Warke et al v. Jouhari-Sardasht Date:, 2013 BCPC 296

Citation: Warke et al v. Jouhari-Sardasht Date: 20131029 2013 BCPC 0296 File No: 11-22505 Registry: North Vancouver IN THE PROVINCIAL COURT OF BRITISH COLUMBIA BETWEEN: DALE ROBIN WARKE and ROBIN LOUISE SMITH CLAIMANTS AND: GHOBAD JOUHARI-SARDASHT and CLEAR CUTT CONSTRUCTION LTD. DEFENDANTS REASONS FOR JUDGMENT OF THE HONOURABLE JUDGE CHALLENGER Appearing in person: D.R. Warke Appearing in person: R.L. Smith Appearing for Clear Cutt Construction Ltd.: Ghobad Jouhari-Sardasht, an officer of the company Place of Hearing: North Vancouver , B.C. Dates of Hearing: February 12, 15, March 4, April 26, May 3, June 28, 2013

Date of Judgment: October 29, 2013 [ 1 ] On February 15 th 2013 the claimants were successful in obtaining judgement against the defendant company, Clear Cutt Construction Ltd., for damages arising from a new home construction contract. The matter was adjourned for a payment hearing which was held on June 28 th 2013. [ 2 ] As a result of the examination of the records the defendant was ordered to produce in advance of the payment hearing, the claimants applied at the payment hearing to have judgement also awarded against the sole shareholder and director of the defendant corporation, Mr.

Jouhari-Sardasht on the basis that he lost the protection of the limited liability of the company as it was operated as a sham or façade and was nothing more than his alter ego as the sole director and shareholder. As it is sometimes referred to, they are asking the Court to pierce or lift the corporate veil. [ 3 ] The preponderance of evidence reveals that it was indeed Mr. Jouhari-Sardasht who was carrying on the business and not the company itself and for this reason I am awarding judgement against him personally.

An alternative basis for his personal liability is that the company was acting as his agent and not in its own interests. Furthermore, he engaged in conduct using his company as a tool to commit fraud and other dishonest acts. (see: Canadian Corporate Business Law , McGuiness, Kevin P., LexisNexis, 2007,

Chapter 2 .26 to 2.62) [ 4 ] The defendant argues that the Claimants are not entitled to this order as they insisted on paying him personally to avoid paying taxes. I do not accept his evidence in this regard. In any event, this argument does not make sense on its face as he was being paid a flat rate for management fees and he would have borne the responsibility to pay taxes on those monies.

The rest of the payments in question were to sub-trades and suppliers. [ 5 ] A payment hearing commenced immediately upon judgement at which time an order was made for the defendant to produce both his personal banking and corporate banking and business records. No corporate invoices whatsoever were produced for the time during which he was working on the claimant’s home. No deposits were made to the corporate account during this time and no income was reported on the company’s tax return for the relevant time.

Any cheques produced by the defendant to demonstrate payments to sub-trades or for materials were written on a personal account. [ 6 ] In the early days of the arrangements with the defendant, the claimants provided him with funds to cover the new home warranty costs. As required by that program a GIC in the amount of $10,000.00 was obtained in the company’s name.

Once the claimants got to the point where they were no longer prepared to continue to make any further scheduled payments due to issues which were arising with the quality of the construction, the defendant cancelled his enrollment in the program and deposited both the GIC funds and the refund directly into his personal account. [ 7 ] Mr. Jouhari-Sardasht also claimed to have in fact made a payment to the plumbers in 2010 but two cheques he issued to them on his personal account was returned NSF. The claimants gave him money to pay sub-trades which he pocketed.

He also purchased a $6000.00 heat pump, billed the claimants for that and then returned the item and kept the refund. [ 8 ] It is also apparent from an examination of the company records that Mr. Jouhari-Sardasht produced false invoices in respect to some of the funds he misappropriated. This conclusion is based on the fact that there are invoices which have the same number as invoices billed to other clients but with amounts that represent to the penny items such as a new home warranty refund. Penalty under Rule 20(5) [ 9 ] The defendant filed a counterclaim alleging that he was owed over $50,000.00.

During the course of his evidence it became clear that there was no reasonable foundation for his counterclaim. Indeed, to the contrary, I find that his counterclaim was concocted. [ 10 ] As a result, I am awarding the claimants 10% of the value of their claim in the specific amount of $2500.00. Expenses for Professional Witnesses [ 11 ] The claimants are also entitled to their out of pocket expenses for the architect and builder who testified as to the deficiencies in the defendants work and the cost to remedy them. The total for these expenses is $854.00. [ 12 ] In

summary the claimants are awarded the following: Judgment - $25,000.00 (with pre judgment interest to run from April 30 th 2011) Penalty - $2500.00 Costs - $854.00 Filing Fee -$156.00 Service - $100.00

[ 13 ] I delegate the calculation of the interest to the Registry.