Docket: T-1484-12
Citation:
2015 FC 324
Ottawa, Ontario, March 16, 2015
PRESENT: The
Honourable Madam Justice Simpson
ADMIRALTY
ACTION IN REM AND IN PERSONAM
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BETWEEN:
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EHLER MARINE & INDUSTRIAL
SERVICE CO.
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Plaintiff/
Defendant by Counterclaim
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and
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THE OWNERS AND ALL OTHERS INTERESTED IN THE SHIP M/V PACIFIC
YELLOWFIN, COLIN GRIFFINSON, MARELON GRIFFINSON AND GREAT BEAR COASTAL
MARITIME CO. LTD.
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Defendants
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and
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COLIN GRIFFINSON, MARELON GRIFFINSON AND GREAT BEAR COASTAL
MARITIME CO. LTD.
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Plaintiffs by Counterclaim
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JUDGMENT AND REASONS
TABLE OF CONTENTS
I.
INTRODUCTION
[1]
The Plaintiff’s action is for the unpaid portion
of the amount it charged for the re-fastening, re-caulking and related work [the
Repairs] it performed on a vessel called the Pacific Yellowfin [hereafter the
“PYF” or the “Vessel”]. At issue is the nature of the contract between the
Plaintiff and the owners of the PYF and specifically, whether the Plaintiff is
bound by the estimate/quotation it provided for the Repairs.
[2]
The Defendants’ counterclaim arises from damage
to the PYF which occurred after the completion of the Repairs while the Vessel
was being launched.
II.
THE PARTIES
[3]
The Plaintiff, Ehler Marine Industrial Service
Co. [Ehler Marine], is an American corporation which carries on business at the
Lovric Sea-Craft ship yard [the Lovric Yard] at Anacortes in Washington State,
USA. Mr. Ed Ehler Sr. [Mr. E.E.] is Ehler Marine’s President and Director. He is
also the manager of the Lovric Yard. He provided estimates and entered into
contracts for the Repairs. He also performed some of the re-fastening.
[4]
The Defendants, Mr. Colin Griffinson [Mr. C.G.]
and his wife, Mrs. Marelon Griffinson, are Canadian residents and the owners of
the PYF. Great Bear Coastal Maritime Co. Ltd. [Great Bear] is the British
Colombia corporation through which Mr. C.G. operates a charter business using
the PYF. Colin Griffinson Inc. was also named as a Defendant but no remedy is now
sought against it because the Plaintiff has learned that it was not actually
involved in the dispute even though its letterhead and email address were used
for much of the relevant correspondence. For this reason, an Order was made
amending the style of cause to delete Colin Griffinson Inc..
III.
THE PACIFIC YELLOWFIN
[5]
The PYF is a wooden motor vessel that was built
in 1944. It is 114 feet long and is propelled by two diesel engines. The PYF is
certified by Transport Canada as a passenger vessel and is subject to safety inspections.
In 2011, at its quadrennial inspection, Transport Canada required the Vessel to
be re-fastened and re-caulked. This work is typically performed once – at the
halfway point in a vessel’s life.
IV.
THE WITNESSES AND THE EVIDENCE
[6]
Mr. E.E. and Mr. David Hartford testified for
the Plaintiff. Mr. Hartford is a shipwright with many years of experience in
caulking large wooden vessels. He was hired by Mr. E.E. to work on the PYF as
chief caulker. He testified that the caulking proceeded smoothly.
[7]
For the Defendants, the Court heard from Mr.
C.G., Mr. David Sharp and Mr. John Dixon.
[8]
Mr. C.G. serves, from time to time, as captain
of the PYF. During the Repairs, he periodically attended at the Lovric Yard to
check on the progress of the work. He was also present to paint the Vessel’s
bootstripe and he was onboard during the haul-out and
the launch.
[9]
Mr. David Sharp is a shipwright employed by
Great Bear. He served as Mr. C.G.’s on-site supervisor during the Repairs. He
was present at the Lovric Yard from Monday to Thursday each week and, when
there were difficulties associated with the re-fastening, he undertook the
corrective work.
[10]
Mr. Dixon is a retired marine engineer. He was
present during the haul-out and the launch and was aboard the PYF when Mr. C.G.
took her back to Vancouver following the Repairs.
[11]
In addition to the oral testimony, the evidence
also included read-ins from Mr. C.G.’s Examination for Discovery and Exhibits. “Will say” statements from most of the shipwrights and
general labourers who performed the Repairs were among the Plaintiff’s Exhibits.
In those statements, the workers provided their daily time sheets and swore to
their accuracy.
V.
MATTERS NOT IN ISSUE
[12]
There is no dispute that:
•
the re-fastening and re-caulking were well done.
Mr. C.G. was pleased with the work and paid bonuses to all the shipwrights and
general labourers;
•
the hours of work recorded by the shipwrights
and the general labourers were accurate;
•
no unusual problems were encountered during the
re-caulking; and
•
there was no structural damage when the PYF was
launched. The damage was cosmetic and involved paint and filler.
VI.
THE FORMATION OF THE ORIGINAL CONTRACT
[13]
Following Transport Canada’s requirement that
the PYF be re-fastened and re-caulked, Mr. C.G. sent a Request for Proposal
dated October 24, 2011 [the RFP] to several shipyards including the Lovric Yard.
[14]
The RFP said, inter alia, that Mr. C.G.
wanted a “reasonably accurate estimate” for re-fastening
and re-caulking 15 seams below the waterline per side.
[15]
On receipt of the RFP, Mr. E.E. contacted Mr.
C.G. and expressed interest in undertaking the Repairs. According to Mr. C.G., as
their discussions continued, Mr. E.E. advised that he had performed similar work
on a wooden tugboat known as the Ivanhoe, that he owned his own wooden vessel
and that he had worked on the Alaskan fleet. For these reasons, Mr. E.E.
assured Mr. C.G. that he was the “perfect man”
for the job.
[16]
Based on the RFP, Mr. E.E. provided an initial estimate
dated October 28, 2011 [the First Estimate] in which he described 13 items of
work. Six items were estimated with the stated proviso “T
& M”. The parties agree that this meant that the work on these items
would be billed on the basis of the time actually spent to perform the work and
the materials actually used.
[17]
Items 6, 7, 8, 10 and 12 are in dispute and will
be referred to collectively as the “Disputed Items”. They all have estimated
costs which are not described as “T & M” in
the First Estimate. Specifics of those items (not the related materials) are as
follows:
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Item 6 is the re-fastening using
approximately 4,000 fasteners.
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$15,760.00
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Item 7 is the re-caulking.
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$33,600.00
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Item 8 is the priming, cementing and
tarring of all seams.
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$12,200.00
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Item 10 is the spraying of one coat
of anti-fouling paint.
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$820.00
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Item 12 is clearing the dock of
debris in preparation for launching.
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$1,350.00
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[18]
Mr. E.E. provided a second estimate [the Final Estimate] with a fax dated January 26, 2012
in which he described the Final Estimate as a “quote”.
On his Examination for Discovery, Mr. E.E. acknowledged that, in general, a
quote is a more certain or accurate figure than an estimate but he said that his
estimate was not a fixed bid. Mr. E.E. also agreed on his Examination for
Discovery that Mr. C.G. had asked him to “harden up”
his numbers. He testified that he had done so, and that he told Mr. C.G. that
he felt fairly confident about estimating the Repairs because of the work he
had recently finished on the Ivanhoe.
[19]
In the Final Estimate, which was also based on work
on 15 seams, the dollar figures for the Disputed Items were as follows:
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Item 6 – re-fastening with 4,000
fasteners.
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$14,600.00
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Item 7 – re-caulking.
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$35,500.00
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Item 8 - priming, cementing and
tarring.
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$12,200.00
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Item 10 – anti-fouling paint.
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$820.00
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Item 12 - clear the dock.
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$1,350.00
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[20]
The estimated amounts for the materials and
consumables for the Disputed Items are described below.
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First Estimate
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Final Estimate
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Item 6 - Materials ½ x 8” lags and washers.
Consumables –
cutter bits, sealers, glue, fir.
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$4,240.00
$380.00
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To be supplied by Mr. C.G. instead
of Mr. E.E.
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$0.00
$540.00
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Item 7 – Cotton,
oakum/pound – 260 lbs
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$2,574.00
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260 lbs
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$2,574.00
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Item 8 – cement,
tar sealer, primer, brushes
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$380.00
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$380.00
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Item 10 –
filters, thinners
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$180.00
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$180.00
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Item 12 – no
materials
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$0.00
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$0.00
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[21]
During the negotiations, Mr. E.E. inspected the
PYF in the water at her boathouse in New Westminster, B.C., and Mr. C.G.
visited the Lovric Yard to view the Plaintiff’s facilities. During that visit,
Mr. C.G. took Mr. E.E.’s advice on several topics. For example, Mr. C.G. decided
to use three beads of oakum in the re-caulking instead of one bead of cotton
and two of oakum, and he decided to use longer fasteners. In my view, this
evidence shows that Mr. C.G. acknowledged Mr. E.E.’s expertise about the repair
of wooden boats.
[22]
Mr. E.E. says that he prepared the estimates
based on the following inputs. He roughly calculated the total length of the
seams using 100 feet as the length. Although the PYF is 114 feet long, he used
100 feet in all seams to account for their varying lengths. He used 15 as the
number of seams and multiplied 100 x 15 to reach 1500 linear feet per side. He
then doubled the number to 3000 feet to account for both sides of the Vessel.
In addition to the 3000 feet, he used his experience with the Ivanhoe and other
boats to estimate how much material and how many man hours and days the work
would take. Based on these inputs, he calculated the dollar figures he provided
in the estimates.
[23]
On January 10, 2012, based on figures he was
given by Mr. E.E. over the telephone, Mr. C.G. agreed to hire the
Plaintiff to perform the Repairs. The parties agree that the dollar figures provided
by phone are those which subsequently appeared on the Final Estimate.
Accordingly, the Final Estimate is the basis of the contract for the Repairs reached
on January 10, 2012 [the Original Contract].
VII.
THE PARTIES’ POSITIONS
[24]
The Plaintiff says that the Final
Estimate is just that – an estimate. In other words, it is his “best guess” about the price Mr. C.G. could expect to
pay. However, he says that he never committed to charging those prices for the
Repairs. He says it was always his understanding that he would charge for the
time actually expended and materials actually used, and that the entire
contract was based on time and materials even though “T
& M” was not used to describe the estimates for the Disputed Items. The
Plaintiff’s Final Invoice of April 11, 2012 [the Final Invoice] reflected his
understanding. All the charges were based on time and materials and the
Plaintiff says that these are amounts due. The charges for labour for the Disputed
Items are:
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Item 6 re-fastening (27 seams)
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Shipwrights
General Labour
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$2,665.00
$25,998.50
$28,663.50
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Item 7 re-caulking (29 seams)
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Shipwrights
General Labour
Side Labour
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$66,560.00
$5,220.00
$1,440.00
$73,220.00
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Item 8 cement, etc.
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$10,962.00
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Item 10 paint, etc.
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$520.00
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Item 12 clear the dock
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$4,292.00
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[25]
On the other hand, Mr. C.G. says that as the
negotiations developed, he made it clear that he wanted a revised quote with “hard” numbers. He says that Mr. E.E. impressed him
with his experience and convinced him that he could provide such a number.
VIII. THE LAW
[26]
The test for determining whether there has been consensus
ad idem between contracting parties in the absence of a verbal or a written
undertaking is an objective one. In St. John Tug Boat Co. Ltd. v Irving
Refining Ltd., [1964] S.C.R. 614, the Supreme Court of Canada adopted the
following statement from Lord Blackburn in Smith v Hughes (1871), LR 6
QB 597 at 607, as the proper test:
If, whatever a
man’s real intention may be he so conducts himself that a reasonable man would
believe that he was consenting to the terms proposed by the other party and
that other party upon that belief enters into a contract with him, the man thus
conducting himself would be equally bound as if he had intended to agree to the
other party’s terms.
[27]
In Greenhill Properties (1977) Ltd. v
Sandcastle Recreation Centre Ltd. (1998), 39 CLR (2d) 205 at paragraph 89
(BCSC), the Court referred to G.H.L. Fridman, The Law of Contracts 3rd ed.
(Toronto: Carswell, 1994) where the author summarized the test at page 16 of
that text:
Constantly
reiterated in the judgments is the idea that the test of agreement for legal
purposes is whether parties have indicated to the outside world, in the form of
the objective reasonable bystander, their intention to contract and the terms
of such contract. It is not what an individual party believed or understood was
the meaning of what the other party said or did that is the criterion of
agreement; it is whether a reasonable man in the situation of that party would
have believed and understood that the other party was consenting to the
identical terms.
[28]
The Plaintiff and the Defendants in this case
agree that the test for determining whether the Plaintiff is bound by its
estimate is not what each party subjectively believed the terms of the contract
to be, but rather “what a reasonable man in the
situation of the parties would understand the contract to be” (Aerovac
Systems Ltd. v Darwin Construction (Western) Ltd., 2010 BCSC 654 at
paragraph 25).
[29]
The Defendants also referred the Court to
several cases that address the circumstances in which an estimate or a quote
can be held to have contractual effect. In Golder Associates Ltd. v Mill
Creek Developments Ltd., 2004 BCSC 665, Masuhara J. summarized the law on
this topic and concluded the following at paragraphs 22 to 24:
Mitigating in
favour of an estimate having binding effect is the principle that although
estimates are necessarily somewhat imprecise, persons in the business of
providing work preceded by estimates should be able to do so with some
accuracy: see Kidd, supra at 540.
The plaintiff
cited the recent Alberta case of Husky Oil Operations Ltd. v Ledcor
Industries Ltd., 2003 ABQB 751, [2003] A.J. No. 1111. In that case, the
Court examined the principles underlying the question of whether an estimate is
binding, and stated at [paragraph] 36: “It is clear the court has to look at
the circumstances in which an estimate is provided, the positions of the two
parties, the knowledge of the party providing the estimate and whether it was
relied upon by the party requesting it.”
In sum, the Court
must determine if the estimates were made in circumstances which imbue them
with contractual effect and, if so, what margin of error may limit the extent
to which the estimates are binding.
IX.
CONCLUSIONS ABOUT THE ORIGINAL CONTRACT
[30]
I am persuaded that an objective reasonable bystander
would conclude that Mr. E.E. offered to perform the work and charge the prices
for the Disputed Items that he set out in the Final Estimate. My first reason
for this conclusion is the language of the Final Estimate itself. The fact that
Mr. E.E. did not qualify the prices for the Disputed Items with the “T & M” label used elsewhere in the Final Estimate
indicates that the figures for the Disputed Items were firm prices in the sense
that they would change only if the nature and/or physical extent of the work materially
changed. My conclusion is reinforced by the evidence that, by this point in the
negotiations, the language in the RFP (“reasonably
accurate estimate”) had been overtaken. Mr. C.G. and Mr. E.E. were
using the word “quote” to describe what they
both understood to be the “hard” numbers in the
Final Estimate and Mr. E.E. was expressing “confidence”
in those numbers.
X.
THE MISTAKE AND THE AMENDED CONTRACT
[31]
On February 11, 2012, the PYF arrived at the
Lovric Yard and the next day, she was hauled out on marine ways by Mr. E.E..
Mr. C.G. was present along with Mr. Sharp. It was then discovered that the RFP
had incorrectly described the PYF as having 15 seams below the waterline [the
Mistake]. As they stood near the PYF following the haul-out, Mr. C.G. and Mr. E.E.
discussed the Mistake and agreed that significantly more than 15 seams per side
required re-fastening and re-caulking. Mr. C.G. and Mr. E.E. agreed that the
work would proceed notwithstanding the Mistake [the Amended Contract]. However,
they each testified that they had a different understanding of the terms on
which the further work would be performed.
[32]
Mr. E.E. testified that when it became obvious
that there was significantly more work to be done, Mr. C.G. stated “That’s why I’m called the King of Time and Materials”
and then said “Proceed”. In Mr. E.E.’s view, this
statement signified Mr. C.G.’s offer that thereafter, all the work, including
the Disputed Items, would be charged on a time and materials basis. Mr.
E.E.’s view was that he accepted this offer.
[33]
Mr. E.E.’s counsel says that the fact that Mr.
E.E. submitted two progress invoices, which included charges for time spent re-fastening
and re-caulking, and the fact that the Defendants made payments towards those
bills without expressing concern, is evidence that they understood that the
Amended Contract would be billed entirely on a time and materials basis.
[34]
On the other hand, Mr. C.G. only recalls asking
if Mr. E.E. would undertake the more extensive work, and when Mr. E.E. said “yes”, Mr. C.G. then said “we
will proceed based on our [Original] contract”. He testified that he
thought that the prices in the Original Contract would be pro-rated upward to
reflect the percentage change in the work. However, the possibility of
pro-rating and the basis for the calculation were not discussed.
[35]
Although he was present at the haul-out, Mr.
Sharp had no recollection of the conversation between Mr. E.E. and Mr. C.G.
about the Amended Contract.
XI.
CONCLUSIONS ABOUT THE AMENDED CONTRACT
[36]
Given that Mr. E.E. repeated in two subsequent
emails the unusual phrase he attributes to Mr. C.G., I accept that Mr. C.G. did
say that he was the “King of Time and Materials”
following the discovery of the Mistake. However, in my view, an objective
reasonable bystander would not have understood that all the negotiations for a “hard” price which preceded the Original Contract were
nullified by that remark. This conclusion is supported by an email dated March
23, 2012 from Mr. C.G.’s accountant to Mr. E.E. following her receipt of the
second progress invoice. She spoke of discrepancies in timesheets she had
received and, in that context, said “Since we are fast
approaching our estimates total, it is imperative that we clear up any issues
sooner than later”. It is clear from this statement that she viewed the
estimates as firm prices.
[37]
Accordingly, I find that the parties agreed to
proceed “based on our contract” as Mr. C.G.
testified. This meant that the prices for the Disputed Items in the Original Contract
would be pro-rated to reflect the increased work.
XII.
THE RE-FASTENING AND RE-CAULKING – ITEMS 6 &
7
[38]
The re-fastening and re-caulking began on February
14, 2012 and the Repairs finished on or about April 4, 2012.
[39]
Dealing with the re-fastening (Item 6), the
First Estimate shows that the fasteners were “materials”
which Mr. E.E. was going to supply. However, since Mr. C.G. agreed to supply
them, their cost of $4,240.00 does not appear in the Final Estimate. The parties
agree that the re-fastening was in fact accomplished with 2599 (rounded to
2600) fasteners of varying lengths.
[40]
The Defendants’ position is that they had a firm
price and that, because 2600 fasteners were used instead of 4000, the physical
extent of the work was materially less than that set out in the Final Estimate.
They submit that they are therefore entitled to a 35% reduction in the Final
Estimate amount of $14,600.00. On their calculation, this would leave $9,460.00
owed.
[41]
However, Mr. E.E. testified that, in his view,
the nature of the re-fastening work also changed because the fastening crew
experienced difficulty making the fasteners grip in certain areas of the Vessel
where the wood had deteriorated.
[42]
Mr. Sharp agreed that there was an initial
problem because the workers were drilling holes that were too large. This
prevented the fasteners from gripping the wood effectively. He corrected that
problem and said that thereafter, there were only occasional situations in
which a fastener did not grip. He said that this did not slow the fastening to
a great degree. In view of this evidence and the fact that, at Mr. C.G.’s
expense, Mr. Sharp performed the work necessary to provide a remedy when
fastening problems arose, I have concluded that the nature of the work performed
by Mr. E.E.’s workers did not change to a degree that warrants a departure from
the Final Estimate. I therefore accept the Defendants’ calculation of the
amount owed.
[43]
I now turn to the re-caulking (Item 7). The
Defendants say that the calculation of the extra work caused by the Mistake
should be based on linear footage. They calculate that the Mistake increased
the seam length to be re-caulked to 4800 feet and therefore represented a 60%
increase in the work over the 3000 feet Mr. E.E. used for the estimates. However,
the Plaintiff does not agree that the Final Estimate should be pro-rated and
says that the actual time taken for the work should be the basis for the price.
The Plaintiff also says that, if linear feet are to be used, 4800 feet is not an
accurate number. It says that 5400 linear feet, or an 80% increase, is more
accurate and notes that even this figure is somewhat low because it does not
include the two seams above the waterline that Mr. C.G. added while the Repairs
were underway [the Added Seams].
[44]
I am unable to accept the Defendants’ submission
that linear footage is the proper basis for pro-rating the Final Estimate to
reflect the extra work. Although Mr. E.E. prepared the estimates using a rough
calculation of 3000 linear feet as one of his inputs, there is no evidence that
the parties ever discussed this or any other footage amount before the Original
or Amended Contracts were made. Indeed, the first reference to Mr. E.E.’s
calculation of 3000 feet appears in his fax of April 27, 2012 which followed
the Final Invoice of April 11, 2012 by more than two weeks. As well, the first
notice Mr. E.E. received of the Defendants’ calculation of 4800 feet appears
with Mr. C.G.’s email of April 24, 2012 – also well after the date of the Final
Invoice.
[45]
In my view, an objective reasonable bystander
would conclude that the Original Contract was based on the 15 seams described
in the Defendants’ RFP and the Amended Contract (which was expressed by Mr.
C.G. to be “based” on the Original Contract) was in
turn based on the increased number of seams revealed after the haul-out when
the Mistake became apparent. The increase from 15 to 27 seams represents
an increase of 80% and the increase from 15 to 29 seams to reflect the Added
Seams involves an increase of 93.33%.
[46]
Since the parties did not contract based on
linear footage, the pro-rated calculations for Item 7 should be based on the
number of seams, and the revised price for the re-caulking of 29 seams (including
the Added Seams) should therefore be determined by the following calculation:
•
The Final Estimate provided a price of
$35,500.00 for 15 seams or $2,366.67 per seam;
•
The price per seam of $2,366.67 x 29 seams
results in a total owed of $68,633.43.
XIII.
THE CEMENTING AND PAINTING – ITEMS 8 & 10
[47]
For the reasons given above in the discussion of
the re-caulking, I would pro-rate these numbers upward based on the increase in
the number of seams from 15 to 29. This means that the calculation for Item 8 (cementing)
is:
- The Final
Estimate provided a price of $12,200.00 for 15 seams or $813.33 per seam;
- The price per
seam of $813.33 x 29 seams results in a total owed of $23,586.67.
[48]
For Item 10 (painting), the following calculation
is based on an increase from 15 to 27 seams. The Added Seams are not included
because Mr. C.G. painted the bootstripe:
- The Final
Estimate provided a price of $820.00 for 15 seams or $54.66 per seam;
- The price per
seam of $54.66 x 27 results in a total owed of $1,475.82.
XIV. THE DOCK CLEAR UP – ITEM 12
[49]
For this item, the Final Estimate amount was
$1,350.00 and the Final Invoice charged $4,292.00 reflecting the time actually taken
to complete the work. Mr. E.E. said that the extent of the work changed because
29 seams instead of 15 seams per side were reefed. This meant that there was an
increase in the quantity of debris on the ground that had to be swept up. However,
Mr. E.E. acknowledged that the reefing work did not increase in direct
proportion to the increased number of seams because some of the seams were
empty.
[50]
The more significant change from the amount in
the Final Estimate to the charge in the Final Invoice is said to be due to a
change in the physical nature of the work. Mr. E.E. testified that, when the
PYF arrived at the Lovric Yard, Messrs. C.G. and Sharp asked him to hire a
truck to pump out the bilges before the reefing was done. Mr. C.G. testified
that he was willing to pay the $4,000.00 charge for the truck. However, Mr.
E.E. testified that he decided not to hire a pumper truck, and instead
installed a boom to capture the oil and water that spilled from the bilges. The
clean up of those spills was the principal reason for the increase of $2,942.00
in the price of Item 12.
[51]
In my view, neither party anticipated that oily
bilges would be an issue once the PYF arrived in Anacortes. Although Mr. C.G.
offered to hire the pumper truck, Mr. E.E. was not contractually obliged to do
so. Accordingly, the work needed to boom and clean up the bilge oil is a change
in the physical nature of the work and a change in the price is therefore
justified. Since there was no quote for this work as it related to the oil, I have
concluded that the Plaintiff should be compensated on a quantum meruit
basis. Because there is no dispute that the hours posted by Mr. E.E.’s
employees were accurate and because Mr. C.G. was willing to pay $4,000.00 to
deal only with the bilge oil, I find it reasonable to order the Defendants to pay
the amount the Plaintiff charged for this item. Accordingly, the sum of
$4,292.00 is owed.
XV.
AMOUNTS OWED FOR DISPUTED ITEMS
[52]
The amounts owed under this heading are:
•
Item 6 – Re-fastening (27 Seams): $9,460.00
owed.
•
Item 7 – Re-caulking (29 Seams): $68,633.43
owed.
•
Item 8 – Cementing etc. (29 Seams): $23,586.67
owed.
•
Item 10 – Painting (27 Seams): $1,475.82 owed.
•
Item 12 – Dock Clear-up: $4,292.00 owed.
XVI.
AMOUNTS OWED FOR DISPUTED MATERIALS
[53]
The amounts owed under this heading are:
•
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Item 6
|
The Final Estimate showed a charge of $540.00 for consumables. That
figure should be reduced by 35% to account for the reduced number of lags
actually installed – i.e. 35% of $540.00 = $189.00, and $540.00 - $189.00 = $351.00.
|
•
|
Item 7
|
The Final Estimate showed 260 lbs of Oakum for 15 seams at $9.90 per
lb. The quantity for 1 seam would be 260 lbs ÷ 15 = 17.3 lbs. For 29 seams, the quantity would be 17.3 lbs x 29 =
501.7 lbs. The amount owed is 501.7 lbs x $9.90 = $4,966.83.
|
•
|
Item 8
|
Portland cement, tar, sealer primer, brushes. For 15 seams the price on
the Final Estimate was $380.00. For 1 seam, the price would be $380.00 ÷ 15 = $25.33. The amount owed is $25.33 x 29
seams = $734.57.
|
•
|
Item 10
|
Filters, thinners were estimated to be $180.00 based on 15 seams. The
price per seam would be $180.00 ÷ 15 = $12.00. The
amount owed for 29 seams would be $12.00 x 29 seams = $348.00.
|
XVII.
OVERALL SUMMARY
[54]
Counsel for the Defendants prepared a summary of
the amounts owed, which he attached to his final written submissions. Counsel
for the Plaintiff accepted the summary with the correction for item 11 noted
below. Using the Defendants’ figures for the items which are not in dispute
with the corrections noted below, and using my calculations for work and
materials for the Disputed Items (Items 6, 7, 8, 10 & 12), the revised
figures are as follows:
|
Item
|
Amounts
|
Item total
|
|
Item 1
|
$22,890.00
|
$22,890.00
|
|
Item 2
|
$467.50
|
$467.50
|
|
Item 3
|
$1,105.00 + $130.50 + $517.12 +$136.48
|
$1,889.10
|
|
Item 4
|
$455.00 + $3,161.00
|
$3,616.00
|
|
Item 5
|
$8,368.75 + $6,206.00
|
$14,574.75
|
|
Item 6
|
$9,460.00 + $351.00
|
$9,811.00
|
|
Item 7
|
$68,633.43 + $4,966.83
|
$73,600.26
|
|
Item 8
|
$23,586.67 + $734.57
|
$24,321.24
|
|
Item 9
|
$3,712.00 + $297.05 + $88.73
|
$4,097.78
|
|
Item 10
|
$1,475.82 + 348.00
|
$1,823.82
|
|
Item 11
|
$406.00
|
$406.00
|
|
Item 12
|
$4,292.00
|
$4,292.00
|
|
Item 13
|
$2,380.00
|
$2,380.00
|
|
Item 14
|
$747.50 + $72.33
|
$819.83
|
|
Item 15
|
$65.00
|
$65.00
|
|
Item 16
|
$520.00
|
$520.00
|
|
Additional lags
|
$722.10
|
$722.10
|
|
Total owed
|
$166,296.38
|
|
Payments made
|
$117,970.60
|
|
|
|
Corrections:
|
Item 3
|
$130.50 was
missed and is now included.
|
|
Item 9
|
$297.05 and
$88.73 were missed and are now included.
|
|
Item 11
|
$406.00 was
left out in error and is now included.
|
|
Item 14
|
$747.50 was
incorrectly stated as $520.00. $747.50 is now included.
|
|
Item 16
|
No figure was
included. It is $520.00 and is now included.
|
XVIII. THE LAUNCH AND THE DAMAGE
[55]
The Repairs were completed, the site was cleared
and the PYF was launched on April 5, 2012 [the Launch]. However, the Launch did
not proceed smoothly. Although the ways extended 250 feet into the water, the
PYF did not float free on the first attempt. Mr. E.E. therefore hauled her back
up the ways so that her bow was on shore and her stern remained in the water [the
Mid-Launch Position]. At that time, one of her engines was started so that it
could be operated in reverse and two skiffs were brought in to pull her
backwards off the ways. As a result of these efforts, the PYF floated free of
the ways on the second attempt.
[56]
During the Launch, Messrs. C.G., Hartford and Sharp
were aboard and on deck. They testified that they heard loud popping and
cracking sounds, and that the PYF’s paint cracked and split. However, their
evidence about when the damage occurred is inconsistent. Mr. Hartford wasn’t
sure but thought it happened at the end of the second launch attempt as the PYF
came off the ways. Mr. C.G. thought it happened at the bottom of the ways when
the first launch attempt failed, and Mr. Sharp thought it occurred when the
boat was in the Mid-Launch Position.
[57]
Regarding the extent of the damage, Mr. Hartford
saw cracks in the paint in the seams at the joints of the vertical planks on
the port side of the main deck house from the aft end of the house to the
front. Mr. C.G. said that he heard a “cracking and
snapping of timbers” and “incredible noise”.
He did not give his location on the PYF and did not describe the location of any
damage. However, he did say in an answer that was read in from his Examination
for Discovery that he saw open seams, cracks in the walls and paint lying on
the floor. Mr. Sharp was standing on the starboard deck and he testified that
he saw paint cracking on that side of the main deck house where the plywood
sheathing came together. However, he did not describe the extent of that
cracking. He also heard cracking noises under the deck. He initially said he
saw cracks in the paint in the seams between the planks on the starboard side
of the hull at midships above the waterline. Then he changed his evidence and
said that he “noticed some significant cracking in
virtually every plank seam on the topside of the hull”.
[58]
The Defendants (Plaintiffs by Counterclaim) say
that, as Dockmaster, Mr. E.E. is responsible for the damage because it was an
implied term of the Original and Amended Contracts that the Launch would be
safe.
[59]
Mr. E.E. and Mr. Hartford both speculated about
the cause of the damage after the Launch but there was no agreement among those
present about what went wrong. Mr. C.G. testified that the PYF had weathered
very heavy seas and had previously been hauled on marine ways without damage.
Mr. Hartford and Mr. Sharp both testified that they had never seen such damage
during a launch.
XIX.
THE COUNTERCLAIM
[60]
The Counterclaim is for damage caused during the
Launch. However, the evidence adduced in support of the Counterclaim is
incomplete. A bundle of documents was presented to Mr. C.G. to be marked as an Exhibit
during his testimony. However, Counsel for the Plaintiff objected to the documents
being marked because of late disclosure. Since the documents were not listed in
the Affidavit of Documents, were not produced during Examination for Discovery,
were made the subject of an Undertaking, and were not provided to Counsel for
the Plaintiff until the last business day before trial, the objection was
allowed and the documents are not in evidence. However, notwithstanding this
ruling, there is some evidence about the Counterclaim.
[61]
The Counterclaim consists of the following three
amounts:
a.
$17,379.00 [the Painting Claim] – This sum is described
in Mr. C.G.’s email of April 24, 2012 [the Email];
b.
$840.00 – This sum is described in an invoice
from Western Marine Surveyors dated July 31, 2012 [The Surveyor’s Invoice]; and
c.
$3,400.00 – This sum is described in an invoice
from Allied Shipbuilders dated June 29, 2012 [The Allied Invoice].
The
Email and the Allied and Surveyor’s Invoices were all Exhibits at trial. I will
deal with them in turn.
A.
The Painting Claim
[62]
The Email describes this claim as follows:
[…] as you are
aware, the Pacific Yellowfin sustained considerable damage while sitting on the
ways. This is due to incorrect set-up at the outset.
[…]
I have just spent
a considerable amount of time and money making good all of these repairs.
The exterior repair
and painting costs to the hull based on your lower rate of $58.00 per hour
total $18,055.00. To be fair, I will reduce this price by $4,986.00 (Labour
$4,466, Materials $520.00) because I do put a coat of paint on the boat every
year. The exterior repair work now sums $13,069.00 (Labour $12,064.00,
Materials of bondo, sandpaper, and other sundries are $1,005.00)
The interior
costs to repair and repaint the main cabin and hallways, also at $58.00 per
hour total $4,310.00 (Labour $4,060.00, Materials of paints, bondo, sandpapers,
and other sundries are $250.00)
The total to date
is $17,379.00.
[63]
Mr. C.G. did not testify about these
aspects of the Email. This means that there is no explanation for his statement
that the “PYF sustained considerable damage while
sitting on the ways”. There was no evidence at trial that any such damage had
occurred. Accordingly, to the extent that the repair of such damage is included
in the Painting Claim, it is unsubstantiated and makes the amount claimed for
exterior painting unreliable.
[64]
The amount
claimed for exterior painting is also unreliable because there is no clear
evidence about the extent of the damage to the hull above the waterline. As
noted earlier, Mr. Sharp’s evidence was inconsistent. There were photos of
damage to the hull above the waterline but Mr. C.G. referred to them only to
give evidence about the presence of rust bleeding through the paint. He did not
use them to describe the extent of the damage. Further, there is no evidence of
the time needed to make repairs to this area of the hull or of the amounts paid
to those who made the repairs.
[65]
Regarding the
claim for interior repairs, there was no evidence at trial about damage to the
interior of the PYF.
[66]
Regarding the
main deck house, there are photos in evidence which show the damage and as
stated above, Messrs. Hartford and Sharp testified that that damage occurred
during the Launch. However, there is no evidence to describe the time taken to
repair this damage or to show what the workers were actually paid to effect the
repairs.
B.
The Surveyor’s Invoice
[67]
The Surveyor’s Invoice shows that a surveyor
visited the PYF’s boathouse in Richmond to inspect damage caused by the Launch.
However, his report is not in evidence and he did not testify. Further, there was
no clear evidence about why this inspection was necessary. Mr. C.G. simply
testified that the surveyor was called in so that he could “make note” of the paint damage and “log it into his book”.
[68]
The Surveyor’s Invoice shows that the
surveyor also attended at a dry dock on June 12, 2012 to “inspect the underwater portion of the hull and document the
condition of the hull”. However, there
was no evidence about why this inspection was needed. No one testified that
there was any concern about damage to the hull below the waterline.
[69]
In my view, Mr. E.E. is responsible in contract
for the cost of repairing the paint damage that occurred during the Launch, and
I find that the Launch caused damage to the paint on both sides of the main
deck house and some damage (the extent is unknown) to the paint on the hull
above the waterline.
[70]
However, I have no means of assigning a
dollar value to work needed to repair this damage.
C.
The Allied Invoice
[71]
It is noteworthy that this invoice shows that
the PYF was put in dry dock for one day for a hull survey on June 12, 2012. However,
since there is no evidence to show why the hull needed to be inspected, I
cannot conclude that the dry dock expense is justified.
[72]
For all these reasons, the Counterclaim will be
dismissed.
XX.
THE CREDIT CARD FEES
[73]
The Original and Amended Contracts include no agreement
that:
i.
Mr. C.G. would pay a deposit or make progress
payments;
ii.
Mr. E.E. would accept payment from Mr. C.G. by
credit card.
[74]
However, after the Repairs were underway, Mr.
E.E. asked for a $25,000.00 deposit and progress payments, and Mr. C.G. agreed
to his request.
[75]
The disagreement between the parties is about
whether Mr. C.G. also agreed to pay Mr. E.E. 2.2% as a credit card fee for
payments he made using a credit card.
[76]
Mr. E.E. testified that Mr. C.G. asked to use a
credit card to pay the deposit and progress payments because he wanted to
collect airline points. Mr. E.E. said that he could do so if he paid a credit
card fee of 2.2%. Mr. E.E. says that evidence of Mr. C.G.’s agreement to pay
this fee is found in his first progress invoice of February 27, 2012. It refers
to the fee when it says “If paying by Credit
Card…please add 2.2% card fee with payment”. However, this statement
does not appear on either the second progress invoice or on the Final Invoice.
Mr. E.E. also says that the Defendants’ failure to dispute the reference to the
fee is further evidence of their agreement. Mr. E.E. sent a separate invoice
for credit card fees dated May 1, 2012 in the amount of $1,534.86.
[77]
Mr. C.G. testified that a 2.2% credit card fee
was never discussed, and that it would make no financial sense to use a credit card
to collect airline points if he was required to pay a fee.
[78]
In my view, the evidence described above would
not persuade an objective reasonable bystander that Mr. C.G. agreed to pay 2.2%
on payments he made using his credit card. In other words, the Plaintiff has
not met its burden to establish such an agreement. Accordingly, the invoiced
amount is not owed.
XXI.
THE EXCHANGE RATE
[79]
The parties have agreed that, at the relevant
date, U.S. and Canadian currency traded at par.
XXII.
INTEREST
[80]
Counsel for the Defendants says that interest
should be set at 3% because it is the prime rate and because prime was endorsed
by the British Columbia Court of Appeal in its decision in Omega Salmon
Group Ltd. v Punico Gemini (The), 2007 BCCA 33. It was an admiralty case in
which the trial judge rejected prime as the appropriate rate and instead
awarded a rate of interest that was personal to the plaintiff in that it was
based on the plaintiff’s actual cost of borrowing.
[81]
The Court of Appeal was troubled by the
uncertainty that would be created if interest awards depended on the outcome of
inquiries into plaintiffs’ personal circumstances. The Court therefore ordered
that interest should be set at the prime rate.
[82]
The Plaintiff, on the other hand, asks me to
follow Mr. Justice Harrington’s decision in Kuchne & Nagel Ltd.v Agrimax
Ltd., 2010 FC 1303, in which he awarded interest at 5%. In this regard, he
spoke of section 3 of the Interest Act, RSC, 1985, c I-15 [Interest
Act] which remains unchanged today. He said the following in para. 24 his
judgment:
[…] Although
interest is often awarded at a commercial rate, given the current bank prime
lending rate I consider it more appropriate, and just, to award pre-judgment
and post-judgment interest at the legal rate of 5 percent, as specified in the Interest
Act.
[83]
The question is whether I should follow the
British Columbia Court of Appeal and award prime or follow Mr. Justice
Harrington and award 5% under the Interest Act given that prime remains
low (it is now 2.85%). In my view, since prime is still low and since the
principle of comity applies, interest will be set at 5%.
XXIII. COSTS
[84]
The Plaintiff failed to prove an agreement that
the Disputed Items were to be billed on a time and materials basis. This was
the theory of its case.
[85]
However, the Defendants have failed to prove
their Counterclaim.
[86]
In these circumstances if the parties cannot
agree to settle costs – perhaps on the basis that each bear their own – I will
hear submissions by teleconference at a mutually convenient time.
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