September 15, 2008
Documentation is important for Consumer Protection Act
By Rob Kennaley
McLauchlin & Associates
Recently, an appeals decision was published concerning a dispute between a contractor and homeowner in the context of the Consumer Protection Act. It’s the same Act that I reviewed in a series of articles some time ago. It is important to note that it took three and one-half years for the litigation to work its way through the courts. Ultimately, the contractor lost.
The decision offers hard evidence that contractors who work in the residential sector should do what they can to meet the requirements of the act. The decision also illustrates how important it is to clearly document both the scope of work and agreements over changes in the work with clients.
The situation began on June 9, 2004, when a homeowner and his wife entered into an agreement with a contractor for the construction of a sunroom addition to their home. What happened next depends on whom you believe. With very few exceptions, the contractor and clients had very different recollections in that regard.
Ultimately, the contractor submitted the plans to the city on October 8, 2004, and a building permit was issued on October 27, 2004. Come October, the clients say the contractor had promised, and they expected, that the construction would start immediately and be completed quickly. The contractor, however, said that it was agreed that, given the season and the inclement weather expected, construction would be delayed until the following spring.
The homeowners commenced a court action, asking that the contract be rescinded and that their deposit be returned by the contractor. In this regard, the homeowners relied on the Consumer Protection Act. The court agreed with the homeowners, holding that: “by regulation 17/05(s. 24) of the Act, an enforceable agreement requires the correct address of the premises from which the supplier conducts business and the date or dates on which delivery, commencement of performance, ongoing performance and completion of performance are to occur. These details clearly did not form part of the agreement entered into between the parties on June 9, 2004.”
The court also decided that the homeowner did not derive any real benefit from the drawings for the sunroom, which had been provided, and refused to provide the contractor with a credit in that regard. Finally, the court found the contractor, and his principal, jointly and severally liable to compensate the plaintiff for damages for the unfair practices!
The contractor appealed. The appeals court, however, concluded that the trial judge was correct in his interpretation of the Consumer Protection Act. The agreement, the court said, should have been in compliance with act and the right to rescind, as well as the right to seek damages were remedies available to the homeowner under the act.
Again, the case illustrates how the Consumer Protection Act can be used by residential clients to set aside contracts and seek damages. More importantly, the case illustrates how important it is for contractors to enter into contracts which clearly delineate the scope of work and, further, to ensure that all changes (including changes to schedule) are documented and, if possible, approved by the owner.
Robert Kennaley is a former landscape design build contractor and an honourary member of Landscape Ontario, who now practices construction law in Toronto. He can be reached at (416) 368-2522 or at kennaley@mclauchlin.ca. This material is for information purposes and is not intended to provide legal advice. Readers who have concerns about any particular circumstance are encouraged to seek independent legal advice in that regard.
McLauchlin & Associates
Recently, an appeals decision was published concerning a dispute between a contractor and homeowner in the context of the Consumer Protection Act. It’s the same Act that I reviewed in a series of articles some time ago. It is important to note that it took three and one-half years for the litigation to work its way through the courts. Ultimately, the contractor lost.The decision offers hard evidence that contractors who work in the residential sector should do what they can to meet the requirements of the act. The decision also illustrates how important it is to clearly document both the scope of work and agreements over changes in the work with clients.
The situation began on June 9, 2004, when a homeowner and his wife entered into an agreement with a contractor for the construction of a sunroom addition to their home. What happened next depends on whom you believe. With very few exceptions, the contractor and clients had very different recollections in that regard.
Communication is key
Much of the dispute was over the schedule. The homeowners said that construction was to start immediately and be completed by the end of the summer. The contractor, however, said the owners changed the plans over the summer, both in size and complexity. In addition, the contractor said the owners knew, or ought to have understood, that construction could not begin until the plans were approved by the city and a building permit was issued.Ultimately, the contractor submitted the plans to the city on October 8, 2004, and a building permit was issued on October 27, 2004. Come October, the clients say the contractor had promised, and they expected, that the construction would start immediately and be completed quickly. The contractor, however, said that it was agreed that, given the season and the inclement weather expected, construction would be delayed until the following spring.
The homeowners commenced a court action, asking that the contract be rescinded and that their deposit be returned by the contractor. In this regard, the homeowners relied on the Consumer Protection Act. The court agreed with the homeowners, holding that: “by regulation 17/05(s. 24) of the Act, an enforceable agreement requires the correct address of the premises from which the supplier conducts business and the date or dates on which delivery, commencement of performance, ongoing performance and completion of performance are to occur. These details clearly did not form part of the agreement entered into between the parties on June 9, 2004.”
Clearly outline scope of work
Also, the court found the homeowners were entitled to rescind the contract as a result of “unfair practices.” The court essentially decided that the contractor had made “a representation” that the work could be done within a certain time frame, when he knew or ought to have known that he could not.The court also decided that the homeowner did not derive any real benefit from the drawings for the sunroom, which had been provided, and refused to provide the contractor with a credit in that regard. Finally, the court found the contractor, and his principal, jointly and severally liable to compensate the plaintiff for damages for the unfair practices!
The contractor appealed. The appeals court, however, concluded that the trial judge was correct in his interpretation of the Consumer Protection Act. The agreement, the court said, should have been in compliance with act and the right to rescind, as well as the right to seek damages were remedies available to the homeowner under the act.
Again, the case illustrates how the Consumer Protection Act can be used by residential clients to set aside contracts and seek damages. More importantly, the case illustrates how important it is for contractors to enter into contracts which clearly delineate the scope of work and, further, to ensure that all changes (including changes to schedule) are documented and, if possible, approved by the owner.
Robert Kennaley is a former landscape design build contractor and an honourary member of Landscape Ontario, who now practices construction law in Toronto. He can be reached at (416) 368-2522 or at kennaley@mclauchlin.ca. This material is for information purposes and is not intended to provide legal advice. Readers who have concerns about any particular circumstance are encouraged to seek independent legal advice in that regard.