

representative of a supplier of framing materials, and the Plaintiffs’ designer, Shawn Carm.

[17] At the conclusion of the evidence and oral argument on November 28, 2019, I reserved

my decision. On September 30, 2021, counsel for the Plaintiffs supplied a 122-page written

argument, combining their response argument to the Defendants’ oral submissions delivered on

November 28, 2019 with the written argument that was to follow their own oral submissions

delivered on November 27 and 28, 2019. Counsel for the Defendants filed a brief written

response argument on October 8, 2021.

[18] The Court wrote to counsel on February 7, 2022, seeking clarification on two matters.

First, the parties were invited to respond to a question relating to Invoice 118. Second, the parties

were invited to make further written submissions on the legal relationship, if any, between the

Page: 6

parties following the completion of the lock-up contract. The parties submitted further written

submissions on February 18, 2022 and February 24, 2022, respectively.

[19] These are my Reasons for Decision.

II. Facts

[20] The Plaintiffs have resided in the family home that is the subject of this litigation since

August 2015. The home is located just west of Carstairs, Alberta. Previously, the Plaintiffs lived

on Ms. Swanby’s family farm also located in the Carstairs region. The Plaintiffs operate a grain

farm east of Carstairs.

[21] Ms. Swanby completed Grade 12 and then qualified and worked as a hairstylist. During

her career, she has owned, operated, and sold two businesses, a Telus Mobility store and a

courier company.

[22] Mr. Swanby is a power engineer, holding a certificate from SAIT obtained in 1991. For

the past nine years, he has worked out of the country as an oilfields manager. At present, he

works for Glencore on a 28-day on/28-day off rotation in Chad, Africa. As such, he spends a

great deal of time outside of Canada. Mr. Swanby has no experience as a structural engineer and

neither he nor Ms. Swanby has any background or experience in house construction.

[23] Mr. Swanby gave evidence that he planned to pay for the construction of the residence,

including the Plaintiffs’ initial mortgage, sometime in 2019, at which point he would terminate

his overseas work commitments. As a result of the need to finance the remediation work and the

other associated costs relating to the delayed completion of the project, he testified that he did

not expect to be able to consider retirement for at least another ten years, approximately 2029.

[24] The Plaintiffs acquired the land on which the home is built in 2009 or 2010. They were

looking to move to a new location and searched for land that had either a mountain or coulee

view. The planned home was to serve as a retirement home that could accommodate a

wheelchair on an all-purpose ground floor, as well as a home for their then teenaged daughters.

Their plans included a walk-out basement and multiple windows overlooking the view of the

coulee. They had known for some time that they would build a home and had collected

photographs from magazines over the years depicting house ideas that they wished to

incorporate.

[25] The Plaintiffs met Shawn Carm (“Carm”) at the Carstairs arena while attending a hockey

game. They learned that Carm was a designer who had built some large, custom-built homes in

the past. Carm told them that he “gets to do the pretty stuff,” but did not know how to do the

other tasks associated with new home construction. The Plaintiffs liked Carm’s ideas.

[26] Carm provided them with some home design ideas and introduced them in late 2010 to

Gordon Snell (“Snell”), an architectural draftsman employed by Innographic Design and

Drafting (“Innographic”). The Plaintiffs provided Snell with a rough sketch they had prepared

(which no longer exists), together with magazine photographs gathered over the years. They

discussed with Snell their interest in having stone on the bottom portion of the home’s exterior,

as well as granite or concrete counter tops in the kitchen and stone around the stove. Snell told

them that they would require a robust floor in the kitchen area to support these heavy building

materials. Carm attended the last couple of meetings with Snell and assisted the Plaintiffs with

Page: 7

their design ideas, including the design of a large exterior deck to be incorporated into the plan,

as well as interior beams and an interior staircase.

[27] Snell produced a design for the Plaintiffs’ home based on the materials and input they

provided. The drawings that he ultimately prepared for the Plaintiffs addressed this enhanced

load requirement. Carm provided additional design ideas once the Plaintiffs received the

drawings. Ms. Swanby recalled that the drawings were completed in mid to late 2010, though it

could have been later. She identified Exhibit 1-A-1 as the drawings prepared by Snell, the final

version of which was dated May 8, 2011. A few minor modifications were made to the drawings

prior to the start of construction, but such modifications related only to the placement of doors.

Snell told the Plaintiffs that he thought they should employ an Insulated Concrete Form (“ICF”)

foundation for their planned home.

[28] The Plaintiffs had no written agreement with either Carm or Snell for the work that they

performed.

[29] Carm proposed that the Plaintiffs engage a builder in Calgary with whom he had worked

in the past. The Plaintiffs met this builder on two occasions. During their second meeting, the

Calgary builder provided an oral estimate of approximately $1.4 million to build the home based

on his review of the Snell drawings.

[30] Mr. Swanby hoped to find a builder in their local area. In late 2010, the Plaintiffs

approached Metcalfe to find out if he was interested in building the home. Metcalfe previously

had built custom homes for Ms. Swanby’s brother, Mr. Swanby’s cousin and friends they knew

in the area. Metcalfe was also the next-door neighbour of Ms. Swanby’s brother. The Plaintiffs

were familiar with the Defendants’ work as a home builder, having seen Tru-Square signs on

homes in the Carstairs area. According to the Plaintiffs, Metcalfe had a great reputation in the

Carstairs region.

[31] When first contacted by telephone, Metcalfe indicated that he was looking to wind-up his

construction business and was not really interested in taking on the project. He told them that he

was about to go to Phoenix for the winter and had plans for a cross-Canada road trip with his

wife the following year. In the spring of 2011, the Plaintiffs contacted Metcalfe again and asked

if he would be interested in being their general contractor for the residence. While he was

hesitant to take on the job due to his upcoming travel plans, he agreed to discuss it with his wife.

He responded a short time later, indicating that he was possibly interested, but only in terms of

construction to the lock-up stage given his upcoming holiday plans. Ms. Swanby understood that

the lock-up stage included pouring the foundation, framing, and installation of doors and

windows. Following a further meeting with the Plaintiffs, Metcalfe agreed to build the home to

the lock-up stage.

[32] Metcalfe was advised from the outset that the home was to be both a family home and the

Swanbys’ planned retirement home. He was shown the Snell drawing that included the interior

beams, a very large exterior deck, and the requirement for a robust floor construction to support

the stone and granite features in the kitchen. Metcalfe advised the Plaintiffs that this was the

largest project he had ever built and that he probably would require a subcontractor to complete

what he described as the complicated framing for the planned house.

[33] Metcalfe provided the Plaintiffs with three separate quotes for the job. The initial quote

was for $500,000 to complete construction to the lock-up stage. The second quote, dated July 6,

Page: 8

2011, for a total cost of $578,875.40, including GST, added interior drywall and exterior stucco

to the contract price: Exhibit 1-C-2.

[34] The Plaintiffs’ bank required a price quote for the entire cost of building the home,

including all interior finishing. During an in-person meeting in early August 2011, Metcalfe

provided a quote for the entire construction project. The written quote (Exhibit 1-C-3) is dated

August 4, 2011 and totals $1,064,348.00. It sets out specified allowances to cover exterior and

interior finishes. Metcalfe subsequently provided the Plaintiffs with a document dated August 21,

2011 (Exhibit 1-C-20) that set out in great detail the projected costs to construct the entire

residence. After listing a number of items totalling $352,251.00, he added the “part from Tru-

Square Homes”, $659,510.00, for a total of $1,011,761.00.

[35] Metcalfe expressed no reservations about his ability to follow the plan and construct the

home. He told the Plaintiffs that he would fly back from Phoenix periodically to keep a handle

on the job.

[36] The parties signed three separate contracts at a sod farm near the location of the

Plaintiffs’ recreational trailer on August 22, 2011. The meeting lasted approximately 40 minutes,

during which time there was a discussion regarding Tru-Square’s obligation to meet Code

requirements and to ensure that all trades on site would have insurance and WCB coverage.

While the parties signed more than one contract at the time, there is no dispute that the

agreement reached that day required the Defendants to build to the lock-up stage only, with

framing to start in late September 2011 and completion to lock-up stage by early 2012.

[37] The first contract, Exhibit #1-C-5, involved construction of the residence to the lock-up

stage, including stucco and drywall, in the revised amount of $692,485.50.

[38] A second contract was signed the same date for a total contract price of $1,011.760.00,

plus GST of $50,588.00, for a total contract price of $1,062,348.00, Exhibit 1-C-6. That contract

was for the construction of the residence to completion.

[39] A third pre-printed form of contract, Exhibit 1-C-4, the ANHWP contract, was brought to

the meeting by the Plaintiffs. This contract also covered the construction of the entire residence

at a cost of $1,062,348.00.

[40] The Plaintiffs obtained a building permit from the county. At the request of the county,

they also obtained a geotechnical inspection (Exhibit 1-A-3) dated July 2011, prepared by Curtis

Engineering Associates Ltd of Calgary. The report recommended the use of Type 50, Sulphate

Resistant Portland Cement for the foundation due to the soil composition. A copy of the report

was provided to Metcalfe.

[41] The Plaintiffs retained Quality Dirt Works (“Quality”) to do excavation work and pour a

concrete pad for a planned future workshop on the property. While James Quartz, the principal

of Quality, was on site, Ms. Swanby suggested to Metcalfe that Quality undertake the excavation

work for the property. Metcalfe, who was familiar with Quality’s work, agreed as Quality’s

equipment was already on site. The Plaintiffs paid Quality’s invoice of $16,803.15 (Exhibit 4) as

excavation was not part of the contract with Tru-Square.

[42] As noted above, Snell recommended that the Plaintiffs use an ICF foundation for the

residence. However, Metcalfe advised that he did not like ICF foundations and would never

install one. He told the Plaintiffs that if they wanted him to build their home, they would have to

accept a standard foundation. They agreed, though they told Metcalfe that he was required to

Page: 9

otherwise follow Snell’s plan. At one point, the Plaintiffs asked Metcalfe if any new drawings

would be required in light of the change in foundation. Metcalfe indicated that no further

drawings would be required and that any necessary adjustments could be made along the way.

[43] Metcalfe also testified that Ms. Swanby was also opposed to ICF foundations. However,

this was never put to her in cross examination. Moreover, there is nothing in her evidence to

suggest that she had any experience with building foundations so as to afford her a basis upon

which to form an opinion.

[44] After the foundation was completed, Metcalfe told Ms. Swanby that it was a pretty good

job and just a little off, but nothing that would affect anything. Later, Metcalfe told her that the

framing was just a bit off because it was a difficult foundation due to all the jut-outs in the house

design. He told her that there was nothing to be concerned about as it could be addressed during

the framing. Ms. Swanby was not concerned by these comments and had full trust in Metcalfe.

[45] During the framing process, Ms. Swanby spoke to John McEwen, the framer, on a regular

basis. On one occasion, he told her that the foundation was “off” and that there were some issues

with the framing. He also told her that Metcalfe was not being particularly helpful, that the

trusses were not fitting on the foundation and that there was not enough material on site. He

reported that he had to salvage some of the used cribbing material. According to Ms. Swanby,

McEwen related that Metcalfe had provided the direction to use whatever material was available

on site. When she subsequently asked Metcalfe about the issues that McEwen had raised,

Metcalfe told her that the foundation was not quite square but that this was a common occurrence

in construction and there were no issues at all in terms of the overall project.

[46] Metcalfe was on site only occasionally during the framing process and generally not as

frequently as the Plaintiffs had anticipated. During the summer of 2012, he went on his planned

cross-Canada road trip. He was also frequently away on camping trips and trips to Saskatchewan.

According to Ms. Swanby, a number of trips “popped up” and Metcalfe would advise of his

planned absences. Prior to entering into the contract with the Defendants, the Plaintiffs were

aware only of the planned cross-Canada road trip.

[47] The Plaintiffs hired the Defendants to manage the various subtrades. Due to Metcalfe’s

frequent absences, the project did not proceed as rapidly as expected. When issues arose during

the construction, the Plaintiffs were left to try to reach Metcalfe to attempt to resolve them.

[48] According to Ms. Swanby, the construction was progressing slowly and not in

accordance with the schedule that had previously been provided. At one point, Metcalfe told her

that some of the delay was on account of poor weather. He also reported that there were some

issues with the trusses.

[49] Ms. Swanby described in detail some of the specific problems that arose during the

construction. Tiles were being installed in one of the bathrooms by Metcalfe’s brother, John.

Ms. Swanby recalled that she and Carm stopped by the project while the tiling was taking place

and raised concerns with the way some of the tiles were placed. John Metcalfe responded that he

was doing the best he could. When the concerns were relayed to Metcalfe several days later, he

told her that if they were going to be that picky they could find their own tiler. Shortly thereafter

John Metcalfe’s tools and equipment disappeared from the job site and he never returned to

finish the job. The Plaintiffs were then forced to go out and hire their own tiler to correct the

Page: 10

mistakes and finish the job. According to Ms. Swanby, Metcalfe’s general attitude towards the

project changed after John Metcalfe walked off the job.

[50] Metcalfe provided the name of his flooring supplier, Deerfoot Carpet, Ms. Swanby found

the flooring she liked, but was told that it would be difficult to get due to labour problems in the

USA. Metcalfe told her that she was going to have to outsource the product herself.

[51] Metcalfe also advised Ms. Swanby that his supplier would not build the staircase set out

in the design plans and that she would have to outsource the stairs. As a result, the Plaintiffs had

to seek out, hire and pay their own tradesperson to rough in the staircase.

[52] Metcalfe suggested his own painter for the interior painting. Ms. Swanby knew that this

painter had done a poor job on her brother’s residence. When she suggested another painter,

Metcalfe threw his hands up in the air and told her to find her own painter.

[53] At one point, Metcalfe referred the Plaintiffs to his cabinet supplier in Red Deer who

submitted a quote for the job. Carm suggested that they obtain other quotes from other suppliers.

He wanted to bid on this part of the project himself as he had his own cabinetry company.

[54] On May 23, 2013, several weeks prior to the scheduled possession date, Ms. Swanby was

notified by the flooring subcontractor that water was leaking into the residence through the

windows. The initial leak was detected in the main floor Great Room, as well as in the Bonus

Room located over the garage. Ultimately, it was determined that all of the main floor windows

and many of the second-floor windows leaked.

[55] Metcalfe was advised of the leaking windows by Ms. Swanby that same day, but he did

not attend the site to investigate the matter for several days. I accept Ms. Swanby’s evidence that

when Metcalfe finally attended, he denied any responsibility for the problem. Rather, he blamed

Carm for the leaking windows, citing his inset or recessed window installment specifications as

the cause of the problem. Metcalfe refused to assist the Plaintiffs in investigating the cause and

extent of the window leaks.

[56] On May 29, 2013, Troy Snyder (“Snyder”), Director of Operations and President of

Western Form Works, attended the residence at Carm’s request to inspect the leaking windows.

Snyder had approximately 25 years of experience in residential and commercial construction and

was, amongst other things, a project manager as well as a ticketed carpenter, log home builder,

and excavator. Metcalfe was present during this inspection. Snyder subsequently issued a report

(Exhibit 1-D-5) in which he noted, amongst other things, that the windows had not been installed

in accordance with the specifications that Carm had previously provided to Metcalfe.

[57] Snyder noted that it started to rain during the course of his visit and he observed water

leaking through the soffits. He recommended that the roof be assessed to determine how water

was getting into the soffit.

[58] While Snyder had no recollection of the homeowners being present during his inspection,

I accept Ms. Swanby’s evidence that she was present. I also accept her evidence that Snyder told

Metcalfe to fix the windows, to which Metcalfe responded, “Not my responsibility”.

[59] Metcalfe took no action to repair the windows or to offer up any possible solutions to

remedy the problem in either the short-term or the long-term. Shortly thereafter, the Defendants

left the construction site and never returned.

Page: 11

[60] As more fully described below, the Swanbys began to investigate the installation of the

leaking windows commencing in July 2013. This led to the investigation of other construction

deficiencies identified by the engineers and others hired by the Swanbys to assist them in

uncovering the construction deficiencies and in recommending and executing the required

demolition and remediation work.

[61] Around July 17, 2013, Ms. Swanby personally served Metcalfe with a letter listing the

deficiencies. By the terms of the letter, July 26, 2013, was set as the deadline for Metcalfe to

address the leaking windows. The Swanbys’ then counsel sent a follow-up letter dated July 30,

2013 (Exhibit 1-G-11) referring to earlier correspondence from the Defendants, apparently

seeking access to the property to conduct an inspection. (The Defendants’ earlier correspondence

was not produced at trial.).

[62] Metcalfe sent an email to Ms. Swanby on July 22, 2013 (Exhibit 1-G-15) outlining the

mediation/arbitration processes associated with the ANHWP. He expressed his willingness to go

to non-binding mediation if the Swanbys were prepared to agree. Failing agreement, Metcalfe

advised that that “final option” would be for him to trigger the arbitration process. Metcalfe

made no reference in this communication to any intention to address any of the deficiencies

identified in Ms. Swanby’s July 17, 2013, correspondence.

[63] Ms. Swanby responded to Metcalfe’s email on July 23, 2013 (Exhibit 1-G-10), advising

that someone would be hired to repair the damage caused by the leaking windows if Metcalfe

was not prepared to act. She expressed a willingness to attend mediation after the necessary

repairs had been completed.

[64] Ms. Swanby subsequently contacted the ANHWP and learned that the fact that the

contract amounts owing to Tru-Square had not been paid in full, and that the Plaintiffs did not

have possession of the home, meant that there was no building warranty in place. Ultimately, no

mediation or arbitration ever took place.

[65] Metcalfe’s failure to respond to the substantive concerns raised in their letters led the

Swanbys to conclude that Tru-Square and Metcalfe had repudiated the contract.

[66] In July 2013, the Swanbys hired Tamata’s General Contracting & Consulting (“TGC”),

an experienced construction and remediation contractor, to begin the investigative and

demolition work required to determine the nature and scope of the construction deficiencies.

During his initial examination of the premises, TGC’s principal, Mike Juniper (“Juniper”), found

water-damaged drywall in every room of the home. Juniper provided a written quote dated

August 8, 2013, based on his understanding of the scope of work as of that date: Exhibit 1-F-3.

At the time, he estimated that the total cost would be $19,140. On August 19, 2013, he provided

a revised quote based on an enhanced scope of work in the amount of $41,701.80. He

subsequently produced a detailed budget quote dated January 2014 (Exhibit 1-F-9) in which he

estimated the total cost of all repairs to be $802,597.11. Juniper ultimately produced a detailed

written report regarding his involvement in this matter: Exhibit 1-F-35. Juniper explained that the

scope of work greatly expanded as a result of the testing and investigative work undertaken by

the Plaintiffs and the two engineers hired to oversee the remediation process.

[67] The Plaintiffs also retained Dana Bjornson (“Bjornson”), a building envelope engineer,

and David Matthews (“Matthews”), a structural engineer, to assist them in investigating

Page: 12

suspected construction deficiencies. Both subsequently were called as expert witnesses during

the trial.

[68] As more fully set out below, Matthews concluded that there were numerous building

Code deficiencies and failures to meet industry best practices in Tru-Square’s construction.

[69] The Plaintiffs asked Bjornson to examine the condition of the building envelope,

including if there were any deficiencies or Code deviations. Bjornson found that the building

envelope was not properly constructed and required remediation. She concluded that there were

numerous building Code deficiencies and failures to meet industry best practice in Tru-Square’s

construction of the building envelope.

[70] Remediation work did not begin until July or August 2014. This work was undertaken by

Juniper and TGC, working closely with Bjornson and Matthews to correct the various

deficiencies identified, and to ensure that the remediations were Code-compliant and met the

custom homebuilding industry’s accepted standards of practice. Juniper’s involvement in the

remediation process continued until approximately August 2015. The Plaintiffs finally took

possession of the fully remediated residence in late August or early September 2015, more than

two years after the initial occupancy date.

III. Issues

[71] Numerous issues, both factual and legal, arise in this matter:

(a) Can the Defendants be concurrently liable in both contract and tort?

(b) What were the terms of the parties’ contract?

(c) Was the parties’ contract amended and, if so, what were the amended terms?

(d) Did Tru-Square and/or Metcalfe have a duty of care to the Plaintiffs?

(e) What were the deficiencies in the house as constructed?

(f) Did the Defendants, or either of them, breach the contract with the Plaintiffs?

(g) Are the Defendants, or either of them, liable to the Plaintiffs in tort?

i. Was the Defendants’ work inherently dangerous?

ii. Was Metcalfe’s conduct fraudulent?

iii. Is it appropriate to pierce the corporate veil in this case?

iv. Did Metcalfe induce Tru-Square to breach its contract?

(h) Is the ANHWP’s dispute resolution process applicable?

(i) What is the appropriate measure of the Plaintiffs’ damages?

i. Are the Plaintiffs entitled to consequential damages?

ii. Are the Plaintiffs entitled to non-pecuniary damages?

iii. Are the Plaintiffs entitled to punitive damages?

iv. Are the Plaintiffs entitled to aggravated damages?

v. Was there contributory negligence by the Plaintiffs?

vi. Did the Plaintiffs appropriately mitigate their damages?

vii. Have the Plaintiffs benefitted from improvement?

(j) Are the Defendants entitled to payment under their Counterclaim?

Page: 13

IV. Evidence

[72] As will become clear later in these Reasons, my findings on the credibility and reliability

of the witnesses, both lay and expert, has an impact on my subsequent determinations.

A. James Metcalfe

[73] According to the Plaintiffs, the Defendants’ case rests on Metcalfe’s testimony. They

maintain that Metcalfe was not a credible or reliable witness and that the Court should approach

his testimony with great caution. Due to his frequent and extended absences from the job site, the

Plaintiffs say that Metcalfe cannot speak with any authority to the quality of the work of his

subtrades. His evidence in this regard is entirely self-serving. The Plaintiffs further contend that

Metcalfe’s failure to produce any contemporaneous notes, documents or photographs tracking

the progress of the project negatively impacts the reliability of his evidence. In the result, the

Plaintiffs argue that little or no weight should be given to his evidence.

[74] In terms of his credibility, the Plaintiffs cite several instances where Metcalfe gave

inconsistent, even contradictory, evidence during the trial. I would summarize some of these

instances as follows:

a) In the Statement of Defence, the Defendants conceded that Metcalfe was the general

contractor for the project to the lock-up stage. He made the same admission during

questioning. However, at trial, Metcalfe suggested that Carm was the general

contractor. Later, in cross-examination, he was insistent that the Swanbys were their

own general contractors. Further, Metcalfe swore an affidavit on April 18, 2016,

deposing that he was not the general contractor. Finally, in his response to the Notice

to Admit Facts, Metcalfe stated he was a “builder” and not a “general contractor”.

b) In the Agreed Statement of Facts, Exhibit 2A, para 66-67, it was admitted that Tru-

Square’s insurance coverage during the construction of the Swanby residence was

held by Metcalfe as a sole proprietor and, further, that the insurance policy was

cancelled on or about May 13, 2013. Metcalfe testified in chief that the insurance had

no relevance at all to the construction of the Swanby residence. However, during

cross-examination, he conceded that he had taken out property and liability insurance

as a sole proprietor on behalf of Tru-Square Homes, but that the insurance was

cancelled in May 2013 (Exhibit 35).

c) In direct examination, Metcalfe testified that he had been up on the roof and inspected

the work of the roofing subtrade. He stated that the work appeared to be

unexceptional and in order. In cross-examination, he confirmed that he had been up

on the roof, but conceded that he never inspected the work.

d) In his evidence, Metcalfe suggested that the complexity of the interior finishing on

the residence served as a disincentive to his continued involvement in the project

beyond the lock-up stage. However, in cross-examination he conceded that the

complexities associated with the house related to the foundation and the framing, both

of which were clearly within the scope of his work.

e) In the Agreed Statement of Facts, Metcalfe admitted that several aspects of his work

were deficient, but his testimony was to the contrary.

Page: 14

[75] The Defendants, on the other hand, urge me to accept the evidence of Metcalfe and to

prefer his evidence over that of the Plaintiffs where there is a conflict.

[76] I have several concerns with Metcalfe’s evidence generally. First, I agree with the

Plaintiffs’ contention that Metcalfe’s frequent and extended absences from the job site, and

indeed Alberta, adversely impact the reliability of his evidence respecting the key events. He was

not present for almost 50% of the time from the outset of construction to the completion of the

lock-up stage. His lack of contemporaneous notes, documents, or photographs contributes to my

concern about the reliability of his evidence relative to events that took place many years ago.

[77] I also have concerns with Metcalfe’s credibility. I accept the Plaintiffs’ assertion that

Metcalfe gave conflicting, even contradictory, evidence. As a witness, I found him to be highly

combative and quick to deflect responsibility for most, if not all, of the extensive deficiencies

discovered by the Plaintiffs’ experts after Metcalfe abandoned the project. Generally, he was

unwilling to acknowledge any responsibility for the very serious issues that arose during the

project. As more fully set out later in these reasons, I reject the evidence of Metcalfe on several

key matters in dispute. The combined impact of these adverse findings relative to Metcalfe leads

me to approach the entirety of his evidence with considerable skepticism.

B. The Plaintiff’s Experts

[78] The Plaintiffs called three expert witnesses at trial: Bjornson, Matthews, and Cameron

Kraychy. All of them gave their evidence in a clear, straight-forward manner and were not

seriously challenged in cross-examination.

1. David Matthews

[79] Matthews was qualified by the Court as an expert in structural engineering and qualified

to give opinion evidence with respect to building code compliance, applicable industry standards

and best practices relating to the design, construction, and constructional components in custom

residential home construction in Alberta. His curriculum vitae was marked as Exhibit 11.

Matthews provided two reports to the Court, an initial report dated April 7, 2017 (Exhibit 12)

and an Expert Rebuttal Report dated October 30, 2017 (Exhibit 13).

[80] Matthews is the principal of Madden Matthews Engineering Ltd, with experience in

structural engineering over a span of 30 years. His expertise is directly applicable to the various

issues that arose in this litigation. His expert report is the result of extensive examination,

investigation and on-site testing. He gave detailed and comprehensive evidence that I found to be

highly credible. I accept his evidence.

2. Dana Bjornson

[81] Bjornson is a professional engineer registered with the Association of Professional

Engineers and Geoscientists of Alberta (“APEGA”) as well as the Leadership in Energy and

Environmental Design (“LEED”) Rating Systems. She is an engineering graduate from the

University of British Columbia (1994) and holds a Master of Architecture degree from the

University of Oregon (1999). Her curriculum vitae was marked as Exhibit 15.

[82] Bjornson has worked in the field of building envelope engineering for over 30 years. She

has extensive experience in relation to residential and commercial construction projects. She

serves as a member of the Alberta Building Envelope Council (“ABEC”) and is the principal of

Page: 15

her own firm, Optimize Envelope Engineering Ltd. As of the date of her court appearance in this

matter, she had reviewed over 300 building envelopes in the preceding two years. She has

previously given expert evidence in the Provincial Court of Alberta.

[83] The Plaintiffs asked Bjornson to examine the condition of the building envelope,

including if there were any deficiencies or Code deviations. Bjornson submitted an expert report

to the Plaintiffs on April 7, 2017, having inspected the site on July 10, September 8, October 18,

2013, and October 24, 2014: Exhibit 16. Bjornson reviewed the condition of the windows,

exterior doors, stucco, stone, decks, soffits, interior vapour barrier, interior insulation, drainage

systems, and roofing. The deck was also flood-tested on July 10, 2013. She provided an Expert

Rebuttal Report dated September 12, 2017. Her CV was marked as Exhibit 15.

[84] Bjornson was qualified by the Court as an expert in building envelope engineering and

permitted to give opinion evidence in the areas of building code compliance, applicable industry

standards, and best practices relating to the design and construction of building envelopes in

Alberta custom residential construction. She gave very detailed and comprehensive evidence that

I found to be highly credible. I accept her evidence without reservation.

3. Cameron Kraychy

[85] Cameron Paul Kraychy (“Kraychy”) was qualified by the Court as an expert in the field

of general contracting in the context of custom home building. He was qualified to give opinion

evidence on the role of the general contractor and the applicable standard of care in the custom

home building industry in Alberta, and as regards the remediation of custom homes and

renovations.

[86] Kraychy provided an Expert Report dated March 28, 2017 (Exhibit 27) and an Expert

Rebuttal Report dated September 19, 2017 (Exhibit 28).

[87] I found Kraychy’s evidence to be of considerable assistance in relation to a number of

issues. First, he provided the perspective of a seasoned custom home builder on the need to

engage engineering support relative to structural design, including design changes, as well as

structural issues arising during construction. Second, he provided important evidence on the role

of the general contractor on a construction project in terms of overall project oversight and the

effective management of subtrades. Third, he gave evidence as to the appropriate

communications strategy to be employed by a general contractor relative to the customer or

homeowner so as to ensure that they are fully apprised of the progress of the project and, in

particular, problems or issues arising during the project and the proposed strategy to address such

matters. Based on his qualifications and experience, I accept Kraychy’s evidence regarding the

industry standards and best practices applicable to a general contractor working in the custom

home building field.

C. The Defendants’ Expert

[88] The Defendants called Doug Mark Hamman (“Hamman”) and sought to have him

qualified in the following areas:

a) The field application of the requirements of the Code;

b) Field design and construction of structural support systems;

c) Field design and construction of building envelope systems for construction projects;

Page: 16

d) Construction project management, including budgeting, scheduling, trades oversight,

and the inspection of completed work to confirm Code compliance has been met.

[89] The Plaintiffs urged the Court to find that Hamman was not qualified to give expert

evidence and to decline to admit his report into evidence. After hearing extensive argument from

counsel, I qualified Hamman as an expert homebuilder and project manager in the four areas

proposed by the Defendants. However, I declined to allow him to give expert evidence as an

engineer in any of those areas. I also note that Hamman was not qualified to give expert evidence

as either a custom home builder or a remediation expert given his lack of experience in both

domains. Accordingly, Hamman provided no evidence regarding the standard of care applicable

to custom residential homebuilding. Subject to these and other limitations more fully set out

below, Hamman’s Expert Report dated July 17, 2017 was received in evidence (Exhibit 48).

[90] The Plaintiffs urge the Court to approach Hamman’s evidence with great caution,

particularly given his alleged cursory examination of the actual construction project and the fact

that he offered conclusions based on limited visual examination and without the benefit of

destructive testing or comprehensive investigation. The Plaintiffs argue that Hamman’s evidence

should be restricted to the determination of Code compliance and structural components in

residential home construction.

[91] Hamman’s report was based on three visits of approximately 1.5 hours duration each.

Given the size of the residence and the nature and number of alleged deficiencies, I am satisfied

that Hamman’s opportunity to fully inspect the residence was necessarily limited by the time

constraints. Further, his comments and conclusions were based on his observation of pre-exposed

areas of the residence. He conducted no independent testing. This stands in sharp contrast to the

comprehensive investigation undertaken by the Plaintiffs’ experts and Juniper. I would also note

that Hamman’s report is silent on several deficiencies noted by Bjornson, Matthews and Juniper.

[92] Of note, Hamman acknowledged the deficiency of the Defendants’ work in quite a

number of instances. He expressed agreement with many of the conclusions reached by the

Plaintiffs’ experts.

[93] I accept the Plaintiffs’ contention that Hamman’s assessment of the individual

deficiencies was incomplete. A number of the assumptions that form the foundation of some of

his conclusions are not substantiated by the evidence. This and the other constraints previously

identified lead me to place very limited weight on Hamman’s evidence. I do not, however, go so

far as to accept the Plaintiffs’ assertion that the weight to be attributed to Hamman’s evidence is

credibility-based. In my view, the difficulties with Hamman’s evidence are related to the

reliability of that evidence, not to his credibility.

[94] I do not view Hamman’s report as a technical response to the engineering evidence of

either Matthews or Bjornson or a response to the custom home building expertise of Kraychy. In

this regard, I accept the Plaintiffs’ caution as regards the treatment of Hamman’s expert

evidence. As the Plaintiffs properly point out, Hamman’s more limited accepted areas of

expertise place significant restrictions on his ability to challenge or otherwise undermine the

opinions and findings of the Plaintiffs’ engineering expert witnesses. In my view, this is the

natural consequence of the Defendants’ decision not to call engineering experts of their own to

challenge the Plaintiffs’ experts.

Page: 17

[95] Indeed, the Plaintiffs go so far as to suggest that there is essentially no defence to the

deficiencies aspects of the case. While I accept the general thrust of this argument, it is still

necessary to consider carefully the evidence of the engineering experts and Kraychy, and all of

the other evidence in this case, to determine whether the Plaintiffs have satisfied the burden

resting on them to establish the individual alleged deficiencies. I would simply add that

Hamman’s reports and trial testimony have been carefully considered in this process.

[96] The Defendants appear to rely on Hamman’s report as offering to the Court an alternative

remediation work plan reflected in the budgeting exercises that he undertook. He compared his

proposed scope of work with a quote that TGC prepared before remediation efforts were

commenced. The Plaintiffs challenge the weight to be given to Hamman’s comparative

remediation budgets. They say that Hamman’s budgets are unreliable given that his credibility

was impugned and his primary conclusions have been found to either be incorrect or

untrustworthy. As noted above, I do not find that Hamman lacked credibility.

[97] The law does not require the cheapest or most economical solution to effect remediation,

but only that reasonable efforts be made in this regard. Cost is only one factor to be taken into

consideration. The Plaintiffs say that, only three weeks from their anticipated possession date,

their trust in their contractor had been destroyed. While the Defendants argue that the costs

incurred were too high, the Plaintiffs respond that there is no evidence that should cause the

Court to doubt, let alone reject, the investigation results of Bjornson or Matthews, their

remediation recommendations and, ultimately, Juniper’s charges. This issue is more fully

explored later in these Reasons in the section dealing with the calculation of damages.

V. Analysis

[98] This matter raises numerous legal and factual issues.

A. Concurrent Liability in Contract and Tort

[99] The Plaintiffs maintain that a building contractor can be liable concurrently in contract

and tort unless the terms of the contract clearly and expressly limit or exclude liability in tort.

They maintain that the contract in this instance is entirely silent on the issue of limiting or

excluding tort liability. I agree.

[100] The Plaintiffs rely on Vermillion & District Housing Foundation v Binder Construction

Limited, 2017 ABQB 365 at paras 123-25, where the Court explained:

The conduct of a contractor may constitute not only a breach of contract but also

negligence: Heintzman and Goldsmith, at 7-2. Generally speaking, there is a duty

of care owed by a contractor to an owner: University of Regina v Pettick (1991),

90 Sask R 241, 6 CCLT (2d) 1 (CA). What is undertaken by the contract will

indicate the nature of the relationship that gives rise to the common law duty of

care, but the nature and scope of the duty of care that is asserted as the foundation

of the tortious liability does not depend on specific obligations or duties created

by the express terms of the contract – the distinction is between what is to be done

and how it is to be done: Central & Eastern Trust Co v Rafuse, [1986] 2 SCR 147

at 204, [1986] SCJ No 52.

Page: 18

In Fraser-Reid v Droumtsekas, [1980] 1 SCR 720 at 726, [1979] SCJ No 125,

Dickson J. for the majority stated the relevant question as being: “Did the builder

act as a competent and careful builder would have acted in what he did or did not

do?”, citing Batty v Metropolitan Property Realizations Ltd, [1978] 2 All ER 445

(CA) and Dutton v Bognor Regis United Building Co Ltd, [1972] 1 All ER 462

(CA).

An owner may sue a building contractor alternatively or concurrently in contract

and tort, and a contractor who is negligent in the performance of a contract to

build is liable in tort to any person suffering resultant injury to person or property,

unless such liability is limited by the contract: Dominion Chain Co v Eastern

Construction Co (1976), 12 OR (2d) 201, [1976] OJ No 2104 (CA), aff’d without

reference to this point [1978] 2 SCR 1346, Dabous v Zuliani (1976), 12 OR (2d)

230, 1 CPC 48 (CA), Central Trust Co; BG Checo International Ltd. v British

Columbia Hydro & Power Authority, [1993] 1 SCR 12, [1993] SCJ No 1.

[101] Briefly stated, the plaintiff in Vermillion advanced claims for breach of contract and

negligence by a general contractor in the construction of an addition to an existing building. The

contractor ultimately was found to have breached the contract and to have been negligent for

failing to exercise reasonable care and skill in ensuring that the construction was undertaken in

accordance with the accepted standards of a reasonable contractor.

[102] The Court in Vermillion confirmed at para 179 that in breach of contract, “the wronged

plaintiff is entitled to be put in as good a position as he would have been in if there had been

proper performance by the defendant” [citations omitted]. In tort, “[T]he purpose of an award of

damages...is to put the innocent party back into the position as if the tort had not occurred”

[citations omitted]: at para 181. With respect to potential concurrent liability in both contract and

tort, the Court stated at para 183 that “it would seem anomalous to award a different level of

damages for what is essentially the same wrong on the sole basis of the form of action chosen,

though particular circumstances or policy may dictate such a course”.

[103] There is no dispute that Vermillion also stands for the proposition that the contractual

measure is the preferred approach in cases of concurrent liability in both tort and contract: see

para 22. Ultimately, I am satisfied that it makes no practical difference whether a case is assessed

as a tort claim or a contract claim. In both instances, the measure of damages is the same, ie., to

put the plaintiff back in the position they ought to have enjoyed but for the breach of contract or

the breach of a duty of care.

[104] While the overall approach to both liability and damages may be the same under both

contract and tort, contractual liability is limited to the specific contracting parties, in this case

Tru-Square, other than in circumstances involving the lifting of the corporate veil. By contrast,

the Plaintiffs contend that both Tru-Square and Metcalfe can be held liable in tort. The Plaintiffs

argue that Metcalfe can be found personally liable for negligence, as well as fraud.

B. Liability in Contract

[105] To establish liability under contract, the Plaintiffs must prove the existence of an

enforceable agreement, the breach of an obligation(s) under that agreement and a resulting loss

that was foreseeable and not too remote.

Page: 19

1. The Lock-Up Contract

[106] The parties’ Agreed Statement of Facts includes the following statements relating to the

three contracts they signed on August 22, 2011:

a) On August 22, 2011, Tru Square (by Metcalfe) and the Plaintiffs executed an

Alberta New Home Warranty Program (ANHWP) form of agreement valued

at $1,062,348.

b) On August 22, 2011, Tru Square (by Metcalfe) and the Plaintiffs executed two

additional forms of agreement for construction services valued at $1,062,348

and $692,485.50, respectively.

c) Metcalfe typed up and prepared both forms of agreement other than the

ANWHP agreement.

[107] All of these contracts were fixed-price contracts and included a four-stage draw payment

to the Defendants. The first contract (Exhibit 1-C-5) involved construction of the residence to the

lock-up stage (the “Lock-Up Contract”), including stucco and drywall, in the amount of

$692,485.50. It excluded all interior finishes, any stone, any fireplaces and any exterior services.

The homeowner was responsible once the drywall was finished. Work performed by others was

specifically the responsibility of the homeowner.

[108] The Lock-Up Contract refers to the design prepared by Innographic, but states that “the

building spec or design of plan drawings may not always be followed as suggested by

draftsman”. Further, the contract stipulates:

This contract shall replace the contract that covers the entire home but shall have

all the warranty on all work done by Tru-Square Homes Ltd. as covered by the

ANHW program.

[109] The second, unnumbered paragraph of the Lock-Up Contract stipulates the inclusions and

exclusions. Included in the contract price of $692,485.50 are the following:

...foundation (excluding excavation, backfill), framing, windows/doors installed,

overhead doors installed (allowance of $7000 for 3 doors), shingles, acrylic

stucco (all built-outs are extra – includes $5000 allowance for built-outs in price),

eavestrough, plumbing, heating, electrical (including pot lights but not rest of

fixtures), insulation, drywall, concrete finished in basement and garage.

[110] Excluded from the Lock-Up Contract are the following: “any exterior services (water

line, septic, power, gas, road, etc.), any fireplaces, any stone, any interior finishes (except

plumbing, heating and some electrical)”. In another portion of the Lock-Up Contract, the

owner’s responsibility for all interior finishing after drywall, including false beams, is repeated.

Later, it stipulates:

Once the building is completed to the point where the drywall is finished, then the

home owner takes over the overseeing and responsibility of finishing the home

except those that are the responsibility of Tru-Square Homes. All interior

finishing is the responsibility of the homeowner.

[111] Under the heading “Comments or Specs”, the Lock-Up Contract included a term relating

to the construction of the foundation:

Page: 20

Basement has 8” concrete wall, not ICF. Finished ceiling height to be

approximately 9’1”. Concrete to be 25 MPA (type 50) with two rows of 2 (10

mm) rebar in the 9 foot wall and 1 row of 2 rebar in 4’ wall. Footing to have 2

bars in as well. Concrete walls to step down to walkout as grade allows.

[112] The Lock-Up Contract stipulates that Tru-Square is responsible for ensuring that the

residence meets building codes and that it will “strive for high quality”. Trades are to have WCB

coverage or private insurance, while the homeowner is required to have building and liability

insurance. A four-step payment schedule is set out in the final portion of the contract as follows:

1. After completion of the foundation- $110,000.00;

2. Framing complete, including doors/window installed, roof complete, rough in

plumbing, heating, electrical, insulation and vapour barrier installed, concrete

basement poured - $350,575.00;

3. Insulation and drywall complete, heating equipment installed - $130,000,00;

4. Stucco completed, concrete exterior pads, finals on electrical, heating, plumbing,

eavestrough and garage doors installed - $101,910.50.

[113] The second signed contract contemplated construction of the residence to completion for

a total price of $1,062,348.00. This second contract repeats many of the terms set out in the

Lock-Up Contract, including that payments are due “after completion of 4 stages as per ANHWP

contract”.

[114] While this contract provided details as to the construction of the basement, no reference

is made to the type of concrete to be used, unlike the Lock-Up Contract. The second contract

does, however, specify that the basement walls are not ICF. Unlike the Lock-Up Contract, the

cost of excavation and backfill were not excluded from the second contract.

[115] The second contract includes allowances for exterior and interior finishes, namely:

$ 5,000.00

Stucco build outs (installed)

$30,000.00

Stone (installed)

$ 8,000.00

Two fireplaces (installed)

$30,091.00

Finish material (not including cabinets)

$15,000.00

False beams and ceiling timber/beams (installed)

$ 6,000.00

Window/door upgrades

$ 2,000.00

Interior stair upgrades

$27,000.00

Deck covering material with railing (installed)

$10,000.00

Appliance allowance

$33,660.00

Floor coverings (supply and install main floor)

$14,735.00

Floor coverings (supply and install lower level

$54,710.00

Cabinets (supply and install)

Page: 21

$ 2,736.00

$ 5,471.00

$ 3,000.00

Wall tiles (supply and install)

Electrical fixtures (does not include pot lights which is part of electrical)

Steam shower (supply and install)

[116] Finally, the second contract specifies that trades are required to have WCB coverage or

private insurance that meets the standards. The homeowner is stated to be responsible to have

building and liability insurance and is also responsible for the supply of power. Unlike the Lock-

Up Contract, this contract states that Tru-Square belongs to the ANHWP.

[117] Metcalfe brought both of these contracts (1-C-5 and 1-C-6) to the meeting. Both are on

Tru-Square letterhead. The Plaintiffs had never seen the documents before, but reviewed them

briefly and then signed them.

[118] The third form of contract, the pre-printed ANHWP contract, was brought to the meeting

by the Plaintiffs. This contract also covered the construction of the entire residence at a cost of

$1,062,348.00. Unlike either 1-C-5 or 1-C-6, it specified a completion date of June 30, 2012.

[119] While this third contract is stated to be between Craig and Georgina Swanby and Tru-

Square Homes Ltd, it was signed only by Craig Swanby, though both Plaintiffs initialled each

page of the multi-page document. Of note, some of the blanks are filled in with the following

information:

a) Under paragraph (f), the construction section, the following was added: “Custom Plan

from Innographic Design and Drafting (Gordon Snell) with changes as outlined in

Part 2 of contract”;

b) Under paragraph (g), the price of the home was stated to be $1,011,76.00 plus GST of

$50,588.00, for a total contract price of $1,062,348.00.

c) Under paragraph (h), the terms of payment were stated as follows:

(i) 0 deposit;

(ii) 0 upon the removal or satisfaction of Conditions in paragraph 21;

(iii) $169,975.68 on completion and inspection of foundation (16%);

(iv) $350,574.84 upon completion and inspection of ready to drywall (33%);

(v) $276,210.48 upon completion and inspection of drywall complete, heating

installed (26%);

(vi) $265,587.00 being the balance of the total price and interest, if any, on the

completion and possession of the home, whichever occurs first.

d) The purchaser was stated to be responsible for utility connections, building permit,

utility costs, and building/liability insurance (paragraph M);

e) Completion date was stated to be June 30, 2012, though the builder did not guarantee

this date in the event of delays for which the builder may not be responsible

(paragraph N);

f) Under the heading “warranty” (paragraph S), the contract provided:

The Builder agrees to provide the Builder Warranty set forth in

detail in the Warranty Certificate appearing on page 6 of this

Agreement as the minimum requirement on the part of the Builder.

Page: 22

The Builder may provide warranty coverage in addition to the

minimum required in the said warranty and in such event, the

additional warranty coverage shall be contained in an addendum in

writing signed by the Builder and attached to this Agreement.

Additional coverage is provided solely by the Builder and the

Program does not warrant the Home beyond the terms, conditions,

limits and exclusions contained in the Warranty Certificate.

[120] A Single Family Residence Warranty Certificate was attached to the contract.

[121] It seems clear that the detailed quote provided by Metcalfe and dated August 21, 2011,

was in furtherance of the Plaintiffs’ request for information, presumably for their bank, as to the

total cost to complete the project. Metcalfe’s breakdown confirms that at that point in time, the

agreement was for him to build to the lock-up or drywall stage only. The document also includes

a handwritten timeframe for the projected completion of various stages of construction. Of note,

the timeframe indicated that drywall would be completed by the end of February 2012, with

work on the interior to commence on March 1, 2012. The document also confirmed that the

initial quote was for $551,310 and referred to a “new” quote of $659,510, the new quote to

include exterior stucco, a concrete garage pad, entrance pad and deck pad, soffit, facia,

eavestrough, ANHWP fees, and other items.

[122] I am satisfied that at the time of the August 22, 2011 meeting that led to the signing of the

three contracts, the parties had come to an agreement that the Defendants would construct the

home to the lock-up stage only. As such, their agreement was that the Lock-Up Contract (1-C-5)

was to apply. At that time, the Plaintiffs contemplated completing the residence on their own.

2. Was the Lock-Up Contract Amended or Varied?

[123] The parties take very different positions on the question of whether there was an

agreement reached that committed the Defendants either to finish the construction of the

residence or to complete some aspects beyond the lock-up stage.

[124] In Hyslip v Macleod Savings & Credit Union Ltd, [1988] 90 AR 141 (QB), the Court

held that a contract may be varied by agreement. At para 30, the Court stated:

It may be stated as a general principle that the parties to a concluded agreement

may by agreement vary the terms of their concluded agreement, and that such

variation may be by express agreement or may be implied by conduct. An

agreement varying an existing agreement must in itself amount to a valid contract.

To effect a variation the parties must be ad idem in the same sense as for the

formation of a contract, and there must be consideration passing. Where an

agreement is varied it then operates according to the variation, and the original

term or terms cannot be set up by one of the parties against the other. A variation

cannot occur by a unilateral notification by one party to the other, without any

agreement, but if the variation is made unilaterally by one party and accepted by

the other party and there is valid consideration passing a variation of the original

contract can occur.

[125] According to Metcalfe, the agreement to build to the lock-up stage was the only

agreement that was ever reached. However, he also says that the total contract consisted of 1-C-

5, the Lock-Up Contract, as well as portions of 1-C-4, the ANHWP contract relating to warranty

Page: 23

coverage for the work performed by the Defendants. This ignores the fact that 1-C-4 expressly

refers to an agreement to construct the entire residence. The Defendants’ reliance on a portion of

1-C-4 as forming part of their agreement is, in my view, not supported by the evidence. There is

no evidence before me that the parties ever reached a consensus that a portion of 1-C-4, the full

construction contract, was to be included as part of their agreement. However, it is not necessary

for me to resolve this.

[126] The Defendants say that a plain reading of the terms of the Lock-Up Contract reveals that

it “replaced” the full contract. As such, they maintain that the Plaintiffs did not have the option

of making anything other than the Lock-Up Contract the document governing the parties’ legal

relationship.

[127] In my view, the plain meaning of the first paragraph of the Lock-Up Contract is that it

was intended by the parties to replace the full contract. While I accept the Defendants’

contention that it was not open to the Plaintiffs unilaterally to re-activate the earlier agreement, it

was certainly open to the parties to reinstate the earlier contract upon a further agreement to this

effect. Likewise, it was open to the parties to vary the Lock-Up Contract to incorporate some or

all of the terms of the full house contract.

a) The Fall 2011 Amendment

[128] Both Mr. and Ms. Swanby say that, about three-quarters of the way through the framing

process, they concluded that completion of the residence post lock-up stage was beyond their

capability. They decided to ask Metcalfe to complete the project. According to Ms. Swanby, she

had a discussion with Metcalfe while standing close to the doorway of the unfinished kitchen in

which he agreed to build the residence to completion. She did not recall the exact words that he

used, but he verbally agreed to complete the construction of the residence. Ms. Swanby

mentioned to Metcalfe that they already had a signed contract for the completion of the

residence, but he did not respond. The Plaintiffs maintain that the Defendants thereby committed

to completing the residence in accordance with the full price contract signed on August 22, 2011

(Exhibit 1-C-6).

[129] Metcalfe acknowledges that he did have a conversation with Ms. Swanby at some point

regarding him taking on the completion of the residence, but disputed he agreed to finish the

home or to be bound by the full contract, either 1-C-4 or 1-C-6.

[130] I accept Ms. Swanby’s evidence that she had a discussion with Metcalfe in which he

agreed to build the residence to completion. I am satisfied that the parties came to an agreement

in the fall of 2011 to vary the terms of their existing contract. By the terms of this oral

agreement, the Defendants agreed to complete the construction of the residence. As such, the

parties agreed to be bound by the terms of the fixed-price, full contract signed on August 22,

2011, for $1,062,348.00, Exhibit 1-C-6, as constituting an amendment or variation of the Lock-

Up Contract. Under the terms of the revised contract, Metcalfe remained the general contractor.

[131] In their written submissions, the Defendants contend that the Plaintiffs abandoned their

argument that they ever exercised the option to proceed on the full contract. The Defendants say

that this abandonment took place during counsels’ oral submissions at the conclusion of the

evidence. I have carefully reviewed the evidence of both Mr. and Ms. Swanby and am satisfied

that they both testified as to their belief that they reached an agreement with Metcalfe to vary the

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terms of the Lock-Up Contract so as to incorporate the terms of the full house contract. I accept

the assertion of counsel for the Plaintiffs that this argument was never abandoned.

[132] That said, it seems clear that this first variation agreement reached in the fall of 2011 had

limited practical implications for the progress of the project. At the time, the Defendants were

still very much engaged in those aspects of the construction of the residence that formed part of

the Lock-Up Contract. The Plaintiffs maintain that all of the deficiencies claimed in this action

flow from the Defendants’ work to the lock-up stage. As such, the Plaintiffs say that whether or

not the parties subsequently entered into a new contract for the construction of the entire

residence is not material to the resolution of this litigation.

[133] Save for the possible involvement of the stone mason in the leaking windows, I agree

with the Plaintiffs’ contention in this regard. On the evidence before me, it is clear that the terms

of the agreement reached between the parties relative to the completion of the project beyond the

lock-up stage are largely irrelevant to the issue of liability. There is no dispute between the

parties that virtually all of the deficiencies relied upon by the Plaintiffs in this litigation were

items covered by the Lock-Up Contract. While the installation of the exterior stone was not part

of the Lock-Up Contract, its removal was necessitated by the deficient stucco work that clearly

was covered. This is discussed in greater detail later in these Reasons.

b) The May 2012 Amendment

[134] The second amendment alleged by the Plaintiffs is potentially more significant.

[135] The Plaintiffs assert that the full price contract was varied in May 2012. Ms. Swanby’s

evidence was that this new agreement was prompted by the Plaintiffs’ escalating concerns about

the sub-contractors hired by the Defendants to complete the interior work on the residence. As

noted above, when Ms. Swanby raised concerns with respect to the quality of John Metcalfe’s

work, he walked off the job, leaving the Plaintiffs to hire their own tile sub-contractor to re-do it.

Issues also arose with the Defendants’ painting sub-contractor and cabinet supplier. Further,

Metcalfe was unable or unwilling to meet the Plaintiffs’ requests relative to flooring and a

planned staircase. Finally, Ms. Swanby was growing increasingly frustrated by the delays

occasioned by Metcalfe’s frequent absences from the job site and his continuing refusal to assist

in keeping track of the various allowances established for the interior work.

[136] The full price contract included a list Metcalfe had prepared of allowances to complete

the interior finishings. Ms. Swanby understood that the full price contract was a fixed price

contract and that the itemized amounts were Metcalfe’s guidelines as to what could be spent to

complete the interior. When Metcalfe subsequently refused to provide regular budget updates

relating to these allowances, Ms. Swanby turned to Carm to assist her in preparing budgets to

ensure that they knew exactly where they were at relative to each line item. Exhibit 1-I-37 was

the first budget that she developed with Carm when the required information was not

forthcoming from Metcalfe. Exhibit 1-I-20 was a later version of this same budget. These

spreadsheets were created in late 2012 or in early 2013 when bills started to arrive from the

various interior trades.

[137] Ms. Swanby testified that she, Metcalfe and Carm met in May 2012 and arrived at a

verbal agreement under which the Plaintiffs agreed to pay the Defendants either 5% or 10% of

the cost of work completed by subcontractors, depending on whether the subcontractor was

identified and hired by the Plaintiffs or by Metcalfe. It was also agreed that Metcalfe would

Page: 25

receive and process all of the sub-contractors’ invoices and then seek reimbursement from the

Plaintiffs. While the terms of this alleged variation were not reduced to writing, Ms. Swanby

believed that Metcalfe and Tru-Square continued as the general contractor for the project. She

and Mr. Swanby both testified that they believed it was only fair to provide some compensation

to the Defendants for their continuing work on, and oversight of, the full price contract even if

the Plaintiffs hired some of the sub-contractors.

[138] According to Metcalfe, he was approached by Ms. Swanby and Carm in May 2012, just

prior to the completion of the drywall, and told that the Swanbys were unable to sell their other

property and were therefore in a difficult financial situation. Metcalfe asserts Carm asked him if

he would be willing to pay certain invoices with a 5% or 10% mark-up just to assist the Swanbys

for a period of time. Metcalfe agreed. Carm set up a schedule on one of the budgets that added

the 5% or 10% mark-up. Metcalfe says he had no input as to whether he was given 5% or 10%

for the various trades. He insists that he simply agreed to receive and process the invoices of the

sub-trades beyond the lock-up stage. The Defendants strongly dispute that Metcalfe retained any

oversight function for the project beyond the completion of the lock-up stage.

[139] Carm’s evidence on this point was very limited. He confirmed that a meeting took place

with Metcalfe and Ms. Swanby in May 2012, during which they reviewed on an item-by-item

basis the various finishing items and determined whether Metcalfe would receive a mark-up of

5% or 10%. Carm referred to a budget he prepared dated May 21, 2012, Exhibit 1-I-21, which

includes various 5% and 10% mark-ups identified as “Jim’s percentage” or “Jim’s mark-up”.

Carm’s May 15, 2012, budget did not include these mark-ups. A subsequent budget prepared by

Carm dated January 1, 2013, revealed that Metcalfe’s mark-up was reduced to 5% in certain

instances where, according to Carm, Metcalfe was unable to provide the trade for the required

interior work.

[140] Carm was never questioned about Metcalfe’s version of what took place at this meeting,

nor was he asked to confirm his alleged initiation of this discussion or his alleged proposal to

assist the Swanbys through difficult financial circumstances. Metcalfe’s version of events also

was never put to either Mr. or Ms. Swanby during cross-examination.

[141] No arguments were advanced at trial regarding the possible application of the so-called

rule in Browne v Dunn, 6 R 67, 68 (H L 1893), even after the Court invited further written

submissions on the nature of the legal relationship between the parties, if any, beyond the terms

of the Lock-Up Contract.

[142] I accept the evidence of the Plaintiffs. Given the Defendants’ failure to put this key issue

to the Plaintiffs in cross-examination or to their own witness, Carm, in direct examination, and

for other reasons discussed below, I place little weight on Metcalfe’s version of events.

[143] There is no evidence to support Metcalfe’s contention that the cost-plus arrangement

came about because of financial difficulties experienced by the Plaintiffs when they were unable

to sell their other home. To the contrary, the evidence indicates that the Plaintiffs had obtained

full financing from the bank to cover the construction of the entire residence: Exhibit 1-H-22.

Further, Carm testified that he was unaware of any financial difficulties on the part of the

Swanbys. While Mr. Swanby gave evidence about financial strain that arose during the

remediation process that required them to cash in some of their retirement investments, I am

satisfied that this arose much later than the timeframe relied upon by Metcalfe.

Page: 26

[144] The Defendants forcefully assert that they retained no supervisory or oversight

responsibilities beyond the scope of work set out in the Lock-Up Contract. They advance two

arguments to support their position that they were not the general contractor and, as such, not

responsible for the work of the trades involved in the finishing work post lock-up. First, the

Defendants, relying on Carm’s evidence, maintain that Metcalfe’s only role relative to the trades

for which he received a 5% mark-up was to simply pay their invoices. According to the

Defendants, “[I]t is not commercially reasonable that Mr. Metcalfe would not have a role in the

hiring or supervision of these trades but would be responsible for deficiencies in their work”:

Defendants’ Response to Additional Reply Submissions of the Plaintiffs, para 12.

[145] The Defendants called Carm as a witness at trial, which obviously imposed limitations on

their ability to challenge his evidence. Absent an application under the Canada Evidence Act,

RSC 1985, c C-5, or the Alberta Evidence Act, RSA 2000, c A-18, or under the common law, to

have Carm declared an adverse or hostile witness, the Defendants were precluded from cross-

examining him. No such application was made. The Defendants must accept Carm’s evidence as

given.

[146] Carm’s evidence was to the effect that Metcalfe’s responsibilities relative to those trades

identified by the Plaintiffs, and for which Metcalfe was entitled to a 5% mark-up, were limited to

the payment of the invoices submitted by that particular trade. However, when questioned as to

who would be responsible for issues pertaining to the quality of work undertaken by any of the

so-called 5% trades, Carm offered two responses. First, he suggested that he would be

answerable to the Plaintiffs if trades associated with his company, C & S Fine Furniture Ltd,

performed sub-standard or deficient work. Second, he suggested that if another of the 5% trades

performed substandard work, that trade would be called back to correct the problem. Carm also

made it very clear that his role on the project did not include any personal responsibility for any

deficiencies arising from the work of any of the 5% trades. When then asked who would be

responsible to call back the affected trade to correct the matter, he suggested that anyone from

the team could make the call.

[147] I attach very little weight to Carm’s understanding of the chain of responsibility for

performance issues and deficiencies related to the finishing trades. There is no evidence that

Carm is legally trained. He was not qualified as an expert witness to give legal opinions. While

no objection was taken to his responses to hypothetical questions clearly touching on legal

matters, I do not attribute to this aspect of his evidence the significance advanced by the

Defendants. In my view, Carm was merely sharing his views as to his personal sense of

responsibility for trades that he brought to the project either personally or through the Plaintiffs.

As a practical matter, he believed that trades should be called back to correct sub-standard or

deficient work. At the same time, he clearly saw very significant limits on his personal

responsibility insofar as he was quick to point out that he would not bear any personal financial

responsibility in such circumstances. Moreover, Carm was adamant that he was not the general

contractor and that this role was played by Metcalfe from the outset of the project until the

Defendants abandoned it in June 2013. In the result, I am unable to accept Carm’s views as being

in any way determinative of the underlying issue relating to legal responsibility.

[148] In my view, Metcalfe’s evidence that the cost-plus variation of May 2012 was a financial

arrangement only is not credible. It is inconsistent with his continued regular presence on the

job-site, a presence that would not have been required for someone exercising an invoice

payment function only. It is also inconsistent with Carm’s time sheets and the various email

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exchanges between Carm and Metcalfe and others that confirm Metcalfe’s continuing active

involvement in the project. In rejecting this aspect of Metcalfe’s evidence, I reiterate that

Metcalfe’s alleged financing arrangement was never put to either Mr. or Ms. Swanby in cross-

examination. Likewise, it was never put to Carm notwithstanding the key role Metcalfe claimed

he played in the discussion leading to this new financial arrangement. My rejection of Metcalfe’s

evidence on this key issue significantly impacts my overall assessment of his credibility as a

witness in these proceedings.

[149] The Defendants advance a series of arguments regarding Carm’s role throughout the

construction project, but most particularly relative to the finishing trades involved in the post

lock-up phase of the process. Carm identified a number of these trades, including his own

company, C & S Fine Furniture Ltd, which was involved in furnishing and installing much of the

interior cabinetry. Several of the other trades, including the stone mason, Lawrence Masonry,

were identified and hired by the Defendants.

[150] Carm’s role in this construction project is the subject of significant disagreement between

the parties. The Defendants suggest that he played a significantly more active role than simply

the Swanbys’ designer. The Plaintiffs, on the other hand, view the Defendants’ focus on Carm as

nothing more than an attempt to deflect responsibility for the supervision and oversight of the

project away from Metcalfe. In my view, the Plaintiffs’ argument finds support in Metcalfe’s

contradictory evidence regarding his role described earlier in these Reasons.

[151] Carm was hired by the Plaintiffs as their designer and paid $85 per hour for his work

throughout his involvement in the project. He was required to keep track of his time. He did not

have a written contract with the Plaintiffs and there was never a contractual relationship between

him and the Defendants.

[152] I am satisfied that Carm’s involvement in the project created some confusion for

Metcalfe, who testified that he had never worked with a designer before. Metcalfe’s initial email

communication with Carm on August 27, 2011, days after the parties signed the contracts for the

construction of the residence, confirms Metcalfe’s uncertainty about the arrangement: Exhibit 1-

G-23. The final paragraph of the email reads as follows:

I’m sure the clients appreciate your input into their new home and hopefully we

can work together as smoothly as possible so that the owners can get the best

product possible for a reasonable price. I gather this is something neither one has

done before (work together) so we will need to communicate what is happening

as the project continues. I will try to remember to keep you informed on the

progress and schedule but I imagine you will be by regularly to see for yourself

which will be good as you may pick up something that I may have missed that

works toward the finished house.

[153] Carm testified that the Swanbys initially invited him to take on the role of general

contractor, but he declined on the basis that he lacked the required technical knowledge and

experience. According to Carm, he was the designer on the project and, as such, his work

involved design, budgeting and the coordination and scheduling of some of the finishing trades.

[154] Nonetheless, Carm had significant experience in the design process, as well as in the

finishing processes that follow the lock-up stage. The Plaintiffs placed great reliance on his input

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and advice throughout. He acted somewhat as a “go-between” for the Plaintiffs in their dealings

with Metcalfe throughout the construction project.

[155] I am satisfied that part of Metcalfe’s confusion regarding Carm’s role flowed from the

fact that Carm frequently acted as the Plaintiffs’ voice in dealings with Metcalfe and others. This

confusion was compounded by Metcalfe’s significant time away from the job site when

circumstances required Carm to step into the breach during these absences to try to keep the

project rolling. On occasion, when Metcalfe’s travel schedule rendered him difficult or

impossible to contact, Carm filled some of the oversight vacuum created by Metcalfe’s absences

from the site, including relaying messages to and from Metcalfe.

[156] The Defendants cite several examples of circumstances in which Carm is alleged to have

played a key role in the oversight and supervision of the project, particularly after the lock-up

stage was reached. For example, the Defendants suggest that Carm’s email to Metcalfe on

September 19, 2012, makes it clear that he was assuming responsibility for the project with the

result that Metcalfe and Tru-Square cannot be found to have been responsible for the work of the

finishing trades.

[157] Carm’s email (Exhibit 1-I-46) contained a list of fourteen items that he suggested

required Metcalfe’s attention. The heading at the top of the email is “Items I need you to finish

before I take over the project”. At the conclusion of that email, Carm asked Metcalfe to sent out

an email to all of the trades to notify them that “I will be the contact person for the project”. On

September 22, 2012, Metcalfe sent an email to Carm listing the names and contact information

for ten of the trades working on the project. The email read as follows:

Hi Shawn,

Sorry for the delay but have been extremely busy of late.

True Blue Plumbing and Heating – Jason 540-8230

Eagle Electric – Jim 556-9853

Amax Exteriors – Allan 559-4539 (eavestrough, soffit/fascia)

Glen Coulter – drywaller 507-9840

Diamond Fireplace – 273-0000

John Lawrence – 874-3413 – stone

John 561-1270 – tile

Kory 507-3783 – concrete

Lumberding Exteriors 888-8504 (shingles)

M+K Stucco (Merlin) 944-1077

I believe you have any others that I have missed. If not, you can phone my cell (it

is no extra cost as long as I am in the country) or email but I won’t have access all

of the time. Any questions – phone. The other unfinished items will be delt [sic]

with on my return.

[158] Carm sent a further email that same day acknowledging receipt of Metcalfe’s earlier

message and stating: “[T]hank u when are u leaving and when approximately will u be back?

Have a great trip.”

[159] According to Carm, this email exchange took place in the context of Metcalfe’s planned

absence from the province for a period of three weeks, during which there would be periods of

time when he could not be reached via cellphone or email.

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[160] What I take from this email exchange is that Carm was taking over the temporary

supervision of the project during Metcalfe’s absence. On the evidence before me, it is clear that

Metcalfe was regularly away from the job site for personal reasons, including pre-planned

vacations. On occasion, when Metcalfe’s travel schedule rendered him difficult or impossible to

contact, Carm was required to fill some of the gap created by his absence, including contacting

the trades directly. In my view, given the oversight vacuum created by Metcalfe’s frequent

absences from the site, it is not particularly surprising that Carm provided guidance and advice to

the Plaintiffs at various stages of the construction process. This email exchange was situation-

specific and involved Carm covering for Metcalfe during an extended absence from the project.

[161] To the extent that the Defendants are suggesting that this email exchange reflects some

sort of general transfer of the oversight responsibility for the project from Metcalfe to Carm, I

am unable to accept this contention. Carm insisted that it never occurred to him that Metcalfe

was not the general contractor. Further, Carm’s evidence was that he did not instruct any of the

trades on how to perform their functions. He maintained that he was not paid by the Plaintiffs to

supervise the trades. I accept his evidence on all of these points. Metcalfe’s role and legal

responsibilities as general contractor remained unchanged.

[162] As regards the finishing work that took place following lock-up, Carm’s increased

oversight role was, in my view, consistent with his role a designer for the project. However, I

reject any suggestion by the Defendants that Carm was ever the general contractor on the project.

On the evidence before me, I am satisfied that this was Metcalfe’s role throughout.

[163] Metcalfe’s contradictory evidence on this point is, as previously stated, troubling. I am

satisfied that Metcalfe’s failure to properly supervise the project as a result of his personal travel

commitments, together with his focus on his upcoming retirement, are the principal reasons that

he failed to note and address the short-cuts and construction deficiencies of the various sub-

trades that plagued the project to the lock-up stage. While I accept the proposition that it is

important to consider carefully Carm’s role in some of the key decisions taken during the course

of construction, I approach Metcalfe’s evidence in this regard with some considerable

skepticism, particularly his attempts to deflect responsibility to others, notably Carm.

[164] I am satisfied that Metcalfe and Tru-Square remained the general contractor for the

project after agreeing to complete the residence on a cost-plus basis.

3. Breach of Contract

[165] The Plaintiffs led a substantial quantity of evidence highlighting the various deficiencies

that were discovered by experts retained following the Defendants’ refusal to address the leaking

windows and, ultimately, the Defendants’ abandonment of the project. This evidence is set out in

the various expert reports prepared by Bjornson, Matthews, and Kraychy, as well as the evidence

of the Plaintiffs’ remediation contractor, Juniper. In response, the Defendants led evidence

challenging some of the observations and conclusions of the Plaintiffs’ experts and called their

own expert.

[166] The Plaintiffs rely on these specific construction deficiencies in support of their

contention that the Defendants are in breach of contract relative to their construction of the

Plaintiffs’ residence. I will address those deficiencies in detail later in these Reasons.

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C. Liability in Tort

[167] The Plaintiffs contend that the Defendants owed a duty of care based on their contractual

obligation to construct the residence, that they breached that duty of care through the negligent

performance of their contractual obligations, and that the Plaintiffs suffered damage as a result.

[168] The Plaintiffs also say that Metcalfe should be held personally liable for the negligent

construction performance of Tru-Square. Specifically, the Plaintiffs assert that the law provides

that principal individuals may be held personally liable where the work performed is inherently

dangerous or where a principal of the defendant contractor induces a breach of contract.

[169] Metcalfe was aware from his pre-contract discussions with the Plaintiffs that they were

seeking his assistance in the construction of their dream retirement home. Before entering into

the agreement, Metcalfe had occasion to review the Swanbys’ architectural plans and, as such,

was aware of their design specifications. Further, Metcalfe presented himself as a custom home

builder who had at least some experience in building high quality homes.

[170] In their written brief, the Plaintiffs suggest that Tru-Square and Metcalfe were under a

duty of care “to fulfill the contract in the manner expected of a reasonable [sic] competent and

careful custom home builder, having mind to established industry custom and practice.” In this

regard, the Plaintiffs cite Vermillion at para 124, wherein the Court, citing Dickson J (as he then

was) for the majority in Fraser-Reid v Droumtsekas, [1980] 1 SCR 720 at 726, states that the

relevant question is, “[D]id the builder act as a competent and careful builder would have acted

in what he did or did not do?”.

[171] I accept the Plaintiffs’ contention that the scope of the Defendants’ duty of care is

informed by both the terms of the contract and other general principles. In this instance, the

terms of the contract specified that the Defendants were to meet Code requirements and to

“strive for high quality”.

[172] On the expert evidence before me, I am satisfied that the Code represents only the

minimum standards required by law. In this regard, the Plaintiffs cite Holtslag v Alberta, 2006

ABCA 51 at para 35, where Sulyma J (ad hoc) for the Court stated:

The provisions of the Code are technical requirements relating to minimal health

and safety standards and the use of safe and adequate building materials (see para.

10 and excerpt from the Preface to the National Building Code of Canada 1990 in

Part D above). As the respondent submitted, the Code cannot be said to be a

textbook on building design. ...The statute establishes a regulatory scheme for

building products and is intended only as a set of minimum standards for the

benefit of the public at large.

[173] The Plaintiffs maintain that the standards applicable to custom home building are higher

than those prescribed in the Code. Bjornson, Matthews and Kraychy all testified that the Code is

a set of minimum construction standards. The Defence expert, Hamman, confirmed that a

reputable construction manager seeks a higher standard then merely meeting the minimum

requirements in the Code: Evidence of Hamman (Cross), October 15, 2019, at 11:41 a.m.

[174] In her expert report, Bjornson stated that many of the provisions of the Code either are

outdated or have been withdrawn by the Standards Association, and that, for this reason, the

building industry relies on other standards. Her evidence was that the Code’s minimum building

Page: 31

standards typically lag behind practices and standards generally applicable to the construction of

custom-build luxury homes: Evidence of Bjornson (Direct) – April 22, 2019 (am). As more fully

discussed later in these Reasons, she expressed the view that in relation to roofing, the Alberta

Roofing Contractors Association (“ARCA”) Roofing Application Standards Manual is the

accepted standard for roofing installation purposes, not the Code’s “extremely outdated”

provisions.

[175] Kraychy stated that Metcalfe placed undue reliance on the minimum requirements of the

Code. Given that Metcalfe was hired to build a custom, luxury home, Kraychy maintained that

the Code’s minimum standards did not reflect the required accepted standard. He provided

particulars as to some of the attributes and duties of a reasonably competent and careful custom

home builder, including:

a) Providing advice and assistance to clients relative to project budgeting;

b) On-going communication with clients to ensure they are aware of changes,

problems and delays in construction;

c) Working with clients to resolve issue or problems arising during the course of

construction so as to ensure that clients are properly informed of the status of

the project. In this regard, the custom home builder is required to offer

solutions to problems or issues that may arise without compromising overall

building performance;

d) Oversight of design and shop drawings to ascertain changes, either required or

made, and consulting engineering professionals as required to ensure

satisfactory building performance. Changes to the designed structural

foundation or framing elements require the custom home builder to seek the

advice and direction of engineering professionals;

e) Oversight of sub-contractors to ensure work quality.

Evidence of Kraychy (Direct) – April 25, 2019 (10:45 am – 12:20 pm).

[176] As regards to his responsibility for the material and labours supplied by his sub-

contractors, Metcalfe acknowledged that “My contractors are my responsibility”: Exhibit 29 at

84:9-12. Hamman described the general contractor’s responsibility for his sub-contractors in the

following terms: “if I’ve hired trades, they are me”: Evidence of Hamman (Cross), October 18,

2019, 2:15 p.m.

[177] As noted above, the Plaintiffs rely on construction deficiencies in support of their

contention that the Defendants are in breach of contract relative to their construction of the

Plaintiffs’ residence. The Plaintiffs rely on these same deficiencies as supporting their claim that

the Defendants breached their duty of care and are, as such, also liable in tort.

D. The Deficiencies

[178] Before turning to consider whether or not there was a breach of this contract and, if so,

whether the Plaintiffs sustained damages as a result of the breach, I would note that the decision

in Vermillion confirms that there are implied terms in every building contract. At para 122, the

Court held:

Page: 32

Unless the contract or the circumstances indicate otherwise, the contract will

contain an implied term that the work will be done in good and workmanlike

manner, the workmen employed on the work will possess the ordinary skill of

those exercising the particular trade, and the materials will be of good quality and

reasonably fit for the purpose for which they are used: Heintzman and Goldsmith

at 4-50. In G Ford Homes Ltd v Draft Masonary (York) Co (1983), 43 OR (2d)

401, 1 DLR (4^th) 262 (CA), Cory J., as he then was, observed that a contractor

undertaking to do work implicitly undertakes that it will be undertaken with care

and skill and in a workmanlike manner and will be reasonably fit for the purpose

for which is it required, unless the circumstances of the contract exclude such

liability.

[179] As previously stated, the Plaintiffs led a substantial quantity of evidence highlighting the

various construction deficiencies. I turn now to reviewing that evidence in detail.

1. The Foundation

[180] The Plaintiffs contend that the Defendants failed to meet the appropriate standard of care

as a general contractor in the custom home trade when they failed to engage an engineer

regarding the change to architectural design drawings relative to the foundation. Specifically, the

Defendants elected to pour a traditional foundation, rather than the ICF foundation specified in

the drawings.

[181] There is no dispute that an ICF foundation consists of the standard 8-inch wide poured

concrete wall supplemented by rebar reinforced polystyrene forms that remain in place. In a

traditional foundation, the temporary forms are removed after the concrete has cured.

[182] I accept Kraychy’s evidence that this change should have been reviewed and approved by

an engineer to ensure that it did not impact on other structural elements of the construction.

According to Kraychy, Metcalfe should have obtained the proper engineered drawing for the

new foundation. Similarly, he needed to make sure that the consulting engineer contacted

ZyTech to discuss the implications, if any, of using a different type of foundation on the overall

planned framing structure for the residence. I am satisfied that Metcalfe failed to take any of

these steps.

[183] While I note that Metcalfe was insistent that the change in the type of foundation

employed in this instance had no impact in terms of the dimensions of the perimeter walls, I am

satisfied that it represented a sufficiently significant deviation from the original plan as to

warrant expert review. In a November 19, 2012 email to the Plaintiffs, Metcalfe apologized for

the quality of the framing, noting: “I really appreciate how patient and understanding you have

been during the building process and am sorry that the framing wasn’t done as well as it should

have been which has caused us some problems especially in the bathrooms”: Exhibit 1-G-23, p

83. It is not clear whether or not these framing issues were related to the wall overhang relative

to the foundation.

[184] In his written report, Matthews noted the lack of vertical alignment of wood framed walls

supported on foundation walls at the east elevation of the residence. Specifically, he noted (at p

5) that “the bottom plate of the stud wall supported at grade level was projecting significantly

beyond the face of the foundation wall, and vertical support for the wall was compromised”. By

way of remediation, he noted that the thickness of the concrete foundation wall was increased to

Page: 33

provide support for the full thickness of the supporting wall (at p 5). He also noted (at p 6) that

the “substitution for ICF with conventional formwork has potentially significant structural

impacts”.

[185] The Defence expert, Hamman, expressed the view that the wall overhang was Code-

compliant and, as such, acceptable. He recognized, however, that the overhang would have to be

addressed in subsequent framing steps. Matthews, on the other hand, felt that the as-built

condition was not satisfactory. He conceded that the situation was Code-compliant, but asserted

that it did not satisfy industry standards. Both Matthews and Kraychy believed that the change

from the ICF to traditional foundation was a likely cause of the wall misalignment.

[186] In my view, the remediation recommended by Matthews was a reasonable response to the

concern relative to the vertical support available to the wall.

[187] In final argument, counsel for the Defendants suggested that Juniper’s evidence was to

the effect that this recommended repair was never actually made. Assuming that to be the case,

then Juniper obviously did not bill the Swanbys for this work.

[188] Bjornson also raised issues with respect to waterproofing and damp-proofing relative to

the foundation. In her report, and confirmed in her rebuttal report, Bjornson observed that

waterproofing and damp-proofing did not meet s 9.13.2.4.(2) of the Code, which required that

holes in dampproofed concrete walls be sealed off with cement mortar or damp-proofing

material. No treatment to the concrete ties at the foundation damp-proofing was observed on the

SE elevation, contrary to s 9.13.2.4.(2). Bjornson also suggested that best practice is to include a

drainage mat installed to the foundation perimeter, as per s 9.14.5.1 of the Code.

[189] The Defendants challenge certain aspects of Bjornson’s evidence in this regard, notably

her conflicting evidence as to whether or not the absence of a drainage mat amounts to a Code

violation. The Defendants also question the extent of the absence of damp-proofing observed by

Bjornson, though I note that the Hamman made no observations in this regard. In accepting the

evidence of Bjornson on this latter point, I note that there is no evidence that the Plaintiffs took

any steps to address this issue during the remediation process. Accordingly, it is not strictly

necessary for me to make any specific findings in this regard.

2. The Leaking Windows

[190] Ms. Swanby first became aware of the leaking windows on May 23, 2013. She observed

water pooling by the great room window on the main floor. Water was also present half-way

across the 800 square foot Bonus Room above the garage, as well as in the doorway above the

downstairs bedroom and leaking into the basement. As described earlier in these Reasons,

Metcalfe was immediately alerted to the situation by Ms. Swanby, but took several days to attend

the job site. He denied responsibility for the problem and failed to take any steps to assist the

Plaintiffs in the assessment or remediation of the problem.

[191] When Snyder attended the residence to inspect the leaking windows, he was provided

with a copy of recessed window installation detail that Carm had given to Metcalfe as an

example of this type of installation, Exhibit 1-A-4. He conducted a detailed examination of some

of the leaking windows. After removing the stone sill, Snyder determined that a lot of the details

set out in the drawing, Exhibit 1-A-4, had not been followed. Specifically, he referred to the fact

that there was no weeping rope and no foam rod and sealant. He also determined that some of the

laps (waterproofing) had not been installed properly. Further, Snyder noted that the metal

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flashing at the bottom of the window was bent upward “a little bit” by the stone sill. He noticed

that the bottom flashings on other windows were also slightly bent.

[192] While on site, Metcalfe suggested to Snyder that the impact of the stone sill pushing up

the metal flashing was the cause of water entering the residence. Snyder disagreed with this

suggestion, observing that if the window had been properly sealed, the fact that the flashing was

somewhat bent would not result in water leaking into the residence.

[193] Snyder subsequently issued a report, Exhibit 1-D-5, in which he concluded:

Upon inspection of the windows (Master bedroom & Bonus room) we noted that

the window was not completed as per drawing specifications due to water pooling

behind the stone Lintel. We did not observe weeping ropes or tubes used to drain

access water from the windows in question. It is also noted the drip flashing was

bent on a reverse grade towards the window with no foam rod and sealant

observed throughout. These issues created the water to pool behind the lentil [sic]

and break the window wrap therefore allowing water to penetrate the wall.

[194] In terms of corrective actions, Snyder’s report recommended the following:

Stone to be removed as needed and lintel lowered to accommodate drip flashings

installation as per drawing details. (Positive slope, Foam Rod and Sealant).

After stone (as needed) is removed verify building wrap installation is as per

drawing details and correct if necessary, before reinstalling stone.

Weeping ropes/tubes to be installed under lentil [sic] as per drawing details.

[195] Snyder provided a quote to repair the windows (Exhibit 1-I-22) in the amount of

$11,530.00, inclusive of GST.

[196] Water damage was observed by Bjornson at all main floor windows on the rear elevation

of the residence and below the windows of the Bonus Room above the garage. Bjornson found

that this water damage was consistent with the Swanbys’ reports of water leakage. In her report,

Bjornson noted that there were water stains visible on the floor above the garage, under the

windows at the back of the house, and in the master bathroom area. In conjunction with her

investigation, Bjornson conducted flood testing by applying a light spray of water via hose onto

the exterior of various windows. Flood testing on the second story window above the garage

showed water entering the window sill at two locations within minutes.

[197] The Plaintiffs maintain, relying on Bjornson’s expert opinion, that the windows were

improperly installed by the Defendants, and that this improper installation gave rise to the

ensuing leaks. The Plaintiffs contend that the window leaks were not the result of deficient or

problematic design issues, as alleged by the Defendants, but rather the improper installation

undertaken personally by Metcalfe and the framer. The Plaintiffs point to the fact that Metcalfe

was personally responsible for the application of the peel-and-stick membrane associated with

the required creation of a continuous moisture barrier, during the window installation.

[198] The Defendants advance several different arguments in their denial of any responsibility

for the leaking windows. First, they suggest that the stone mason, John Lawrence, damaged the

installed window assembly when installing the sill stones. According to the Defendants,

Metcalfe’s role was complete by that point in time as the installation of the stone occurred well

after the lock-up stage had been reached. Second, the Defendants seek to attribute to Carm a

Page: 35

good deal of the responsibility for the leaking windows on the basis that he initiated this change

from the original design and provided the design detail to complete the recessed installation.

Third, the Defendants say that Metcalfe warned Ms. Swanby and Carm that the recessed

windows were a bad idea and that he would not provide a warranty that they would not leak.

According to the Defendants, McEwen also warned Carm about the recessed installation.

Finally, the Defendants challenge the Plaintiffs’ decision to replace all the windows, rather than

effecting the repairs proposed by Snyder.

[199] There is conflicting evidence relating to the installation of recessed, as opposed to flush-

mount, windows and doors. It is common ground that the original design called for flush-

mounted windows. I accept Ms. Swanby’s evidence that, following the signing of the contract,

Carm proposed, and the Swanbys agreed to, a change in the design to recessed installation of the

windows. Carm provided Metcalfe with a drawing used on a previous project to help explain the

concept, specifically the framing and installation requirements, as Metcalfe was confused by the

specifications. Carrm also provided Metcalfe with some photographs illustrating this earlier

installation, though these photographs are not in evidence. Metcalfe advised Ms. Swanby that he

had never previously undertaken such an installation and was not sure that it would work. The

framer, McEwen, was also unfamiliar with this type of window installation and was “leery”

about this specification.

[200] Metcalfe’s evidence was that he believed from the outset that the recessed design was a

mistake. McEwen testified that he told both Metcalfe and Carm that he did not think that the

recessed windows were a good idea given his belief that they would leak. According to McEwen,

Carm assured him that he had figured out the recessed installation. Ultimately, McEwen agreed

to install the recessed windows, but told Metcalfe and Carm that he would not guarantee that the

windows would not leak. McEwen had no recollection of ever speaking to the Plaintiffs about

the recessed windows and doors.

[201] According to Carm, neither Metcalfe nor McEwen ever expressed any concerns to him

regarding the recessed installation specification. He maintained that Metcalfe or McEwan could

have easily indicated their reluctance or unwillingness to install the windows in this fashion but

did not do so. In this regard, I note that Metcalfe refused to undertake the project if the Plaintiffs

insisted on the use of an ICF foundation as specified in the design drawings. Whatever hesitation

or reluctance Metcalfe may have had about the recessed installation of the windows, there is no

dispute that he went ahead and installed the windows in that fashion and subsequently billed the

Plaintiffs for recessed windows.

[202] I approach McEwen’s evidence with some caution. His evidence contained repeated

references to “I would have” or “I would not have” without certainty as to what he actually did in

this instance. For example, he seemed uncertain as to whether there was a building permit for the

project. At one point, he indicated that he was not sure, but later gave evidence regarding the

permit being a one-page document. Overall, he seemed to have a limited recollection of what

actually took place in this instance.

[203] I accept Carm’s evidence that Metcalfe was confused by the specification, and that this

was the reason that he provided a drawing used on an earlier project, together with some

photographs. Significantly, the drawing Carm provided included disclaimers that the drawing

was for design purposes only and that the responsibility for proper installation of the windows

lay with the contractor. Carm also gave evidence that he met with Metcalfe on several occasions

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to discuss the recessed window installation and, specifically, the special framing requirements to

accommodate the stone returns around the recessed windows and doors.

[204] After the windows had been installed, Metcalfe presented Ms. Swanby with the invoice

covering the window installation and advised her verbally that he would not cover the warranty

on the windows. In his testimony, Metcalfe conceded that he did not disclaim any warranty on

the installation of the windows until he issued Invoice 118 on September 1, 2012, well after the

windows had been installed: Exhibit 1-C-11. The invoice contains the following language:

Peel and stick, chaulking (sic), extra lumber and personal labor for framing to

recess doors and windows (does not include extra labor from framer) As this does

not meet building code warranty is void in regards to any moisture entering

building (emphasis added).

[205] Metcalfe’s disclaimer makes no reference to any specific provision of the Code. In cross-

examination, Metcalfe conceded that he made no investigation to determine whether or not the

recessed installation was Code compliant or not.

[206] In my view, Metcalfe’s disclaimer of responsibility for the installation of the recessed

windows came too late to relieve him and Tru-Square of responsibility for any deficiency arising

from the installation of the windows. Under the circumstances, Metcalfe should have either

refused to install the recessed windows, as he refused to utilize the ICF foundation, or sought

written instructions from the Plaintiffs to proceed with the recessed installation at the Plaintiffs’

sole risk.

[207] The Defendants seek to buttress their denial of responsibility for the leaking windows on

a number of other grounds. First, they point to the fact that the Plaintiffs ultimately elected not to

reinstall the windows in a recessed configuration given Juniper’s advice that he would not

warranty windows installed in this fashion. Bjornson also expressed concerns relating to some of

the details associated with the original plan set out in Exhibit 1-A-4 and recommended to the

Plaintiffs that they flush-mount the reinstalled windows.

[208] While Bjornson had reservations about some of the details of the design, she expressed

the view that it was “not unexecutable.” She also indicated that the recessed windows should

have had a design detail specifically prepared for this house, saying “It is a difficult design, but it

can be achieved.”

[209] I am not persuaded that the after-the-fact views of either Juniper or Bjornson in this

regard are of any assistance to the Defendants. The fact that the Plaintiffs followed the strong

recommendation not to reinstall the windows and doors in a recessed fashion during the

remediation process does not change the fact that Metcalfe installed the windows without ever

providing a similar strong recommendation.

[210] The Defendants also rely on the terms of their agreement with the Plaintiffs to construct

only to the lock-up stage. In particular, the Defendants cite the provision of the contract, Exhibit

1-C-5, that specifically excluded the exterior stonework. As such, the Defendants say that they

are not responsible for the work of Lawrence, the stone mason. According to the Defendants,

Lawrence bent the window flashings while installing the stone sills underneath the windows,

thereby causing the windows to leak.

[211] Lawrence was called as a defence witness and gave evidence with respect to the leaking

windows. He testified that he had no experience installing stone sills where the windows were

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recessed. He could not recall if he was provided with a copy of Exhibit 1-A-4, the recessed

window detail that Carm provided to Metcalfe.

[212] There is no evidence before me as to any specific discussions between Lawrence and

Metcalfe regarding the special requirements of the recessed window installations. According to

Carm, Metcalfe was on site frequently during the time that Lawrence was engaged in the

installation of the stone veneer to the exterior of the residence. As such, Carm assumed that they

must have had discussions, though Carm claimed that he was not a party to any such discussions.

[213] Lawrence had some difficulty installing some of the stone stills so that they would fit

under the windows. Some of the stones had to be made thinner to fit. He also indicated that some

of the flashings “got pushed up a bit”, but that it was “OK” and he did not feel that it was a big

issue. In response to the question whether he had any concerns about the windows leaking,

Lawrence responded (May 14, 2019 (Direct), 11:24 a.m.):

Q

Did you have any concerns about the window openings

leaking?

A

Well, I had never seen a design like that, and to me it’s

creating a trap, looking at the design.

Q

A

Q

A

Q

A

What do you mean when you say creating a trap?

Well it’s creating a spot for water to pool.

And where would it pool?

At the sills.

At the sill where the sill meets the house?

Yeah.

[214] Lawrence confirmed his familiarity with weeping ropes and tubes but explained that

weep holes and ropes are not installed in a closed system like the one he was dealing with at the

Swanby residence.

[215] The Code is silent on the installation of windows but requires at section 9.27.1.1 that no

precipitation penetrate the interior of the building:

Minimizing and Prevent Ingress and Damage

1) Except where exterior walls are protected from precipitation or where it can be

shown that precipitation ingress will not adversely affect occupant health or

safety, exterior walls shall be designed and constructed to

a) Minimize the ingress of precipitation into the assembly; and

b) Prevent the ingress of precipitation into interior space.

[216] According to Bjornson, the discontinuous moisture membrane and holes around the

windows allowed water to enter under the window framing and enter the building around the

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rough opening. Bjornson concluded that the breaks in the moisture barrier below the windows

caused the leaks and led to the long-term damage to the interior components and the potential for

fungal growth. I accept her evidence that the deficiencies were related to installation issues and

not design issues. She maintained that if the windows had been properly installed, “they were not

likely to leak”: Evidence of Bjornson, Re-Direct, April 24, 2019, 4:29 p.m.

[217] Notwithstanding that the working drawings for the installation of the windows called for

the use of sealant, a minimal sill flashing was installed at the base of the windows with an

inadequate slope and no sealant. Moisture was directed along the window flashing, contrary to s

9.7.4.2 of the Code, which requires the application of caulking to prevent the entry of water into

the structure.

[218] At the base of the windows, a minimal sill flashing was installed with an inadequate slope

and no sealant, despite sealant use being indicated on the window installation drawings. Moisture

was directed along the window flashing, contrary to the Code requirements in section 9.7.4.2:

Caulking Compound

1) Caulking shall be provided between window frames or trim and the exterior

siding or masonry in compliance with Subsection 9.27.4.

9.27.4.1 Required Caulking

1) Caulking shall be provided where required to prevent the entry of water into

the structure.

2) Caulking shall be provided between masonry, siding or stucco and the

adjacent door and window frames or trim, including sills, unless such

locations are completely protected from the entry of rain.

[219] Batt insulation was installed between the window frame and rough opening. While this

installation did not violate the Code, Bjornson expressed the view that it is inconsistent with best

practices. As such, she pointed to the 2014 Code at section 9.7.6.1.13: “Windows, doors, and

skylights shall be sealed to air and vapour barriers.” According to Bjornson, this change to the

Code represents formal acknowledgement of a best practice. She recommended that spray foam

be applied consistently to the full depth instead of having a discontinuous barrier.

[220] Hamman confirmed that the window installation was not Code-compliant. Specifically,

he found that the rough openings were not properly framed, leading to water being directed into

the building.

[221] According to Juniper, all but four or five of the windows had to be replaced. All the main

floor windows showed signs of leakage. I accept Bjornson’s evidence that the window

installation did not satisfy Code or industry standards or best practices. Based on the evidence

before me, it seems clear that several factors contributed to the leaking windows, including:

a) The windows’ rough openings were improperly framed such that the sill stone

directed water towards the building, rather than away from the structure;

b) The required peel and stick membrane was not installed properly so as to interrupt the

continuity of the seal and to direct moisture towards the interior;

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c) There was no back dam at the interior side of the framing at the rear of the window

cavity. Sloping the window framing or installing a shim would have met this

requirement;

d) The flashings were bent and flat, as opposed to having a 6% minimum slope. There

were no flashings between the stucco and the stone on the horizontal cladding

transitions. Similarly, there were no end dams on any of the flashings;

e) As installed, the windows did not accord with the specifications in the building

drawings. Specifically, there was no weeping rope and no rain screen fabric installed

behind the stone veneer. Likewise, there was a mix of foam and batt installation

around the windows when the drawings called for foam only.

[222] I am satisfied that the windows were improperly framed and installed by the Defendants

and their framer, and that this improper installation led to the various leaks. Bjornson and

Hamman agreed that the rough openings for the windows had been improperly framed.

Moreover, Metcalfe was fully aware of the special framing requirements associated with the

recessed installation, including the space required to accommodate the stone returns. Bjornson

also identified a series of additional installation deficiencies that compounded the framing

problems.

[223] I do not accept the Defendants’ contention that the leaking windows were entirely the

result of Lawrence’s installation of the stone sills that pushed up and bent the previously

installed metal flashings. Snyder rejected Metcalfe’s assertion that this was the cause of water

entering the residence. Having carefully considered the detailed evidence adduced at trial on this

issue, I find that the slightly bent flashings were not a factor contributing to the leaking windows.

While bent flashings were clearly not a “best practice”, the underlying cause of the window leaks

was entirely the result of improper installation, including improper framing of the rough

openings for the windows.

[224] Regardless of Metcalfe’s role post lock-up, I am satisfied that he had a responsibility to

take reasonable steps to ensure the integrity of the window installations that clearly formed part

of the Lock-Up Contract. This responsibility included collaborating with Lawrence on the

installation of the doors and windows. Metcalfe’s lack of experience with the installation of

recessed windows and doors should have heightened his diligence in ensuring that Lawrence was

fully aware, and fully understood, the special requirements for this somewhat unique feature. I

am satisfied that Metcalfe failed to take these steps.

[225] Lawrence was one of the Defendants’ trades, hired by the Defendants to complete the

stonework on the exterior of the residence. I am satisfied that the Defendants were responsible

for at least this aspect of Lawrence’s work on the project, either as the general contractor or as a

project coordinator with some oversight responsibilities for the project. I am satisfied that these

oversight responsibilities at the very least included the obligation to work collaboratively with

Lawrence on a very complex window installation that had been largely completed under the

terms of the lock-up contract.

[226] The Swanbys accepted Bjornson’s advice not to re-install recessed windows. In addition,

Juniper told Ms. Swanby that he would not warranty the labour on the installation of the new

windows if the recessed design was retained. He gave evidence that he believed that the design

of the recessed windows was “poor” and that there were lots of avenues available for the

Page: 40

windows to fail. The flush-mount reinstallation involved some additional framing costs, but such

costs were considerably less than the anticipated costs associated with a recessed re-installation

and, overall, a less costly repair option.

[227] Bjornson recommended replacement of the windows. Her inspection of the removed

windows revealed residual foam and sealant, damaged frames, and broken flanges. She also

noted that the operation of some of the windows appeared to be difficult. Further, her

understanding was that the manufacturer’s product warranty was likely voided once the windows

were removed. She acknowledged that it might be possible to re-use the windows in certain

circumstances, but that the contractor would have to be confident in accepting responsibility for

the used product.

[228] Juniper explained that when a window is removed, it is no longer a “new” window. A re-

installed window would no longer be covered by the manufacturer’s warranty, though the labour

would be covered by warranty. Juniper testified that 4 or 5 windows in the home were found to

have no issue and were never removed or replaced.

[229] Hamman confirmed that a contractor would warranty the re-installation of windows only

if it was certain that they were in proper condition. He said his experience suggested that the

windows could be reinstalled without affecting the manufacturer’s warranty if care is taken not

to damage them during the removal process. In his written report, Hamman recommended that

the windows be re-used following the Code method of lapped blueskin. During his testimony, he

acknowledged that the Code does not refer to such a method, but stated nonetheless that it was

best practice. He acknowledged that his expert report was in error in this regard.

[230] Hamman acknowledged that he did not have an opportunity to inspect the windows after

they had been removed. In cross-examination, he conceded that, to the extent that Bjornson’s

conclusions regarding the condition of the windows was correct, they would need to be replaced.

He did not factor window replacement in his suggested remediation budget.

[231] I am satisfied that the Plaintiffs’ decision to replace the windows was reasonable under

the circumstances. In my view, the level of confidence required for a contractor to re-install and

provide a warranty for the used windows was missing in this instance. I am also satisfied that the

manufacturer’s product warranty would have been voided due to damage on removal.

[232] The Plaintiffs spent approximately $31,000 to replace all of the windows, save for the

four or five windows that were determined not to require replacement and the decision to

eliminate one of the windows that had been removed. I am satisfied that this was a reasonable

expenditure under the circumstances.

3. Bonus Room

[233] The Plaintiffs maintain that there were several construction deficiencies relating to the

Bonus Room, a large room located above the garage.

a) Roof

[234] During the course of their investigative work, the Plaintiffs determined that the roof

trusses in the Bonus Room were cut and not properly connected to the ridge beam. A number of

trusses were also found to be oriented on their weak axes. Further, the 34-foot long steel I-beam

was found to lack proper connection to the outside walls.

Page: 41

[235] In his report (at p 10), Matthews expressed the following concerns with respect to the

Bonus Room roof:

a) Lack of connection of steel ridge beam to supports;

b) Structural inadequacy of support header above windows at east and west walls;

c) Absence of hangers at trusses at numerous locations;

d) Non-approved field-modification of trusses by cutting;

e) Missing nails in hangers;

f) Lack of fit of trusses evidenced by trussed not fully seated at hangers;

g) Split wood components due to nailing;

h) Absence of nails at dimensional lumber components at truss support detail at walls.

[236] In his evidence, Metcalfe acknowledged that he was personally involved in some of the

framing in the Bonus Room. He maintained that that there were no cuts or other modifications to

the trusses supplied by Zytech. He also stated that the I-beam was well secured and that he was

satisfied that it had been wedged into position in such a fashion that it was not likely to move.

Further, to the best of his knowledge, Metcalfe believed that the hangers supplied by Zytech had

been installed. Finally, he challenged one of the photographs presented to him as even being a

truss, “guessing” that it had been cut during the process of de-construction.

[237] I accept Matthews’ evidence that the roof system in the bonus room was significantly

compromised as a result of the structural irregularities he noted in his report and related in his

evidence. Specifically, he testified that good practice requires proper connection of the trusses to

the ridge beam. Similarly, good practice dictates that truss members should not lie on their weak

axis and should not be modified on site. In this regard, he observed that the roof is a critical

structure, the failure of which poses significant safety risks to the occupants of the residence.

Hamman conceded that the roof in the Bonus Room lacked some connection details and required

additional blocking.

[238] According to Matthews’ report (at p 10), “extensive remedial structural work was carried

out to address the numerous deficiencies observed.” Matthews prepared detailed drawings

illustrating remediation details, Exhibit 1-A-7, including SK-C, a drawing detailing the required

Bonus Room truss support, and SK-D, the required Bonus Room truss support cradle.

b) Floor

[239] According to Juniper, the Bonus Room floor was missing at least some of the blocking

between the floor joists stipulated in the Zytech drawings. In addition, Juniper testified that a

portion of the tongue and groove sub-floor had been cut out in the area near the windows. He

also observed that there was a floor joist missing.

[240] Metcalfe and McEwen both testified that blocking was installed but referenced a Zytech

drawing that indicated blocking was not required. In support of their contention in this regard,

they produced Exhibit 38, a drawing that appears to be an enlargement of a portion of the

complete Zytech drawing, Exhibit 1-A-9. Metcalfe’s evidence was that he did not notice that a

floor joist was missing.

[241] I accept Juniper’s evidence that the complete Zytech drawing for the Bonus Room

included a requirement for blocking. The fact that Metcalfe and McEwen included some

blocking strongly suggests that this was always a structural requirement. No satisfactory

Page: 42

explanation was ever provided as to how Exhibit #38 came into existence or that it was actually

relied upon by the Defendants.

[242] The recommended remediation involved installation of a new sub-floor, the requisite

blocking identified in the Zytech drawing (Exhibit 1-I-35, p 18, top photograph) and installation

of the missing floor joist.

[243] Under the circumstances, I am satisfied that the remediation work effected by the

Plaintiffs in this regard was both reasonable and appropriate.

c) Insulation and Ventilation

[244] In the vaulted areas of the attic, Bjornson reported that the thickness and installation

method of insulation blocked the soffits, thus preventing effective cross-ventilation between truss

cavities. She stated that this amounted to a violation of the Code.

[245] During his investigation, Juniper removed some of the drywall in the Bonus Room

ceiling and determined that the insulation batts were touching the plywood roof sheeting such

that there was no room for air to circulate between the roof and the insulation.

[246] The roof and attic ventilation requirements are outlined at section 9.19.1.2.(3) and section

9.25.2.4(6) of the Code:

9.19.1.2 Vent Requirements

3) Required vents may be roof type, eave type, gable-end type or any combination

thereof, and shall be distributed

a) Uniformly on opposite sides of the building;

b) With not less than 25% of the required opening located at the top of the

space, and

c) With no less than 25% of the required openings located at the bottom of

the space...

9.25.2.4 Installation of Loose-Fill Insulation

6) Where soffit venting is used, measure shall be taken

a) To prevent loose-fill insulation from blocking the soffit vents and to

maintain an open path for circulation of air from the vents into the attic or

roof space, and

b) To minimize airflow into the insulation near the soffit vents to maintain

thermal performance of the material.

[247] According to Bjornson, the ventilation in the Bonus Room was not compliant with the

Code, in that the insulation prevented proper air flow as it was installed too close to the roof

sheathing. In addition, there were no continuous ridge vents. Further, the vents were not properly

connected. Specifically, the Code required two-inch to three-inch spaces between the cavities,

whereas the as-built state involved only one to one-half inch space between cavities.

[248] Hamman did not inspect the attic space of the Bonus Room. The Defendants made no

observations about the ventilation space at the trusses, though they pointed to the fact that there

was a four-inch space on top of the insulation allowing for ventilation. Nevertheless, Bjornson

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expressed the view that four-inch spaces in the individual cavities were insufficient for the

purposes of cross-ventilation.

[249] At Bjornson’s direction, Juniper installed Styrofoam baffles next to the roof sheeting and

then insulation batts in order to create sufficient room for air to circulate between the insulation

and the roof. In order to increase the R factor to R-40, Bjornson also directed Juniper to apply

spray insulation over the insulating batts. He estimated that spray insulation is approximately

twice the cost of insulation batts, but noted that there was insufficient room in the cavity to

accommodate R-40 batt insulation and, further, that no plastic vapour barrier was required when

using spray insulation.

[250] I accept the evidence of Bjornson and Juniper as regards these deficiencies and the

necessary remediation. While the Defendants challenge the need for a building envelope

engineer to make this type of recommendation, I am satisfied that this fell within the proper

scope of Bjornson’s very thorough review of the as-built construction of the residence at the time

of her involvement.

d) Stairs

[251] There is a conflict in the evidence as to the as-built condition of the Bonus Room stairs,

particularly the connection between the stairs and the floor.

[252] According to Juniper and Matthews, the stairs were not connected to the floor system

either with bolts or hangers, as required by the Zytech drawings: Exhibit 1-A-2, SWA922.

Limited finishing materials, including drywall, were holding the stairs in place, together with a

few nails. Matthews’ evidence was that the stair to floor connection was very deficient and

presented a risk of detachment or collapse. He noted the lack of fasteners in suggesting that the

construction represented poor workmanship.

[253] Metcalfe’s evidence was that McEwen installed the stairs, attaching them at the top, but

that Metcalfe was personally involved in nailing and screwing every joist to wall studs. McEwen

pointed to Exhibit #38, which appears to be an enlargement of the Zytech drawings. As in the

case of the Bonus Room floor blocking, the portion of the drawing containing detailed

specification notes is missing from the enlarged version.

[254] McEwen’s evidence was that he “would have screwed” the stairs into the floor system

and then to the walls and that he was the person who put the screws in: Evidence of McEwen

(Direct), May 13, 2019, 2:16 p.m. In my view, there are some serious issues with the reliability

of McEwen’s evidence generally. As previously noted, it was replete with language such as “I

would have...” or “I wouldn’t have...” without certainty as to what he actually did. I am satisfied

that, though well-meaning, he had limited recollection of what actually took place. In the result, I

find that his evidence is not reliable and I attach little weight to it.

[255] Hamman made no observations as to any defects relative to the stairs. His evidence was

simply that they appeared to be pinned at both ends and that he conducted no further

investigation.

[256] Given the contradictions in the evidence of Metcalfe and McEwen in terms of who

actually installed the screws alleged to have been employed to connect the stairs to the floor, I

prefer the evidence of Juniper and Matthews on this point. I am satisfied that the stairs were only

minimally connected to the rest of the structure and presented a significant risk of collapse.

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[257] The Plaintiffs’ remediation, connecting the Bonus Room stairs in accordance with the

Zytech drawings through the use of bolts, hangers and backers, was both appropriate and

reasonable under the circumstances: Exhibit 1-F-35, pp 13, 17 (remediated stairs).

4. The Garage

[258] The as-built state of the garage raised a number of concerns. First, the division walls

between the house and the garage were not insulated to prevent the migration of C0-2 gas from

the garage into the residence. Second, the garage doors had to be re-installed with new springs.

Third, open heat runs were found buried in the insulation in the ceiling space with no connection

to registers: Exhibit 1-G-35, p 15, bottom photograph; p 16, bottom photograph. Juniper said he

had never seen such a configuration before. Fourth, electrical wires that were intended to be

connected to various exterior electrical outlets were rolled-up and located behind drywall:

Exhibit 1-G-35, p 20, lower photograph.

[259] The garage floor was also determined to be off the foundation’s footing and floating

above it: Exhibit 1-F-35, p 126, bottom photograph; p 127, top photograph. In other words, the

concrete slab that represented the garage floor was not connected to the footing.

[260] The Defendants made no submissions, either orally or in writing, relative to this

particular construction deficiency.

[261] Metcalfe offered no explanation relative to the insulation of the division walls between

the garage and the residence or the need to re-install the garage door. With respect to the open

heat runs, he maintained that this was common practice, relying in part on hearsay statements of

the heating contractor, who did not give evidence during the trial. Metcalfe’s evidence with

respect to the electrical wires located behind drywall was to the effect that the wires would have

been connected during the final walk-through. The electrician, Dueck, testified that he did not

complete his work on the residence due to unpaid invoices, but that he would normally do a

walk-through at the end of a job to test circuits and label wires.

[262] Metcalfe gave evidence that there was gravel located underneath the garage pad, together

with a Styrofoam floor heating system. He also stated that there were piles located every 8 feet.

However, he offered no evidence to confirm his assertions regarding the piles or Styrofoam.

Further, his evidence on this point was never put to Juniper in cross-examination. Hamman’s

report makes no reference to this alleged deficiency.

[263] Metcalfe also maintained that the garage doors were not part of the contract as they were

one of a number of items that were listed as an allowance. However, I note that the final draw

invoice 137, Exhibit 1-C-17, lists this allowance as a credit.

[264] Juniper testified that the remediation work in the garage included installing spray foam

on the walls separating the garage from the main residence, as well as the ceiling, to protect the

Bonus Room and the living areas from CO-2 gas. I am satisfied that the Plaintiffs’ remediation in

this regard was appropriate to address the underlying issue.

[265] I reject Metcalfe’s explanation that the rolled wires concealed behind the drywall would

have been detected and connected during the final walk-through. Even assuming that to have

been the case, there would have been costs associated with the necessary disruption and repair to

the drywall, as well as the cost of connecting the wires to individual outdoor electrical boxes at

the time of the final walk-through. As such, I am satisfied that the remediation costs were more

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or less the same as would have been incurred under the scenario outlined by Metcalfe. In my

view, the Plaintiffs acted reasonably in pursuing this course of action.

[266] I am also satisfied that the Plaintiffs acted reasonably in adding rebar to the garage pad

and in pouring concrete underneath the slab to connect the pad to its footing, thereby avoiding

the risk of breaking the concrete pad. To address this issue, Juniper testified that additional

concrete had to be poured to fill the void and establish a connection between the footing and the

garage pad.

5. Door Threshold Cut-Outs

[267] There is conflicting evidence on the cutting of the sub-floor in the area of the exterior

door thresholds for the purpose of making space for the installation of stone sills underneath.

[268] According to Matthews, the floor sheathing at door thresholds on the east elevation of the

residence, that is at the rear of the residence leading to the deck, had been cut out by a saw. He

expressed the view that these cut-outs were neither Code-compliant nor acceptable practice. He

testified that he had never seen this done before. I accept the evidence of both Bjornson and

Juniper that water entered the basement through these threshold cut-outs and that water damage

was visible upon removing the drywall in various rooms in the basement. Similarly, daylight was

visible through the cut-outs. According to Bjornson, the moisture barrier failed at the threshold

cut-outs: Evidence of Bjornson (Direct) – April 17, 2019.

[269] Juniper gave evidence regarding the as-built condition, depicted in Exhibit 1-G-35, p 24,

top and bottom photographs. According to him, water was able to enter the basement as a result

of the discontinuous nature of the sub-flooring. He described the resulting damage to the drywall

in the rooms in the basement.

[270] Metcalfe acknowledged that he provided directions to the framer to cut the thresholds and

that this was not normal practice. He testified that he took directions from Carm on this matter.

McEwen’s evidence was to the effect that both Metcalfe and Carm provided directions to him to

cut the thresholds. In this regard, the Defendants rely on two emails Carm sent to Metcalfe.

[271] On December 22, 2011, Carm sent Metcalfe a short email that read as follows:

Jim see attached pictures. On the bottom of the doors there is a space for the stone

to fit in the larger the better but if I only end up with ¾” I will cut the stone to fit.

Attached to the email are three photographs. Two of the photographs depict windows, not doors,

while the third photograph shows two sets of double doors. I do not interpret this email as in any

way providing “instructions” to Metcalfe to cut the thresholds to accommodate the stone

installation.

[272] The second email is dated March 13, 2013, two months prior to the Plaintiffs’ discovery

of the leaking windows. The relevant portion of the email reads as follows:

...In our final walk through I pointed out that there was missing stone under three

doors. I was under the impression that he was going to install it before he packed-

up. He may not have installed it due to the fact the wood needs to be chiseled out

under the door in order for him to install it like the other doors.

[273] Carm says he provided no directions to Metcalfe or McEwen on how to ensure that there

was a minimum ¾” space below the door openings for stone installation. He maintained that he

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provided photographs to Metcalfe to illustrate similar installations. He testified that his only

involvement in effecting changes to doors or door openings involved a request made to a mason

to chisel down some wood at a door on the front side of the house. Carm never saw the changes

made to the exterior door thresholds and was surprised to see photographs depicting the as-built

details.

[274] I accept Carm’s evidence on this point, namely that his only involvement in effecting

changes to door openings involved one of the doors on the front of the house. Even if there was

some confusion as to which doors that Carm was referring to in his March 13, 2013 email, the

interpretation advanced by the Defendants is not reasonable given the language employed.

[275] It is significant, in my view, that Metcalfe was aware that Carm was not an engineer.

While Carm’s role in the project is the subject of some disagreement between the parties, as

discussed elsewhere in these Reasons, I am satisfied that his primary role was as designer and

co-ordinator and that he never had any responsibilities relative to the construction of the building

structure or the integrity of the building envelope.

[276] In my view, Metcalfe was responsible for the structural integrity of the building. Even if

Carm had provided such instructions, a finding that I am not prepared to make in these

circumstances, Metcalfe, the general contractor, cannot avoid responsibility on the basis that he

took instructions from a designer on a matter pertaining to a structural and building envelope

element. I also note that Metcalfe made no efforts to obtain an engineering opinion regarding the

threshold cut-outs. Finally, Metcalfe had previously refused to install the ICF foundation

specified in the Innographic drawings and, indeed, advised that Plaintiffs that he would not build

the home if they insisted on an ICF foundation. Under the circumstances, I reject his contention

that he directed McEwen to breach the integrity of the building envelope because he had been

directed by Carm to do so.

[277] Matthews directed remediation work, namely to cut back more of the floor sheathing in

order to tie the floor back in and extend it to the foundation. Juniper gave evidence regarding this

remediation process. All of the doors along the back deck were removed. At Matthews’

direction, TGC installed Blueskin silicon, flashing and spray foam in conjunction with the repair

work. Fortunately, all of the doors could be re-used.

[278] Hamman agreed that it was “absolutely necessary” to replace the cut-out sheathing:

Evidence of Hamman (Cross) - April 24, 2019, at 4:09 p.m.

6. Interior Electrical

[279] During the investigative process, live electrical wires were located in the master bedroom

taped up behind the drywall. Live wires were also located underneath the jet tub. Further, a plug

in the mechanical room had been covered with drywall. The investigative process was

complicated by the fact that the electrical box was not marked. During the remediation, TGC had

to trace all the electrical lines throughout the residence in order to label the electrical panel.

[280] As previously indicated, the electrician, Dueck, did not complete his work at the

residence because of nonpayment of his invoices. He testified that he had no recollection of any

wiring behind the drywall in the master bedroom, but did not deny any of the deficiencies

identified by the Plaintiffs in this regard. Rather, he stated that he does not energize wires until

he has completed his work and, further, that he would have found such wires through testing at

the time of completion. Dueck also testified that there were no electrical drawings for the project

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and that he would have labelled the main breaker box at completion. Notwithstanding Dueck’s

evidence that the wires were not energized, the Plaintiffs properly point out that the remediation

work required electrical power. The electrical system was, accordingly, activated during the

remediation process, including the live wires in the master bedroom.

[281] Metcalfe acknowledged the plug in the mechanical room that had been covered by

drywall. However, he denied that there were hot wires around the jet tub and stated that leaving

hot wires behind a master bedroom wall is common practice. I do not accept Metcalfe’s evidence

on this particular issue.

[282] The question of remediation on this particular matter was straight-forward. By all

accounts the work was not finished. As such, completing the project necessarily involved the

completion of the electrical work by TGC in conjunction with its overall remediation work.

7. Foundation, Framing and Nail Floor Wall Connection

[283] The Plaintiffs’ concerns under this heading fall into three related categories. The first

involves the wall off-set from the foundation. The second relates to the use of non-pressure

treated lumber near grade-level, while the third relates to alleged non-compliance with the

Code’s nail requirement for wall to floor connections.

[284] First, the Plaintiffs say that the deck wall overhung the foundation by approximately one

and one half to two inches. While this was Code-compliant, the Plaintiffs, relying on Matthews’

opinion, say that it was not satisfactory from a custom home construction standard. Further, the

Plaintiffs maintain that Metcalfe’s decision not to follow the Zytech drawings calling for an ICF

foundation in favour of a traditional foundation, changed the width of the foundation walls.

Despite Metcalfe’s assurances to the Swanbys that the foundation “looked good”, and his

direction to McEwen to adjust the framing of the walls to account for the fact that the foundation

was not square, Metcalfe failed to correct the wall off-set from the foundation: Evidence of

Metcalfe (Cross) – May 10, 2019, 10:20 a.m. Furthermore, Metcalfe knew in the fall of 2011 that

two wall sections were not square.

[285] Hamman stated that the wall overhang was Code-compliant and therefore acceptable, but

acknowledged that action would need to be taken to offset the overhanging foundation in

subsequent framing steps. He also conceded that he had not accounted for occupancy and live

loading in reaching this conclusion. Matthews, on the other hand, was of the opinion that the risk

of the wall off-set from the foundation was that the wall could lose the ability to support vertical

loads, thereby compromising overall stability.

[286] Kraychy opined that it is common practice to hire a surveyor to set the elevations

properly in conjunction with pouring a foundation. Further, he indicated that it is customary to

get engineered drawings for a foundation. He testified that he has never constructed a foundation

based on architectural design alone.

[287] Metcalfe failed to engage a surveyor or obtain engineered drawings for the foundation.

He also failed to consult Zytech or an engineer on the impact of his planned change to the

foundation. Both Kraychy and Matthews expressed the view that the change from the ICF

foundation to the non-ICF foundation was a likely cause of the wall misalignment.