Ramco’s Carpet Warehouse Ltd. v. True Construction Ltd., 2020 BCPC 180

Citation: Ramco’s Carpet Warehouse Ltd. v. True Construction Ltd. 2020 BCPC 180 Date: 20200910 File No: 124050 Registry: Kelowna IN THE PROVINCIAL COURT OF BRITISH COLUMBIA (Small Claims Court) BETWEEN: RAMCO'S CARPET WAREHOUSE LTD. DBA RAMCO FLOOR & TILE CLAIMANT AND: TRUE CONSTRUCTION LTD. DEFENDANT RULING ON APPLICATION OF THE HONOURABLE JUDGE A. TAM Counsel for the Claimant: C. Fraser Counsel for the Defendant: L. Coulter Place of Hearing: Kelowna , B.C. Date of Hearing: August 5, 2020 Date of Judgment: September 10, 2020

[1] This is a motion brought on by Ramco’s Carpet Warehouse Ltd. (hereafter referred to as “Ramco’s”) to set aside a pre-judgment garnishing order granted by the Registrar on October 16, 2019 in the amount of $16,710.84 in favour of True Construction Ltd.(hereafter referred to as “True”). The trial on the merits of this matter has not yet been scheduled. Background [2] The Claimant Ramco’s was a subcontractor in a construction project in which the Defendant True was the general contractor.Ramco’s provided material and labour for the installation of flooring material.

The overall project was that of the construction of aschool. Ramco’s alleges that they submitted a series of invoices to True which have not yet been paid. Ramco’s sues to collect on theunpaid invoices. True denies the claim and says that Ramco’s breached their end of the bargain as Ramco’s work was deficient, causingdelay and requiring additional operating cost to correct the deficiencies. The project was ultimately completed beyond the date stipulatedin the contract. True counterclaims for the cost to correct those deficiencies.

The written agreement between the parties incorporates alist of supplementary conditions which specify, in part, that:

Article 4.2 – If the Subcontractor fails to meet milestones or otherwise agreed upon times for completion of specific tasks or for theentirety of the work, the contractor may, at their discretion, perform cost recovery for any increased costs or

schedule delay due to thesubcontractor not meeting the requirements of the Schedule. [3] The above clause is the basis of True’s counterclaim. They have proceeded to remedy the alleged deficiencies by doing thework themselves. They then tallied up the cost by using a

schedule specifying the effective rate for each tradesperson and each piece ofequipment. True then totalled the cost of that remediation, and apportioned it among all the sub-trades that were involved. This was doneby dividing the total cost by the number of days each particular sub-trade was involved beyond the stipulated completion date. By thismethod, they arrived at Ramco’s portion of the remedial cost, that being $16,710.84. On October 16, 2019, True applied for a pre-judgment garnishing order on an ex parte basis, to garnish this sum from Canadian Western Bank, where Ramco’s does business.

In thatapplication, True relied on the affidavit of Mr. Marcus Koeck which says in part at para. 3: Ramco’s breach and the resulting deficiencies caused True to incur operating cost losses in the amount of $16,710.83 to correct thedeficiencies. [4] That sum has now been deposited with the Court by Canadian Western Bank and Ramco’s is now asking the Court to set thepre-judgment garnishing order aside, and that the funds be returned to them. Position of the Parties [5] Ramco’s advances two grounds for this application.

They say that when one analyzes the nature of the counterclaim, theamount sought is not a liquidated sum, which is a statutory pre-requisite to the granting of a garnishing order. Secondly, they say that theaffidavit of Mr. Koeck did not meet the statutory requirement of disclosing information which is relevant and material.

Specifically, Mr.Koeck did not advise the Registrar that $16,710.83 represented Ramco’s proportionate share of the remedial cost, and not the entirety.For either or both those reasons, the garnishing order ought to be set aside. [6] True says that if Ramco’s were held to be in breach of the contract, then the damages arising is a simple calculation of addingup the cost, and dividing the total by the number of days each sub-trade was involved beyond the stipulated completion date, to arrive ateach sub-trade’s proportionate share.

Regarding the obligation to fully disclose relevant material on a supporting affidavit, True says thatRamco’s did not plead this ground on the notice of application currently before the Court and should not be permitted to rely on it. In anyevent, what Mr. Koeck said in his affidavit is true and has met the statutory requirements. The Governing Law and Principles [7] The parties agree that one pre-requisite to a pre-judgment garnishing order is that the damages must be liquidated. In Dhaliwalv.

Bonterra Resources Inc., 2019 BCCA 303, Dewitt-Van Oosten J.A. said at para. 25: [25] To obtain a prejudgment garnishing order, the applicant must state in affidavit form that: (

i) an action is pending; (ii) the time ofits commencement; (iii) the nature of the cause of action; (iv) the actual amount of the debt, claim or demand; and (

v) that it is justly dueand owing, after making all just discounts: s. 3(2)(d), COEA. A “debt due” is defined in s. 3(1) of the COEA to include a debt,obligation and liability that is “owing, payable or accruing due”. [26] Based on the manner in which s. 3(2)(

d) of the COEA has been interpreted, the law is clear that the claim underlying aprejudgment garnishing order must involve a liquidated sum: Politekni at para. 24, citing Pe Ben Industries Co. v. Chinook Construction& Engineering Ltd., (BC CA), [1977] 3 W.W.R. 481 (B.C.C.A.). Pe Ben holds that “unliquidated damages, whetherarising in tort or in contract, cannot be the subject matter of a garnishing proceeding”: at 486. [8] In Busnex Business Exchange Ltd. v.

Canadian Medical Legacy Corp., 1999 BCCA 78, the Court defined “liquidated sum” as aspecific sum which is either “already ascertained or capable of being ascertained as a mere matter of arithmetic” (see para. 9). InDhaliwah, supra, the Court there added this further refinement at para. 34: [34] Instead, whether a notice of civil claim advances a liquidated claim, in whole or in part, requires an individualized assessment.

That assessment will necessarily be informed by the evidence provided in support of the application for a garnishing order, including(but not limited to): the context of the dispute between the parties; the terms of any agreement said to ground the debt, obligation orliability; possible acknowledgements of debt and/or part-performance by the defendant; and the pleadings. See, for example: Pick O’Sea Fisheries Ltd. v. National Utility Service (Canada) Ltd. (1995), (NS CA), 1995 NSCA 208 , 130 D.L.R. (4th)472 (N.S.C.A.) at paras. 47-50. Is this a claim for a liquidated sum?

[ 9 ] True says that Ramco’s is liable for their share of “any increased costs or

schedule delay due to the Subcontractor not meeting the requirements of the Schedule” and that amount is readily ascertainable. In my view, there are two fundamental difficulties with True’s position. Firstly, what is or is not a cost that arose from Ramco’s alleged deficient performance will necessarily require some adjudication. For example, included in the calculation of the counterclaim was additional work done by True’s electrician at the rate of $100 per hour. Presumably, True says this was necessary because Ramco’s did not do its job properly or in a timely fashion.

Ramco’s disputes this and will argue the opposite. As such, without first determining whether each of those line items is an expense incurred due to Ramco’s not meeting the requirement of the Schedule, it is not possible to determine the total cost for which all of the sub-trades should be responsible. [ 10 ] This then leads into the second difficulty. True proposes to divide the total additional cost simply by the number of days each sub-trade worked on the project beyond the stipulated completion date. Firstly, I do not see in the material this particular formula.

If it exists as a term of the contract, my attention was not drawn to it. Nor has Ramco’s agreed that that was going to be the method by which

Article 4.2 was going to be interpreted. Secondly, whether a particular sub-trade should share in reimbursing True for any additional cost, I would think, calls out for argument. Why should the painter, who did her work properly and in a timely fashion, but was nevertheless delayed because the dry walling was delayed, be responsible for the deficient work someone else did, or be responsible for the delay someone else caused? Conversely, depending on the nature of their involvement, some sub-trades should be more responsible for the additional cost, than simply on a “per day” basis.

This would be so if that particular sub-trade contributed significantly to the delay of the project, more so than others. Absent some express agreement (of which I did not hear any), all of these issues need to be assessed before a Court can determine how to apportion the additional cost among the sub-trades. This, of course, is necessary in order to determine the increased cost due to Ramco’s not meeting the requirements of the

Schedule . [ 11 ] In the result, neither the numerator nor the denominator in the formula proposed by True can be ascertained without some adjudication and assessment of the underlying facts. It is not simply arithmetic that is required. While True has done the math and has arrived at a specific figure by following their proposed formula, that does not, of itself, mean necessarily that the proposed figure is a liquidated sum. This latter proposition is endorsed by the Court in Dhaliwal at para. 33 . [ 12 ] For the above reasons, I conclude that True’s counter-claim is not for a liquidated sum.

As such, the garnishing order of October 16, 2019, on Canadian Western Bank for $16,710.84 ought to be set aside and the funds returned to Ramco’s. [ 13 ] Having so concluded, I do not need to deal with Ramco’s second argument that Mr. Koeck’s affidavit failed to meet the statutory requirement of disclosing all material facts. ________________________ The Honourable A. Tam Provincial Court Judge