Lord Wrenbury :-

The appellant is a building contractor. The respondents are restaurant keepers, who may be called the building owners. The question on the appeal is as to the construction of a contract between these parties for works of alteration, construction and fitting up in a restaurant and public dining room on the first floor over 119½, King Street East, in the City of Hamilton. The contract is dated 5th March, 1919, and is made between the building owners of the first part and the contractor of the second part. The relevant clauses are three in number, and for convenience will be referred to as the first, second and third clauses.

After a recital that the contractor has agreed to supply certain materials and perform certain services, the deed proceeds by the first clause as follows :

"Now this agreement witnesseth that in consideration of the sum of $ 3,000, to be paid as follows : $ 1,000 on the signing of this agreement further sum of $ 1,000 when it appears to the satisfaction of all the parties hereto that materials have been furnished and services performed to the extent of $. 2,500, and the balance or sum of $ 1,000, thirty days after the completion of this agreement, the party of the second part covenants, promises and agrees to with the parties of the first part that he will furnish the materials hereinafter mentioned and will perform services as hereinafter set forth. "

The deed then details the work to be done and the materials to be supplied. These leave such things as the size of a mirror, the size and location of a private sleeping room and the size and location of two public dining rooms " to be agreed upon between the parties. "

The deed then proceeds by the second clause as follows :

"The parties of the first part covenant with the party of the second part that if it is ascertained upon the removal or attempting to remove the partition or partitions that the construction of the building will not permit such removal without serious damage to same then this agreement is to be at an end and the parties of the first part will reimburse the party of the second part for labour expended up to such time and the party of the second part covenants that he will return so much of the $ 1,000 payment as remains afters satisfying his claim for labour performed. "

Next follows the third clause which runs as follows :

"The parties of the first part covenant with the party of the second part that in the event of the materials to be supplied and the labour performed amounting in value to more than $ 3.000 then the parties of the first part will reimburse the party of the second part for such excess. The party of the second part covenants that in the event of such labour and materials being less in value than $ 3,000 then the final payment will be the actual amount expended by the party of the second part over $ 2,000 plus 12½ per cent instead of $ 1,000 as above stated. In estimating the value of the materials to be supplied and the labour performed the party of the second part on the final settlement of the amount due under this agreement shall produce all accounts paid by him for labour and materials and shall be entitled to the amount ascertained as paid by him for labour and materials plus 12½ per cent."

The work to be done as described in the contract, was very largely varied, added to and departed from, not merely by the addition of extras, but by substantial and extensive alterations in the scheme.

A dispute arose between the parties as to the amount payable by the building owners. The contractor brought an action against the building owners in the Supreme Court of Ontario at Hamilton to recover $ 3830-36, being as he alleged the amount due to him on the footing that under the third clause he was entitled to the difference between a sum of $ 7,010-36 which he said was due to him under the third clause, and the sum of $ 3,180, which had been paid him on account. The judge of the County Court held that the third clause was