Executive Summary: Key Legal and Evidentiary Issues

• Belfor (Canada) Inc. sought $95,341.03 in consequential expenses from BC Hardwood Floor Co. Ltd. for costs incurred during remedial flooring work at a Vancouver residence.

• Central dispute involved whether the contractual warranty's "labour and materials" coverage extended to third-party consequential expenses such as furniture removal, alternative accommodation, and cleaning.

• The warranty explicitly excluded "all consequential and out of pocket expenses incurred by the homeowner/occupant of the premises, during the execution of the warranty work such as hotel bills."

• Conflicting affidavit evidence between Kelly Mazzei (plaintiff) and Michael Crompton (defendant) rendered the issues of causation, reasonableness, and damages unsuitable for summary trial.

• An expert report by Clayton Shull on the flooring deficiencies was deemed inadmissible because he was neither qualified as an expert nor did he provide his own affidavit.

• The Court found the contractual exclusion clause valid and enforceable, dismissing the plaintiff's action and awarding costs to the defendant.

Background and the flooring contract

In January 2022, the owner of a house located at 5929 Hudson Street in Vancouver, British Columbia, hired Belfor (Canada) Inc., doing business as Belfor Property Restoration, as a general contractor to carry out flood restoration and repair work. Belfor, in turn, hired BC Hardwood Floor Co. Ltd. to supply and install flooring in the house. On January 20, 2022, a representative of Belfor signed a quote presented by BC Hardwood, which became the operative contract between the parties. BC Hardwood completed the flooring work in May 2022, and Belfor completed the restoration work in the house in August 2022.

Discovery of flooring deficiencies

After Belfor had completed its work, the owners of the house discovered that there were deficiencies with the flooring work done by BC Hardwood. Belfor notified BC Hardwood of the flooring deficiencies, and on September 22, 2023, BC Hardwood's general manager, Michael Crompton, sent a letter to the homeowner acknowledging the deficiencies and proposing remediation work. BC Hardwood agreed to remove and replace the most affected boards and to sand, fill, and stain the floors with the original stain combination using Rubio Monocoat finish on the main and basement levels. The remedial work commenced in March 2024 and was completed in April 2024.

The warranty clause and consequential expenses

At the heart of this dispute was the warranty clause contained in the contract. The warranty provided that BC Hardwood warranted all contracted work for the period of one year from date of invoice, covering "labour and materials necessary to perform warranty work." Critically, the warranty excluded "all consequential and out of pocket expenses incurred by the homeowner/occupant of the premises, during the execution of the warranty work such as hotel bills," and was only in place when the account had been settled in full. Belfor argued that the warranty's coverage of "labour and materials" must include something more than the defendant's costs to rectify the flooring deficiencies, necessarily encompassing the preparatory and ancillary work required to facilitate the floor repairs, including packing, removing, and storing the homeowner's furnishings; providing alternative living arrangements for the homeowner and his family; removing and replacing the affected flooring; repairing and re-sanding the affected flooring; caulking, filling, and painting trimming and baseboards; and cleaning the house at the conclusion of the remedial work. Belfor initially invoiced $145,258.08 including GST but was prepared to waive its claim for the alternative living arrangement expenses of the homeowner, reducing the claim to $95,341.03.

The contract's conditions and terms

The contract contained additional provisions that reinforced BC Hardwood's position. Under the heading "Conditions," it stated that certain work was to be "performed by others and is arranged and paid for by the client," including final dust cleanup, final paint touch-up, and furniture removal, storage, and replacement if required. The "Terms and Conditions" section further specified that dust cleanup, furniture removal, toilet bowl removal and replacement, and kitchen utilities removal and replacement were all to be done "by others," and it was expressly understood that "expenses for clean up, accommodation, contents removal and storage costs caused by delay will not be paid for by BC Hardwood."

Conflicting evidence and evidentiary issues

The parties presented conflicting evidence through their respective affidavits. Kelly Mazzei, general manager for Belfor, deposed that Belfor told BC Hardwood about the consequential expenses and BC Hardwood never objected to these expenses. Belfor also argued that BC Hardwood implicitly agreed to the consequential expenses when the plaintiff requested that the floor had to be free and clear of furniture before the remedial work was done and the defendant did not disagree. Michael Crompton, general manager of BC Hardwood, countered that at no time was BC Hardwood ever informed or advised by Belfor that Belfor would seek recovery of the consequential and out of pocket expenses from BC Hardwood following the completion of the warranty work. Crompton deposed that instead, Belfor advised BC Hardwood that they would take care of the homeowner's requests. Crompton further asserted that, based on his experience in the hardwood flooring industry, the warranty work did not require the owners to move out for an extended period (only the finishing days required the property to be unoccupied), that contents in unaffected rooms did not need to be boxed and removed as poly plastic would have efficiently sealed off those areas, that door casings and trim did not need to be removed nor re-painted since only select affected boards were replaced, and that the disconnecting or reconnecting of plumbing, electrical components, fixtures, and appliances was unnecessary. An additional evidentiary difficulty arose from a report authored by Clayton Shull dated June 12, 2023 that Mazzei attached to her first affidavit. The court found this report inadmissible because Shull had neither been qualified as an expert nor did his report detail his qualifications, and he should have provided his own affidavit on the hearing.

Suitability for summary trial and severance of issues

Both parties agreed that the discrete question of contractual interpretation was suitable for summary trial under Rule 9-7 of the Supreme Court Civil Rules. However, the court found that a determination of any damages by way of summary trial was not appropriate, particularly given the conflicting evidence of Ms. Mazzei and Mr. Crompton and the lack of admissible evidence as to the cause of the flooring deficiencies and the reasonableness or necessity of any of the consequential expenses claimed by Belfor. Both parties agreed that the issue of liability should be severed if a determination of damages could not be made on the summary trial application. The court found a compelling reason to order severance was the likelihood that a significant savings in time and expense would be realized by the summary trial, and that an interpretation of the warranty may resolve the matter in its entirety or at least reduce the issues at trial to a determination of damages.

The court's interpretation and ruling

Applying the principles from Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, the Honourable Mr. Justice Tindale adopted a practical, common-sense approach to interpreting the contract as a whole, giving the words used their ordinary and grammatical meaning consistent with the surrounding circumstances known to the parties at the time of formation of the contract. The court noted that this was a commercial contract where both the plaintiff and the defendant were commercially experienced, and found no inequality in bargaining positions between them. The court held that, on a reading of the contract as a whole, the warranty expressly excludes the consequential expenses sought by Belfor, and the warranty covers the defendant's labour and material costs necessary to perform the warranty work, not the labour and material costs of a third party. The court further found that it was not reasonably foreseeable that Belfor would incur the costs of the consequential expenses on behalf of the owners of the house at the time that the contract was entered into. Accordingly, the court found the contract contained a valid and applicable contractual exclusion clause which saved BC Hardwood from liability. The plaintiff's action against BC Hardwood was dismissed, and BC Hardwood was entitled to its costs of the action. No specific monetary amount was awarded, as costs were to be assessed.