Kulmatycki (Stelor Services Group Inc) v Duncan's First Nation, 2016 ABQB 434

Court of Queen’s Bench of Alberta Citation: Kulmatycki (Stelor Services Group Inc) v Duncan's First Nation, 2016 ABQB 434 Date: 20160805 Docket: 1503 00009 Registry: Edmonton Between: Steve Kulmatycki operating as Stelor Services Group Inc. and Ken Rich Plaintiffs - and - Duncan's First Nation, Chief Don Testawich, Carmelita Pogado Obradovic. Tony Testawich and Rigs Oilfield Services Ltd. Defendants _______________________________________________________ Reasons for Judgment of L.A. Smart , Master in Chambers _______________________________________________________ Introduction [ 1 ] The Plaintiff Steve Kulmatycki (Kulmatycki) operating as Stelor Services Group Inc. (SSG) seeks

summary judgment as against Duncan’s First Nation (DFN) under a “terminated” fixed term Consulting Agreement (Agreement”) with Duncan’s First Nation. Under the terms of the Agreement SSG was to receive $155,000 annually payable bimonthly commencing September 23, 2013 and reimbursement for out-of-pocket expenses. [ 2 ] Paragraphs 5 and 7 of the Agreement are particularly relevant to this application and read as follows: 5. Expense Reimbursement. SSG shall be entitled to reimbursement from DFN for all “out-of-pocket” expenses related to the administrative operations that may include but is not limited to:

- Professional dues and annual administrative conference; - Cost of all job related expenses including but not limited to; - General Contractor’s liability insurance with a minimum of 2 million dollars liability; - All travel cost in the performance of said services. 7. Term/Termination. This Agreement shall be effective for a period of 3 years beginning September 23, 2013 to September 22, 2016 (the “term”), and unless DFN gives notice to SSG on or before April 01, 2016 of its intention to terminate this contract on April 05, 2015, this contract shall continue for another term.

The contract may be terminated at any time by DFN by giving thirty (30) days written notice to SSG and in event of such termination upon the first or any subsequent year of this term, SSG shall be entitled to a lump sum payment equivalent to the sum of all payments that SSG would have received for the remainder of the term. In the event such notice is given, SSG shall perform the services required by this contract up to and including the effective date of termination specified in the notice and shall, upon request, provide DFN with a written report of services rendered to the time of termination.

The contract may be terminated at any time by SSG by giving thirty (60) days written notice. SSG specifically agrees that the notice and compensation set forth in this paragraph constitutes reasonable, fair and equitable notice and compensation for damages, if any that may be suffered by SSG as a result of termination of this contract. [ 3 ] Kulmatycki alleges he was dismissed in December 2014 and entitled to a lump sum payment of $345,831.98 being the sum of the fees due for the remainder of its term under the Agreement.

In addition, he claims that he did not receive his full monthly Fee for Service from October 2013 to the time of his dismissal and that DFN is obliged to reimburse him for accommodation and travel expenses through to November 30, 2014. [ 4 ] The Consulting Agreement, a Letter of Intent and a Confidentiality Agreement were signed by the DFN Chief while at meetings in Vancouver on August 29, 2013. The documents nor their terms were disclosed to the Band Council until November of 2014 when Kulmatycki made a demand for amounts alleged to be outstanding under the Agreement.

Since Kulmatycki started work he controlled payments to SSG and himself which amounted to approximately $10,000 per month for his services. In the demand he claimed entitlement to $167,915 under the Agreement to that point in time of which $32,456 remained outstanding and an additional $42,126 for accommodation and travel expenses. DFN says that all payments actually received by Kulmatycki and SSG are close to the cumulative amounts claimed.

Kulmatycki doesn’t deny receiving amounts of that magnitude but notes that this characterization by DFN fails to take into account that they included reimbursement of a number of expenses incurred on behalf of the DFN. All but $1000 of those expenses are for expenses other than the accommodation and travel claimed in the demand. DFN made little comment on the appropriateness of or entitlement to those other expenses [ 5 ] DFN denies entering in to the written Agreement or alternatively that the Agreement is void as it was never ratified by the Chief with Band Council and no resolution ever passed.

There is an acknowledgment that Kulmatycki was hired by the DFN and that the $10,000 per month for services plus payment of authorized travel expenses was probably fair and proper remuneration. It is argued that because Kulmatycki controlled the making of those payments they must be reflective of the “true agreement” between them. [ 6 ] There is no Band Council resolution adopting the Agreement. On its face the Agreement would be unenforceable. Neither party provided helpful argument on this point. DFN appears to be acknowledging that Kulmatycki is entitled to compensation essentially on a quantum meruit basis.

The terms of the Agreement and the extent to which it might influence determination of the appropriate compensation may need to be examined in that context. Housing and Travel Expenses [ 7 ] For housing and travel expenses Kulmatycki relies on an alleged guideline of amounts allowed but DFN denies such a guideline exists. The invoices for housing are for use of a house that Kulmatycki owned in Grande Prairie and travel is a mileage charge from that residence to the DFN office on days he worked (about 300 km round trip).

The wording of the Agreement (assuming it would apply) may or may not support reimbursement of these items. More evidence is needed to determine what was contemplated by the parties whether they are under the Agreement or otherwise. The Balance of the Term [ 8 ] Paragraph 7 of the Agreement is set out above. Kulmatycki would be entitled to payment for the balance of the term of the Agreement if DFN terminates regardless of the reason. The Agreement is silent on this point but presumably if Kulmatycki were to terminate the provision for damages would not apply.

DFN has made a number of arguments as to why this provision should not be enforced. As noted, it is argued that there is no Agreement or agreement otherwise on this. Alternatively, given the circumstances surrounding execution of the Agreement (i.e. no independent legal advice) and the one sided nature of the Agreement particularly the “punitive” consequences arising from a termination, the Court ought to grant relief by declining to enforce it. [ 9 ] Very relevant are the circumstances surrounding Kulmatycki’s departure from DFN.

In September of 2014 on behalf of DFN Kulmatycki engaged MNP LLP to investigate certain housing and land activities including the propriety of payments made to Conrad Sewepagaham and Silver Pine Construction Ltd. At the November 17, 2014 Band Council meeting the demand was made for monies claimed owing to SSG under the Agreement and that there be resolution by November 30, 2014. As is evident the matters were not resolved and the payment not made. [ 10 ] On December 4, 2014 at the meeting of Chief and Council it was suggested that the MNP LLP investigation be expanded to include a review of Kulmatycki’s services.

The discussion at that point is the basis upon which DFN takes the position that Kulmatycki resigned and left the meeting. In argument Kulmatycki says that he departed so as not to impede the investigation and thereafter worked

from an external site. He goes on to say that his Agreement was terminated at some later point in time. Regardless, the parties are diametrically opposed as to the proper

interpretation of the exchange and their conduct that took place at the meeting. The only way to resolve that issue is to hear viva vo ce evidence from those present. What is clear is that both parties understood either at that meeting or not long thereafter that their relationship was at an end. On January 2, 2015 SSG and Kulmatycki had issued a Statement of Claim against DFN to enforce the terms of the Agreement and as early as January 6, 2015 DFN had hired a new manager. More specifics of the actions and conduct of both parties following the December 4, 2014 meeting would provide meaningful insight in to the respective positions of the parties. Conclusion [ 11 ] On an application for

Summary Judgment I must consider whether a fair and just decision can be made on the record before me ( Hyrniak v Maudlin , 2014 SCC 8 ). In my view there are very serious issues with respect to the enforceability of the Agreement and the

interpretation of provisions of the Agreement, notably paragraphs 5 and 7. Furthermore, there is conflicting evidence as to what occurred at the December 4, 2014 meeting and limited evidence of subsequent events the resolution and assessment of which are material to the characterization of the nature of the termination and the application of paragraph 7. [ 12 ] If the Agreement is found to be unenforceable then additional evidence from both parties would be essential for determination of a fair and reasonable compensation for services and expenses.

Amounts actually paid to SSG and Kulmatycki may be relevant but the totalling of all payments without regard to the reason for payment is not helpful. [ 13 ] The resolution of the foregoing issues are necessary requisites to granting of a judgment for payments claimed both pre and post the December 4, 2014 meeting. Accordingly, the application for

Summary Judgment is dismissed. Although DFN has successfully resisted this application the lengthy and detailed argument suggesting that all amounts based on SSG’s and Kulmatycki’s own measure had been fully paid only served to obfuscate the relevant facts and issues meriting a trial. DFN will have its costs on

Schedule C reduced by half plus reasonable disbursements. Dated at the City of Edmonton, Alberta this 5th day of August, 2016. L.A. Smart M.C.C.Q.B.A. Appearances: Priscilla Kennedy DLA Piper (Canada) LLP for the Plaintiffs Pierre Asselin Durocher Simpson Koehli & Erler for the Defendant, Duncan's First Nation