Akhavi-Araghi v. Kim Date:, 2012 BCPC 307

Citation: Akhavi-Araghi v. Kim Date: 20120827 2012 BCPC 0307 File No: 1033516 Registry: Vancouver IN THE PROVINCIAL COURT OF BRITISH COLUMBIA BETWEEN: ATIEH AKHAVI-ARAGHI CLAIMANT AND: YOUNG IN KIM & NICOLE CHO HAIR DEFENDANT REASONS FOR JUDGMENT OF THE HONOURABLE JUDGE N.N. PHILLIPS Appearing for the Claimant: A. McKenzie, Student-at-Law Appearing in person: Young In Kim Place of Hearing: Vancouver , B.C. Date of Hearing: August 7, 2012

Date of Judgment: August 27, 2012 Overview [ 1 ] On October 1, 2010, the Claimant, Atieh Akhavi-Araghi (hereinafter the Claimant or Akhavi), began work as a hair stylist in the Defendant’s hair salon. The Claimant and the Defendant had an agreement whereby Akhavi would pay $1200 for the monthly rental of a chair in the salon. Within fourteen days of the start of the salon-sharing arrangement, the relationship between the parties became strained. After the police were called, the two women parted company.

This claim was brought by Akhavi seeking the return of deposit and rental monies she claims she over-paid the Defendant. The Evidence At Trial [ 2 ] The Claimant told the Court she had worked in the hair styling industry for about twenty-four years, including a period of time when she had owned and operated her own salon in Vancouver’s West End neighborhood. After taking time away from work to be at home, she decided to return to work and was looking to do so in the West End in order to try to take advantage of some former client contacts.

When she found a notice advertizing a chair for rent in the Defendant’s salon, she arranged to speak with the Defendant. [ 3 ] According to the Claimant, the two women met and spoke about the business opportunity for the first time around the 20th of September 2010. The parties met again on the 23 rd of September and at that time the Defendant asked for a deposit telling the Claimant it was needed because there were other people interested in renting the chair. Akhavi provided the Defendant with a cheque for $1200 dated October 21, 2010.

In the memo line of the cheque the words “for rent” were written. [ 4 ] On September 27 the parties met again and drew up a contract which is set out in its entirety below: ______________________________________________________________________ Contract Owner: Nicole Cho Hair [Young, Kim] Tenant: Address: 1789 Robson Street, Vancouver BC V6G 1C4 Lease: The term 3 years Rental: $1200.00 tax Use: Hair Salon 1 Chair Deposit: 1200.00 PS: In 6 months the contract will become invalid if [the Claimant] fails to pay the rent or if either of us (A) (

B) is not Satisfied with the other person’s business style. 09.27.2010 Nicole Cho

B) Tenant – Atieh-Akhavi Address: 402 6823 Station Hill Dr. Burnaby, BC V3N 0A9 ______________________________________________________________________

[ 5 ] The Claimant testified that in addition to the $1200 cheque she gave to the Defendant on September 27 th , she provided $1200 cash for rent for the month of October. Akhavi said the cash was provided to her by her husband. Akhavi told the Court she had also given the Defendant a further $300 cash payment around the same time.

Additionally, the Claimant said she gave the Defendant four cheques each in the amount of $300 for the total rent owing for October and a further $1200 cheque each for the November and December 2010 rent. [ 6 ] The Claimant told the Court she understood from discussions she had with the Defendant that the first $1200 cheque and the four $300 cheques were to be held as security for substitute payments which were to be made in cash. The Claimant told the Court the parties had agreed the Defendant would return the non-negotiated cheques upon the cash payments being made.

The Claimant understood the Defendant preferred to deal in cash so tax would not have to be paid. The cash payments may have also been put in place out of consideration to the Claimant who needed time to generate revenue. The Claimant told the Court she understood from their contract negotiations that if the parties did not like working together after a few months, her $1200 deposit would be returned to her. [ 7 ] Shortly after the Claimant began working in the salon, tension arose relating to where the Claimant ate her lunch and over competing claims for customers.

According to the Claimant, tension also built due to the fact that the Defendant refused to return the non-negotiated cheques to her and her unwillingness to provide receipts for any cash payments made. [ 8 ] For her part, the Defendant told the Court she was not really advertizing to rent a chair in the salon but entered into discussions with the Claimant for that purpose due to the fact the Claimant approached her with an interest in doing so.

The Defendant told the Court that the only money she had received from the Claimant was the $1200 deposit cheque and an additional $300 cheque paid to her in early October. The Defendant said when she tried to cash the other rent cheques for October, stop payment orders had been issued and she was unable to do so. She denied having received any cash payments from the Claimant or refusing to return non-negotiated cheques to the Claimant upon cash being paid.

The Defendant also told the Court that the Claimant had not given her any rent monies at the start of October and that the four $300 cheques dated October 10, 15, 20, and 25 were for the October rent. [ 9 ] The Defendant told the Court the business relationship broke down when the Claimant and her husband pressed her to return cheques which the Defendant continued to hold as rent came due. Matters came to a head on the 14 th of October when the two women argued about the matter and both claimed the other spat at her. The police were called and attended the salon that day.

After determining the dispute to be civil rather than criminal in nature, the police told the Claimant, as the tenant, that she would have to leave. The Claimant left as suggested, telling the Court she only took her purse with her, leaving behind all of her hair cutting equipment. [ 10 ] On October 15 th the parties again exchanged words at the salon and the police were called, although they did not attend until the following day. The police spoke then with the Defendant who said the Claimant retained possession of a key to the salon and a sign board she wanted returned.

The police apparently called the Claimant and left a message seeking return of the items. The Claimant agreed she had taken an advertizing sandwich board sign from outside the salon when she left but told the Court another sign advertizing the Defendant’s own stylist work was left behind and that the Defendant had agreed she could take the board advertizing her own services. [ 11 ] Akhavi told the Court that after the business relationship ended she had issued stop payment orders on any outstanding cheques payable to the Defendant.

In the process of doing so Akhavi learned that her bank had made an error and that on September 23 rd the Defendant had been able to negotiate her $1200 cheque even though it was post-dated for October 21 st . A copy of that cheque provided to the Court bears the notation October 14 th suggesting that was the date the Claimant obtained her copy of the negotiated cheque from her bank.

The Defendant acknowledged she had deposited the cheque on the 23 rd of September but told the Court she had not withdrawn the money. [ 12 ] The Defendant called as a witness a customer who happened into the salon on October15 th just as the Claimant was leaving. Ms. Sun testified she was in the salon as a first-time customer and upon entering she noted that a woman who was leaving appeared to be angry. Ms. Sun said the woman leaving carried a large purse-like bag. Ms.

Sun said she overheard the woman and the Defendant exchange words about the sandwich board sign. [ 13 ] From the evidence of the Claimant and the Defendant it was apparent the parties continued to have problems leading the police to attend the salon on one further occasion. Akhavi told the Court the police had been called to help her retrieve her equipment and to return her copy of the key for the store to the Defendant. Police records tendered by both parties at trial show that on October 21 st a police officer returned the key that had been given to him by the Claimant.

Although the Claimant had asked the police to retrieve her hair styling equipment when they visited the salon, the Defendant told the officer that she had not kept any of the Claimant’s property. The Defendant maintained at trial that none of the Claimant’s property had been left behind. [ 14 ] In addition to seeking compensation for rental and deposit monies paid to the Defendant, the Claimant sought damages for $171 in materials purchased by her husband to repair the neon sign for the salon. It had been agreed that the Defendant would pay for the cost of the materials purchased to do the work.

Although a cheque for the materials had been written by the Defendant, it was subsequently the subject of a stop payment order after relations between the parties broke down. The Defendant told the Court she had issued the stop payment order due to a concern that the Claimant’s rent cheques would not clear. [ 15 ] Although the parties provided the Court with copies of negotiated and non-negotiated cheques, no documentary proof was proffered relating to any cash payments that might have been made.

The Claimant told the Court her husband had helped her with the cash payments but provided no details on how that money had been obtained or produced. The Claimant told the Court she was not able to call her husband to testify at trial as they had separated and she did not know his whereabouts. No evidence was led as to the date of separation or what efforts, if any, were made by the Claimant to try to obtain banking or financial information from her former spouse documenting cash payments to the Defendant. [ 16 ] The Claimant told the Court the value of her equipment left at the salon was approximately $2200.

She said she had come up

with that price based on what she recalled having paid when she purchased the items new two or three years earlier. She said she wasunable to get duplicate receipts for the equipment purchases from the retailer as urged by the Trial Conference judge to do. Applicable Law [17] The issue in this case is whether, as a result of the alleged improper collection of additional money, the Defendant breached thecontract thus entitling the Claimant to repudiate the contract and treat it as rescinded.

A party to a contract may repudiate it if there is abreach, but that breach must be a fundamental one. [18] In Genesis Tower Ltd. v. Cheung [2002] B.C.J. No. 2386, the Court of Appeal adopted with approval the following test offundamental breach (@ paragraph 14): A fundamental breach occurs where the event resulting from the failure by one party to perform a primary obligation has the effect ofdepriving the other party of substantially the whole benefit which it was the intention of the parties that he should obtain from the contract. Syncrude Canada Ltd. v.

Hunter Engineering Company Inc., (SCC),[1989] 1 S.C.R. 426 at 499, 57 D.L.R. (4th) 321. The test has also been stated slightly differently - a fundamental breach is based on "some act which substantially deprives the innocentparty of the intended benefit such party was to obtain under the contract". Lau v. 1755 Holdings Ltd. (1995), 46 R.P.R. (2d) 249(B.C.S.C.) at 261, aff'd (1996), (BC CA), 6 R.P.R. (3d) 152 (B.C.C.A.). The test as to whether there has been a fundamental breach of a contract is an objective one and the subjective consideration of the partyclaiming fundamental breach is not relevant.

Lau (S.C.), at 254, para. 15. [19] In Hunter Engineering Co. v. Syncrude Canada Ltd., (SCC), [1989] 1 S.C.R. 426, Madam Justice Wilsonstated (paragraph 137): The formulation that I prefer is that given by Lord Diplock in Photo Production Ltd. v. Securicor Transport Ltd., [1980] A.C. 827 (H.L.),at p. 849. A fundamental breach occurs "Where the event resulting from the failure by one party to perform a primary obligation has theeffect of depriving the other party of substantially the whole benefit which it was the intention of the parties that he should obtain fromthe contract" (emphasis added).

This is a restrictive definition and rightly so, I believe. As Lord Diplock points out, the usual remedy forbreach of a "primary" contractual obligation (the thing bargained for) is a concomitant "secondary" obligation to pay damages. Theother primary obligations of both parties yet unperformed remain in place. Fundamental breach represents an exception to this rule for itgives to the innocent party an additional remedy, an election to "put an end to all primary obligations of both parties remainingunperformed" (p. 849).

It seems to me that this exceptional remedy should be available only in circumstances where the foundation ofthe contract has been undermined, where the very thing bargained for has not been provided. [20] Counsel for the Claimant submitted that the Court would need to assess the credibility of both parties in order to determine whatevidence to accept from the trial. There are many tests or factors that can be applied when assessing the credibility of a witness. JusticeO'Halloran's remarks on point in Faryna v.

Chorny, (BC CA), [1952] 2 D.L.R. 354 (B.C.C.A.) at p. 356, are helpful inthe context of a civil dispute: The credibility of interested witnesses, particularly in cases of conflict of evidence, cannot be gauged solely by the test of whether thepersonal demeanour of the particular witness carried conviction of the truth. The test must reasonably subject his story to an examinationof its consistency with the probabilities that surround the currently existing conditions.

In short, the real test of the truth of the story of awitness in such a case must be its harmony with the preponderance of the probabilities which a practical and informed person wouldreadily recognize as reasonable in that place and in those conditions. Analysis [21] Akhavi is the claimant in this case and as such has the burden of proof to establish, on a balance of probabilities, that theDefendant breached the agreement the women had made. The Claimant submitted that the Defendant breached the contract by takingfrom her more money in rent and other payments than she was entitled to.

Specifically, the Claimant testified the Defendant did so byreceiving $1200 in cash and $1200 by way of cheque for October rent along with an additional sum of $600 (by way of a $300 cashpayment and a $300 cheque). [22] To succeed in this claim, the Claimant needed to present evidence to prove the Defendant received more than she was owedunder the contract. The evidence of the parties on what amounts were paid was diametrically opposed and mostly uncorroborated.

In her Notice of Claim, filed December 8, 2010, the Claimant stated that on October 14th she asked the Defendant for a receipt for the pastpayment of $1500 comprised of two cheques. In the prayer for relief she also sought reimbursement for the first instalment of thesecurity deposit of $300 cash. [23] At trial, the Claimant was adamant that she had given the Defendant a $300 cash payment, a $1200 cash payment and the initial$1200 cheque marked “for rent”. The Claimant did not articulate what the $1200 cash payment was for and it was not apparent from theevidence what money, if any, was owed at the time.

The Claimant provided four $300 cheques for October rent and the evidence made

clear that the first of those cheques had been cashed by the Defendant. [ 24 ] Given the Claimant’s limited financial means in October 2010, coming up with $1500 cash to pay the Defendant would likely have been a significant burden and one that she and her husband would presumably have some record of.

Although I appreciate the difficulty the Claimant might now find herself in trying to obtain documentary materials from her ex-husband to establish the source and payment of any additional monies, she would have had to have appreciated the importance of that information when the parties’ business relationship broke down and she was still together with her husband. [ 25 ] While it is a bit troubling that the Defendant cashed the $1200 cheque on September 23, almost a month ahead of when it was payable, she said that she did not withdraw the money but kept it as security.

She was not cross-examined on this point and there was no other evidence led as to what became of the money. As such, I am not prepared to find from the Defendant’s conduct that she dealt improperly with the money. [ 26 ] The Claimant urged the Court to resolve the contrast in the evidence by an analysis of credibility as between the two parties. Having carefully analyzed their evidence, however, I am simply unable to find anything that would cause me to prefer the evidence of one woman over the other on this point.

In saying that, I do not find that one or both of them were trying to mislead the Court, only that their stories suffered from a lack of corroborating evidence the Court looks to in order to help determine whether one person’s story is more reliable than another. Neither woman had a good recall for the events which took place almost two years ago, and their evidence about the matter was vague and imprecise. [ 27 ] Consequently, I find the Claimant has not proven that she paid the Defendant any money over and above the cheques for $1200 and $300.

The contract the parties had reached specifically allowed them to “invalidate” their business relationship if it proved to be unsatisfactory and I find that is what they did in mid-October 2010. The Claimant did not establish that the Defendant committed a fundamental breach of the contract, rather the evidence shows there was a mutual parting of ways as contemplated in the contract. [ 28 ] However, the contract is silent on what was to become of any rent money paid for a month if the business relationship ended mid-month.

The Claimant worked until the middle of the month and should have paid $600 rent to the Defendant by this time. [ 29 ] I find the $1200 cheque payment was intended to serve as the deposit amount specified in the lease. Both women agreed to end the business relationship mid-October. The contract is silent on what was to become of the deposit if the contract was terminated early. The evidence did not establish that either the Claimant or the Defendant suffered any loss due to the early termination of the contract.

In the result, I think it appropriate to order that the Defendant keep $300 toward the rent for the second of the four October rental payments and that she return $900. In other words, I find the evidence tended to show the Claimant paid the Defendant a total of $1500 and that the Defendant was entitled to $600 as payment for half of the rent for October. [ 30 ] Finally, the Claimant sought return of her hair styling equipment which she claimed was converted by the Defendant.

The Defendant denied having kept any of the Claimant’s equipment and argued the police reports tended to support her position in this regard. I am not prepared to assign any weight to the police reports on point as they do not make clear what the attending officers saw when they were at the salon and no police were called as witnesses to the point at trial. Similarly, although I accept Ms.

Sun may have seen the parties at the end of an unpleasant encounter mid-October, she had no evidence to offer about the Claimant’s equipment. [ 31 ] What the parties were in agreement on was that the Claimant left the hair salon in a hurry at the behest of the police when the relationship broke down on October 14 th . The Claimant left with her purse and the salon key and apparently nothing else. It does not appear the Claimant was ever able to retrieve her equipment and I am satisfied she did suffer the loss of her equipment and that the Defendant received the benefit of same.

In terms of quantifying the loss, the Claimant told the Court her equipment was purchased new a few years before the incident and that she had paid about $2200 for it. No bills of sale or material detailing the value of the used equipment was presented by the Claimant and the Court is left to assign an amount based on the limited evidence presented. Having considered the evidence on point, I find the Claimant is entitled to be compensated the sum of $1000 for the loss of her equipment. Result [ 32 ] The Claimant is thus entitled to a return of $900 from the $1500 she paid the Defendant.

This leaves the Defendant with $600, a sum which accords with 50% of the October rent. Additionally, I find the Defendant did keep the Claimant’s equipment and that the Claimant should be compensated $1000 for this loss. I do not think it appropriate to award the Claimant the $171 her ex-husband was to be paid for his work on the sign as that is money he would be entitled to and not the Claimant.

I also do not find it appropriate to award the Claimant the fees she paid to issue stop payments on outstanding cheques given that both parties were involved in bringing the contract to an end and dealing with outstanding cheques. However, the Claimant is entitled to her $156 filing fee and her service fees. Given the divided success at trial, the parties will bear their own costs. [ 33 ] The judgment amount is to be paid in full by the Defendant to the Claimant by September 30, 2012 unless prior to that date the Defendant files an application and fixes a date for a Payment Hearing. _______________________ N. N.

Phillips Provincial Court Judge