Brundage et al v. Burgess Plumbing et al Date:, 2013 BCPC 417

Citation: Brundage et al v. Burgess Plumbing et al Date: 20130625 2013 BCPC 0417 File No: 12-1168 Registry: Williams Lake IN THE PROVINCIAL COURT OF BRITISH COLUMBIA BETWEEN: CLAYTON DREW BRUNDAGE AND CHERI VERA GULLASON CLAIMANTS AND: BURGESS PLUMBING, HEATING AND ELECTRICAL CO. LTD. AND D. RYAN EVANS DEFENDANTS RULING ON APPLICATION FOR DISMISSAL Rule 7(14)(

i) OF THE HONOURABLE JUDGE E. L. BAYLIFF Counsel for the Claimant: J. Gereluk Appearing for the Defendants: Ms. Johansen and Mr. Daum

Place of Hearing: 100 Mile House , B.C. Date of Hearing: May 29, 2013 Date of Judgment: June 25, 2013 [ 1 ] This is my Ruling on the verbal application of the Defendants (“Burgess”) to have the Notice of Claim in this matter dismissed as being without reasonable grounds or disclosing no triable issue, pursuant to Rule 7(14)(i). [ 2 ] The issue is whether there is any evidence that claimants (“Brundage”) had any sort of legal relationship with Burgess upon which to base a law suit. Was there a contractual relationship?

Or, was there some sort of relationship of reliance that might give rise to a claim in tort [1] ? [ 3 ] Although my initial view of this matter was that there was no legal relationship between these parties, I have changed my mind based on the submissions of Mr. Gereluk on behalf of Mr. Brundage. In my view, the Brundage’s action is saved by what the author G.H.L. Fridman, Q.C. calls an “anomalous doctrine” of agency law concerning “undisclosed principals”.

Because of this doctrine I find that there is at least some evidence that a contractual relationship existed between Brundage, as “undisclosed principals” and Burgess and therefore it would not be proper for me to dismiss the claim prior to trial. The verbal application is therefore dismissed and this matter will proceed to trial. [ 4 ] To explain the reasons for my decision in a little more detail, I find that when the realtor, Mr. Walker, phoned Burgess and asked them to conduct a “WETT” inspection of the furnace in question, he was doing so as the agent of Brundage.

Burgess agreed to do the work and a verbal contract was created between Walker (as agent for the undisclosed principal, Brundage), and Burgess. [ 5 ] Although Mr. Walker says in his Affidavit that he made his position as agent clear to Burgess, I find (for the purposes of this application, at least) that Burgess was not aware that Walker was acting as the agent of Brundage when the contract was made.

This is evidenced not only by what Burgess says but also by the fact that it wrote up the invoice for this job not in the name of Brundage but, rather, in the name of 100 Mile House Realty. [ 6 ] Given that Burgess was not aware of Brundage’s existence at the time they entered into the contract to do the work how can it be said that a contract between Brundage and Burgess was created? [ 7 ] G.H.L.

Fridman, in his book Canadian Agency Law , 2 nd Edition, at ¶ 6.41 says there are three requirements before there can be an enforceable contract between a third party (Burgess in this case) and an undisclosed principal (Brundage in this case): “…For the requisite privity [between an undisclosed principal and a third party] to exist these qualifications must be satisfied: (

a) the terms of the contract and the surrounding circumstances must permit the possibility of identifying the undisclosed principal [Brundage], by showing that the agent [Walker and 100 Mile House Realty] was not doing so as the real and only principal; (

b) the personality of the principal [Brundage] was a matter of indifference to the third party [Burgess]; and (

c) the agent [Walker and 100 Mile House Realty] acted with authority in making the contract in issue.” [ 8 ] In this case there is no issue with the first and the third requirement. It was possible for Burgess to have identified that Brundage was the one they were actually contracting with had they asked Walker questions about this. (I am not suggesting Burgess should have done so.) And, based on the affidavits of Brundage and Mr.

Walker, it is clear that Walker acted with Brundage’s authority in making the contract for the inspection with Burgess. [ 9 ] It is the second of the three requirements where there is a very real question and, in my view, this will likely be an issue at trial as well. I will restate the second requirement identified by Fridman, in the form of a question: was the personality of the principal [Brundage] a matter of indifference to the third party [Burgess]? [ 10 ] During submissions on this application Mr. Daum of Burgess said that this second requirement was not met in the case at bar.

He said they most definitely care who it is that they are contracting with because they want to be sure that they are going to get paid for their work. When the realtor, Mr. Walker called and asked Burgess to do this inspection, Burgess thought they were contracting with an established company with whom they had done business in the past – 100 Mile House Realty. Burgess, he suggests, would have been much more hesitant to do business directly with the undisclosed principals, Mr. Brundage and Ms. Gullason, who they had never met before.

I infer that Burgess might not have been willing to do the work just on a phoned-in request, and they might have required the $112 fee to be paid either in whole or in part before doing the work. Other than this concern about credit, Mr.

Daum said, Burgess would not have been concerned about who the “personality of the principal” was – in other words, they would not have been concerned about who they were entering into a contract with to do the inspection, as long as they could take reasonable precautions to be sure they were going to get paid. [ 11 ] Although Burgess’ concern about the credit-worthiness of their customer is understandable, I find that it was a fairly minor concern in this case. The amount of money involved - $112 – was fairly small and I think that their concern about the credit issue was, as a result, fairly small.

The fact that they were willing to hand the inspection report over to Brundage when he came in and paid the bill rather than insisting that only 100 Mile Realty was entitled to the report, demonstrates, I think, that in this case, at least, who they were doing the work for was not a matter of great concern to them. [ 12 ] I do think that the written submissions of Burgess hint at another reason why Burgess may have cared about the fact that the party they were contracting with was actually Brundage and not 100 Mile Realty. At paragraph 7 Burgess writes:

“When Mr. Walker contacted us and requested an Inspection, it is reasonable to assume he was doing so to advance the sale.

Mortgagecompanies require insurance, insurance companies require WETT inspections on Wood Burning Appliances, this is common knowledgeamongst all realtors.” [emphasis added] [13] This comment suggests that Burgess might take more time explaining the limitations of such an inspection – that a Level Iinspection only involves an examination of “readily accessible” components of the furnace – if they could see that the person they weredealing with was a home buyer, perhaps a first time home buyer, rather than an experienced realtor.

However, there is insufficientmaterial before me on this application to really assess this aspect of the matter. [14] At this pre-trial stage the court needs to be cautious about dismissing a claim if there is some evidence of a triable issue. In thiscase I find that there is at least some evidence of a contractual relationship between Brundage, as an undisclosed principal of the agentWalker and Burgess, a third party, upon which either party can sue the other.

Therefore I will not dismiss Brundage’s claim pursuant toRule 7(14). [15] The other major issue raised by Burgess is whether Brundage’s claim in contract or tort has any reasonable chance of successgiven that he only paid $112 for the inspection and that it never purported to be anything other than an inspection of the “readilyaccessible” components. The argument that is being advanced here, I believe, has some similarity to the argument that is advanced onbehalf of home inspectors who are sued when defects are later discovered. Brownjohn v. Ramsay, 2003 BCPC 2 , [2003]B.C.J. No. 43 (B.C. Prov.

Ct.) is an example of such a case. [16] This may be a valid argument on the part of Burgess and I am sure, now they have counsel, the Claimants’ will carefully assesstheir chances of success in this matter both in contract and in tort before proceeding further. I remind both parties of Rule 20(5) of theSmall Claim Rules which allows the court to order a party to pay the other party up to 10% of the amount claimed if the party proceededthrough trial with no reasonable basis for success. However, I agree with Mr.

Gereluk that the degree to which Brundage relied uponthe inspection report, and whether or not that reliance was reasonable in the circumstances, are issues that can only be determined uponthe hearing of evidence at trial. [17] In

summary, the verbal application to dismiss this Notice of Claim as disclosing no triable issue is dismissed and the matter isadjourned to the Judicial Case Manager to fix a new date for trial. I have decided that the trial should not be heard by me. ________________________ E. L. Bayliff Provincial Court Judge