Date Issued: April 22, 2022

File: SC-2021-007092

Type: Small Claims

Civil Resolution Tribunal

Indexed as: Walter Powell Architect Inc. v McLaren, 2022 BCCRT 467

Between:

WALTER POWELL ARCHITECT INC.

Applicant

And:

JENNIFER CELYSE MCLAREN and STEPHEN MCLAREN

Respondents

And:

WALTER POWELL ARCHITECT INC.

Respondent by counterclaim

REASONS FOR DECISION
Tribunal Member:	Trisha Apland

INTRODUCTION

1.      This dispute is about payment for architectural services.

2.      The applicant and respondent by counterclaim, Walter Powell Architect Inc. (WPA), performed architectural services for the respondents and applicants by counterclaim, Jennifer Celyse McLaren and Stephen McLaren. WPA claims payment of its final $3,914.38 invoice, plus 24% annual contractual interest.

3.      The McLarens agree WPA performed architectural services for them. They say that WPA’s architect and sole owner, Walter Powell, designed a home that did not meet their criteria and would have cost them double their budget to build. They say they already paid WPA $18,470.33 and do not owe anything more. In the counterclaim, the McLarens seek reimbursement of $5,000 they paid WPA for the architectural services. They say they are owed more but have limited their claim to $5,000, the small claims monetary limit of the Civil Resolution Tribunal (CRT).  

4.      WPA is represented by Walter Powell. The McLarens are represented by Ms. McLaren.

JURISDICTION AND PROCEDURE

5.      These are the CRT’s formal written reasons. The CRT has jurisdiction over small claims brought under section 118 of the Civil Resolution Tribunal Act (CRTA). Section 2 of the CRTA states that the CRT’s mandate is to provide dispute resolution services accessibly, quickly, economically, informally, and flexibly. In resolving disputes, the CRT must apply principles of law and fairness, and recognize any relationships between the dispute’s parties that will likely continue after the CRT process has ended.

6.      Section 39 of the CRTA says the CRT has discretion to decide the format of the hearing, including by writing, telephone, videoconferencing, email, or a combination of these. In some respects, both parties of this dispute call into question the credibility, or truthfulness, of the other. In the circumstances of this dispute, I find that I am properly able to assess and weigh the evidence and submissions before me. I note the decision Yas v. Pope, 2018 BCSC 282, in which the court recognized that oral hearings are not necessarily required where credibility is in issue. Bearing in mind the CRT’s mandate that includes proportionality and a speedy resolution of disputes, I decided to hear this dispute through written submissions.

7.      Section 42 of the CRTA says the CRT may accept as evidence information that it considers relevant, necessary and appropriate, whether or not the information would be admissible in a court of law. The CRT may also ask questions of the parties and witnesses and inform itself in any other way it considers appropriate.

8.      Where permitted by section 118 of the CRTA, in resolving this dispute the CRT may order a party to do or stop doing something, pay money or make an order that includes any terms or conditions the CRT considers appropriate.

ISSUES

9.      The issues in this dispute are:

a.    Is WPA entitled to payment of $3,914.38 for its architectural services, plus contractual interest?

b.    Alternatively, to what extent, if any, are the McLarens entitled to reimbursement of the claimed $5,000.

EVIDENCE AND ANALYSIS

10.   In a civil proceeding like this one, WPA as the applicant must prove its claims on a balance of probabilities (which means “more likely than not”). The McLarens have the same burden on the counterclaim. I have read all the parties’ submissions but refer only to the evidence and argument that I find relevant to provide context for my decision.

Background

11.   The parties agree that the McLarens hired WPA to design a single-family home. After an initial in person meeting, the parties signed a written hourly rate contract on April 1, 2021. Under the contract’s terms, the parties agreed:

•         Mr. Powell would design a home as per the McLarens’ instructions, advise the McLarens about the cost implications of their decisions, and prepare a set of architectural documents.

•         The McLarens would pay WPA $225 per hour for Mr. Powell’s services.

•         The construction budget for the home was the McLarens’ “sole responsibility”.

12.   I find it was also an implied term of the contract that Mr. Powell’s work quality would meet a reasonably professional standard: Belfor (Canada) Inc. v. Drescher, 2021 BCSC 2403.

13.   After signing the contract, the McLarens paid WPA a $4,000 retainer and they started the design process.

14.   In early April 2021, the parties agree the McLarens told Mr. Powell they wanted a home with an open floor plan situated for privacy and ocean views, plus some other features, and that their target construction budget for the home was $1.5 million dollars. They agree the estimated construction costs were $400 per square foot.

15.   The McLarens sent Mr. Powell images of home designs they liked, which were large luxurious modern homes. They also sent him 2 rudimentary sketches that Mr. McLaren had prepared for a design they envisioned for the home. After Mr. Powell put Mr. McLaren’s sketches into a 3-D model, the parties met on May 4, 2021 to discuss the design. The parties’ follow up emails indicate that Mr. Powell had identified some concerns with Mr. McLaren’s sketched design. He asked the McLarens if they just wanted someone to draw up Mr. McLaren’s design or whether Mr. Powell could consider some other design.

16.   Ms. McLaren wrote back that they “definitely” did not want someone to draw up Mr. McLaren’s design. Instead, they wanted Mr. Powell “to come up with better options and most likely a whole new plan”. She wrote that she believed Mr. Powell had understood their priorities and they didn’t want to “hamper [his] creativity. We do want a beautiful house. We are looking forward to you showing us your design”. Based on this email exchange, I find the parties had a mutual understanding that Mr. Powell would have discretion to custom design their home.

17.   On June 26, 2021, Mr. Powell sent architectural plans and images to the McLarens with his new design to scale and situated within the surrounding topography. Mr. McLaren emailed that “the house looks fantastic”. Over the following month the parties went back and forth with Mr. Powell incorporating the McLarens’ revisions on the design.

18.   Ms. McLaren says Mr. Powell never discussed their budget after the first meeting until July 23, 2021 when he asked them again what their budget was. She says when they told him it was still $1.5 million, Mr. Powell told them “Oh, this is a $3 million dollar home”. Mr. Powell says he asked again about the budget because clients’ budgets can change. He says he designed the home following what the McLarens said they wanted and at that point the construction costs were about $1.8 million and not $3 million dollars. However, he says he let the McLarens know that depending on the kind of finishes, fixtures, equipment, site work and landscaping their total costs could go as high as $3 million dollars. He says they then discussed how they could achieve what the McLarens wanted within their budget by making the home smaller and being careful about finishing and other choices.

19.   I find the parties’ correspondence indicates that the McLarens agreed to move forward with modifying Mr. Powell’s design. The correspondence shows the McLarens contributed to the revision process and Mr. Powell reduced the home size to bring it within their budget. In August, Mr. Powell sent the McLarens copies of the revised plans and images showing a 2,751 square foot home. The design images show a modern home with a fairly open floor plan around a central fireplace. The home is also embedded in the side of a slope for privacy and ocean views as I find they had asked for. Mr. Powell’s email told them he could make some adjustments to further reduce the size and was working on their window package.

20.   On August 16, 2021, Ms. McLaren wrote to Mr. Powell that Mr. McLaren “really does just want a tweaking of his plan. So, I now know that nothing else is going to work for our relationship than getting his plan built.” She apologized for Mr. Powell’s efforts and described his work as “wonderful”. She asked if Mr. Powell would be willing to look at Mr. McLaren’s sketched design again and work with it but that she would understand if he did not. Mr. Powell wrote that it would be “too stressful” for him to go back and try to make Mr. McLaren’s sketches into a “real house” and suggested it would be better for them to find someone else. He asked for payment of WPA’s last invoice in the amount of $3,914.38, which the McLarens refused to pay. The parties’ business relationship then ended.

Is WPA entitled to payment of $3,914.38 or are the McLarens entitled to a $5,000 refund?

21.   The McLarens’ position is that WPA breached the parties’ contract. They argue Mr. Powell designed a home that was double their budget and when it was revised, it did not meet their criteria and he then quit the project early, refusing to work with Mr. McLaren’s design. As a result, they say they should not have to pay what they estimate as $8,000 for the time he spent designing a home that’s construction costs were allegedly double their budget.

22.   Mr. Powell says designing a custom home is an “iterative process”. He says it typically goes through a series of revisions, sometimes getting bigger and sometimes getting smaller, until it resolves the issues in a final design. He says the process with the McLarens was not any different. He says he followed the McLarens’ instructions and ultimately designed a home that met their priorities and was within their budget. He says the design was not finished and he could have made some modifications at their request. He says the fact that the McLarens wanted to “discard everything” and return to Mr. McLaren’s original design should not discount the services he provided for them and does not entitle them to refuse to pay the outstanding amounts owed under the contract, or to a refund.

23.   Mr. Powell also says the construction cost for Mr. McLaren’s own design would have been over $1.6 million dollars for the home alone and would have required expensive site and foundation work, plus other extra costs. He says their decision was ultimately about wanting to return to Mr. McLaren’s design.

24.   I find an assessment of the standard and quality of an architect’s work is outside the knowledge of an ordinary person and requires expert evidence: see Zettl v. Roger Garside Construction Ltd., 2016 BCSC 2307. There is no expert opinion, such as from an architect, that the process of designing the McLarens’ home or the design itself fell below that of a reasonably competent architect.

25.   For the reasons that follow, I find Mr. Powell, on WPA’s behalf, met the terms of the parties’ contract. While the parties had mutually agreed that Mr. Powell would have discretion to create his own design, the submitted correspondence shows he still followed the McLarens’ instructions and they collaborated in the process.

26.   Based on the sample images they sent to Mr. Powell, and their desires as expressed in their emails, I find the McLarens were seeking elements in a home that were more costly than their $1.5 million dollar budget. Essentially, I find they were likely wanting a multi-million dollar home on a smaller budget.

27.   I find the correspondence shows Mr. Powell informed the McLarens of the budget implications and this led to revisions after the July meeting. Based on its square footage and construction costs, I find Mr. Powell’s August design likely fell within the McLarens’ budget, which Ms. McLaren does not specifically dispute.

28.   I find the McLarens have not established WPA breached the contract because the July design was more expensive than their budget. This is because without expert evidence, I cannot conclude that the process Mr. Powell followed by first designing the home based on the McLarens’ desires and then revising it down to their more basic priorities was deficient or outside a professional standard.

29.   The McLarens say the revised August design does not meet all their criteria. However, I find the 3-D design images show the August design did meet their priorities as stated in their emails for an open plan modern home with privacy and ocean views. Given the McLarens participated in the design process, sent emails praising the design, and paid WPA’s invoices as the design process progressed, I find they were pleased with the process and the design at that time. Based on Ms. McLaren’s August 16, 2021 email, I find the McLarens decided late in the process that they only wanted the home initially designed by Mr. McLaren.

30.   I find Mr. Powell accepted Ms. McLaren’s August 2021 offer to decline to rework Mr. McLaren’s designs and he did not unilaterally “quit” the contract early. I find the McLarens are not entitled to a refund simply because they no longer want the home as designed by Mr. Powell. As they agreed to pay for Mr. Powell’s services on an hourly rate, I find the McLarens must pay WPA’s for those services.

31.   Based on WPA’s invoices itemizing Mr. Powell’s hours and the statement of account, I find the McLarens must pay WPA a total of $3,914.38 for Mr. Powell’s architectural services and I dismiss the McLarens’ counterclaim.

Interest, Fees, and Expenses

32.   The parties’ contract shows they agreed that an annual interest rate of 24% would apply to unpaid invoices. I find WPA is entitled to contractual interest on the $3,914.38 debt from its invoice date of August 18, 2021, to the date of this decision. The interest equals $638.31.

33.   Under section 49 of the CRTA and CRT rules, the CRT will generally order an unsuccessful party to reimburse a successful party for CRT fees and reasonable dispute-related expenses. I see no reason in this case not to follow that general rule. I find WPA is entitled to reimbursement of $175 in paid CRT fees and dismiss the McLarens’ claim for reimbursement of fees paid for the counterclaim. Neither party claimed dispute-related expenses.

ORDERS

34.   Within 30 days of the date of this order, I order the McLarens to pay WPA a total of $4,727.69, broken down as follows:

a.    $3,914.38 in debt,

b.    $638.31 in contractual interest, and

c.    $175 in CRT fees.

35.   WPA is entitled to post-judgment interest, as applicable.

36.   I dismiss the McLarens’ counterclaims.

37.   Under section 48 of the CRTA, the CRT will not provide the parties with the Order giving final effect to this decision until the time for making a notice of objection under section 56.1(2) has expired and no notice of objection has been made. The time for filing a notice of objection is 28 days after the party receives notice of the CRT’s final decision.

38.   Under section 58.1 of the CRTA, a validated copy of the CRT’s order can be enforced through the Provincial Court of British Columbia. A CRT order can only be enforced if it is an approved consent resolution order, or, if no objection has been made and the time for filing a notice of objection has passed. Once filed, a CRT order has the same force and effect as an order of the Provincial Court of British Columbia.