Lam v. BM Chan International Cosmetology College Date:, 2011 BCPC 74

Citation: Lam v. BM Chan International Cosmetology College Date: 20110331 2011 BCPC 0074 File No: 1034032 Registry: Vancouver IN THE PROVINCIAL COURT OF BRITISH COLUMBIA BETWEEN: RAY LAM CLAIMANT AND: BM CHAN INTERNATIONAL COSMETOLOGY COLLEGE INC. DEFENDANT REASONS FOR JUDGMENT OF HIS WORSHIP DARRELL W. ROBERTS Appearing on their own behalf: Ray Lam Appearing for the Defendant: Monita Chan & Edmond Lee Place of Hearing: Vancouver , B.C.

Date of Hearing: March 23, 2011 Date of Judgment: March 31, 2011 [ 1 ] The Claimant seeks the sum of $3,548 contending it is the balance of monies owing under a contract made with the Defendant for an internet web design and instruction of the Defendant’s staff for online marketing of the Defendant’s products and services. The contract is in the form of an agreed and accepted letter dated September 20, 2010 entitled Consulting and Training Services for BM Chan (The “Letter Agreement”) and, as summarized below, has the following provisions that are relevant to the issues in dispute:

a) The term is from September 20 to November 30, 2010;

b) The services of the Claimant, Mr. Lam, are set out in a document attached to the Letter Agreement called “Terms of Reference for BM Chan”, which refers to the services as “BM Chan Training Overview” and describes them in three categories or “modules”: basic web design, web analytics/site optimization, and online advertising. In each of these 3 modules, instruction and training of the BM Chan personnel appears to be at the centre of the services the Claimant is to provide under the Letter Agreement. .

c) The fee payable to the Claimant is the sum of $5,000 plus HST and is payable: “...for the described services performed and completed to the Client’s satisfaction Payment to Ray Lam within Thirty (30) days following receipt of a monthly invoice from Ray Lam which references Ray Lam, details the services performed, the person performing each of the services, the time spent and the fee for each of the services. The HST portion of the $600 (sic) will be made to Ray Lam

Ninety (90) days upon completion of work.” (The italics are mine; the underlining is in the Letter Agreement and has no particular significance in these Reasons for Judgment) [ 2 ] Before leaving the Letter Agreement, in the attached terms of reference the contract fee of $5,000 is broken down into: Module 1 – Basic Web Design 24 hours $1,320.00 Module 2 – Web Analytic/Site Optimization 24 hours $1,320.00 Module 3 – Online Advertising 40 hours $2,475.00 Discount ($115.00) Subtotal Training Package $5,000.00 Tax (HST @ 12%) $600.00 Grand Total $5,600.00 [ 3 ] On September 22, 2010, only two days after the date of the Letter Agreement, Mr.

Lee, a representative for BM Chan, asked Mr. Lam to prepare an invoice based on training for 6 employees at a cost of $900 per person, and to set out details of training, learning outcome, benefits to employees, and to BM Chan income and staff etc. Mr. Lam prepared and sent such an invoice that day and instead of sending a “monthly invoice” with the required details of training of the Defendant’s staff as required by the terms of the Letter Agreement, he sent a total invoice for $5,400 plus HST for a grand total of $6,048. [Reference, the Claimant’s Trial Statement] [ 4 ] In oral testimony Mr.

Lam said that he was following the request in Mr. Lee’s email and assumed the agreement had been amended (6 x $900) to a new total before tax of $5,400, although neither Mr. Lee’s email nor the email of Mr. Lam sending the invoice mention anything about the agreement being amended. [ 5 ] Mr.

Lam testified that at the date of this email of September 22, 2010 he had completed much of the web design as he had earlier worked on it after looking at competitors websites, but he acknowledged there had been little if any training of BM Chan’s staff and, as noted above, the invoice does not reference any details of the services performed, the persons performing them, the time spent or the fee for each of the services, as required by the payment provision of the Letter Agreement. [ 6 ] Soon after the sending of this invoice matters between the parties fell into disagreement.

The Defendant was experiencing a turn-over of staff, meetings were delayed or cancelled as a result, and requests were received by Mr. Lam that he considered were beyond the scope of work. [Claimant’s Trial Statement] [ 7 ] Then on October 9, 2010 Mr. Lam submitted a draft template for the Defendant’s website, and during the period October 10-14, 2010 the Defendant indicated some minor dissatisfaction with the draft website but did not respond to Mr. Lam’s request for a meeting to discuss it. [ 8 ] On October 14, 2010 Mr.

Lam sent an email reminding the Defendant that the invoice sent September 22, 2010 should be paid 30 days after it was issued, thus indicating he wanted payment by October 22, 2010, notwithstanding the statement in this email that “currently 40% of the contract is complete”, and as already noted, the absence in the invoice of any details of the services provided. [Claimant’s Trial Statement

Schedule H] [ 9 ] At the hearing Mr. Lam acknowledged that after October 14, 2010 little if any work was done under the Letter Agreement. He said that he requested meetings, they were refused and no training took place, and in his trial statement it is mentioned that materials were being withheld by the Defendant. [ 10 ] On October 21, 2010 the Defendant advised Mr. Lam that he would be paid 50% of the amount due with the remainder to be paid upon completion and satisfaction. Mr.

Lam immediately disputed this proposed payment and contended that the contract was 85% complete, although there is no evidence of anything being done under the Letter Agreement after October 14 , 2010 when he said, as noted above, that it was only 40% complete. [Claimant’s Trial Statement] [ 11 ] On October 22, 2010 the Defendant followed through with their proposal and sent Mr. Lam a cheque for $2,500. Mr. Lam says he accepted it as payment on account, but thereafter communication between the parties became an acrimonious exchange of positions: Mr.

Lam demanded payment of the balance of the account which he asserted was amended to include an additional $600 [at trial he acknowledged this was his mistake in arithmetic and the increase was $400], and the Defendant asserted a lack of satisfaction with the website and that none of their staff received any training nor did Mr. Lam provide proof of the details of the work he was to perform. [Claimant’s and Defendant’s Trial Statements] [ 12 ] On October 26, 2010, just 4 days after receiving the cheque for $ 2,500, Mr.

Lam filed his Notice of Claim against the Defendant claiming the sum of $3,548 as the balance payable under the contract. This claim assumes the contract amount was amended to the sum of $5,400 [correcting his writing error of $5,600] plus HST of 12 %, or $648 for a total of $6,048 less the received payment of $2,500. This is the calculation for the claimed balance of $3,548. [ 13 ] The Defendant responded in a Reply filed on October 29, 2010 that denies the claim and advances a Counterclaim for the full amount of the fee and HST and the cost of a company search fee for $5,622.

This appears to be based on the total fee in the Letter Agreement of $5,000. Later, upon application to the Court, the Counterclaim was amended to the sum of $2,760 representing the monies paid of $2,500 plus HST and a filing cost. Analysis and Conclusions The Claim of Mr. Lam [ 14 ] Beginning with Mr. Lam’s position that the Letter Agreement was amended from $5,000 to $5,400 by the email from Mr. Edmond Lee of September 22, 2010, as a matter of the requirements of contract law there is no evidence that such amendment was either

intended or accepted. Further, the contention that the contract was amended is not mentioned by either party, and later when the Defendant sent a cheque for $2,500 it was referred to as “50% of the amount due” [Claimant’s Trial Statement para. 23]. This statement does not indicate any awareness let alone acceptance by the Defendant of the alleged amendment to the total amount payable under agreement. [ 15 ] Turning to the larger question of whether Mr.

Lam is entitled to the balance payable under the Letter Agreement, this requires proof on a balance of probabilities that he has fulfilled all of the contract requirements for such payment. Such proof is completely lacking. The invoice he sent on September 22, 2010 for the total contract payment, increased by $400, was premature to say the least. As such it did not and could not detail the services performed or the persons performing them or the time spent and the fee for each of the services, all as required by the Letter Agreement.

While the Defendant might be taken to have waived such invoicing requirements when paying one-half of the contract fee on October 22, 2010, this does not absent the requirement of their proof for payment of the balance, and no such proof was made before me. [ 16 ] On the evidence it appears that the sum total of the Claimant’s work under the contract was the submission on October 9, 2010 of a draft template for the Defendant’s website.

There appears to have been no training of the Defendant’s staff and it bears repeating that the major aspect of the services to be provided by the Claimant under the Letter Agreement was training of the Defendant’s staff in online marketing of the Defendant’s products and services. The whole of the terms of reference appended to the Letter Agreement, as noted above, read this way. At the hearing Mr. Lam said repeatedly that the intent of the agreement was the work he did on his own in analyzing the websites of competitors and in the design of the website for the Defendant.

But, the terms of the written Letter Agreement govern and they do not support him. Under the agreement it is all about the training of the Defendant’s personnel, little if any of which the Claimant had engaged in when he launched this suit on October 26, 2010. [ 17 ] There is the further fact that, while at the hearing Mr. Lam suggested ever larger estimates of the percentage of completion of his services, in his email of October 14 , 2010 following which no work appears to have been done under the agreement, he said “currently 40% of the contract is complete.” [ 18 ] While it might have been possible for Mr.

Lam to argue it is the Defendant’s fault that he was unable to complete the training services under the contract, i.e., because the Defendant cancelled meetings and failed to reschedule them, Mr. Lam’s insistence on immediate payment of the balance of the contract fee before the work was done and then abruptly commencing this lawsuit on October 26, 2010 put this argument out of reach. Indeed, according to the email of the Defendant of October 23, 2010 the first staff training session was to have been held on October 25, 2010, but was not held because Mr.

Lam insisted on full payment first. [Claimant’s Trial Statement Schedules P and Q] [ 19 ] Therefore, on the whole of the evidence I find that Mr. Lam has failed to establish any right to the claim that he has advanced, and, subject to the contract obligation of the Defendant to pay to the Claimant HST on the payment already made (see the Residual Judgment infra ), I dismiss the Claimant’s claim.

The Defendant’s Counterclaim [ 20 ] The Defendant seeks recovery of the payment of $2,500 made on October 22, 2010 on the basis that the website template provided was unsatisfactory and that the work under the agreement was not completed. [ 21 ] There are however a number of problems with this position. The Defendant received the template for the website on October 9, 2010 and did not indicate any serious problems with it and initially at least ignored requests for meetings to proceed further. Then on October 22, 2010, knowing the terms of the Letter Agreement, the Defendant paid the sum of $2,500 to Mr.

Lam without insisting on receiving any of the details of the services Mr. Lam had provided, as the agreement required. [ 22 ] It is my view on these facts that the Defendant waived these contract requirements and cannot now seek to rely on them. In short, the Defendant must be taken by its conduct to have accepted that the Claimant was entitled to the payment of $2,500 at the time this payment was made. The fact of this payment in these circumstances also overbears the Defendant’s contention that the work done was unsatisfactory as the extent and nature of the services Mr.

Lam had provided were fully known to the defendant when the payment was made [ 23 ] There is the further difficulty for the Defendant in that on the whole of the evidence provided in the two trial statements, much of the delay in the provision of the services under the Letter Agreement lies at the feet of the Defendant, in changing the personnel that Mr.

Lam was to work with, and in cancelling and not holding the required meetings for the training of the Defendant’s staff. [ 24 ] Therefore, on the whole of the evidence it is my conclusion the Defendant has not established a right to the damages in the counterclaim and the counterclaim is dismissed.

Residual Judgment for the Claimant. [ 25 ] While the payment of a tax such as HST on monies received for services rendered would seem to be a matter that can be left to the normal legal requirements for paying taxes and need not require an order of the court, in this case the Letter Agreement specifically provides that: “The HST portion of $600 (12% x $5,000) will be made to Ray Lam within Ninety (90) days upon completion of the work.” [ 26 ] In view of this provision, the Defendant is required by the Letter Agreement to pay to Mr.

Lam, and he, of course, to the Receiver General of Canada, the 12% HST on the payment made under that agreement of $2,500, being the sum of $300, and I so order. [ 27 ] Since the only order herein is the payment of monies that are a tax payable to the Federal Government, I do not order any costs, the result being each side shall bear their own costs.

_______________________ Darrell W. Roberts Q.C. Adjudicator