A British Columbia Supreme Court judge has delivered a decisive ruling in favor of a Campbell River couple who faced a breach-of-contract lawsuit from a renovator they terminated after the company dramatically increased the estimated cost of a small home addition. Justice Robin Baird found that the renovator, not the homeowners, had breached the contract, dismissing the lawsuit entirely.
Contractor's Lawsuit Dismissed After Cost Doubling
Element Restorations sued Michaela and Alvin Arruda after the couple refused to pay when the initial estimate of $35,350 for a 120-square-foot addition to their house ballooned to approximately $70,000. According to the judgment, the Arrudas had paid about $21,000 as an initial down payment. One month into the renovation, they were informed that work completed so far had cost an additional $33,000, with another $12,000 needed to finish the project.
Homeowners Express Alarm Over Budget Overshoot
The couple stated that at that point, the job was 71 percent over budget, and they had not received any written explanation for the drastic increase. In an email to the builder, Michaela Arruda expressed alarm about the "drastic overshot on the initial quote" and wrote, "We feel like you’ve pulled the wool over our eyes on this job." Justice Baird noted in his ruling that the Arrudas had placed their faith and trust in the contractor, who "let them down badly and thereby caused them a good deal of undeserved stress and aggravation."
Renovator's Response and Homeowners' Action
Almost six weeks after the job began, the couple received an itemized accounting of expenses from the company's owner, totaling nearly $55,000, with an estimated $12,600 still required to complete the work. The owner offered to waive the company's 20 percent labor costs and charge the Arrudas almost $50,000 for the work done so far, without completing the remaining $12,600 in work. Instead of accepting this offer, the Arrudas terminated the contract without further payment and hired another contractor to finish the job for about $9,000.
Court Finds Renovator Breached Contract
At a four-day trial in March, the company sued for breach of contract, while the Arrudas countersued for the amount paid to the second contractor, though they ultimately sought only dismissal of the company's lawsuit. Justice Baird found that the company's evidence regarding earlier price increases did not justify the escalated costs. He stated that a bill of $70,000, before the additional $12,000-plus to complete the job, represents "not a reasonable margin of error in budgeting."
Judge's Ruling and Outcome
Justice Baird ruled that the company breached the contract by under-quoting the cost and failing to keep expenses within the estimate or notify the homeowners of budget changes. Consequently, he dismissed the lawsuit. The couple ended up paying the down payment plus the extra costs to the second contractor, which was slightly less than the original $35,350 quote. Baird concluded, "In my view, in all the circumstances, this is the best outcome that the plaintiff is reasonably entitled to expect."
This case underscores the importance of clear communication and adherence to contractual estimates in home renovation projects, providing a precedent for homeowners facing similar disputes with contractors over unexpected cost overruns.
