CASE: The Case of Adam, and the Addition that Aroused Angst

Adam decided to have an addition constructed on his existing home in a municipality in British Columbia, to accommodate an international student from Taiwan to whom had contracted to rent for the coming year at a local college. The student had promised to pay $5000 by way of rent for the accommodation. 5 Adam approached Riley, a small contractor in the area, who was experienced in residential renovations and additions. Adam and Riley signed a contract for the construction of the addition for a price of $75,000. The contract required that Riley pay for the necessary building permit, which Riley knew would require a payment of $500. The contract also stipulated that the addition had to be completed in two months, so that the student could take occupancy at the beginning of the fall semester. Two days after signing the contract, Riley attended at the municipal hall to obtain the building permit that was necessary in order for the addition to be lawfully constructed. Riley then learned that the municipality had, the day before, passed a new bylaw requiring that contractors intending to build within the municipality would have to deposit $25,000 in cash to ensure compliance with all local building regulations. Riley then informed Adam that he would not be making such a deposit, as it was not called for in his contract. Adam responded that it was Riley's responsibility to obtain all the necessary municipal "permits". Riley disagreed and said he would not perform the work under those conditions. As a result of the delay caused by Riley's refusal to perform the work, Adam could not retain another contractor to construct the addition on time, and the international student obtained accommodation elsewhere. Adam therefore lost the $5000 in rent the student had agreed to pay. Adam then sued Riley for damages for breach of their contract. Adam's lawsuit was dismissed at trial. Adam appeals.

QUESTIONS:

1. What is the legal issue?
2. What is the legal test to be applied?
3. How should the legal test be applied to the fact presented?
4. What is the most probable legal resolution of the Case, having regard to the legal test and its application to the fact Presented?

All ANSWERS must be based on the Canadian Law