The other day I was contacted by a homeowner who was getting to the final stages of a home renovation. Unfortunately, the contractor had walked off the job. The homeowner was diligently trying to find solutions.
I didn’t get a lot of information about the nature of the dispute, but I was able to provide some general information to the homeowner:
Document the status
To understand where the project was when the renovator walked off the job, it is important for the homeowner to document – or more appropriately record – the situation. This means taking detailed pictures that are easily understandable. Any recording by photos or video of a situation should include wide perspective shots and more detailed shots of defects.
Lighting should be controlled to ensure that any anomalies are easily seen in a picture. Close in shots should include a ruler in order to provide a means for someone subsequently reviewing the record to determine sizes.
Photos and videos should include time, date and GPS information which will be recorded in the metadata of the photo.
All relevant documents, emails, and texts should be identified and transferred into a place where the information can subsequently be easily retrieved. Too many cases have failed on the lack of texts and emails due to lost devices or parties not thinking about saving data until it was too late.
Collect information including ‘expert’ information on costs
After the situation is documented, I then pointed out to the homeowner that there was important information that they were missing.
The missing information had to do with the costs that would have to be engaged to complete the renovation project. Although they may have had a fixed-price contract or estimate from the original renovator, homeowners will soon discover that what they thought the project might cost to finish is something completely different when a contractor who understands what they are doing is asked to quote to finish the job.
There is also a problem that arises. That is that most ‘new’ contractors who are seeking to do the work will think that the way to do impress the homeowner is to discount the work that was already done. In some cases, the previous job may very well be deficient, however, what the homeowner really needs at this point is an accurate idea of the costs that will be incurred to finish the job as well as an opinion of the quality of the work that was completed as compared to what the original expectations were.
The dual purposes creates a problem: to be qualified as an ‘expert’ for an opinion, it is preferable that the person does not actually have any biases such as being awarded the contract to do the future work. However, few contractors are ready to provide detailed quotes sufficient for being used in a dispute unless they are awarded the contract. The exception to this rule is usually a consulting engineer who is ready to offer such opinions on an hourly rate. However, many homeowners find that the fees to be incurred for an engineer are too expensive.
Mediating the Dispute
The homeowner was initially calling me as a mediator. What could I do to help bring the contractor to the table to discuss the matter?
I explained to the homeowner that a mediation is a facilitated negotiation between parties. The mediator had no power to force the parties to come to the table (unless there was an agreement to that effect which did require mediation which there was not in this case.)
The homeowner quickly realized that they would have to contact the contractor and suggest mediation. My own rates for mediation are about $750 + HST for a half-day mediation. Although parties might split this cost, I also advised that, in order to proceed, some parties sometimes decide to front the entire fee to get the mediation started. However, the bottom line was that the parties would have to agree to mediate; there was no way to force someone to mediation if their agreement did not provide for this.
Arbitrating the Dispute
The renovation contract apparently contained a sentence that said that the parties would arbitrate any dispute. No actual process was provided for.
This is unfortunately a type of clause that is too frequently found in written agreements that parties may have prepared themselves. Their objective is to avoid the court system; they may have heard that arbitration will allow them to do that. However, they leave all of the details out of the clause because a dispute is always the least likely possibility when parties are signing an agreement.
In Ontario, the Arbitration Act, 1991, provides that many of the important details can be quickly dealt with (for example, unless otherwise specified, there will be one arbitrator,; the arbitrator can determine their own procedure and the court will generally supervise the process.) However, the appointment of the arbitrator is actually an agreement of the parties. This leads the homeowner back to the challenge of having to contact the contractor and get their agreement to the process.
Amendments which were made in Ontario to the Construction Act that came into force on Oct. 1, 2019, provide for something called ‘construction dispute interim adjudication’. When a construction dispute can be boiled down to a payment requirement, an adjudication can be a very speedy way for someone like the homeowner to receive a legally binding determination in a cost-effective manner.
First, the homeowner needs to understand how much money they believe they are owed. This is where the information they collected earlier is useful.
In the case of the homeowner that called me, they believed that they had paid the renovator more than the work that was done was worth. This seemed like a good case for adjudication, and I accordingly pointed the homeowner to the Ontario Dispute Adjudication for Construction Contracts website: www.odacc.ca .
ODACC is a private company (I am a construction adjudicator on their roster) who has been awarded the official Ontario government contract to provide construction adjudications in the province. The process provides for a very speedy (generally less than 2 months) to yield determinations for payments that can be enforced through the courts.
Small Claims Courts
Finally, I informed the homeowner about the court process. In Ontario, small claims courts have a jurisdiction of up to $35,000. (I’m a part-time deputy judge in the small claims court system.)
Again, the information on costs that was collected earlier will help the homeowner put together a Plaintiff’s Claim. Not only can the form be completed as a PDF form (see http://ontariocourtforms.on.ca/en/ ) but there is now a new portal that allows the claim to be filed online: https://www.ontario.ca/page/file-small-claims-court-documents-online .
The challenge for the homeowner with going to small claims court is that the process is relatively slow. It will be about a month before the renovator files their defence and then it may be a few months before a settlement conference is scheduled by the court. After the settlement conference, it can then be a few more months before the matter can be set down for trial.
Another consideration is that small claims is a formal court process which some parties are uncomfortable representing themselves in. Accordingly, they can seek out a paralegal or lawyer to represent them which will increase the costs that they will incur.
The homeowner who initially called me to engage a mediator found out that there was still some initial groundwork to lay. Then there were a number of different choices that were available.
At the end of it all, I had to ask myself, if this was my home renovation, which path would I follow?
The answer was simple: Construction Adjudication.
Why? Fast, simple, and a legally binding decision. What more could a party ask for? Most of the other systems can be ‘gamed’ with a renovator who doesn’t want to participate.
If I can be of service to you, please don’t hesitate to call: Marcel Mongeon: Tel (tollfree): 855-390-1818 or email@example.com