Pemberton Valley Lodge v. Adara Date:, 2015 BCPC 140

Citation: Pemberton Valley Lodge v. Adara Date: 20150417 2015 BCPC 0140 File No: 1223159 Registry: North Vancouver IN THE PROVINCIAL COURT OF BRITISH COLUMBIA BETWEEN: THE OWNERS, STRATA PLAN KAS2662 and PEMBERTON VALLEY LODGE OWNERS' MANAGEMENT CORPORATION CLAIMANTS AND: THE OWNERS, STRATA PLAN VR1858 and ADARA HOTEL OWNERS' MANAGEMENT CORPORATION DEFENDANTS ORAL REASONS FOR JUDGMENT OF THE HONOURABLE JUDGE DYER Appearing for the Claimants: D. Penner Appearing for the Defendants: D. Hilton, Company Representative Place of Hearing: North Vancouver Dates of Hearing: May 28, 29; August 19; December 12, 15, 2014; April 17, 2015

Date of Judgment: April 17, 2015 [ 1 ] THE COURT: In this action, the claimants seek to recover from the defendants certain monies relating to two contracts said to exist, referred to as the laundry services agreement and shared services agreement, pursuant to which the claimants assert that they agreed to provide certain laundry and management services to the defendants, and for which Pemberton Valley Lodge had invoiced the defendant Adara, but had not been paid. [ 2 ] In addition, the claimants initially asserted in their notice of claim the defendants owed them and they are entitled to receive from them two further amounts: (1) an amount of $833.47 for services its employees, Ms.

Martin and Ms. Ronayne, performed for Adara, so-called shared services; and (2) amounts put on the claimant credit card by the claimant, but for the benefit of the defendants, and for which the defendants agreed to reimburse the claimant, but have not done so. The amount claimed was $403.91 excluding interest and costs. [ 3 ] The claimants are not now pursuing the first $833.47 claim. [ 4 ] The claimants are described in the notice of claim as The Owners, Strata Plan KAS2662 and Pemberton Valley Lodge Owners' Management Corporation.

The defendants are therein described as The Owners, Strata Plan VR1858 and Adara Hotel Owners' Management Corporation. [ 5 ] I understand that each room or unit in the two hotels, namely the Pemberton Valley Lodge located in Pemberton and the Adara located in Whistler, are strata units, individually owned by a person or other legal entity. All the owners of each hotel are intended to be encompassed in the description, for example, The Owners, Strata Plan KAS2662 with respect to Pemberton Valley Lodge, hereinafter referred to as "PVL".

The second claimant or defendant, as the case may be, for example, Pemberton Valley Lodge Owners' Management Corp., is said to be the governing body of all individual units. Each hotel has a strata council, and I understand that the members of the PVL strata council are the same persons as the directors of the Pemberton Valley Lodge Owners' Management Corporation.

The Adara Hotel, I believe, is similarly constituted and operated. [ 6 ] Thus, the two management companies named as a claimant and defendant, as the case may be, seem to run these two hotels, which are both said to be vacation destination properties. [ 7 ] For ease of reference in these reasons, I will refer to the claimants at times as PVL and the Adara, or simply Adara. I should also state that, according to the evidence that I have heard, there is no shared ownership in the two hotels. [ 8 ] PVL has 84 rooms and Adara has 42 rooms.

From approximately 2008 on, PVL had a commercial laundry facility on site in Pemberton in its hotel premises; Adara did not. Thus, PVL's laundry facility did all laundry generated by guests or workers at PVL, and in addition, at the material time in 2008 and 2009, took in laundry from others and generally charged a piecework fee for doing the same. [ 9 ] The evidence is that hotels like PVL and Adara generate various amounts of dirty laundry on any given business day.

This dirty laundry comprises towels, face clothes, bathrobes, sheets, bedspreads, pillow cases, rags, and other items, for example, used in the kitchen of each facility. [ 10 ] I understand that each hotel had a policy at all material times whereby: (1) it encouraged guests to reuse towels and like items to save the environment; and (2) that bed linen for guests staying longer than three nights was changed every third night.

Where guest stays were shorter, the rooms would have been completely made up after each guest left, with all new linen, towels, et cetera. [ 11 ] The summer was a busy time typically for both hotels, and the less busy time would have been in the fall and winter months. [ 12 ] At the trial in this matter, taking approximately five days, some eight witnesses were called by the parties and various documents were submitted by each side. I do not intend in the following

summary to deal with every piece of evidence offered by each witness. Rather, I intend to sketch out, in hopefully chronological order, certain of the more relevant facts in this case. The Evidence [ 13 ] Much of the evidence in this case is not in dispute. PVL opened to the public on August 15, 2004. David MacKenzie first started with PVL on April 4, 2004, as general manager. PVL was initially managed by a hotel management company called Atlantic Pacific or "Atlific".

MacKenzie said it hired him to manage PVL, but that he was paid by PVL. [ 14 ] In August 2004, PVL had a laundry services agreement with Whistler Village Inn and Suites located a 20-minute drive away and said to be a "sister hotel", to have PVL bed linens, which were all the same size, done by Whistler, based on a cost per occupied room night of $1.52. PVL was responsible for transporting the laundry to and from Whistler Village Inn. PVL laundered its own towels and other items at the time in a machine on PVL property. Whistler Village Inn was then being managed by Atlific, as was PVL.

In that sense, they were so-called "sister hotels". [ 15 ] There was no commercial laundry then in Whistler, the closest such facility being in Squamish. [ 16 ] MacKenzie executed a written memorandum with respect to this arrangement for PVL on August 15, 2004. He testified he was then aware that this sort of arrangement was also in use for other hotels managed by Atlific. The two hotels, PVL and Whistler Village Inn, were able to share occupied room figures due to their sister relationship, including having a common management company, namely

Atlific. [ 17 ] MacKenzie was aware in August 2004 that laundry services could also be provided on other bases: for example, payment by piece laundered or by weight of dirty laundry delivered. The evidence is that a hotel's occupied room nights is considered to be confidential information and would not be available between two hotels dealing at arm's length.

Sister hotels do not, however, deal with one another at arm's length. [ 18 ] In 2006, Laura Arnold commenced working at PVL and has, subject to her employment later with a company called Bellstar in or about the years 2009 and 2010, remained with PVL to date. [ 19 ] In 2006, the owners of PVL were on the lookout for a new hotel management company.

They elected to go with Bellstar Hotels and Resorts Ltd ("Bellstar"). [ 20 ] Cathy Robinson was then Bellstar's operations manager, residing in Calgary where Bellstar's head office has been located at all material times, and she assisted in PVL's management early on and had a positive cooperative relationship with MacKenzie at all material times. [ 21 ] In early 2008, PVL decided to build a commercial laundry in their hotel.

They solicited and obtained several smaller outside laundry customers, for example, small lodges, bed and breakfast facilities, and restaurants, and had different fee arrangements with them for provision of laundry services, including by piecework, but not, however, on an occupied room night basis.

None of their customers at the time were so-called sister hotels. [ 22 ] Because at this time PVL was not in a sister relationship with any of these outside customers, it of course had no ability, for example through a common management company, to readily access this type of confidential information (occupied room nights) from a customer.

PVL has, since 2008 to date, continued to offer laundry services to outside, non-sister hotel customers, for the most part on a piecework charge basis. [ 23 ] Prior to August 23, 2009, Adara's laundry was being done by Alpha in Squamish and Adara was charged by the piece or item laundered. Alpha was then a commercial laundry, not a hotel. In four months, from May to August 2010, Alpha apparently charged $17,121.11 to do Adara's laundry or what was said to be an annualized amount of, say, $51,363.33.

Adara did all drop-offs and pickups, and the service was provided seven days a week. [ 24 ] In 2009, Adara was managed by Trilogy Village Green Properties. Adara was then somehow unhappy with their management services. Mr. Hilton of Adara knew Paul Lermitte, then the chair of the PVL board of directors. Commencing in or about March 2009, PVL had switched its management company from Atlific to Bellstar. Lermitte was pleased with Bellstar's work and diligence, and so advised Hilton.

Bellstar was given, in essence, a positive reference by Lermitte. [ 25 ] In the result, in the summer of 2009, Adara commenced discussions with Bellstar concerning it taking over the management of Adara from Trilogy. These negotiations were ongoing through to November or December 2009, when Bellstar commenced managing Adara. [ 26 ] MacKenzie recalled in the summer of 2009 meeting with Mr. Tingley and Mr. Zwickel of Bellstar and discussing budget issues, as well as PVL potentially doing laundry for Adara, I assume in the event that Bellstar commenced managing Adara.

He recalled they suggested the service might be charged on an occupied room night basis, as the two hotels could easily share occupancy information, and this methodology would save time and not require the need to add up pieces of laundry at PVL or, I suppose, as well, at Adara. MacKenzie recalled the discussions focused on an equitable solution being found for both hotels if Bellstar ended up managing both. His evidence as to what Bellstar representatives said is technically hearsay as neither man was called as a witness at trial. It is nonetheless part of the narrative in this case.

Ralf Strub was not then proven according to trial evidence an executive with Bellstar. Jon Zwickel and Kelly Tingley were then Bellstar vice presidents. A meeting was arranged on September 23, 2009, whereat representatives of both the PVL and Adara boards of directors could meet Bellstar representatives to discuss Bellstar managing Adara and, if so, synergies, what occupational efficiencies might be achieved between Adara and PVL, who Mr. Hilton says were not competitors and served different markets.

Hilton attended but MacKenzie did not. [ 27 ] Once Bellstar commenced managing PVL, MacKenzie, then PVL's general manager, became, as I understand the evidence, a Bellstar employee. I have no clear date for when these events occurred. [ 28 ] On September 23, 2009, this discussion and the meeting at the River Rock Casino Hotel in Richmond generally involved how the two hotels might work together if under Bellstar's joint management, who would attempt to serve the interests of both hotels.

Adara then was having Alpha do its laundry and had concerns it was paying too much. [ 29 ] Hilton recalled this meeting five years prior to the trial and, having no notes of the discussion made available at trial, recalled laundry services being provided by PVL to Adara being discussed, but no discussion on Bellstar, (1) obtaining three quotes for Adara for same, and (2) the need for a senior executive at Bellstar to approve any laundry service contract between the two hotels, assumedly if Bellstar commenced to manage Adara, which it was not doing on September 23, 2009. [ 30 ] Hilton also recalled there were discussions on the board of directors of each hotel having to approve (

a) a laundry service contract, and (

b) any sharing of employees between the two hotels, and if this occurred, that there would be a payment by the user hotel to the supplier hotel. [ 31 ] Hilton recalled Tingley assuring all present that MacKenzie would have the best interests of both hotels in mind; Hilton assumed if he ended up managing both hotels, which had not yet occurred. This, too, is hearsay evidence.

[ 32 ] Hilton testified he was, on September 23, 2009, then alive to the potential of a conflict of interest in the provision of laundry services by PVL to Adara if a common hotel management company existed, but again felt at the time the two did not compete and served different markets. [ 33 ] Mr. Hilton hoped at the conclusion of this meeting that if PVL supplied laundry services to Adara, that they would cost less than a commercial rate and that PVL would use its excess laundry capacity in providing them. [ 34 ] On September 27, 2009, Zwickel forwarded what Mr.

Hilton has called a letter of intent to the PVL and Adara board of directors. This letter in substantial part states as follows: It is directed to Carl Van Noort at PVL and Dennis Hilton at Adara. The subject is "Hotel operational synergies and cost savings", and the body of the letter is as follows, and I quote: Gentlemen, I understand you met on September 23rd with Kelly Tingley, Bellstar's vice-president of operations, to discuss the viability of your two hotels working together under Bellstar's management to achieve operational synergies and cost savings. I am pleased to document the agreement you reached. 1.

The duties of David MacKenzie, the general manager of Pemberton Valley Lodge, will be expanded to include becoming general manager of the Adara. Colin Hedderson, the Adara guest service manager, will report to David, and David will continue to report directly to Kelly Tingley. 2. David will continue to be employed by Bellstar. His annual compensation will be reimbursed to Bellstar and allocated as follows: (

a) base salary will be increased by $10,000 to 86,000 and will be allocated 40,000 to Adara and 46,000 to Pemberton Valley Lodge; (

b) benefits will be allocated proportionately; (

c) car allowance in an amount to be determined will be allocated 100 percent to Adara; (d the current Pemberton Valley Lodge bonus of up to $28,120 remains unchanged and will continue to be based on the original $76,000 base salary; (

e) additional proposed bonus of 12,500 will be paid by Adara; (f bonus formula for both hotels to be established by Bellstar. 3. If David's job-sharing arrangement is terminated for any reason: (

a) David's duties, responsibilities, and compensation will be rolled back to the levels in place prior to this arrangement; (

b) the hotels agree not to recruit each other's staff. 4. The hotels agree to share other staff on an as-needed basis. Salaries and wages will be allocated accordingly on a per diem basis. 5. Subject to each hotel's approved annual budget, the two hotels agree to:

(

a) adhere to Bellstar's policies and procedures; (

b) fully support Bellstar's marketing programs and operating standards; (

c) share sales, marketing, and other expenses with other Bellstar-managed hotels on fair, equitable, agreed-to formulas. 6. Pemberton Valley Lodge will provide laundry service, including pickup and delivery to the Adara. The cost of providing this service will be determined annually by the Bellstar operations team, and included in each hotel's operating budget. The cost to the Adara will be determined based on Pemberton Valley Lodge's cost plus a reasonable profit, while keeping the charges less than those of commercial laundry companies servicing Whistler.

Bellstar will establish the arrangements outlined in this letter with David and ensure his full concurrence. It ends: Please confirm your agreement with the terms outlined in this letter. Sincerely, Bellstar Hotels and Resorts Ltd. [ 35 ] Then the name Jon Zwickel appears, executive vice-president. [ 36 ] Lastly, the bottom of the letter contains a place for a representative of the owners of Pemberton Valley Lodge to sign, and a place is shown for Mr. Van Noort's signature. Likewise, the Adara was provided with a place to sign and a place for Mr.

Hilton to affix his signature as president of, I assume, the strata council. [ 37 ] Hilton testified that this letter, in his view, accurately set out what all parties at the September 23rd River Rock meeting discussed and agreed to.

He never signed it at page 2 and said he was never asked to do so, and said on September 27th, Adara was still negotiating with Bellstar as to whether or not it would agree to Bellstar managing it. [ 38 ] MacKenzie had not seen this letter prior to the onset of this litigation, said he was not privy to what he said was an agreement in it, but that to his knowledge this agreement was reached, but that some of the details in it were not in his employment agreement with Bellstar. [ 39 ] MacKenzie said that between September 30 and October 21, 2009, Bellstar offered him a job to manage both PVL and Adara.

He toured the Adara Hotel. Hilton knew that this event had occurred. As the proposed pay was less than MacKenzie anticipated, MacKenzie initially refused the offer and did not take on this additional role for Bellstar until June 30, 2010. [ 40 ] I should also state that no copy of this letter signed by Mr. Zwickel is placed in evidence, and it was far from clear to me that there is such a signed copy in existence, nor was a copy of this letter signed by Mr.

Van Noort placed in evidence at the trial. [ 41 ] Hilton testified that after the September 23rd meeting, and commencing in or about October, the two hotels' boards of directors started to work together somewhat; for example, in resolving problems both hotels had with Bellstar's marketing services charges. I note this cooperation could not have occurred this early, as Bellstar had no agreement with Adara until December 2009, and therefore could not have been charging Adara anything, including for marketing services. I believe Mr.

Hilton is mistaken on the date he gave in evidence. [ 42 ] On October 2, 2009, Alpha Laundry in Squamish provided a quote to Laura Arnold for its charges to do laundry "in a resort setting" on a piecework basis. Ms. Arnold was then a Bellstar employee working at PVL. Ms. Patryluk, then I believe on PVL's strata council and perhaps a director as well, forwarded a copy of this quote to Mr. Higgenbotham and Mr. Hilton at Adara in December 2013.

She understood this quote was got by Bellstar as part of its researching costs for laundry services. [ 43 ] Hilton understood that Cathy Robinson of Bellstar was, in October 2009, before it commenced managing Adara, out looking for laundry services quotes. He understood that only PVL later provided one, but seemingly he was mistaken in light of the Alpha, October 2, 2009, quote.

There is no evidence in this case any other commercial laundry facility was then operating near Adara and able to provide a quote to do Adara's laundry. [ 44 ] MacKenzie recalled Cathy Robinson, Bellstar's operations manager, had by this time in the fall of 2009 come to Whistler from Calgary and was on site at Adara in a temporary management role, working with a Mr. Henderson, who shortly left to assume a management job with a different hotel. If I understood Mr. MacKenzie to give me the name "Henderson", it may in fact be the Hedderson referred to in paragraph 1 of the September 27, 2009, Bellstar letter.

[ 45 ] At this time, MacKenzie felt Adara was transitioning to Bellstar management. He recalled Robinson was at Adara during the 2010 Winter Olympics and responsible for managing it then. MacKenzie did not give me a precise date upon which he understood Arnold commenced work at the Adara in Whistler. He also recalled Robinson then pressing him as to whether or not PVL could or would do Adara laundry. [ 46 ] On either November 1 or December 1, 2009, and I have been given both dates, Bellstar commenced managing Adara. Robinson was initially interim general manager.

She then hired a Mark Munn, also a Bellstar employee, to manage it and he remained until MacKenzie took over the general manager's job in June 2010. [ 47 ] I have not been provided with a copy of either Bellstar's management agreement with PVL, nor its management agreement with Adara, nor its agreement with anyone, including MacKenzie.

I understand Adara paid PVL $1,500 to obtain a copy of this PVL-Bellstar management agreement during the fall of 2009 during negotiations that it had ongoing with Bellstar. [ 48 ] In the result, I do not know what it says, if anything, about what Bellstar was to do for either property, who was to do it and how, and, for example, who could enter into contracts for Adara and whether they needed to be first approved of by Adara's board of directors or indeed anyone.

Nor do I know the extent to which any of the principles or intentions in the September 27th Bellstar letter of intent set out above found their way therein, if at all. Insofar as one might conclude Bellstar was an agent for Adara, the actual scope of its authority is thus unknown. [ 49 ] I understood that Laura Arnold worked in the fall of 2009 as a director of sales at PVL with Mr. MacKenzie and then commencing after Bellstar commenced managing Adara on November 1 or December 1, 2009, in the same capacity at Adara. MacKenzie testified that he felt he had a good relationship with Ms.

Robinson, whom he referred to as a colleague. He tried to help her when she came to Whistler. PVL invited the Adara staff to its Christmas party in December 2009. [ 50 ] Robinson asked him in January 2010 to provide her with a quote on PVL providing laundry services to Adara. He did so by email on January 8, 2010, attaching PVL's laundry pricing for 2010 based on three pickups and drop-offs a week, and unit or piece pricing.

Nevertheless, MacKenzie testified that PVL never charged for laundry services on a piecework basis for a sister hotel. [ 51 ] I would understand that by January 8, 2010, Robinson had likely seen Alpha's quote sent to Ms. Arnold on October 2, 2009, also a unit or piece calculation.

There is no evidence in this case that laundry services are ever provided to an arm's length customer on an occupied room night basis; for example, a hotel supplying such confidential information to a commercial laundry like Alpha in Squamish. [ 52 ] MacKenzie testified in January 2010, PVL was then benchmarking its laundry prices with what it understood Squamish commercial laundries were charging. He described Squamish as an early competitor. When one compares the October 2, 2009, Alpha quote with the January 2010 PVL quote, the prices per unit are either the same or only slightly higher.

For example, Alpha's polyester quilt charge was between $7.39 and $8.45, and PVL's was $7.80. [ 53 ] Robinson told MacKenzie that Adara would be shopping the market for laundry service prices, so he gave her a piecework quote to facilitate the process for her, which was what she wanted. She did not request a per occupied room night quote. PVL was, in 2010, doing outside laundry for others, as I have said, on this piecework basis. There is no evidence Ms.

Robinson ever received a third quote for laundry services, or that there indeed was anyone within a reasonable distance of Adara in Whistler or elsewhere who did laundry on a commercial basis, other than PVL and Alpha.

Thus, there is no evidence three quotes were sought or, if sought, could have been easily got. [ 54 ] MacKenzie said in January 2010, Bellstar had access to confidential information at all its managed properties as to the number of occupied room nights in each per month. [ 55 ] Collingwood commenced work as a front desk clerk at Adara in early 2010 and worked closely with Laura Arnold, who was also then at the Adara, initially for part of each week. [ 56 ] Ralf Strub was called to testify by the defendants. He worked for Bellstar from, he thought, March 2010 to May 2014, when his employment was terminated.

He was thus not at the September 23, 2009, meeting in Richmond. He lived in Brackendale, B.C., at all material times. He thought and was certain, however erroneously I find, that Hilton did Adara's laundry in 2009. No other witness so testified. Sarah Collingwood said Alpha did it in 2009. [ 57 ] Strub believed there were then problems with Hilton's cleanliness. Later in his cross-examination, he said he did not know who was doing Adara's laundry in 2009 and early 2010. He said he instructed MacKenzie to gather quotes for laundry services, I assume he meant for Adara.

He said, "We would have asked MacKenzie for three quotes," which was Bellstar's standard operating procedure, as Bellstar needed to share this information with the PVL and Adara boards of directors. [ 58 ] On cross-examination, he said he would have asked MacKenzie to get more than one quote; Bellstar's standard was three. He did not recall seeing PVL's January 8, 2010, quote from MacKenzie who was then only the general manager of PVL.

MacKenzie did not become general manager of Adara, as I have said, until June 30, 2010. [ 59 ] Strub was not clear when he asked MacKenzie to get three quotes for Adara's laundry services. It is unlikely this was before June 30th. Why would MacKenzie, as PVL's general manager, solicit quotes from others, other than PVL, for Adara while only PVL's general manager? I do not believe MacKenzie was cross-examined on this Strub direction to get three quotes if it was given and three quotes were not got, assuming three were even available. In failing to get them, Bellstar seemingly breached its own policy.

It did manage Adara in December 2010 and thereafter. [ 60 ] It is unclear what, if anything, might be on point on this quote issue in the Bellstar Adara management contract, as I have said, not in evidence. It is clearly another area where Strub appeared confused in his evidence.

[ 61 ] The Winter Olympics in 2010 were a particularly busy time for both hotels. MacKenzie testified Bellstar renewed its October 2009 offer on May 10, 2010, again asking him to manage both hotels, which were then both contracted to it, with Bellstar somehow agreeing to provide management services to each hotel. [ 62 ] Strub agreed he had asked MacKenzie to manage the Adara, and believed, I find again erroneously, that MacKenzie commenced to do so shortly after the Winter Olympics ended. MacKenzie testified he became general manager of both hotels July 1, 2010, overseeing both their operations thereafter.

He said he was "area director for Bellstar Hotels", responsible for both properties, and reported to Bellstar's director of operations. [ 63 ] Strub said he was MacKenzie's immediate supervisor. MacKenzie's wages were split 60 percent to PVL and 40 percent to Adara. His employment contract, also not tendered in evidence, was with Bellstar while it managed both hotels to the spring of 2011. He said he was not expected to keep Bellstar aware of all new contracts in his new position. [ 64 ] Laura Arnold, also a Bellstar employee, had the same salary arrangement with Bellstar, but reported to MacKenzie.

Arnold and MacKenzie's salaries, while working with both PVL and Adara, were fully paid by PVL in the first instance and Adara, by agreement with PVL, was to reimburse it as to 40 percent of the total each month. This arrangement, I find, was in place until both employees left Adara in 2012, as set out below. [ 65 ] MacKenzie said he was pushed by Robinson as early as January 2010, when she managed Adara, to have PVL do a quote for Adara's laundry and indeed to do it. This would have been before July 1, 2010. MacKenzie described her as an interim general manager at this time.

All witnesses agree there is no written laundry services contract between PVL and Adara. [ 66 ] Nonetheless, MacKenzie testified that there was, in his opinion, an oral agreement whereby:

(1) PVL would do Adara's soiled laundry on; (2) a cost per occupied room night basis. [ 67 ] The amount originally discussed between himself and Ms. Robinson was $7 an occupied room night, an amount Robinson suggested, which was later reduced to $6.50 a night when Adara's employee Mr. Gurney, agreed to drop off dirty laundry at PVL and pick up clean laundry five days a week. Gurney lived in or about Pemberton and had to pass by PVL when driving to and from his work at Adara. Adara agreed to pay Gurney $200 a month, according to MacKenzie, as a car allowance, and did so until Mr.

Hilton stopped this arrangement. [ 68 ] Arnold said the $7 amount was one "we" felt would be cost effective and would allow savings on this cost for Adara. She did not state who agreed to this and when; that is to say, who the "we" were. MacKenzie testified the $7 figure derived from a review of Adara's budget and some cost analysis. His evidence on point, I found somewhat vague. He also testified that the $7 original figure was his and Ms.

Robinson's, best estimate of, in essence, a fair price, taking into account all factors; for example, the Adara bed linen change policy every three nights, that the average guest stay was three to five nights, the number of towels guests used, as well as all other laundered items, including bathrobes.

He felt this amount was a pretty reasonable charge. [ 69 ] MacKenzie testified that an occupied room night price was an easier figure to use, in essence, with a sister hotel, and where these confidential numbers were readily available, than charging on a piece-count basis, which required staff, I assume in both hotels, to count dirty laundry out and, in this case, going from Adara and at least outgoing clean laundry from PVL to Adara. [ 70 ] However, Strub also testified that the two most common ways for commercial laundry charges to be calculated were, (1) by dry weight, or (2) piece count, the latter being the more common of the two.

He said he would only approve of (2) for any property he managed. He does not now manage any property. He said there was a third methodology, by load in a given-sized container, but did not suggest this was a popular methodology. [ 71 ] There was no evidence offered by anyone at the trial that Strub was somehow an expert on the provision of laundry services to hotels located in or within say a 30-kilometre radius of Whistler, British Columbia.

Nor was Strub asked what, in his experience, was the most common way for sister hotels to charge when one did laundry for another. [ 72 ] There was no evidence offered in this case from someone other than MacKenzie on this point.

He said, in his experience, occupied room nights was typically used with sister hotels where the one doing the laundry had access to the occupied room night figures in the hotel providing the dirty laundry. [ 73 ] On cross-examination, Strub agreed if two parties agreed and trusted one another, that absolutely occupied room nights was a figure or an acceptable method for the charging of laundry services and, if adopted, would result in some saving of costs as no counting was required.

He said he would never use it as it did not take into account variables such as a hotel's policy of changing bed linen, I believe every third night at both hotels, and the number of people in a given room. He agreed if occupied room nights were to be used, the provider of laundry services would need access to this confidential information at the hotel requiring the services. [ 74 ] I find Bellstar had access to this information for Adara commencing in or about November or December 2009, when it commenced managing Adara. MacKenzie testified that Arnold provided this information to him regularly thereafter.

After July 1, 2010, I find MacKenzie could have accessed this information himself, likely on Adara's computer system. [ 75 ] I return to Mr. MacKenzie's evidence as to the terms of the oral agreement. He also testified to further terms: (1) the laundry services were to start August 15, 2010; (2) the service was to be daily, Mr. Gurney was to drive it to and from PVL five days a week, and on his days off, other PVL staff were to fill in. He testified on occasion both he and Ms. Arnold drove laundry. On this basis, Adara would be

responsible for pickup and delivery; (3) the contract was of indefinite duration or term; (4) no drop-off and pickup times each day were agreed to;

(5) Adara would pay PVL at month-end for laundry services PVL provided;

(6) Adara would pay Gurney $200 a month as a gas allowance. [ 76 ] Lermitte testified for the defendants. He said he was a member of the PVL board of directors from 2009 to 2011. He did not attend the September 23, 2009, meeting in Richmond. He said that the PVL board agreed to provide laundry services to Adara at a cost, in essence, less than those of a commercial provider, plus a reasonable profit to PVL.

The service was to include pickup and delivery, he did not say how or when or by whom. [ 77 ] He felt the arrangement was a good thing for both hotels, as PVL had unused capacity and Adara wanted to make a change. He recalled discussing this idea with Bellstar, but did not say with whom, when, or what was discussed. I found his evidence to be universally characterized with a vagueness.

In any event, he recalled that the PVL board and MacKenzie did discuss, while he was on the board, PVL providing laundry services to Adara with morning pickup and afternoon delivery. [ 78 ] There was some discussion at the board level re charges. The board asked MacKenzie for further details, but according to Lermitte, never got these details. In a written email (April 3, 2013, Appendix 3, Exhibit 2, Tab 3) he says MacKenzie made arrangements directly with the Adara board of directors without detailed terms or knowledge of the PVL board. I find this to be sheer guesswork on his part.

He said he never saw a written contract. The reason, of course, is, and I so find, there was not one. His vague evidence added little to this case, in my view. [ 79 ] Ms. Patryluk testified for the claimants. She was at trial the president of the PVL strata council had had been a PVL board of directors member for three years. I did not understand she was on site in 2009 or 2010 at PVL, or participated in any meetings or discussions on matters germane to this case. If she did, she failed to explain this to me in a satisfactory way in her evidence at trial.

I had the impression that much of her evidence was based on the claimants' documents comprising Exhibit 1 and potentially what she had learned from them and others. I did not find her evidence particularly helpful either. [ 80 ] Mr. Strub testified about a laundry services contract between PVL and Adara. He said Bellstar never finalized the laundry service contract with Adara, by which he meant he never approved of such a contract between the two hotels and with Bellstar seeking the approval of the two boards of directors for each hotel.

He did not testify that Bellstar's approval of such a contract was required by reason of some term in both the management agreements it had with PVL and Adara. Nor did he say that as either a vice-president of Bellstar or its chief operating officer, it was part of his job to approve of such contracts. He said no other Bellstar employee, including Ms.

Robinson, could approve of a laundry service contract between the two hotels without his approval or knowledge. [ 81 ] He further testified that the general managers of every one of Bellstar's managed 13 hotels were required to seek Bellstar's approval with respect to any contract the hotel wished to enter into. This evidence is clearly nonsense.

If a non-Bellstar or Adara employee, for example, an electrician, was called into the Adara to fix a broken fan, for example, it is inconceivable that Strub would have to approve of such a contract before the work could be done. [ 82 ] Importantly, Strub gave evidence that at all material times MacKenzie, but not Robinson, knew and understood his stated role in approving contracts and that the two boards had to approve contracts. He did not testify that others at PVL and Adara understood these two requirements.

MacKenzie, however, was not cross-examined on this point and I give Strub's evidence on point little weight. [ 83 ] Strub said in his view, and he did not say why, for a valid laundry services contract to be made between the two hotels, their two boards of directors would have to approve of it, but he felt no formal vote of each board on point would be required. There is no evidence Strub had any idea of what the legal mandate was of either board and had any basis at all to say this.

I place little weight on Strub's understanding on board requirements at both hotels. [ 84 ] Generally, I confess, I had considerable difficulty in accepting a lot of the testimony Strub gave at trial. He did not impress me as any kind of a hands-on superior corporate executive. He said he attended at the Adara on average two days a month, but did not say what he did or with whom he might have interacted when there. His evidence was wholly vague and general and simply wrong at times.

I had difficulty understanding how he could say there was no agreement between the two hotels relating to PVL doing Adara's dirty laundry, when in fact it did it for some 20 months and Adara paid for this service for all but two months. Rather lamely, I thought, Strub testified he never saw the cheques. [ 85 ] I had the distinct impression listening to Strub that he was telling me what ought to have occurred and, to an extent, was making excuses as to why it had not.

Strub seemed not to agree that Bellstar was potentially in a conflict of interest, trying to arrange a laundry services contract between the two hotels both managed by it, where one provided the service and the other consumed it. I did not find Strub to be a particularly helpful witness in this case. [ 86 ] MacKenzie testified as to his time at Adara after July 1, 2010, when he commenced being general manager of both hotels. At the outset, he said that both he and Ms. Arnold spent significantly more than 40 percent of their time at Adara.

He said it was as much as seven days a week, with some 16- to 18-hour days not being unusual. He felt Adara received more than the benefit of 40 percent of his time while he was their general manager. Their goal was to increase Adara's revenues and reduce its expenses, and with respect to laundry services, reduce their costs from what they were at their current provider, I assume Alpha in Squamish. Arnold said when she started work at Adara, there was a toxic work environment. [ 87 ] Early on, MacKenzie took over several PVL employees to help out to do such jobs as painting and front desk work.

He testified a lot of PVL staff were brought in early on to get Adara up to scratch. His father painted at Adara for one week, MacKenzie said for the

cost of an airline fare from the east. Mr. Hilton said he was paid by Adara to do this work, but gave no particulars, for example, how much and whether the payment was a fair market rate or not. [ 88 ] MacKenzie agreed part of his new job managing Adara was to look both for savings and synergies between the two hotels, one being with respect to laundry services. He also testified an effort was made by both hotels to share staff. He felt on balance Adara benefited more so than PVL on this sharing.

He said in the case of one Jordan Landry who apparently went over to Adara to work a shift for a sick night auditor, that his time was covered by PVL, and he assumed Bellstar in Calgary would have charged his time at Adara to Adara, but was not able to testify that that had occurred. [ 89 ] There was no evidence placed before me as to whether this ever occurred with this employee, or for that matter any other, or as to how exactly they were paid when the two hotels were managed by Bellstar. [ 90 ] MacKenzie said there was less sharing of staff in the spring of 2011, when both hotels left Bellstar's management.

He assumed that Bellstar made accounting entries as above when staff were shared, but he could not testify as to Bellstar's practices in this regard. [ 91 ] Strub testified as to sharing of staff between the two hotels. He agreed this was part of Bellstar's plan to achieve synergies. MacKenzie was expected to track the hours of employees at the two properties. MacKenzie testified these hours were not tracked in the financial statements.

I therefore assume no one kept track of the precise hours a PVL employee worked at Adara, or that an Adara employee worked at PVL. [ 92 ] Strub said if a PVL employee worked at Adara, there should have been a very clear accounting of the hours and that Adara was to compensate PVL, he did not say how. He said he and MacKenzie discussed this. He did not recall if Bellstar had any sort of form to track this type of arrangement. MacKenzie was not cross-examined on such discussions. Strub said it was up to the general manager of the two hotels to approve of an employee of one working at the other, for example, Mr.

Gurney working at PVL, and not his own responsibility to approve of this swapping or sharing of employees. He was aware that PVL staff did maintenance work at Adara, for example repairs to garage doors, and that both PVL and Adara had tapped into one another's available services. He said he was not informed of the details of work PVL employees did at Adara. [ 93 ] Ms. Collingwood, a front desk agent or supervisor at Adara commencing in May 2010, who reported to MacKenzie via Bellstar in June 2010, and later to Ms. Arnold, testified for the defendants.

She recalled MacKenzie at the outset of his general managership of Adara was there two to three days a week, and then slowly over time became what she described as an absentee, so that by August 2011, his actual time at Adara was less, she felt, than eight hours a week. She felt that between August 2011 and February 2012, she and Laura Arnold ran Adara. Her typical five-day work week had both Wednesday and Thursday off. On July 1, 2011, she became duty manager at Adara, a job offered to her by MacKenzie. [ 94 ] She also recalled staff were shared between the two hotels.

She could not recall how many PVL staff came to Adara. She recalled a PVL guest services manager doing or participating in a training session lasting several days at Adara, but could not say how long she was there, what work she did, and admitted she had not tracked her hours. She gave other examples of PVL people working at Adara and said Adara had not paid PVL people to do any work at Adara. Some PVL employees helped with deep cleaning at Adara, but again were not paid. She assumed PVL paid these employees for the hours they worked at Adara. [ 95 ] Mr.

Lermitte testified that he understood that if a PVL employee worked at Adara, PVL was to be reimbursed for this time.

He also seemed to agree that both hotels agreed to share staff once jointly managed by Bellstar, as part of the effort to create synergies. [ 96 ] One thing appears clear on the evidence in this case, and that is while there was some sharing of staff between the two properties, no one really recorded any details as to hours worked or tasks performed by workers from each hotel at the other, and certainly no evidence has been offered that Bellstar, while managing both properties, ever internally credited one or the other for work done by one or the other. [ 97 ] Much evidence was led at trial about Adara's employee, Monty Gurney, who from December 23, 2009, to August 2013, when he ceased working for Adara, was its maintenance manager.

He testified that commencing in August 2010, MacKenzie instructed him to do laundry delivery and pickup between the two hotels. His wages throughout were all paid by Adara. His standard work week was Monday to Friday, starting at eight o'clock a.m., working eight-hour days, with all weekends off. He said in the morning he frequently had to wait for Adara laundry at PVL, and while waiting was instructed to do maintenance work at PVL, for example involving the pool. [ 98 ] After long weekends, he recalled in his statement, (Exhibit 2, Tab 5, Appendix

A) spending most of his day, I assume a Monday, doing laundry runs back and forth between the two hotels.

He believed, I assume, once a month, as on average because there is one long weekend a month at most, likely on a Monday, he would then start his maintenance work at Adara at 1:00 to 2:00 p.m., and asserted, without any details, that therefore needed maintenance work at Adara "piled up". [ 99 ] The sense of his evidence on point was that his pickups on long weekends put him behind in his work by approximately four hours per month, assuming he had a one-hour lunch break from say noon to 1:00 p.m. on the Monday in issue. [ 100 ] In his oral testimony, I understood him to say, contrary to his written statement above, that after a long weekend when there was more laundry to pick up, the actual pickup would take half an hour, and that he would get to the Adara by nine o'clock a.m., not eight o'clock a.m.

He testified he would typically leave the Adara at 3:30 p.m. to drop off laundry at PVL on the way home. If PVL wanted him to do any maintenance work, he would do it then. In his oral evidence, he also said, inconsistently, he did most of his PVL maintenance work in the mornings. [ 101 ] It is unclear when his normal work day ended, for example, 4:00, 4:30, or 5:00 p.m. He received no money from PVL for the maintenance work he did or for laundry delivery. Sometimes he got overtime on his Adara cheque for work done at PVL, but not very often.

He gave no particulars in his evidence as to what he got, when, and for what overtime work, whether at Adara or PVL.

[ 102 ] In his statement, Appendix A, he asserts:

(1) MacKenzie told him to do maintenance work every month at PVL but he did not say what he did and gave no particulars or hours; and (2) when MacKenzie was away, that he worked one hour after his job at Adara. Again, no particulars were given. [ 103 ] He agreed he was paid $92 every two weeks for use of his car in laundry runs, but said initially MacKenzie had offered him $200 every two weeks. No other witness agreed with this latter fact.

Quite a few agreed he was to receive and did receive $200 a month for the use of his car, which he had to drive by PVL twice a day, Monday to Friday, in any event, to get to work at Adara. [ 104 ] Mr. Gurney estimated he did two hours a week maintenance work at PVL; for example, pool work or changing light bulbs at the request of Ms. Arnold or Mr. MacKenzie.

In his oral testimony, Gurney said on average he had to wait twice a month for picking up laundry at PVL, he estimated two hours in total. [ 105 ] Gurney said when MacKenzie was off work in December 2011, Arnold asked him to do maintenance work at both hotels. In his statement, he says he did 10 hours or so at PVL doing maintenance work on the pool and completing work orders. He said Arnold told him he would be compensated for this work, but that he got nothing apparently for 13 days of work.

His evidence was unclear to me as to whether this work was done on Adara work days or how he got from 10 hours or so to 13 days of work. [ 106 ] Ms. Arnold was not cross-examined on these work estimates, including as given by Gurney or in his documents. Ms. Arnold agreed that on one occasion he had to wait 45 minutes for laundry at PVL, and while waiting did some pool work for PVL. MacKenzie recalled only once, as well, that laundry at PVL was late for Gurney's morning pickup and that he had to wait. Arnold could not say PVL ever paid Adara for his pool work this day.

There is certainly no evidence it did. [ 107 ] Arnold recalled both she and MacKenzie asked Gurney to do other maintenance work at PVL, including in the rooms, but could not say how often these requests were made or the extent of the work he did. Arnold recalled, as well, PVL employees did work at times at Adara. [ 108 ] Mr. Gurney recalled seeing PVL staff do maintenance work at Adara quite often, once or twice in a couple of months. Mr. Gurney said initially in his evidence he stopped laundry runs to and from PVL at Mr.

Hilton's request in May or June 2011, and then said it was after February 2012 he stopped, and when MacKenzie left off managing Adara. In February 2012, he told Hilton about his laundry runs for the first time, and then stopped them at Hilton's request. [ 109 ] I felt Mr. Gurney had a very poor recall of dates and events, and based all of his evidence solely on his recollection and offered no document really in support; for example, a log of some sort of what he did on any given day and where he did it. Most of his evidence was, at best, estimates of what he did and some, as per paragraph 9(

a) and (

b) of Exhibit 2, Appendix A, is unclear. [ 110 ] Lastly, Mr. Gurney testified that MacKenzie initially agreed he could take an extra two weeks off in July 2011 to compensate him for doing PVL maintenance work and to allow him to visit his family in Ontario but he then decided this was too much and gave Gurney one additional week over and above his annual two weeks' paid vacation. He agreed Adara paid him $5,440 for the work he did at PVL. The only evidence on point is an email from Robert Simpson, said to be the general manager at Adara, on July 22, 2012, to Mr.

Higgenbotham, stating an extra payment of 5440 will be added to Monty Gurney's pay period ending July 21, 2012, paid on Friday, July the 27th. [ 111 ] I note, notwithstanding Mr. Gurney's evidence on point and the lack of any explanation from Simpson as to what the $5,440 is, the defendants apparently do not now seek to recover this amount from the claimants. [ 112 ] Mr. Hilton testified extensively for the defendants as to whether or not a laundry service contract existed. He said variously:

a) Adara never agreed to an arrangement whereby PVL was to do its laundry at $6.50 per occupied room night.

b) There was no written agreement.

c) It was not until September 9, 2010, that Adara learned from an email MacKenzie directed to Hilton that PVL was even doing it.

d) Adara first learned of the $6.50 occupied room night charge on February 29, 2012, when Gurney and Collingwood told Hilton and Higgenbotham about it. I reject this evidence as simply untrue and inaccurate, as I will explain below.

e) The board of directors at Adara never agreed to the arrangement MacKenzie asserts was put in place. This is and was a fundamental precondition to a valid contract. Inherent in this point is that its board had to approve of such a contract for it to be binding on Adara. There is no evidence Adara ever conveyed this requirement to MacKenzie, Robinson, or PVL, although Strub seemed to accept this requirement without question. There was no discussion at the Adara board about PVL doing Adara's laundry.

f) Adara seemed to know at all material times PVL was doing its laundry. Adara had no reason to end this service.

g) Adara wanted to know the service was being fairly charged to it. It assumed it would be a fair deal, but it was not a fair service which would be one that was at less than a commercial rate and based on a piecework basis.

h) The service was intended to be daily, seven days a week, but was not. There was no service on weekends.

i) MacKenzie never got three quotes, as Strub said Bellstar required. Without them there was no valid agreement.

j) PVL was obliged in its dealings with Adara to follow the principles in the September 27, 2009, Bellstar letter. It did not; therefore,

there was no contract. Hilton did agree that the matter of making or achieving a laundry services agreement was left to the general manager of both hotels, whom he said was Mr. MacKenzie, provided it was beneficial to both hotels, in essence, thereby following or achieving the September 27, 2009, letter principles. Hilton, however, also presumed an agent for a corporation could enter a contract on its behalf. Based only on his acceptance of Strub's evidence as to what Ms.

Robinson, as a Bellstar employee, could or could not do, Hilton felt she could not, as an agent for anyone, enter a contract binding a corporation. There is no reliable evidence, if this limitation existed on Robinson's authority, that it was ever made known to MacKenzie or PVL. I have above set out my finding as to Strub's evidence generally.

k) The Adara board of directors did not approve of or agree to any laundry services agreement, nor did Bellstar or Strub, therefore there could be no valid agreement.

l) An occupied room night basis for laundry services is a ridiculous method to use where hotels change bed linen every three days. This point, of course, overlooks that the majority of other items, for example towels of all sorts, are used daily. I find, seen in this light, the method is less ridiculous than Hilton would have me believe.

m) Bellstar never emailed Adara about the laundry service contract. [ 113 ] Hilton also gave other evidence relevant to laundry services. He testified that he could not state, as MacKenzie testified, laundry services were discussed between MacKenzie and Robinson, in essence on behalf of the two hotels.

Clearly they were and Robinson solicited a quote from MacKenzie in January 2010, when he managed PVL and she managed to some extent, on an interim basis, at Adara. [ 114 ] He also said that PVL invoices were, prior to April 30, 2011, paid by Bellstar in Calgary with Adara cheques, and that therefore Adara was not privy to the content of the monthly invoices.

After April 30, 2011, MacKenzie, under the joint management committee arrangement, which I shall come to, dealt with both ends by which I understood him to mean the issuance of the monthly PVL laundry service invoice and the payment of same by Adara. [ 115 ] Hilton testified that he and the board knew nothing of these dealings.

The Adara board did not know about really the details of the laundry services which Hilton knew PVL had started to do in August 2010, and which Adara wanted done, as it trusted MacKenzie to do what was fair and right; in essence, make a contract more favourable to Adara on a piecework basis. [ 116 ] I have trouble with much of this evidence given by Hilton, in light of Ms. Browes' evidence below. Hilton agreed that the Adara board met monthly, that laundry was not its daily business, and that MacKenzie reported to them.

It would seem to me that insofar as this board of directors at Adara had an oversight function of its managers, it did not exercise it over MacKenzie and with respect to the ongoing and wanted laundry service and, in the spring of 2011, did not see what was there to be seen. [ 117 ] As to shared employees, Hilton believed if PVL used an Adara employee to do any work, PVL ought to have received and paid an invoice from Adara. MacKenzie's duties included tracking this work done by Adara employees and assumedly seeing to it that Adara was paid or credited with this time or its value.

There was a conflict in two Bellstar employees negotiating a laundry services agreement or finalizing one when both hotels had the same manager. Hilton felt MacKenzie ought to have declared the conflict to both boards of directors and asked them to sort out a laundry services agreement, saying to each of them that he would implement their decision. [ 118 ] He alleged MacKenzie profited from the contract said to exist, as PVL's profit increased thereby and therefore MacKenzie's bonus was higher.

MacKenzie was not cross-examined on this point and there is no evidence he received a bonus or as to its amount, if he did, while the alleged contract was outstanding. Hilton said MacKenzie created a laundry services agreement under the radar that was beneficial to PVL and himself.

Hilton, however, said at the outset which I took to mean immediately after July 1, 2010, when MacKenzie became Adara's general manager that they were happy with his work. [ 119 ] On September 9, 2010, MacKenzie emailed Hilton and said in part: I just finalized the numbers for laundry and you will now see an approximate savings of $7,400 per year. [ 120 ] There is no evidence that on receipt of this email, Hilton or any Adara director asked for details, clarification including a copy of a contract or documents, when all knew or are to be taken to know that PVL was doing all Adara's dirty laundry and had been doing so since late August.

Nor did it raise the issue that it had not approved of any arrangement for the delivery of this service or inquiring as to whether Bellstar's senior management had approved of it, all the points it now asserts as set out above. [ 121 ] By January 2011, Hilton was of the view that MacKenzie was undermining the two hotels' boards of directors and somehow preventing them from managing properly.

On January 22, 2011, Hilton, Strub, and Lermitte met at Lermette's office, and representatives from both hotels expressed concern over certain additional Bellstar charges; for example, marketing charges not referred to in Bellstar's contract with each hotel. [ 122 ] Both Hilton and Lermitte testified that as early as the spring of 2010, MacKenzie, although a Bellstar employee, had identified problems concerning Bellstar's accounting and communications for both hotels. Later, MacKenzie pointed out where he thought Bellstar was overcharging them.

How Hilton could have been of the view in these circumstances that MacKenzie was undermining the two boards of directors is unclear to me. [ 123 ] Hilton testified by January 2011, there was a dialogue ongoing between the two hotels which were planning and scrambling to self-manage as two independent businesses. Nonetheless, at this unfriendly meeting in Lermitte's office, they both agreed to stay on with Bellstar, I believe to April 30, 2011. Hilton testified that Bellstar resigned from managing both properties on February 4, 2011. Lermitte agreed with this date.

One reason given was that Bellstar was not happy with being interfered with by people like Hilton on a joint management committee that by then had been formed by the two hotels. [ 124 ] Hilton said Bellstar was then unhappy with MacKenzie and felt he was spying on them on behalf of the hotels' owners. The two

hotels responded to the Bellstar resignation by proposing to self-manage themselves effective May 1, 2011. MacKenzie would continue to manage both and report monthly to each board of directors on operations of each property, and as well to the joint management committee. [ 125 ] After May 1, 2011, MacKenzie would have a contract with each hotel. MacKenzie said he executed a written contract with each hotel, however, at July 1, 2011.

Yet again, no copy of this contract was placed in evidence at trial. [ 126 ] MacKenzie agreed that after May 2011, he had reported as above, but testified the joint management committee in particular became very critical of his work on quite a few occasions; Mr. Hilton being the member who was the most critical of his efforts. The PVL board of directors was not critical of his work, only the Adara board of directors was. [ 127 ] The joint management committee was comprised of two or three directors from each hotel's board of directors.

MacKenzie said in his reports to this committee they discussed, inter alia , sharing employees. According to Patryluk, there was no change in how Adara's laundry was done after May 1, 2011, and PVL continued to issue monthly invoices before setting out its charges and the number of occupied room nights used each month in the calculation. [ 128 ] Adara paid all these invoices, save the final two in the year 2012.

Patryluk understood that after May 2011, but in 2011, Adara engaged and used an accountant, one Robin Browes, to assist with its payables, which would of course include PVL's monthly laundry service invoices. She of course testified for the defendants. [ 129 ] When Bellstar ceased to manage the two hotels on or about April 30, 2011, Ms. Arnold left Bellstar and went to PVL. Both she and MacKenzie agreed on and after May 1, 2011, to manage both hotels with 60 percent of their time and labour with PVL and 40 percent with Adara. Arnold's duties involved sales and marketing.

MacKenzie continued to have full access to Adara's computer operating systems, as did Arnold, and thus could continue to easily access the number of occupied room nights each month at Adara. [ 130 ] Ms. Patryluk understood that PVL paid 100 percent of MacKenzie and Arnold's salaries, and that Adara reimbursed it for 40 percent. MacKenzie and Arnold each confirmed this arrangement in their testimony.

In my view, it is not an issue in this case. [ 131 ] MacKenzie said after Bellstar bowed out of management effective, he said, May 1, 2011, he and Laura Arnold worked as a team managing the two properties to February 28, 2012. MacKenzie agreed he had, on June 22, 2011, promoted Collingwood to duty manager at Adara effective July 1, 2011, and said if neither he or Ms. Arnold were at the Adara, she was then in charge. Her duties, effective July 1, 2011, included creating work schedules for all staff and submitting time sheets for them to MacKenzie, as well as keeping guests satisfied.

Very little evidence was given at trial concerning the schedules, time sheets, and how they were input, for example, into Adara's computer operating system. [ 132 ] In about late November 2011, Ms. Collingwood met with Higgenbotham to complain that Adara was struggling as, in her view, it had no one on site for management support to deal with issues that arose. This meeting was, in her view, a call for support. [ 133 ] As well, in the fall of 2011, Adara was starting to receive negative Trip Advisor reports commenting adversely on its maintenance level and room cleanliness.

Hilton testified at this time Adara was not upset so much with the way MacKenzie ran the Adara, but with the level of his interaction with the joint management committee.

Hilton said as time went on, MacKenzie became, in essence, less cooperative with this committee and it became evident he did not want to be managed, in Hilton's view. [ 134 ] In a letter from, inter alia , Hilton and Higgenbotham, and on behalf of Adara, not PVL, dated December 9, 2011, MacKenzie was put on notice in a meeting he personally attended in Lermitte's Vancouver office that generally if he did not improve his general management of Adara, he would be terminated. He was directed to meet with them on December 16th and to have with him a written plan for improvement.

Hilton testified MacKenzie was expected to have a business development plan and an operating budget, I assume, for 2012 available then, although the December 9 letter does not so state. He may have been asked to prepare those documents earlier. When done, Hilton felt they were of poor quality. [ 135 ] MacKenzie said he was shocked to be given the above letter and that he found Hilton's comments at the meeting to be threatening.

MacKenzie did not attend the December 16th meeting and said he was then so stressed, he took sick leave on December 20th, but returned to work December 30th, 10 days later and not 13 days later. [ 136 ] MacKenzie testified that nothing said by a PVL representative at the December 9 meeting was threatening. No one from PVL testified as to problems at PVL in the fall of 2011 said to have been caused by MacKenzie, for example, as general manager.

Only Adara and its directors had serious issues with him at this time, notwithstanding Lermitte's evidence that MacKenzie was then not being fully forthcoming with details about PVL's laundry services arrangement with Adara. [ 137 ] In January 2012, difficulties continued in the joint management of the two hotels. PVL then made a decision it wanted to end this relationship and have MacKenzie work only as its general manager. Hilton recalled MacKenzie on January 16, 2012, resigned as general manager of Adara effective February 29, 2012. He remained as general manager of PVL.

Arnold did the same, resigning as sales and marketing manager at Adara, but remaining with PVL. Patryluk believed Adara finally severed its relationship, notwithstanding MacKenzie's evidence, closer to the end of March 2012. The ending, in her view, was not amicable and was characterized, she recalled, with some degree of unhappiness and unpleasantness. [ 138 ] MacKenzie agreed in late February or early March 2012, PVL received a request for a proposal for laundry services from Adara and quoted one on a piecemeal or piecework basis.

Once the sister relationship ended between these two properties, PVL was of course not privy to the Adara's occupied room night data. [ 139 ] PVL was at the time still doing all Adara's dirty laundry. The quote provided included a standard form written contract PVL then used with outside laundry customers, not in a sister hotel relationship, and a piecework quote; for example, $7.80 to launder a polyester quilt.

[ 140 ] MacKenzie said this form of quote was then given as the relationship with PVL and Adara was over and occupied room night figures would no longer be available to it.

PVL was not successful in landing this laundry services contract, and its last two invoices of March 1 and April 1, 2012, I assume for doing Adara's dirty laundry for February and March 2012, have never been paid in the total amount of $14,246.96. [ 141 ] It is unclear to me where or how PVL got the March 2012 occupancy room night figure of 939 on the final invoice, when MacKenzie and Arnold had apparently left Adara February 29, 2012. [ 142 ] I should add that both Strub and Hilton testified as to how PVL laundry service invoices to Adara were paid. Strub's evidence in places was simply wrong.

For example, he felt Bellstar paid PVL invoices for Adara online. I give it no weight. Hilton said while Adara was managed by Bellstar, all Adara revenues went into a business account in its name in Calgary under Bellstar's control. Cheques were drawn on this account to pay PVL invoices to Adara. He gave no evidence that anyone other than a Bellstar employee was involved in this process; for example, a member of the Adara board of directors or even an independent accountant. [ 143 ] When Adara left Bellstar April 30, 2011, Adara opened a business account in Pemberton and PVL invoices were paid from there. Ms.

Browes testified as to how this occurred. I will come to her evidence very shortly. [ 144 ] In the summer of 2012, the two hotels exchanged correspondence over outstanding claims, none of which were resolved, and hence on November 14, 2012, PVL commenced this lawsuit. No useful purpose will be served in summarizing all of this correspondence. [ 145 ] Ms. Patryluk testified that this was really the first time that Adara complained about laundry service charges.

She said in her July 9, 2012, letter to Adara which was then suggesting that the laundry service ought to have been calculated on a "room turnover" analysis (apparently in its email to PVL July 5, 2012, and as well later in Exhibit 1, Tab 7, an email from Hilton to PVL of August 28, 2012) that this was inconsistent with industry practice. In her oral evidence, she said it was ridiculous to envisage a laundry charge on this basis, for example, where a person stayed for two weeks.

I note the evidence in this case is the average hotel visitor stay is three to five nights, and both hotels, as I have said, had a policy to change linens every three days, unless the customer requested a more frequent service. [ 146 ] No one other than Hilton suggested this was a reasonable way to charge for laundry services, and even he later appeared to abandon this analysis. I give Exhibit 1, Tab 7, no weight on this issue which I find to be wrong in principle.

I frankly do not understand, in light of the above Adara and PVL policies, how it could have been advanced at all by the defendants. [ 147 ] MacKenzie gave further evidence as to PVL's laundry practices. From August 2010 to March 2012, it did two other outside customers' laundry, as well as Adara's. PVL, in the normal course of operating its commercial laundry, kept a daily record of every piece of laundry it received and who owned it. These counts were set out on chits, I understood one per customer per day, and laundry staff put marks thereon for laundered items.

These chits and entries were then counted by the PVL front desk staff and entered into the PVL computer. [ 148 ] MacKenzie agreed the chit or piece-count system had potential weaknesses as follows: (1) the laundress makes a counting error; (2) if the laundress makes a mark, for example a checkmark, for each item but the desk clerk could add up these marks incorrectly; (3) an erroneous number gets entered by the desk clerk, for example 84 for 64 items. [ 149 ] These chits for March 1, 2012, to April 2, 2012, for Adara's laundry were filed as Exhibit 6 at trial.

In addition, the claimant filed Exhibit 1, Tab 8, being monthly

summary documents from August 2010 to April 2012, entitled "Adara Laundry Count Sheet", which I understand were originally created by a PVL operating system with figures input from the chits; for example, like those found in Exhibit 6. I note in comparing randomly the chit for March 2, 2012, found in Exhibit 6, with the March 2012

summary page, the entries appear to be the same. [ 150 ] The cost column, according to MacKenzie, on these exhibits was later added by PVL, as was the far right, total cost column. [ 151 ] These item costs, according to MacKenzie, were what PVL would have charged an arm's length, i.e., non-sister hotel, laundry service customer where PVL had no access to occupied room night data as it did with Adara. [ 152 ] MacKenzie testified that if one were to use the monthly summaries, Exhibit 1, Tab 8, and calculate costs over the months from August 2010 to April 2012, that the resulting cost of Adara laundry on a per-piece basis over this period of time, save for two months, would be a slightly higher figure than if the occupied room night basis was used.

This analysis was unsuccessfully challenged, in my view, by the defendants, seemingly on the basis that the chits were not reliable. Left up in the air, in my view, and not really clearly verbalized by the defendants was the possibility or prospect that they had perhaps been created after the fact. [ 153 ] MacKenzie testified, by way of example, that if one compared Exhibit 1, Tab 8, page 3, the October 2012

summary, and per-piece cost net of tax of $2,908.50 with the invoice PVL sent Adara for October 2012 laundry services, number 7910, based on 359 occupied room nights at $2,333.50 excluding tax, this example shows a saving this month to Adara of approximately $600 from what PVL would have charged an arm's length customer on a piecework basis. [ 154 ] MacKenzie also testified service fees and delivery charges would be added by PVL to the cost per item on the Exhibit 1, Tab 8

summary cost figures, but did not say what they would be. These additional customer costs would of course serve to increase the difference between the two amounts, namely the monthly cost per occupied room and the piecework costs.

[ 155 ] Ms. Browes, a private accountant engaged by Adara, who was not qualified as a commercial laundry service expert, opined at trial that charging a customer on an occupied room night basis could result in a fair estimate, or I think she meant price, but said she felt it was not as accurate as charging by piece. She was of the view that if a laundry service provider charged by occupied room night, no counting of items would be required, and thus there would be a corresponding labour cost savings to the laundry service provider.

Here, PVL counted the items when washed, and hence her opinion on this point is seemingly unhelpful. [ 156 ] I have no evidence as to when, if at all, Adara ever counted its laundry, whether clean or dirty. [ 157 ] PVL seeks to recover a credit card debt on a corporate Visa card in the amount of $403.91, which it asserts it incurred for Adara. Patryluk said PVL obtained a credit card with a $15,000 credit limit and one card was given to MacKenzie and one to Ms. Arnold. It was to be used by both hotels.

MacKenzie said it was a joint management committee decision for PVL to obtain this credit card and that Adara charges would be reimbursed by it to PVL. [ 158 ] MacKenzie said the credit card was got by PVL as Adara's credit was not very good. Hilton denies this was the reason.

However, Exhibit 1, Tab 12, a September 20, 2011, a joint management committee monthly business operation review document, in Item 12 notes PVL provided the security for this credit card, and Adara's comment is, "Thank you, PVL." This is some evidence corroborating MacKenzie's evidence. [ 159 ] PVL says they have demanded Adara reimburse them for this amount and it has refused to do so.

Adara seems not to dispute that this amount is owing, but claimed PVL owes it money, for example for certain expense claims for MacKenzie, which I shall come to, and really, I think, seeks to set off these claims against any money it owes to PVL. [ 160 ] PVL has advanced a claim in its notice of claim, paragraphs 10 to 15, for some $11,147.52 for shared services, being monies it asserts Adara owes it for labour done by PVL employees, namely the general manager, I assume MacKenzie, $5,683.72 excluding HST, and sales manager, I assume Ms. Arnold, $3,525.25 excluding HST.

The HST claimed on total labour costs for managers of $9,208.97 is set out at $1,105.08, or 12 percent. [ 161 ] This same amount, $10,314.05, is referred to in an undated letter, Exhibit 1, Tab 1, described as a "demand for payment". I understand this was likely emailed to Adara. [ 162 ] It appears in Exhibit 2, Tab 5. It was annotated by Mr. Hilton in blue typing. Under the grand total of $25,798.39, including the two unpaid invoices for laundry services, the above wage contribution claim, and corporate Visa amount, Mr.

Hilton has set out in this court exhibit the following statement: This is the correct total for what the Adara is withholding, but not the total that is owed to the Adara. Please see our attached invoice for the amounts owed to the Adara by PVL.

Payment is overdue in excess of 90 days, so we will therefore be adding interest to the entire amount of $48,491. [ 163 ] I take this to be a form of qualified admission, subject to Adara's concerns over the status of the laundry service contract and whether or not it was fairly calculated, that Adara owed these amounts to the claimant, excluding possibly the full amount of the laundry charge. Its reply makes it clear that at all material times it held back payments from PVL as it felt PVL owed it for various matters therein referred to.

Position of the Parties [ 164 ] I have received and fully considered three fairly lengthy written submissions in this case. Firstly, from the claimant, January 16, 2015; thence from the defendants, February 12, 2015; and lastly, a reply thereto from the claimants filed March 6, 2015. These documents run in total to some 34 pages, not taking into account the smaller typeface used by the defendants. [ 165 ] Because the position of the parties was and is made clear in the evidence, I do not intend to summarize these lengthy and very detailed submissions.

Simply put, this is a case where the defendants say they had no contract with the claimant, and what they were charged for laundry services was unfair or inaccurate, and if they owe the claimant for anything, including wages, the claimant owes them a lot more for a host of matters, including work, one in particular of their employees, a Mr. Gurney, did for PVL and for which he was not paid by PVL. [ 166 ] When dealing with the central issues in this case, I will address all of the important claims each party advances against the other as best I can. [ 167 ] I believe the following issues arise from this case:

(1) Was there a contract on any basis including, as alleged by the claimant, whereby PVL was to provide laundry services to Adara?

(2) If the answer to (1) is yes, what were the terms of the contract?

(3) Was it a term of the contract that Adara's employee, Monty Gurney, assist five days a week with both drop-off of Adara dirty laundry at PVL and pickup of clean laundry with Adara, paying 100 percent of his wages and gas allowance associated with this work?

(4) Did Adara employees do work for PVL for which Adara was to be reimbursed by PVL but was not? Have these claims, if they exist, been established on the balance of probabilities?

(5) Does PVL owe Adara for other amounts in Adara's counterclaim not encompassed above?

[ 168 ] I will deal with these issues in the following discussion. Was there a contract? [ 169 ] Central to the defendants' position in this case is that David MacKenzie is neither a truthful or reliable witness, and indeed in doing what he did while in any way associated with Adara, including, I suppose, while initially employed at Bellstar in the fall of 2009 and in 2010. The defendants come perilously close to accusing Mr.

MacKenzie of fraud. [ 170 ] There seems to be a suggestion in their case that certain laundry chits, as I have said, that PVL produced or he did, and MacKenzie is of course not a party to this case, might be of questionable provenance, particularly owing to the lateness of their production in relation to when the defendants first demanded the same. There is likewise a suggestion that the court reject these documents and, I suppose, any claimants'

summary of them. [ 171 ] Further, the defendants seem to allege that the basis MacKenzie selected for charging them for laundry services was one that best benefited him personally and which would generate more income for him as an owner of a unit or units at PVL, and as an executive, suggesting that his incentive at PVL exceeded his at Adara by a factor of 2.2 times.

Simply put, using occupied room nights enriched MacKenzie at Adara's expense. [ 172 ] I have no evidence, as I suggested, that MacKenzie made any greater salary or was awarded a larger bonus due to the laundry services arrangement in place with the Adara at any material time. The somewhat veiled allegations the defendants appear to make as to Mr. MacKenzie's honesty are very serious and, I think, troubling. In any civil action, they would require a high level of proof.

Such proof is absent in this case, in my view. [ 173 ] By way of example, MacKenzie was not cross-examined strenuously, if at all, as to whether the laundry chits provided were inaccurate or even made up, or as to his salary and incentive bonus results: did he in fact receive one and did he make more because of the laundry services arrangement with Adara? [ 174 ] He was thus not afforded a clear opportunity at trial to respond to these apparent concerns or allegations the defendants have in this case. [ 175 ] I found MacKenzie to be a credible witness.

He was attempting at trial to deal with matters that occurred in some cases approximately five years earlier in time. I do not find that he was untruthful or gave materially inaccurate evidence on any important point in this case. I certainly did detect that he did not particularly like Mr. Hilton, who cross-examined him on behal

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