



COURT OF APPEAL FOR ONTARIO

CITATION: The Birkshire Group Inc. v. Wilkes, 2018 ONCA 631

DATE: 20180711

DOCKET: C57768

Epstein, van Rensburg and Fairburn JJ.A.

In the Matter of the
Construction Lien Act
,
R.S.O. 1990, c. C.30

BETWEEN

The Birkshire Group Inc.

Plaintiff (Respondent)

and

David Wilkes and Angela Wilkes

Defendants (Appellants)

AND BETWEEN

David Wilkes and Angela Wilkes

Plaintiffs (Appellants)

and

Maria Fiume and 2044785
    Ontario Inc. operating as Fiume Interiors

Defendants (Respondents)

Peter-Paul E. Du Vernet, for the appellants

Kevin Sherkin and Jeremy Sacks, for the respondents

Heard: June 28, 2018

On appeal from the
    judgment of Justice Mark L. Edwards of the Superior Court of Justice, dated
    February 12, 2015, with reasons reported at 2013 ONSC 5703.

REASONS FOR DECISION

[1]

This appeal arises out of litigation concerning a home renovation. The
    appellants retained the respondent The Birkshire Group Inc. (Birkshire) to
    perform work on their home. Renovations began in December 2006 and continued
    into the spring of 2007. As of April 2007 the appellants had paid the sum of
    $60,000. At that point, the relationship between the parties had deteriorated. Birkshire
    registered a construction lien against the residence and sued for the balance
    of what it claimed under the parties contract. The appellants denied that any
    further amount was owing, and they claimed there were deficiencies and damages
    caused by the work. They counterclaimed in the construction lien action and
    started an action against the other respondents, Maria Fiume (the wife of
    Michael Fiume, the principal of Birkshire) and her company.

[2]

The actions were tried together. The trial judge concluded that the
    contract price was $122,565. After crediting the appellants for the amount they
    already paid, and for some deficiencies and damages, he awarded Birkshire
    damages of $50,000, pre-judgment interest of $13,398.24 and costs of $83,500.
    He recognized a lien on the property for the total amount of $146,898.24 and
    dismissed the action against Ms. Fiume and her company.

[3]

The appellants raise three issues on appeal. It is sufficient for the
    determination of the appeal to deal only with the first issue, which concerns
    the trial judges failure to refer to the evidence of two witnesses called by
    the appellants in his reasons for judgment.

[4]

After the evidence was concluded, and on the day closing arguments were
    to take place, the appellants brought a motion to reopen the case so that two
    former employees of Birkshire could testify. The motion was supported by
    affidavits from the two proposed witnesses setting out their intended evidence.
    Among other things, one of the former employees, Chris Derewonko, claimed that
    he built bathroom vanities at the Wilkes residence. He did so based upon
    verbal instructions given to him by Ms. Fiume. Mr. Derewonko maintained in his
    affidavit that [a]fter the court action began, Mr. Fiume showed him a
    photograph of one of the vanities and asked him to make a drawing from the
    photograph. That drawing was attached as an exhibit to the Derewonko affidavit,
    filed in support of the appellants request to re-open the case.

[5]

The vanity drawing that Mr. Derewonko said he had prepared
after
the litigation began duplicated a drawing that had been previously entered as
    an exhibit at trial. Ms. Fiume had testified about the vanity drawings and
    suggested that they had been prepared and approved prior to the vanities being
    installed.

[6]

In his ruling permitting the Wilkes to re-open their case to, among
    other things, have Mr. Derewonko testify, the trial judge noted that the proposed
    evidence bore on material issues at trial, including the credibility of the
    respondents: The evidence of Chris Derewonko, if believed, raises credibility
    issues as they relate to the evidence adduced by [the respondents] regarding
    drawings that have been entered into evidence in this trial.

[7]

The parties disagree about the import of Mr. Derewonkos
viva voce
evidence at trial. The respondents maintain that his evidence is unclear and difficult
    to follow from the transcript. Although we agree that Mr. Derewonkos evidence
    is not a model of clarity, it is clear that he testified that he had been asked
    by Mr. Fiume a couple of years before he testified (being at least a few years
    after the litigation commenced), to prepare a drawing of a bathroom vanity he
    had built without a drawing. His evidence on that point is in direct conflict
    with Ms. Fiumes evidence that Ms. Wilkes had approved the construction of all
    of the vanities
after
she was shown the drawings.

[8]

The trial judge accepted the Fiumes evidence as entirely credible. He
    did so without making any reference to Mr. Derewonkos evidence in his reasons
    for judgment.

[9]

The respondents argue that there is no requirement for a trial judge to
    refer to every item of evidence considered or to detail the way each item of
    evidence was assessed (see
R. v. J.M.H.
, 2011 SCC 45, [2011] 3 S.C.R.
    197, at para. 32). They submit that there are very good reasons for the trial
    judge to have rejected the evidence of Birkshires two former employees, or to
    have considered it to be irrelevant to the issues at hand. In their view, even
    if credibility played a role, there is no reason to interfere with the trial
    judges factual findings since he effectively explained
why he preferred the respondents evidence over that of the
    appellants.

[10]

We
    disagree. Considering the record as a whole, including the fact that the trial
    judge reopened the case to hear the evidence of the two witnesses after determining
    that it could bear on the material issue of the respondents credibility, the
    trial judges failure to address this evidence in his reasons creates problems
    on appeal. Credibility played an important role in the trial, in which the
    central issue was the scope and terms of the home renovation contract. The
    trial judge rejected the evidence of the appellants on several points and he
    explained why he preferred the evidence of the respondents. If Mr. Derewonkos evidence
    had been accepted, it would have meant that a drawing that was introduced by
    the respondents at trial as being contemporaneous with Birkshires work, was
    created well after the litigation had commenced. Such evidence could have had a
    material effect on the credibility of the respondents, and indeed on the
    administration of justice.

[11]

Although
    we specifically refrain from commenting upon the credibility of the evidence
    led by the appellants when they re-opened their case, it was incumbent on the
    trial judge to at least advert to the evidence and resolve it. This is
    particularly true given that the trial judge had pre-determined the materiality
    of the evidence, acknowledging that it was sufficiently probative of
    credibility to justify the exercise of his discretion in favour of re-opening
    the case.

[12]

As
    this court noted in
Dovbush v. Mouzitchka
, 2016 ONCA 381, 131 O.R. (3d)
    474, at para. 29, [a] trial judge owes the losing party an explanation for
    rejecting the evidence of a key witness or witnesses  and, while the absence
    of such an explanation is not necessarily dispositive, it may go a long way
    toward putting the reasons beyond the reach of meaningful appellate review. Unfortunately,
    that is the result in the present case. In the absence of any mention of these
    witnesses, and having regard in particular to the potential importance of Mr.
    Derewonkos evidence to the question of the respondents credibility, it is
    impossible to know whether and why the trial judge accepted or rejected the evidence
    or if it impacted his credibility findings.

[13]

Another
    issue in the proceedings was whether Birkshires construction lien was perfected
    in time in accordance with the requirements of the
Construction Lien Act
,
    R.S.O. 1990, c. C.30. In particular, for the lien to be valid it was necessary
    for contract work exceeding $1,000 to have been performed (which would fix the
    contract completion date) after a certain date (which was identified by the
    trial judge as April 4 or 6, 2007). The parties disagreed about whether the
    work that was done during the relevant time was contract work, repair work, or
    work to correct a deficiency. The trial judge, in brief oral reasons, accepted
    that there was at least $1,000 worth of work to be done within the relevant
    time frame, and he referred specifically to the childrens vanity, installation
    of crystals on a chandelier and the hardwood flooring. Having considered the
    evidence, we are of the view that the trial judge would have had to have
    accepted the Fiumes evidence and rejected that of the appellants, with respect
    to the timing and nature of the work that was done on each of these items, and
    as such, the trial judges failure to address evidence relevant to the parties
    credibility precludes effective review of the lien issue as well.

[14]

The
    appeal is therefore allowed. The judgment is set aside and a new trial of the
    two actions is ordered. In the interim, Birkshires construction lien remains
    registered against the subject property and its validity will be determined at
    the new trial. Costs to the appellants in the sum of $8,500, inclusive of HST
    and disbursements. Costs of the first trial shall be determined by the judge
    hearing the new trial.

Gloria Epstein J.A.

K. van Rensburg J.A.

Fairburn J.A.


