Callender v. Somedia Networks Inc. Date:, 2011 BCPC 336

Citation: Callender v. Somedia Networks Inc. Date: 20111201 2011 BCPC 0336 File No: 1033603 Registry: Vancouver IN THE PROVINCIAL COURT OF BRITISH COLUMBIA BETWEEN: CHRIS CALLENDER (dba SONICCODE E-SOLUTIONS) CLAIMANT AND: SOMEDIA NETWORKS INC. DEFENDANT REASONS FOR JUDGMENT OF THE HONOURABLE JUDGE N.N. PHILLIPS Appearing on their own behalf: C. Callender Appearing for the Defendant: R. Schultz, Vice-President, Somedia Networks Inc. Place of Hearing: Vancouver, B.C.

Date of Hearing: November 24, 2011 Date of Judgment: December 1, 2011 Overview [ 1 ] Chris Callender (hereinafter the Claimant or “Callender”) is a computer design consultant. In April 2008, Callender was retained by Somedia Networks Inc. (hereinafter the Defendant or “Somedia”) to carry out work on a Flash Player program. The parties came to disagree about the utility and scope of work provided and the Defendant company refused to pay Callender. Callender sued Somedia in this Court seeking payment of $7,612.50 he billed for his work. This is the decision of the Court following a trial held in this matter.

The Evidence at Trial The Claimant’s Case [ 2 ] Callender testified that he has been in the consulting and computer programming business since 1999. He told the Court that Somedia asked him to put together loose requirements for a computer project the company was working on. The project in question related to a Flash Player, a medium used to provide dynamic, multi-media content on the internet. The program was something Callender had worked on in the past and was familiar with. [ 3 ] Callender told the Court he gave the Defendant an estimate of sixteen hours of work (at $150 per hour) to complete the Flash

Player project. Callender testified an agreement was reached, in accordance with the estimate, during a phone conversation but it was not reduced to writing at any time. Callender testified the parties also agreed that part of Callender’s work would include obtaining design services from a third party for which he would be compensated by Somedia.

Callender told the Court that while it was his usual business practice to prepare and charge for a project scope document, he did not do so in this instance because of the very tight time frame involved. [ 4 ] Callender testified he began the work on the project immediately given that Somedia wanted it done on an urgent basis. His project work began at the start of the weekend of April 18 th , 2008 and carried on throughout the weekend. Callender told the Court issues arose with the project which he attempted to address.

The Claimant testified that as he continued to work on the project he recognized the scope was expanding but he understood the Defendant company wanted him to continue his work in order to complete the project. Specifically, Callender testified that Amir Mirhosseini, his direct contact at Somedia, told him to do work beyond the original scope of the project and that Somedia’s CEO, George Fleming, told him to work to correct the problems with the Flash Player and to finish the project. [ 5 ] The Claimant told the Court that on April 28 th , 2008, he rendered two accounts to Somedia for his work.

The first invoice, # SMN-001, was for the sixteen hours work relating to the original project (“in scope”) and totalled $3045 (including $500 for the third party design work). The second invoice, # SMN-002, was for a further twenty-nine hours of Callender’s work, totalling $4567.50. Callender maintained that the work set out in the second invoice had been approved by either Amir or the CEO. Callender added that approval for the additional “out-of-scope” work had been given during a phone conversation and was confirmed by way of an email on April 23 rd, 2008.

A copy of that email was not produced at trial. [ 6 ] Callender told the Court he was troubled to learn on April 28 th that Somedia had unsuccessfully attempted to migrate his work from the testing to the operational field. The Claimant testified that he protects his work product by setting it up so that a source code is required to migrate work from the development environment to a client production server. Callender uses code to ensure he is paid for his work.

Upon discovering that Somedia was attempting to use his project work before he was paid, Callender refused to provide the company with the necessary code to enable the Flash Player enhancements to function. [ 7 ] Callender disputed having done anything improper to cause the migration of his work to Somedia’s servers to fail and said he would typically be intimately involved in the migration stage, an opportunity not afforded to him in this case. The Claimant maintained he had done the required work properly and was entitled to be paid for both invoices.

Callender said he attempted to work out the dispute with Somedia by agreeing to payment for the sixteen hours of in-scope work in exchange for which he would provide the required source code to Somedia. Distrust among the parties caused such settlement efforts to fail. The Defendant’s Case [ 8 ] The Court heard from R. Schultz, the vice-president of Somedia, and the only witness who gave evidence at trial on behalf of the company. Schultz said he has worked in the internet/IT field for many years.

Schultz testified he joined Somedia in January 2010 and was not involved in a direct way in the dispute with Callender but that he had familiarized himself with the company file. Schultz said that both George Fleming and Amir were unavailable to come to Court to testify. [ 9 ] Schultz confirmed the parties herein had a verbal agreement for Callender to provide enhancements to a Flash Player that Somedia had purchased. Callender was retained to provide advanced functionality to the program, a project estimated to take sixteen hours of work at a cost of $2400.

Schultz said he understood both parties to the agreement appreciated the project was to be carried out under a tight time frame, with Callender performing the work on the project over the weekend of April 18-20, 2008. [ 10 ] Schultz told the Court he understood Callender did not finish the project over the weekend and work carried on into the next week derailing the timing of the planned launch of the enhanced program. On Wednesday April 22 nd , when the Flash Player enhancements were still not functioning, Somedia was unable to use the program at an important client demonstration.

Schultz told the Court that Somedia did not know why the original Flash Player programming Callender carried out failed to work and denied the parties had come to any agreement for Callender to do further work and bill Somedia for it. [ 11 ] Schultz testified that an attempt to move the enhanced Flash Player from a test environment into an operational one on April 28th failed. Schultz said it was at that time Somedia realized Callender had changed the source code making the migration impossible. Schultz said that without the source code, Callender’s work was of no value to Somedia.

Law [ 12 ] The key legal issue to be resolved in this case is whether Callender and Somedia reached an agreement as to the initial and expanded scope of work in relation to the Flash Player project. In Anani v. Malaspina Coach Lines Ltd., [2003] BCSC 700, Justice Loo provided the following helpful

summary of the law regarding the formation of a contact (@ paragraphs 5-8): In order for there to be a legally enforceable contract, there must be an offer, acceptance, and consideration. An offer means that one party offers to another party a willingness to enter into a contract on certain terms. Acceptance means that the other party to whom the offer was made, accepts the offer as made. Both parties must evidence an intention to contract and agree on certain terms. Agreement by BOTH parties on the terms forms the foundation of an enforceable contract.

The same principles apply to varying a term of a contract; there must be evidence that BOTH parties agreed to the variation. The party relying on a contract must prove on a balance of probabilities the terms of the contract that it seeks to enforce. To put it another

way: the party alleging a certain term of a contract, must satisfy the court that the existence of that term is more probable than not. If the judge finds that the evidence is so evenly divided, or he is not sure who to believe, then the burden of proof has not been discharged. On the law relating to proving the existence of a contract and its terms, G.H.L.

Fridman in Law of Contract in Canada , 4th ed. (Toronto: Carswell, 1999) states at pp. 16 to 18: … the test of agreement for legal purposes is whether parties have indicated to the outside world, in the form of the objective reasonable bystander, their intention to contract and the terms of such contract. The law is concerned not with the parties' intentions but with their manifested intentions.

It is not what an individual party believed or understood was the meaning of what the other party said or did that is the criterion of agreement; it is whether a reasonable man in the situation of that party would have believed and understood that the other party was consenting to the identical terms. ... Sometimes it is a simple matter to decide what the parties have manifested to each other, and consequently, whether they have agreed, and if so, upon what. This is especially true where a document containing their agreement has been prepared and signed by the parties.

If the plain wording of the document reveals a clear and unambiguous intent, it is not necessary to go further. ... If there is no single document to which reference can be made in order to decide if a contract exists between the parties, but a series of negotiations, then everything that occurs between the parties relevant to the alleged contract must be considered by the court which is faced with the problem of deciding the issue. From what they have said, done, or written, in combination if necessary, there must be established a bargain or an agreement. ...

In each instance the courts seek proof of an agreement between the parties involving the necessary exchange of acts and promises, promises and promises, or acts and acts. A representation of intention, which has not been made into a promise, will not give rise to a contract merely because the one to whom it has been made has acted upon it. ... [Footnotes omitted.] On the certainty of the terms of any alleged contract, the author goes on to state at pages 19-20: The court cannot make for the parties a bargain which they themselves did not make in proper time.

This means in the first instance, that if a contract is not clearly created by the parties' language or conduct the court cannot construct one. It is for the parties to use such language or employ such conduct as will make plain that they intended to contract.

Once they have done so, they will be bound thereby, even if the result is unreasonable. ... [Footnotes omitted.] Analysis [ 13 ] As is often the case in business disputes which come before this Court, the two successful businesses involved in this dispute encountered difficulties when time pressures and operational demands caused them to depart from their usual prudent practices of carrying out their due diligence and reducing agreements to writing.

I doubt this dispute would have reached an impasse had the parties taken the time at the outset to document what they understood they had agreed to, including the services to be provided and the cost involved. [ 14 ] As the Claimant, the onus was on Callender at this trial to establish, on a balance of probabilities, that there was a meeting of the minds about the terms of both the in-scope and the out-of-scope contracts he has asked the Court to uphold.

Alternatively, the Court must consider whether Callender is entitled to reasonable payment for his work on a quantum meruit basis if he led evidence at trial to prove there was some value in his work based on industry standards. [ 15 ] The evidence in this case made clear that Somedia was under considerable time pressure to make enhancements to the Flash Player program. That pressure lead to both Somedia and Callender very casually entering into their initial arrangement for Callender to work approximately sixteen hours to carry out the enhancements.

Despite the absence of a project plan or contract and the casual way in which the parties dealt with the matter, the evidence clearly established the parties did come to a meeting of the minds. Callender has met the legal burden upon him of proving the existence of a contract for the provision of sixteen hours of work. [ 16 ] Turning to the performance of the contract, the evidence is not clear why Callender’s original work did not make the Flash Player operational by the end of the weekend, but it is clear it did not.

Schultz was not involved in Somedia when these events occurred and was not in a position to give expert testimony on the Flash Player work conducted by Callender. However, Somedia took the position that by entering into the contract Callender held himself out as capable of making the required program enhancements and it was obvious he was the one responsible for the fact the launch failed. [ 17 ] Callender told the Court he is an expert in the Flash Player program but he did not provide any corroboration for this claim.

Callender maintained he did the original work he was contracted to do and that the additional work was required to address other program problems, although he did not provide details about those matters. [ 18 ] Despite the problems with the program enhancements, Somedia was prepared in early May 2008 to pay Callender for his sixteen hours of work on the condition that the source code needed to migrate the program be provided. By taking that position, I find that Somedia must have thought there was some value in Callender’s original work.

The parties tried valiantly to work out a means by which Callender would provide the code and Somedia would provide him payment for his in-scope invoice, but the breakdown of trust between the two parties caused those efforts to fail. Both parties are to blame for this failure. In the circumstances, I find it appropriate to order that Somedia pay for the original contract work and Callender provide the source code to the Defendant.

I recognize that the Code may no longer be of any assistance to Somedia, but it does provide a measure of closure to this matter. [ 19 ] Regarding the additional work performed, Callender did not provide an evidentiary basis upon which the Court could find that the parties came to a subsequent agreement for the Claimant to do work beyond the scope of the original contract. Although Callender maintained there was email correspondence of April 23 rd confirming a phone conversation with CEO George Fleming to this effect, no such email was provided to the Court.

The email correspondence provided appeared to be a complete record of the contract discussions between the parties and no mention was made in the emails of Callender being retained to do work beyond the original sixteen hours. Schultz denied the existence of any such agreement and said it would not make sense for Somedia to have authorized Callender to do a further twenty-nine hours of work when he had been retained at the outset to do only sixteen hours of work.

Although Callender may have thought more work was needed, he should have confirmed the Defendant authorized him to do the extra work before he set about doing it. Accordingly, the Claimant cannot succeed on this aspect of his claim. [ 20 ] However, the Court needs to determine whether Callender should nonetheless be compensated on a quantum meruit basis for the out-of-scope work he did for Somedia. Callendar told the Court he believed Somedia wanted him to do the work and he went ahead and did so and he should be compensated for his work.

Schultz argued that despite the time Callender put into the project, at the end of the day Somedia received nothing of value it could use and there could be no reasonable basis upon which Callender should be compensated for any additional work. [ 21 ] On balance, I find the Claimant did not provide an evidentiary foundation upon which the Court could conclude he provided value to Somedia for the out-of-scope work performed and thus I am unable to attach any monetary amount to that work.

The added work was not authorized; it was disproportionate in scope to the agreed-upon work; and it does not appear to have added any value to Somedia. It would be inappropriate in the circumstances to order Somedia to compensate Callender on a quantum meruit basis. Conclusion [ 22 ] In the result, Callender has met the burden of proving that he and Somedia had an oral agreement for him to provide sixteen hours of professional service to make enhancements to the Flash Player program. Work was done but the project launch was not a success. The reasons for that failure were not made clear on the evidence.

Nonetheless, Callender established he is entitled to payment for his in-scope invoice of $3045. However, he is not entitled to payment for any additional work performed because he failed to prove that the parties had reached an agreement for such work to be carried out.

No order is made to compensate Callender on a quantum meruit basis due to the fact the Claimant did not meet the burden of proving there was value in the additional work he performed. [ 23 ] There having been divided success at this trial, I find it appropriate to order that the parties bear their own costs in pursuing this case. [ 24 ] Somedia is ordered to pay the full amount of the first invoice ($3045) to Callender by no later than the 31 st of January 2012. The Claimant is also entitled to pre-judgment interest (in accordance with the Court Order Interest Act) on that amount from April 29 th , 2008.

If Somedia is unable to pay the full amount by January 31, 2012, they must, prior to that date, file and serve an application setting this matter down for a payment hearing. Finally, Callender is ordered to provide the source code to Somedia by no later than January 31, 2012. _______________________ N. N. Phillips Provincial Court Judge