Dumais v. Caroline & Gislason Lawyers LLP Date:, 2014 BCPC 382

Citation: Dumais v. Caroline & Gislason Lawyers LLP Date: 20141204 2014 BCPC 0382 File No: 13-46945 Registry: Vancouver IN THE PROVINCIAL COURT OF BRITISH COLUMBIA (Small Claims) BETWEEN: FRANCOISE E. DUMAIS CLAIMANT AND: GARY CAROLINE and the said CAROLINE & GISLASON LAWYERS LLP carrying on business as CAROLINE & GISLASON LAWYERS LLP, JOANNA GISLASON and the said CAROLINE & GISLASON LAWYERS LLP carrying on business as CAROLINE & GISLASON LAWYERS LLP, and CAROLINE & GISLASON LAWYERS LLP DEFENDANTS REASONS FOR JUDGMENT OF HIS WORSHIP DONALD YULE

Appearing on their own behalf: F. Dumais Appearing for the Defendants: Lindsay Watson Place of Hearing: Vancouver , B.C. Date of Hearing: November 21, 2014 Date of Judgment: December 4, 2014 Introduction [ 1 ] The Claimant seeks to recover from the Defendants the sum of $275.00 for bookkeeping services rendered to the Defendants in October, 2013. She issued an invoice in this amount dated October 11, 2013 for services rendered on October 4 and October 11, 2013 (Claimant’s Revised Trial Statement, Tab G). In the Defendants’ Reply, they alleged that the invoice was for “services she did not render”.

At the time the Reply was filed, the Defendants also advanced a Counterclaim, since discontinued. In the Defendants’ Trial Statement in support of both the Reply and Counterclaim, para. 26 asserted that the firm refused to pay the final invoice “because it was for services that were not performed or in the alternative were performed in a substandard and/or negligent matter” (sic).

At the hearing, counsel for the Defendants did not dispute that the Claimant attended the Defendants’ offices on October 4 and 11, 2013 for the hours claimed nor did the Defendants dispute that on those dates, the Claimant performed the services that she alleges which are set out in Exhibit ‘M’ to the Claimant’s Revised Trial Statement.

Thus the substantive defence is that the Claimant’s services over the course of her hiring were inadequate or negligent or in breach of express or implied terms of her hiring, but these deficiencies were not discovered by the Defendants until after the Claimant had ceased to work for the firm. Because of the overall deficiencies of the Claimant’s services, the Defendants say that they are not liable to pay the Claimant’s final account, having paid all of the Claimant’s prior periodic accounts without question, totalling almost $6,000.00. [ 2 ] The Defendants assert 5 deficiencies in the Claimant’s services.

They are: [1] a failure to pay vendor invoices on time; [2] a failure to complete the credit card reconciliation; [3] leaving the filing systems in “disarray”; [4] failing to train the legal administrative assistant in the PC Law computer program; and [5] a failure to pay the PST owed by the firm for legal services in July, 2013, by the due date of August 31, 2013. [ 3 ] A brief review of the work relationship between the parties is required. Then I will address each of the issues raised by the Defendants.

Work History [ 4 ] The Claimant was hired by an oral contract as a part-time PC Law bookkeeper for the firm at $50.00 per hour. Both parties agree that the Claimant was to perform full legal bookkeeping services including accounts payable, accounts receivable, preparing and generating invoices for clients, required monthly and quarterly filings and reports, and year end statements. The Claimant reported to one of the partners, Ms. Gislason, with whom she had most of her contact and from whom she took her instructions.

Both parties assert that there was limited oversight of the Claimant’s work by the partners, really Ms. Gislason, which ultimately turned out to be problematic. The Claimant gave written notice of her intent to leave the firm by email dated September 24, 2013 (Claimant’s Revised Trial Statement, Tab E). Her last day of work was October 11, 2013. From May 30 to October 11, 2013, she billed for 117 hours of work. The first express written criticism of the Claimant’s work is Ms. Gislason’s email dated November 8, 2013 (Claimant’s Revised Trial Statement, Tab I).

Issues Re Services Provided Unpaid Vendor Invoices [ 5 ] It is not disputed that some vendor invoices, including those from Northwest Tel Data, BCM and Ricoh were not paid when due. What is in dispute is the reason for non-payment. The Claimant says that she was not authorized to pay vendor accounts on her own authority. She required authorization from Ms. Gislason. Every time the Claimant was in the office, she left for Ms. Gislason a payables report. The Claimant would receive instructions to pay either by a “tick” mark on the report or a note or verbal direction from Ms. Gislason. The Claimant says that Ms.

Gislason was well aware that the Northwest Tel, BCM and Ricoh accounts were unpaid and overdue. The Claimant says that she was instructed by Ms. Gislason not to pay these accounts because, for various reasons, Ms. Gislason was unhappy with the vendor services being provided or had questions about the outstanding invoices. [ 6 ] The Defendants’ Trial Statement, Tab 13, contains a series of emails concerning the Northwest Tel Data account. Northwest Tel Data sent an invoice to the firm on July 22, 2013.

On August 14, 2013 further invoices were sent to the firm which a legal assistant forwarded to the Claimant suggesting that one of the invoices may be a duplicate but that Northwest Tel were calling about payment. On September 11, 2013 the Claimant attended the firm but did not receive payment instructions that day. On September 12, 2013 Northwest Tel advised the firm that 3 separate invoices were overdue and accounts not kept in good standing were not eligible for recurring discounts. [ 7 ] By email dated September 17, 2013 Ms. Gislason advised the Claimant that Northwest Tel was complaining of unpaid bills

and asked the Claimant “Can you sort out what is owing still? His bills seem super confusing as they seem to compound charges. Are we still dealing with the move charges?” Ms. Gislason also indicated she was confused by the PC Law accounts payable statement which seemed to say that nothing was overdue. Ms. Gislason paid the Northwest Tel account on September 20, 2013 advising Northwest Tel on September 19, 2013 that she had not realized they had not been paid. [ 8 ] From Ms. Gislason’s email dated September 17, 2013 I conclude that Ms.

Gislason was aware that Northwest Tel accounts were past due and unpaid and that she had not yet given authority to the Claimant to pay them. [ 9 ] With respect to the accounts of BMC, the firm’s information technology provider, the Defendants’ Trial Statement, at Tab 14, attaches 2 reminder notices, dated September 5 and September 12, 2013 advising of unpaid accounts.

Tab D of the Claimant’s Revised Trial Statement includes emails dated September 4, 2013 which confirm the Claimant’s assertion that the firm was investigating an alternative information technology support provider and the Claimant by email dated September 16, 2013 provided the name of an alternate service provider that she had obtained from her inquiries. [ 10 ] With respect to the accounts of Ricoh, the firm’s photocopier and fax machine provider, at Tab 16 of the Defendants’ Trial Statement, a memo dated September 12, 2013, copied to Ms.

Gislason, advises that a man named “Thomas” had called in response to a phone call indicating that if the firm had a credit, it was with Ricoh Canada and the invoice for $2,237.76 remained payable in full. Tab 15 of the Defendants’ Trial Statement attaches a series of emails dated September 18 and September 19, 2013. On September 18, 2013, the vendor demands payment of $2,237.76 under the lease agreement and requests confirmation of payment by the following day so as to remove the account from the default list.

The vendor indicates an attempt for several weeks to contact the Claimant and refers to leaving a voicemail message that there are no credits owing from the trade up. On September 18, 2013 Ms. Gislason indicates that she has just had the matter brought to her attention and will take care of it immediately. She attributes the oversight to recent staff turnover. She is required to courier a cheque in payment on September 19, 2013. [ 11 ] From the emails at Tab 15 and 16, I conclude that as of September 12, 2013, the firm did have questions about the Ricoh account and I accordingly conclude that Ms.

Gislason had not yet authorized the Claimant to pay the account when the Claimant was last at the firm on September 11, 2013 before the demand email from the vendor on September 18, 2013. [ 12 ] The Claimant asserts in her Revised Trial Statement and in her evidence at the hearing that she was “instructed” by Ms. Gislason not to pay the BMC and Ricoh accounts. In an Affidavit affirmed May 16, 2014 and admitted into evidence as Exhibit 1 at the initial hearing of this matter on May 21, 2014, Ms.

Gislason asserts in para 10 that “ At no time did I instruct the Claimant to withhold payment from vendors or government agencies.” Ms. Gislason was unable to attend the May 21 trial as she was out of the province. She did not attend this further hearing on November 21, 2014. The conflict in the evidence of the parties on this question in my view misses the point. The question is whether Ms. Gislason authorized the payments. There is no evidence to contradict the Claimant’s assertion that she was not authorized to pay invoices without instructions from Ms. Gislason nor is there evidence that Ms.

Gislason did authorize payment of these overdue accounts. I conclude on the evidence that Ms. Gislason was aware that the Northwest Tel, BMC and Ricoh accounts were overdue and unpaid and that she had not given instructions to the Claimant to pay those accounts. It may be that Ms. Gislason was not aware of all of the communications between the unpaid vendors and the firm nor of the “tone” of some of those communications to the firm. If that is the case, the problem arises from poor communications between the Claimant and Ms.

Gislason which in my view reflects on both parties. [ 13 ] I conclude that the non-payment of the identified, overdue invoices was known to Ms. Gislason and was not attributable to the fault or deficiencies in the services of the Claimant. Credit Card Reconciliation [ 14 ] The Defendants’ assert that one of the routine bookkeeping activities that the Claimant was required to do was monthly credit card reconciliations.

They assert that after the Claimant’s departure from the firm a PC Law product expert discovered that the last data entry for credit card reconciliation was made for April 20, 2013 and was entered on or around September 11, 2013. After April 20, 2013, the only reconciliations entered were for some but not all client disbursements.

There were no reconciliations for other business expenses (Defendants’ Trial Statement, Tab C, Affidavit of Jennifer Jay, paras 37 and 38). [ 15 ] The Claimant however asserts that all Visa transactions were entered, reconciled and balanced from January to April and the May transactions were posted and all Visa client disbursements such as client travel expenses were up to date so the firm could capture those disbursements on client invoices.

All other client disbursements were up to date (Claimant’s Revised Trial Statement, para 22). [ 16 ] When the Claimant first commenced to work for the firm, the credit card reconciliations were not up to date. Initially, a legal administrative assistant was to post the Visa entries into the PC Law program but subsequently the Claimant was asked to do the posting herself. An issue arose as to the appropriate way to distinguish between personal and business expenses which required clarification by the firm of which expenses were which.

The Claimant advised the firm that having her post the Visa entries took up a lot of time and was not a good use of her time. Unfortunately, during the comparatively short time that the Claimant worked for the firm, there was a succession of 5 different legal administrative assistants. The Claimant acknowledges that the credit card reconciliations were not fully up to date at the time of her departure. I accept her explanation that she did cover off billable disbursements and did not have adequate time to complete the reconciliations given her other tasks.

I also conclude that the firm was aware of an unresolved issue of the proper recording of business vs personal use Visa entries. I conclude that the Claimant was not negligent nor in breach of her contractual obligations with respect to credit card reconciliations. Filing Systems in Disarray [ 17 ] The Defendants assert that the Claimant did not maintain or create a proper filing system and left things in a mess. Ms. Jay deposes in para 40 of her Affidavit that after the Claimant left the firm in October, Ms. Jay found the firm’s accounts “in disarray”. Ms.

Gislason’s email dated November 8, 2013 to the Claimant (Defendants’ Trial Statement Tab 19) states that as she “muddled through the payments” herself, she found mis-entered amounts and “an absolute mess of bills”.

[ 18 ] The Claimant denies these allegations. She points to a number of systems that she put in place, outlined in Tab L to the Claimant’s Revised Trial Statement. The Claimant further asserts that the PC Law program has a tracking function that can demonstrate who made what entries on what dates including who made changes to what entries on what dates. Thus if the Claimant incorrectly entered information or failed to enter information that had to be entered subsequently, those details could be demonstrated by obtaining the so called “audit trail” report.

No audit trail report has been produced. [ 19 ] I appreciate that the amount involved in this claim may rationally dictate the resources a party chooses to defend it. Nevertheless, the claim has to be decided on the basis of the evidence that is adduced. The problem with Ms. Jay’s evidence and with Ms. Gislason’s statement in her email of November 8 is that the statements are conclusionary and without specific detail or examples. Neither Ms. Jay nor Ms. Gislason gave evidence at the hearing. The Claimant did give evidence and was subjected to a cross- examination.

Apart from the matter of credit card reconciliations, no specific details of un-entered or mis-entered information was put the Claimant in cross-examination. The cross-examination on Tab L was limited to demonstrating that one of the “systems” put in place (item 9) was nothing more than stamping a new file folder for a new vendor. [ 20 ] On the whole of the evidence I am not satisfied that the Defendants have demonstrated that the Claimant’s conduct was deficient in her management of the firm’s accounting filing systems.

Training of Legal Administrative Assistant [ 21 ] The Defendants assert that one of the Claimant’s contractual responsibilities was to train a new legal assistant on PC Law and that throughout her time with the firm she spent a total of roughly only 2 hours on this task (Defendants’ Trial Statement, paras 7 and 22). Ms.

Jay, the new legal administrative assistant hired as the Claimant was leaving the firm, deposes that she received only roughly 30 minutes of training from the Claimant on October 11, 2013, the last day of the Claimant’s employment. [ 22 ] The Claimant asserts that during her comparatively short time working for the firm, the firm had a total of 5 different legal administrative assistants. She concedes that her training of Ms. Jay on October 11 was limited to specific prioritized tasks and full training was not done. The training in the PC Law software by Legalware Systems Ltd., a PC Law software expert, that Ms.

Jay ultimately received on October 25 and November 4, 2013 was in fact arranged prior to the Claimant’s departure from the firm (email from the Claimant to Ms. Gislason dated October 11, 2013, Claimant’s Revised Trial Statement Tab G). I conclude that it was not expected that the Claimant would, or could, comprehensively train Ms. Jay in PC Law on the last day of employment. In the circumstances, and in particular in view of the frequent changes in legal administrative assistant personnel, I conclude that the Claimant was not deficient with respect to her training obligations.

Late PST Payment [ 23 ] It is not disputed that the firm’s PST filing and payment for the month of July, 2013 was not made by the due date of August 31, 2013. The filing and payment were made on September 5, 2013. The firm received a warning notice from the Province dated September 10, 2013 although no penalties or interest were assessed. [ 24 ] The Claimant’s evidence is that prior to the end of each month, she would check with Ms. Gislason that all the bills from the prior month had been issued, then calculate the amount of the PST payable, advise Ms.

Gislason of the amount due, obtain instructions to proceed with payment and then file and make payment by E-Tax without further discussion. Payment by E-Tax involved a direct withdrawal from the firm’s general account and did not require the issuance of a cheque to be signed by Ms. Gislason. [ 25 ] The Claimant attended the firm on August 29, 2013. The Claimant ran off a report setting out the amount of PST payable but did not make the filing or payment that day. She asserts that Ms.

Gislason was informed that the PST filing and payment had not been made and had to be made but the Claimant cannot recall how that message was communicated to Ms. Gislason. The Claimant does not recall why she did not make the filing and payment on August 29, 2014. She surmises that Ms. Gislason may not have been in the office or available. The Claimant made the filing and payment when she was next at the office on September 5, 2013. She does not recall any conversation with Ms.

Gislason on that date as to why the filing and payment had not previously been made. [ 26 ] Attached to the Defendants’ Trial Statement at Tabs 9, 10, 11 and 12 are email communications between September 16 and September 23, 2013 between Ms. Gislason and the Claimant. On September 16, 2013 Ms. Gislason advises that the warning notice had been received from the Province and asked “What happened?”. The Claimant’s email on September 17, 2013 does not answer the question. On September 19, 2013 following a phone conversation with the PST office, Ms.

Gislason advises the Claimant that the warning notice was issued because the July payment was not made until September 6, 2013. Significantly, Ms. Gislason also asks “Is PST due every month? Can you please calendar the payment dates in your and my calendar.” The email also makes reference to filing duplicate returns every month (Ms. Gislason has almost no idea what this means but assumes the Claimant does) and indicates that when Ms.

Gislason prints the payables report from PC Law it shows nothing over 30 days whereas NWT, BMC, Ricoh, and GWL all seem to be overdue. [ 27 ] The Claimant responds by email dated September 23, 2013. She asserts that “The July payment was not made until September 5.” There is no explanation for the late payment. The Claimant advises that PST is due every month and was noted in the Claimant’s Deadline Chart.

She gave further instructions on how to print an accurate report of overdue accounts. [ 28 ] The following day, on September 24, 2013, the Claimant gave notice of her intention to cease working for the firm. [ 29 ] With respect to the late filing and payment of the July PST, I am troubled by the Claimant’s position. She knew the filing and payment had to be made on or before August 31, 2013. She did not make it herself when she was at the firm on August 29, 2013. Her reason for not doing so was an inability to obtain instructions for payment possibly because Ms. Gislason was not in the office that day.

She is sure that she communicated to Ms. Gislason the necessity for filing and paying the PST by August 31, 2013 but is unable to recall how that communication occurred. A copy of the PC Law PST Journal was left for Ms. Gislason. When the Claimant was next at the firm, on September 5, 2013, the Claimant discovered that the PST payment had not been made. She paid it that day. She must have received permission that day to make the payment. The Claimant would have known that the payment was being made late. The

Claimant would have known that there would be a repercussion arising from late payment of that item. I would have expected the Claimant to advise Ms. Gislason on September 5, 2013 that there would likely be a repercussion from late payment, particularly if the Claimant had left explicit instructions to Ms. Gislason to make the filing and payment herself. The Claimant does not recall any such discussion. I find that there was no such discussion because on September 16, 2013, having received the warning notice from the Province, Ms.

Gislason asked “What happened?” Even then, in the email exchange on September 19 and September 23, 2013 the Claimant does not assert that Ms. Gislason was supposed to have made the PST remittance herself in accordance with some kind of instruction from the Claimant. There is no evidence as to how the PST remittances were made in June, 2013, the only prior filing month when the Claimant was working for the firm. I do not think it was sufficient for the Claimant to have left a copy of the PC Law PST journal for Ms. Gislason on August 29, 2013. Ms.

Gislason may have thought it was there for her information only, and assumed the remittance had been made. It is apparent that she did not realize that the firm was required to make PST remittances monthly. [ 30 ] If the Claimant could not get authority to make the filing and payment on August 29, 2013, she might have either made the payment without express authority and explained why later or else followed up with a telephone call or some other direct communication so that she knew that Ms. Gislason was aware of the necessity to make the filing and payment herself. [ 31 ] In the absence of a practice of Ms.

Gislason paying PST remittances herself, sufficient to allow the Claimant to rely upon simply providing a copy of the PC Law PST Journal to Ms. Gislason, I think the Claimant was obliged to take clear steps that she knew were brought to Ms. Gislason’s attention to inform her both that the payment had to be made by August 31 and that Ms. Gislason had to make it. I am not satisfied on all of the evidence that the Claimant took those steps. It seems clear to me that poor communication between the Claimant and Ms. Gislason was an ongoing problem throughout the term of hiring and that Ms.

Gislason was not nearly so understanding of the PC Law program and its capacity as the Claimant assumed. [ 32 ] There was no financial loss to the firm as a result of the late PST filing and payment. Nonetheless, a warning notice was issued creating a payment history within the Ministry of a late payment. This history may expose the firm in the future to a monetary penalty and/or fine in the event of a further inadvertent late payment.

In addition, a late payment of PST is an event that must be disclosed to the Law Society in the firm’s mandatory Annual Trust Report with an explanation as to why any payment was not made “in full and on time”. For law firms, late payment of PST has a significance over and above that of ordinary payables. I conclude that in not making the PST remittance herself on August 29, 2013 or, if that was not permitted, in failing to ensure that Ms. Gislason actually knew that she must make the remittance before August 31, 2013, the Claimant did fail to perform her duties properly.

Conclusion [ 33 ] I find that the Claimant performed the services on October 4 and October 11, 2013 as outlined in Tab M to the Claimant’s Amended Trial Statement. [ 34 ] I find that the Claimant was neither negligent nor in breach of the terms of her contract with respect to the issues of unpaid invoices, credit card reconciliations, maintenance of filing systems or training of legal administrative assistants. [ 35 ] I find that the Claimant was negligent and in breach of her contractual obligations in failing to take reasonable necessary steps to ensure that the July PST payment was made on time. [ 36 ] While there has been no immediate pecuniary consequence of the failure, the firm has been placed in a compromised position and I conclude that a fair result is that the Claimant is not entitled to recover the amount of her final October 23, 2013 invoice.

Accordingly, the Claimant’s claim is dismissed. [ 37 ] With respect to costs, the Defendants have been successful in the result. The Defendants previously abandoned their counterclaim of $5,000.00. This hearing was required because of the Claimant’s determination to recover her final account. In that endeavor she has been unsuccessful. I accordingly award the Defendants costs in the amount of $26.00. Although the Defendants paid filing fees of $182.00, that was a combination of the fees applicable to their Reply and the Counterclaim.

Having previously abandoned the counterclaim, the appropriate filing fees for the Reply are $26.00. [ 38 ] Judgment to the Defendants accordingly. __________________________________ Justice of the Peace, Donald W. Yule, Q.C.