Saskatoon contractor takes Ace Burger to court over unpaid bill

(Source: Google)

The owners of a popular Saskatoon burger joint were in court last month after the contractor they hired to build the restaurant says they stiffed him on the bill.

According to King’s Bench Judge Richard Elson, this was not the first time Ricky Iula had done work for the owners of Ace Burger. They had hired him for work in their other restaurants Congress Beer House and Thirteen Pies, and in the spring of 2019, they asked for his help opening Ace Burger on Broadway Avenue.

This time, they felt they were overcharged.

The previous business in that space was a restaurant, so there were no major structural changes, just “cosmetic updates” — construction of a patio deck, new plumbing fixtures, cabinets, drywall, tile and painting, among other things.

Iula told court his understanding was they hired his company G and I Construction as a general contractor in a “cost-plus” arrangement that guarantees the contractor payment for his expenses, plus a fee, usually figured as a percentage over and above those costs.

The owners told court their understanding was never that Iula would act as general contractor. In their affidavits, Ace Burger owners Cole Dobranski and Bradley Miller said they clarified that with Iula after receiving the first invoice for over $150,000.

They told court they wrote Iula a cheque for $50,000 and asked him to reassess the charges. Later, they said they offered another $25,000 as a gesture of good faith.

Given the work was initiated on an informal oral agreement, Elson says both parties are to blame for the dispute.

“The casual way the parties entered into this arrangement, without written terms and conditions and without specific estimates or quotations, portended conflict,” Elson wrote in his judgment last month.

Iula’s confusing and conflicting evidence of the costs, presented through multiple versions of the same invoice, and the business owners’ “somewhat pedantic scrutiny” of them created “significant distrust and precluded the possibility of an amicable settlement,” Elson said.

According to court records, Miller asked Elson to rely on his judgment about the excessive costs because of his experience building restaurants.

Given his vested interest in the business, Elson didn’t put much weight in his expert opinion.

“As qualified as Mr. Miller and Mr. Dobranski might believe themselves to be, that is of no moment for this court in assessing the reasonableness of the costs incurred.”

Under a cost-plus agreement, the contractor is in a secure position — they take on none of the risk. But Elson points to a number of Ontario court decisions that emphasize the responsibility of a contractor to keep proper accounts in this arrangement.

In this case, Elson says Iula did little to inspire confidence in his company, G and I Construction Group.

“Aside from multiple versions of one invoice — one of which I found was never sent — the evidence suggests that Mr. Iula’s casual entry into this arrangement carried on into his dealings with Mr. Miller and Mr. Dobranski,” Elson said.

“This was amply illustrated by the discrepancies between various versions of [the invoice] and the invoices from subcontractors and suppliers. There was also no explanation for the lack of transparency in his efforts to support the claims for costs incurred. This was particularly evident in Mr. Iula’s failure, before this litigation, to share copies of the various invoices he received.”

Despite the issues the judge described in Iula’s approach, he didn’t think the owners of Ace Burger had enough evidence to prove his costs were incorrect or unreliable.

“As imperfectly as the plaintiff conducted itself in this transaction, it did what it could to negotiate reasonable terms with its subcontractors and suppliers.”

The judge ordered them to pay the remaining balance of just over $67,000.