Five Rivers Stucco Ltd. v. Sunny Sun et al Date:, 2015 BCPC 172

Citation: Five Rivers Stucco Ltd. v. Sunny Sun et al Date: 20150226 2015 BCPC 0172 File No: 1345059 Registry: Vancouver IN THE PROVINCIAL COURT OF BRITISH COLUMBIA Small Claims BETWEEN: FIVE RIVERS STUCCO LTD. CLAIMANT AND: SUNNY SUN, WEST CONTINENT DEVELOPMENT INC., and CHEN GUI ZHENG DEFENDANTS EXCERPTS FROM PROCEEDINGS REASONS FOR JUDGMENT OF THE HONOURABLE JUDGE M. GIARDINI Appearing on behalf of the Claimant: H. Sidhu, Company Representative Appearing on behalf of the Defendant West Continent Development Inc.

and on his own behalf: S. Sun Appearing on his own behalf: C. Zheng Place of Hearing: Vancouver , B.C. Date of Hearing: February 26, 2015 Date of Judgment: February 26, 2015 Introduction [ 1 ] The claimant, Five Rivers Stucco Ltd. (which I will refer to as "Five Rivers"), provides various construction services, including application of stucco and other work related to such installations. Five Rivers claims it entered into an agreement with the defendant Sunny Sun (who I will refer to from time to time as the "Builder") to do stucco work on a house owned by the defendant Mr.

Zheng (who I will sometimes refer to as the "Owner"). [ 2 ] Five Rivers claims it was not paid in full by Mr. Sun or his construction company, West Continent Development Inc. (to which I will refer as "West Continent"). Additionally, it claims the owner of the house, Mr. Zheng, agreed he would pay Five Rivers to complete the stucco work if Mr. Sun and his company did not pay it. [ 3 ] Ms. Cheung, I am noticed you are not translating. Everything is okay? [ 4 ] THE INTERPRETER: Yeah, I will translate it for you now. [ 5 ] THE COURT: Oh.

Well, you are going to have to do it as I go along -- [ 6 ] THE INTERPRETER: Oh, is that right? [ 7 ] THE COURT: -- because I am not going to stop. Why don't we do it this way? Mr. Zheng, do you understand enough that you will just let her know if you need something specifically translated? How would you like to do it? Is that what you would like to do? [ 8 ] CHEN ZHENG: It's okay right now. [ 9 ] THE COURT: All right.

So if it is not okay, just ask me to pause, and then she can start translating and I will slow down a bit. [ 10 ] CHEN ZHENG: Yeah. [ 11 ] THE COURT: Is that all right? [ 12 ] CHEN ZHENG: Yeah. [ 13 ] THE COURT: Okay. Perfect. I will just backtrack a moment. [ 14 ] Additionally, it claims the owner of the house, Mr. Zheng, agreed he would pay Five Rivers to complete the stucco work if Mr. Sun and his company did not pay it. [ 15 ] Five Rivers claims the amount of $24,720 from the two defendants plus filing fees and service fees for a total of $24,976.

Five Rivers acknowledges it received payment of $13,000 and says the amount claimed in these proceedings represents the balance owing for the work it performed on Mr. Zheng's house. [ 16 ] Given the breadth of the issues raised by the parties, but in particular the defendants, it is important to consider the contents of the notice of claim and the replies filed by the two defendants. Notice of Claim & Reply [ 17 ] Five Rivers issued a notice of claim against the Owner, Mr. Zheng, and against Huijin Sun. Five Rivers did not indicate any other name for Mr. Sun. The defendant Mr.

Sun testified he officially changed his name to Sunny Sun in 2002. He was previously called Hui Jian Sun, not Huijin Sun. At trial, I allowed Five Rivers to amend the notice of claim by changing the name to Sunny Sun. Additionally, I allowed the claimant to add West Continent as a defendant. West Continent had not been named in the original notice of claim. [ 18 ] Replies were filed by both Mr. Sun and Mr. Zheng. Mr. Sun, in his reply, denied all of the allegations contained in the notice of claim. He maintained he personally did not contract with the claimant. Five Rivers filed a default judgment against Mr.

Sun which was eventually set aside. Mr. Sun advised he would attend on the trial dates in case the court decided that Sunny Sun should also be named as a defendant, which is what I, in fact, did. [ 19 ] Mr. Sun did not make a counterclaim. Neither did he indicate he would be seeking set-off of any kind against Five Rivers. Moreover, Mr. Sun did not file a third party claim. [ 20 ] Mr. Zheng also filed a reply. He pleaded he was not a party to a contract with Five Rivers, he did not owe any money to Five Rivers, and the defendant Mr. Sun should pay for any amount owing. Mr.

Zheng stated Five Rivers did not complete the work on his home so he had to pay an additional sum of $5,000. He also said that in June 2012, he paid approximately $3,000 in cash to Five Rivers.

Mr. Zheng did not file a counterclaim and did not file a third party claim. [ 21 ] During the trial, the two personal defendants, Mr. Zheng and Mr. Sun, raised issues that could have been made the subject of a counterclaim and/or a third party claim. I made it clear to them that the issue to be decided in this case pertained to Five Rivers' claim and not to other issues they raised at trial but which were not properly brought before the court by the defendants in their pleadings. [ 22 ] I appreciate that all the parties are lay persons and have no legal training. They, of course, have the right to appear in B.C.

Provincial Court Civil Division without a lawyer. I am cognizant of the fact that the purpose of the Small Claims Act and the Rules is "to allow people who bring claims to the Provincial Court to have them resolved and to have enforcement proceedings concluded in a just, speedy, inexpensive and simple manner." However, I do not take that to mean the parties in a Small Claims action can proceed with claims and issues they have not properly identified in their claim or reply or otherwise properly brought to the attention of the court before the trial.

Background [ 23 ] First, I will deal with the original construction agreement. [ 24 ] The defendant Mr. Zheng is the owner of a property with a civic address of 190 MacDonald Avenue, Burnaby, British Columbia. That civic address was changed to 4023 Pandora Street, Burnaby, British Columbia, possibly in the course of the construction. [ 25 ] In June 2011, Mr. Zheng entered into a written construction agreement with West Continent. I will refer to that as the "Construction Agreement." The owner of West Continent was Mr. Sun.

One of the terms of the Construction Agreement provided West Continent was a licensed residential builder pursuant to the Homeowner Protection Act . It also provided West Continent was a registered member of the Canadian Home Builders' Association. The Construction Agreement essentially provided that West Continent would build a house for Mr. Zheng at a cost of $550,000 plus HST based on plans and construction specifications Mr. Zheng provided.

Terms which included the amount of monies to be paid and the dates, a schedule, and terms of payment were also set out in the Construction Agreement. [ 26 ] The completion date for the project was supposed to be "eight months after approval of drawings by the City." The Construction Agreement was signed by Mr. Zheng and Mr. Sun. [ 27 ] An addendum to the Construction Agreement provided the specifications for the house. The addendum also provided that the price included all costs of labour, materials, tools, etcetera, for the completion of the house.

Verbal Stucco Agreement [ 28 ] The claimant, Five Rivers, initially entered into a verbal agreement with Mr. Sun, who is the owner of West Continent. The agreement was to provide services relating to the application of stucco to the exterior of the house. This included installing paper, flashing for all windows and doors, strapping and K-Lath for the exterior of the house, wire lath, plaster stop, bug screen, corner beads, beams and posts, as well as gutters, soffits, gables, rainscreen, stucco coating, and extra work. [ 29 ] Mr.

Sidhu, one of three owners of Five Rivers, said he started work on the house in June 2012. The work he performed included applying double-layer black papers, the rainscreen, lathing, and wire mesh. His workers also applied the first coat of cement for the stucco, which is called the "scratch coat." Additionally, subtrades he hired did work on the soffits, window trim, and the gables of the house. Issue Between the Builder and the Owner [ 30 ] On or about June or July 2012, an issue arose between Mr. Zheng and Mr. Sun. According to Mr.

Zheng, the problem was that by June 2012, work on his house was only halfway completed. Mr. Zheng claimed by that point he had paid a total of $385,000 plus $20,000 for GST to West Continent. The payment represented 70 percent of the total cost of the project. Mr. Zheng decided to take over the construction management of the house.

Later, he and West Continent entered into a new written agreement on or about August 8, 2012, which will be referred to as the "August 8, 2012, Agreement." It appears that Five Rivers and its principals, that is, the three owners, did not know about the August 8, 2012, Agreement or its terms at that time. [ 31 ] Mr. Sun's view was that everything went well at the beginning of the project. By May 2012, they were at the drywall stage, and according to the construction contract, the Owner, Mr. Zheng, was supposed to pay West Continent $27,500. He did not. In June 2012, Mr.

Sun verbally told all the subcontractors working on the project to temporarily stop work. He told them they could start work again after the payment issue was resolved with the Owner. He personally told Mr. Sidhu of Five Rivers about this. [ 32 ] Mr. Sun said he had several discussions with the Owner, Mr. Zheng. These discussions began in June 2012. Mr. Zheng, according to Mr. Sun, proposed that each of them get an appraisal of the value of the work done to date on the project. They would look at the two appraisals and decide the cost to be attributed to the work West Continent had done to date.

They would use that amount to conclude the issue. [ 33 ] Mr. Sun went ahead and got an appraisal, but Mr. Zheng did not. Mr. Sun said he stopped work on the project altogether around June 2012. Mr. Sun said the work to be done by Five Rivers had been agreed to in May and June of 2012 before the payment issue with the Owner had even arisen. [ 34 ] According to Mr. Sidhu, who is the president of Five Rivers, he was aware there was a problem between the Builder and the Owner. On one occasion, he and his business partner, Mr. Sandhu, were at the site. They heard an argument between Mr. Zheng and Mr. Sun. As well, Mr.

Sun told Mr. Sidhu the same day that he had a problem with the Owner.

[ 35 ] Mr. Sidhu said by July 2012, Five Rivers was about to put on the second coat of stucco. Mr. Sidhu asked Mr. Sun for payment. Mr. Sun gave him a $7,000 cheque and later another cheque for $3,000. Mr. Sidhu was not clear about the specific date, but it was around the same time that Mr. Sun told Mr. Sidhu he was having a problem with the Owner. [ 36 ] Mr. Sidhu was at the house site and heard an argument between Mr. Sun and the Owner, who was only known to him as "Jack." Mr. Sidhu heard this argument on the same day Mr. Sun told him he was having a problem with the Owner. Mr. Sidhu said he, his partner Mr.

Sandhu, Mr. Sun, and Mr. Zheng were all present. Alleged Verbal Promise to Five Rivers by Mr. Zheng [ 37 ] Mr. Sidhu said Mr. Zheng told him there was no issue about the stucco work and if Five Rivers continued to work and if Mr. Sun did not pay them, Mr. Zheng would pay them. Mr. Sidhu said this promise was made in front of Mr. Sun. At that point in time, according to Mr. Sidhu, Mr. Sun prepared a written agreement relating to the stucco work. Mr. Sun said when Mr. Sidhu learned of the disagreement between him and Mr. Zheng, he became worried. Mr. Sidhu asked Mr.

Sun to pay him for the work done to date by Five Rivers. [ 38 ] By the time this conversation took place, Five Rivers had already started the stucco work. Mr. Sun said he had discussions with Mr. Sidhu, representing Five Rivers, and with Mr. Zheng both together and separately. He said an arrangement was initially arrived at whereby he would pay $7,000 to Five Rivers and Mr. Zheng would pay $3,000 to Five Rivers. Once that was done, Five Rivers would continue to work on the house. Mr. Sun asserted that after this arrangement was reached, it was Mr.

Zheng's responsibility to pay for any stucco work done on the house. [ 39 ] Mr. Zheng testified he never had any kind of agreement with Five Rivers. Moreover, he also testified he did not promise to pay them any extra money because he had already paid them. I took Mr. Zheng's statement to mean that Five Rivers had been paid because he had paid the Builder a total of $385,000 and the cost of the stucco should have come from that amount. [ 40 ] Mr. Zheng also noted that Five Rivers did not complete the external stucco work on his house and he had to hire another company to complete it. [ 41 ] Mr.

Zheng maintained he had no idea about the content of the contract between the Builder and Five Rivers. He maintained he had no agreement with Five Rivers. [ 42 ] In cross-examination, Mr. Zheng acknowledged that in June 2012 he paid Mr. Sidhu of Five Rivers $3,000 in cash. He did not get a receipt. Mr. Zheng maintained he paid that money because Mr. Sun asked him to prepay that amount as a deposit for the stucco work which was about to start. Mr. Zheng maintained the $3,000 cash payment was made before Five Rivers began work on the stucco. Mr.

Zheng said he never had any kind of agreement with Five Rivers, either verbal or written. He simply did what Mr. Sun asked him to do. The July 17, 2012, Written Stucco Agreement [ 43 ] On the day Mr. Sidhu heard the argument between Mr. Sun and Mr. Zheng, Mr. Sun prepared a written agreement pertaining to the stucco work. According to Mr. Sidhu, this agreement was prepared because of the payment problems Mr. Sun was having with the Owner. The implication was that the written agreement was prepared to document the agreement with Five Rivers. [ 44 ] Mr.

Sidhu said by that point and possibly even on that very day, although it was not clear, Mr. Zheng paid him $3,000 in cash. Accordingly, Five Rivers received a total of $13,000. Documentary evidence and testimony of other witnesses indicated that a cheque dated July 12, 2012, for $7,000 was issued to Five Rivers Stucco by Mr. Sun's company, West Continent. Furthermore, another cheque for $3,000 dated July 7, 2012 (or possibly it could have been July 9 but I could not read the writing) was issued to Five Rivers Stucco by Mr. Sun's company. [ 45 ] Additionally, in cross-examination, Mr.

Sidhu agreed that in June 2012, he received a $3,000 cash payment from Mr. Zheng. He also agreed that Mr. Sun asked Mr. Zheng to pay the $3,000 as a prepayment. According to the July 17, 2012, agreement, Five Rivers was to be paid an additional $18,000 plus another $1,000. [ 46 ] As already noted, Mr. Sidhu said Mr. Sun promised the Owner would pay that amount, i.e., the $19,000. Mr. Sidhu said the Owner, Mr. Zheng, agreed to do so. These statements were all verbal and were not reduced to writing. [ 47 ] Mr. Sun testified he had discussions with Mr.

Zheng because he was considering leaving the job altogether for non-payment. He told Mr. Zheng that if he paid the subcontractors, like Five Rivers, who were halfway through the job, he would follow up. By this he meant supervise the quality of the work and work with the subcontractors. However, if Mr. Zheng did not agree to pay the subcontractors, Mr. Sun would ask the subcontractors to stop working. It would then be up to Mr. Zheng to get other contractors/subcontractors to finish the house. [ 48 ] Mr. Sun said he spoke to Mr. Sidhu and Mr. Zheng separately and later spoke to them together. He met Mr.

Sidhu, Mr. Zheng, and Mr. Sandhu at the jobsite. At that meeting, Mr. Sun said he would pay Five Rivers $7,000. Five Rivers would continue with their work, and the Owner, Mr. Zheng, would be responsible for payment. Mr. Sun testified he heard Mr. Sidhu ask Mr. Zheng, "If Sunny doesn't pay, are you going to pay?" Mr. Sun said Mr. Zheng responded, "Yes." Mr. Sun said, on the basis of that conversation, he signed an agreement with Five Rivers dated July 17, 2012, which states on its face "payment by owner." [ 49 ] Mr.

Sun said the other payments to be made to Five Rivers over what had already been paid, which was $13,000, were between Mr. Sidhu and Mr. Zheng. Mr. Sun said he had no further involvement. Mr. Sun noted he did the same thing with the other subcontractors. Those who had finished their job he paid in full. The subcontractors that were halfway through the job were paid by him up to that point in time, and the remainder was for Mr. Zheng to pay.

[ 50 ] With respect to the payment to Five Rivers, Mr. Sun said he initially paid $3,000 to Five Rivers. He later paid another $7,000. It was his view that clause 4 of the August 8, 2012, Agreement that he signed with Mr. Zheng provided that any other monies owing to Five Rivers should be paid by Mr. Zheng. [ 51 ] Mr. Sun also asserted he was pushed into signing the July 17, 2012, agreement with Mr. Sidhu of Five Rivers. He said Mr. Sidhu told him if he did not sign that agreement, Five Rivers would not continue with the work. [ 52 ] In cross-examination by Mr. Zheng, Mr. Sun agreed Mr.

Zheng did not sign the July 17, 2012, agreement. He agreed that document was an agreement between Five Rivers and his company, West Continent. Terms of the July 17, 2012, Stucco Agreement [ 53 ] The July 17, 2012, stucco agreement is written out on a pre-printed form on the letterhead of Five Rivers. It is dated July 17, 2012, and addressed "to whom it may concern". Mr. Sandhu entered certain information by printing it by hand on the form. Mr. Sidhu signed as president of Five Rivers, and Mr. Sun signed as a builder. That agreement set out several headings: (

a) the process of rainscreen before stucco, (

b) stucco coating, (

c) extra work, and (

d) payment requirements. [ 54 ] Under the heading "payment requirements," it provides: The first payment is due upon completion of the scratch coat. The amount of payment is $13,000. The second and final payment is due upon completion of the final finish in the amount of $18,000 plus HST. [ 55 ] I note that I have referred to both HST and GST, but I refer to it because of the evidence I heard. It is not an error. The parties, when they gave their testimony and made their arguments, used both terms. [ 56 ] There is a handwritten notation for the payment of another $1,000. There is a further handwritten notation next to that item. In parenthesis are the words " after 20 days" . Below that

section there is another handwritten notation: "payment by owner". The document is signed by Mr. Sidhu for Five Rivers and by Mr. Sun. There is a dispute between Five Rivers and Mr. Sun about whether Mr. Sun signed in his personal capacity or as the principal for West Continent. Differences Between the Copies of the July Stucco Contract Tendered in Court [ 57 ] Mr. Sun had a different

interpretation of the meaning of that document. He also tendered into evidence a copy of ostensibly the same agreement. However, his copy was different from the copy tendered by Five Rivers. There are several differences between the copy Mr. Sun tendered and the one tendered by Five Rivers. The most significant difference is that the one tendered by Five Rivers has Mr. Sun's signature, which he identified, on the line titled "owner's signature." The word " owner" is crossed out and replaced by the word " bludler" .

I take it that was supposed to be "builder." On the line below there is a handwritten name, Huijin Sun, and below that the date July 18, 2012. [ 58 ] The copy of the document tendered by Mr. Sun is similar to the one tendered by Five Rivers. On a quick glance, one might not notice that the two copies were not identical. However, there are several other differences. One difference is that on two places in the contract where the word Sun is written, the writing appears to be different and is much clearer in the copy provided by Mr. Sun than in the copy tendered by Five Rivers.

More importantly, however, are the differences in the signature

section of the document. On the signature

section apparently completed by Mr. Sidhu, the signature appears to be different on Mr. Sun's copy from the signature on Five Rivers' copy. [ 59 ] There are also differences in the signature

section completed by Mr. Sun. First, the name printed under the signature, which Mr. Sun identified as his signature, is Sunny Sun. In the Five Rivers' copy, the name is Huijin Sun. Second, the name "West Continent" has been written in between the signature line and the printed name "Sunny Sun." Third, Mr. Sun's signature on the copy he tendered is above the signature line, whereas on the copy tendered by Five Rivers, it is right on the signature line. Five Rivers Not Paid [ 60 ] Mr. Sidhu said Five Rivers continued to do the stucco work and completed it by the end of July 2012. At that point, he called Mr.

Sun for the remainder of the money. Mr. Sun told him to call the Owner because it was the Owner who was going to pay. Mr. Sidhu called Mr. Zheng who told him that it was Mr. Sun who was going to pay. [ 61 ] Between the end of July and the end of August 2012, Mr. Sidhu called both Mr. Sun and Mr. Zheng many times after his company had completed the stucco work. He got the same answer every time he called. Mr. Sun said the Owner would pay, and Mr. Zheng said Mr. Sun would pay.

August 8, 2012, Contract Amending the Original Construction Agreement [ 62 ] As noted, a second agreement was signed on August 8, 2012, between Mr. Zheng and West Continent. Mr. Sun and Mr. Zheng agreed, and the agreement states, it contained amendments to the original Construction Agreement entered into on June 21, 2011. It is a two-page document written in Cantonese and signed by Mr. Sun for West Continent and Mr. Zheng as the owner. Two certified translations of the August 8, 2012, Agreement were provided to the court and the other parties. The translations provided to the court were not identical.

There were differences. However, the gist of the translations is that the agreement of August 8, 2012, between West Continent and Mr. Zheng provides as follows: 1. The duty to complete set out in the original Construction Agreement was modified and the Owner, Mr. Zheng, was made responsible for, and West Continent was relieved of, the responsibility to complete. 2. As to interior work, West Continent was responsible for completing the drywall installation, including all the work of each part at late stage [that is a quote from the translated document]. Once that was done, Mr.

Zheng would take over construction management of

the project for a fee of $20,000 to $25,000. 3. As to exterior work, West Continent was to be responsible for completing "the stucco's installation on the exterior wall, including tying up loose ends for each part." Afterwards, Mr. Zheng would be responsible for construction management himself. 4. Clause 4 dealt with payment. It is worded somewhat differently in each translation. One translation refers to it as closing costs; the other translation refers to it as the payment. Each translation provides that the total construction cost is to be $550,000 Canadian, excluding HST, and also that Mr.

Zheng had already paid West Continent $385,000. The balance shall be paid by Mr. Zheng with the consent of West Continent to the subcontractors. 5. Clause 5 dealt with project payments. In one translation, it is referred to as terms of payment. In the other translation, is it referred to as closing costs standard. The clause provides that West Continent shall pay project costs for work done before/prior to clause 1 and 2. Mr. Zheng is to pay the project payments after that. The clause further provides that Mr. Zheng's payments to subcontractors must be subject to the original agreement.

Payment to subcontractors must be signed off on by both parties. That clause noted there was $165,000, excluding taxes, left in the project budget. Accordingly, if the project costs exceeded $165,000, then West Continent was to pay the balance. However, if the project cost was under $165,000, the balance was to be returned to West Continent. This clause made it clear that any payments made from the balance of the project funds must be signed off by both parties; otherwise, such payments would be invalid. 6.

Clause 6 provided that the project payments to be made by West Continent must be paid to the subcontractors on time. If any disputes arose between West Continent and the subcontractors which resulted in the registration of a lien against Mr. Zheng's house, West Continent was to bear all the legal liabilities and must compensate Mr. Zheng for his losses. [ 63 ] Mr. Sun said that in July 2012, he gave Mr. Zheng the above-noted agreement written in Cantonese. It was eventually signed on or about August 8, 2012.

This agreement was to amend some of the conditions and terms of the original Construction Agreement entered into by West Continent and Mr. Zheng on June 21, 2011. According to Mr. Sun, clause 3 of the August 8, 2012, Agreement provided that after West Continent finished all the work for the outside wall stucco, Mr. Zheng would take care of the construction management. [ 64 ] Mr. Sun also testified that the August 8, 2012, Agreement provided in clause 4 that after $385,000 had been paid to him, the balance was to be paid by Mr. Zheng directly to the subcontractors who worked on the jobsite.

Moreover, in the case of Five Rivers, in addition to clause 4 in the August 8, 2012, Agreement, Mr. Zheng's agreement to pay the subcontractor, according to Mr. Sun, is reflected in the handwritten notation "payment by owner" in the July 17, 2012, agreement. [ 65 ] In cross-examination, Mr. Zheng asked Mr. Sun about the August 8, 2012, Agreement. Mr. Sun acknowledged he was the one who prepared the Cantonese language contract. In doing so, he relied on a conversation he and Mr. Zheng had while they were at Mr. Zheng's restaurant. Mr. Sun denied that he forced Mr.

Zheng to sign the August 8, 2012, Agreement. [ 66 ] In cross-examination, Mr. Zheng suggested to Mr. Sun that clause 3 of the August 8, 2012, Agreement provided that Mr. Sun was responsible for all external wall work. Mr. Sun said clause 3 provided he had to finish the work for the outside stucco wall; however, the obligation to pay arose from clause 4 which provided that Mr. Zheng was the one who had to pay the balance. [ 67 ] Mr. Zheng, in cross-examination, suggested to Mr.

Sun that clause 5 of the August 8, 2012, Agreement, which refers to closing costs, provided that all items covered by clause 2, inside work, and clause 3, outside work, should be paid by West Continent. Mr. Sun disagreed and said Mr. Zheng had misread the contract. Mr. Sun said clause 5 only referred to clause 1, completion duty, and clause 2, inside work. It did not refer to outside work which is covered by clause 3. Accordingly, Mr. Sun asserted Mr. Zheng was the one who was responsible for costs arising out of clause 3, namely, outside work. [ 68 ] Mr. Zheng put to Mr.

Sun that he had made a mistake and had written clause 1 instead of clause 2 and 3. Mr. Sun said he did not make any mistake regarding the numbering of the clauses in the August 8, 2012, Agreement. [ 69 ] Mr. Zheng also suggested to Mr. Sun that clause 1 of the August 8, 2012, Agreement said nothing about construction. Mr. Sun said clause 1 addressed the amendment to be made with respect to the completion date. Mr. Zheng also suggested to Mr. Sun that costs relating to the exterior work were Mr. Sun's responsibility. Mr. Sun disagreed.

He said that in the August 8, 2012, Agreement, he undertook to make sure the work was finished for the outside wall stucco. After that, the construction management would be taken over by Mr. Zheng. However, the closing costs were covered by clause 4 which provided that West Continent, at the time of signing of the agreement, had received $385,000 from Mr. Zheng. That clause further provided that the balance of the monies was to be paid directly to all subcontractors by Mr. Zheng. [ 70 ] Mr. Zheng's

interpretation of the August 8, 2012, Agreement, in particular, clause 3, was that the Builder was responsible for completing the stucco installation on the exterior wall, including tying up loose ends. After that, Mr. Zheng would take over the construction management himself. Mr. Zheng's

interpretation of clause 3 is that the Builder was to complete the stucco installation on the exterior wall and pay the subcontractors for that installation. [ 71 ] In cross-examination, Mr. Sun asked Mr. Zheng about the August 8, 2012, Agreement. Mr. Zheng confirmed he was not saying the original construction contract was nullified. However, he took the position that the wording of clause 3 clearly stated all external work, including the stucco work done by Five Rivers, was the responsibility of the Builder both before and after the August 8, 2012, Agreement. Mr. Zheng's

interpretation was that the word " responsible " referred to both management and payment. The court asked where the word " responsible ” was used in the contract. Mr. Zheng said that the wording of paragraph 3 which states Party 1, the Builder, was to finish all work for outside wall stucco, meant that the Builder was responsible for everything. [ 72 ] It was put to Mr. Zheng by Mr. Sun that the word finished does not mean responsible. Mr. Zheng did not agree. The court asked Mr. Sun and Mr. Zheng whether the word responsible and the word finished in Cantonese are the same word.

Both of them agreed the two words are different in Cantonese. However, Mr. Zheng said they mean the same thing in this context.

[ 73 ] In cross-examination, Mr. Sun directed Mr. Zheng's attention to clause 4 of the August 8, 2012, contract. That paragraph provides that Mr. Zheng had already paid the Builder $385,000 and that "the balance shall be paid directly by Party B with the consent of Party A to the subcontractors." This quote is from Mr. Sun's translated document submitted to the court. Mr. Zheng agreed this is what the contract provided; however, he said it meant all subcontractors but did not include Five Rivers. The court asked why Mr. Zheng believed this to be the case.

He responded Five Rivers was excluded from clause 4 because in clause 3 of the contract it clearly stated the outside work was the responsibility of the Builder. Legal Principles [ 74 ] In an old English case, May & Butcher Ltd. v. The King , [1934] 2 K.B. 17 (H.L.) , one of the judges noted that to be a good contract there must be a concluded bargain. Moreover, a concluded contract is one which settles everything that is necessary to be settled and leaves nothing to be settled by agreement between the parties. The judge also noted that as a matter of general contract law, all the essentials have to be settled.

However, he acknowledged that the essentials may vary according to the particular contract under consideration. [ 75 ] In Hersley v. EMRlogic Systems Inc. , 2010 BCPC 339 and in Versailles Building & Design v. Encore Entertainment Services and Products Inc. , 2012 BCPC 54 , I reviewed some of the legal principles applicable to contracts. I am going to refer to those legal principles here. [ 76 ] First, burden of proof. The party who alleges a breach of contract has the onus, that is, the responsibility, of proving on a balance of probabilities that a contract was made as alleged.

The fact an agreement may not have been reduced to writing does not alter the requirement to satisfy the court about the certainty of the terms agreed to by the parties. The basic contractual principles of offer and acceptance and certainty of terms apply. [ 77 ] Second, elements of a valid contract. In order to determine whether Five Rivers is entitled to additional payment from the defendants, or any of them, I need to decide whether Five Rivers entered into a legally enforceable contract with any or all of the defendants. The elements necessary for the formation of a contract are: (

a) Making an offer - Has an offer been made to enter into an agreement on certain terms? (

b) Acceptance of the offer - Has each term of the offer been accepted by each party, either by words or by conduct? (

c) Is there consideration - Has one party given a benefit or has the other suffered a detriment or loss? (

d) Do the parties to the agreement intend to create legal relations? (

e) Are the terms of the agreement certain and not vague? (

f) Is the agreement complete - Are there any terms left outstanding to be agreed upon later? [ 78 ] In order to create a contract, there must be a meeting of the minds of the parties about the essential terms. There can be no contract without a meeting of the minds of the parties. The question I must ask is whether a reasonable observer examining the exchanges between the parties to this litigation would conclude that a contract had been entered into.

The question is not what a party believes or understands, but what a reasonable person in the situation of the parties would understand the agreement to be. [ 79 ] Sometimes it is a simple matter to decide what the parties have agreed to, for example, where the parties have put their agreement into a written document and signed it. If there is no single detailed written document, then everything that occurred between the parties relevant to the alleged contract must be considered by the court.

This will assist the court in determining whether an agreement can be established on the basis of what the parties have said, done, or written. [ 80 ] Third, oral contracts. In Le Soleil Hotel & Suites Ltd. v. Le Soleil Management Inc. , 2009 BCSC 1303 , Madam Justice Dickson of the B.C. Supreme Court made several points about oral contracts. She noted that the

interpretation of oral contracts turns on the same essential principles as written contracts. However, since the agreement between the parties has not been reduced to writing, the court must consider what the parties said and what they did. It must then objectively assess whether, in context, the words and actions of the parties establish an intention to be bound. Analysis [ 81 ] The issues to be determined in this case are: (

a) Who were the parties to the original contract that resulted in Five Rivers performing stucco work on Mr. Zheng's house? (

b) What were the terms of that initial stucco contract? (

c) Did the terms of that initial contract change? In particular, did the July 17, 2012, agreement amend the original agreement? (

d) Who were the parties to that contract? In particular, did Mr. Sun agree to be personally liable or was he simply acting on behalf of West Continent? (

e) Did Mr. Zheng enter into an oral contract with Five Rivers? If so, what were the terms of that contract? (

f) Has Mr. Zheng established a claim for damages for extra costs against Five Rivers? [ 82 ] I begin with, who were the parties to the original stucco agreement? I am satisfied on the evidence that the original Construction Agreement for Mr. Zheng's house was between Mr. Zheng and West Continent. Moreover, it is clear from the evidence

and the documents submitted at trial that Mr. Zheng retained West Continent as a general contractor who would be responsible for retaining subtrades as required. There is no evidence to suggest that Mr. Zheng had any knowledge or contact with Five Rivers until it arrived at the residence to do the stucco work. [ 83 ] I am satisfied on the evidence of Mr. Sidhu and Mr. Sun that Mr. Sidhu, on behalf of Five Rivers, entered into an initial verbal agreement to provide services relating to the application of stucco to the exterior of Mr. Zheng's house.

It was not immediately apparent whether the initial verbal agreement was between Five Rivers and West Continent or Five Rivers and Mr. Sun. Five Rivers, through its principal Mr. Sidhu, and Mr. Sun appear to have been remarkably casual in their approach to documenting the agreement. According to Mr. Sidhu, in May 2012, Mr. Sun called him and asked him for an estimate for stucco work on the Pandora/MacDonald Street house. Mr. Sidhu gave him a verbal estimate of $31,000 plus GST. This estimate included the stucco work, gutters, soffits, and window trim. Five Rivers had worked with Mr.

Sun before this job and had not experienced any problems. [ 84 ] Documents submitted at trial by Five Rivers indicate that the initial verbal agreement was with West Continent. Invoice number 174 dated July 17, 2012, shows the customer's name as West Continent Dev. (meaning "development"). It should be noted that Mr. Sun's name is also on the invoice. Moreover, the invoice refers to a quote as per the agreement dated 17/7/12. However, more important, there are two cheques, one dated July 7, 2012, for $3,000 and the other dated July 12, 2012, for $7,000 payable to Five Rivers.

Those cheques were issued on the account of West Continent. [ 85 ] It is also significant that the claimant, Five Rivers, has not relied on its initial verbal contract. Instead, in making its claim against the defendant Mr. Sun, it based its case on the July 17, 2012, agreement wherein it claims Mr. Sun agreed to be personally responsible. [ 86 ] Having considered all the evidence and the actions of the parties, I am satisfied on a balance of probabilities that the initial verbal agreement for the stucco work was between Five Rivers and West Continent. Mr.

Sun, in his personal capacity, was not a party to that initial agreement; neither was Mr. Zheng. [ 87 ] The terms of the agreement were that Five Rivers was going to install two layers of paper, strapping, and K-Lath to the exterior of the house, rainscreen, soffits, window trim, rock dash and so on. I have outlined that in the background facts. [ 88 ] The next issue is - did the terms of the initial contract change?

In particular, did the July 17, 2012, agreement amend the original verbal stucco contract? [ 89 ] It is clear from the evidence and the documents submitted at trial that by early summer of 2012, a rift had developed between the Builder and the Owner. As a result, the defendants and Five Rivers were all scrambling to salvage what they could. In one of the documents submitted by him, Mr.

Sun notes that since the Owner had not paid him, he stopped construction work on the house and hired Capital Pacific Realty Advisors, an inspection company, to evaluate the work that had been done to date and the costs associated with that work. [ 90 ] Mr. Sun wrote he retained that company on July 6, 2012. However, the 15-page report submitted by Capital Pacific Realty Advisors clearly indicates they had been called in long before July 6, 2012. In fact, the certification by Mr.

Wong, which is part of the report, indicates he inspected the property on July 3, 2012. [ 91 ] On July 11, 2012, the lawyer for West Continent wrote to Mr. Zheng demanding payment under the Construction Agreement in the amount of $67,000. Clearly, there were issues between the Builder and the Owner early in July, if not before. [ 92 ] I find, against this backdrop, that Five Rivers attempted to do what it should have done in the first place, namely, to put in writing its agreement regarding the terms of the stucco work it was doing on Mr. Zheng's house.

Five Rivers relies on the written agreement addressed "to whom it may concern" and dated July 17, 2012, and on invoice number 174, also dated July 17, 2012. Mr. Sidhu, the principal of Five Rivers, testified the written agreement was prepared because Mr. Sun told him he was having problems with the owner of the house about being paid. [ 93 ] Mr. Sidhu said the July 17, 2012, agreement confirmed what Five Rivers had been retained to do. He maintained Mr. Sun told him he would pay Five Rivers for all the work completed to that date. He confirmed that altogether he received $13,000 in payments. Mr.

Sun paid him $10,000 in two separate cheques, and Five Rivers received another $3,000 in cash from Mr. Zheng. Mr. Sidhu agrees with Mr. Zheng's version of what this was for because he testified that Mr. Sun asked Mr. Zheng to make that $3,000 cash payment as a prepayment. [ 94 ] According to the July 17, 2012, agreement, Five Rivers was to be paid an additional $19,000. Five Rivers maintains that Mr. Sun is personally liable for that amount because he signed that agreement. Five Rivers says the agreement was signed in Mr. Sun's personal capacity and not as a principal for West Continent.

Moreover, as I have already indicated, Mr. Sidhu testified Mr. Sun promised Mr. Zheng would pay that amount and, further, that Mr. Zheng himself agreed. [ 95 ] Mr. Sidhu acknowledged that Five Rivers did not have a written contract with Mr. Zheng. He said the statements about payment were all verbal and were not reduced to writing. [ 96 ] At this point, I wish to note that the value of the documents relied on by the parties regarding the July 17, 2012, agreement is significantly compromised by the fact the version relied on by Five Rivers and the version relied on by Mr.

Sun had a number of obvious and troubling differences. I am not going to detail what I have already commented on in the

section of my reasons setting out the differences between the two versions, but there were a number of other differences which led me to conclude I should give very little weight to that document. [ 97 ] Having considered the testimony of Mr. Sidhu and Mr. Sun, as well as the documents tendered at trial, I am not satisfied that Five Rivers has established on a balance of probabilities that there was any significant change between the original verbal agreement and the July 12, 2012, agreement that was signed by Mr. Sidhu and Mr. Sun. So it was the same agreement that continued, and that was the

agreement between West Continent and Five Rivers. [98] The next question is - did Mr. Sun agree to be personally liable or was he acting on behalf of West Continent? The fallout ofthe difficulties that arose between the Owner and the Builder which affected the subtrades, including Five Rivers, is that everyone wasattempting to protect their own interests. Accordingly, the evidence given in this trial, years after the events, must be carefullyconsidered and scrutinized. The evidence before the court makes it clear that the parties were doing whatever they could to get and, inthe Owner's case, to keep their money.

Five Rivers has not satisfied me on a balance of probabilities that Mr. Sun, by signing the July17, 2012, agreement, was signing on his own behalf rather than on behalf of West Continent. [99] First, given the difficulties the Builder had encountered with getting payment from the Owner, it is unlikely and unreasonable toconclude he would have personally undertaken future liability for the completion of the stucco contract. At this point, the August 8,2012, Agreement between the Builder and the Owner had not yet been signed.

Accordingly, if I were to accept Five Rivers' submissionon this point, it would mean that Mr. Sun was accepting personal responsibility. That simply does not ring true in the circumstances ofthis case. [100] I am satisfied on the evidence that the July 17, 2012, agreement, such as it was, was between Five Rivers and West Continent. Five Rivers has not established that the July 17, 2012, agreement was between it and Mr. Sun in his personal capacity. I am supported inmy conclusion by the fact that on invoice number 174, the customer is shown as West Continent. [101] The next question I will address is - did Mr.

Zheng enter into an oral contract with Five Rivers? If so, what were the terms ofthat contract? Mr. Sidhu, on behalf of Five Rivers, testified that on the day he and Mr. Sun signed the July 17, 2012, agreement, Mr.Sun promised the Owner would pay an additional $19,000 for the stucco work. Mr. Sidhu also maintained the Owner, Mr. Zheng, waspresent and agreed to pay that amount. [102] Mr. Sun testified he too was present at a meeting on the jobsite that included Mr. Sidhu and Mr. Zheng. He maintained that atthat meeting he told Five Rivers he would pay them $7,000 and Mr.

Zheng would be responsible for any further payment. Mr. Sunmaintained he was present when Mr. Sidhu asked Mr. Zheng whether he would pay if Mr. Sun did not. Mr. Sun testified Mr. Zheng saidhe would. Mr. Sun further maintained that, on that basis, he signed the July 17, 2012, agreement with Five Rivers. Mr. Sun testified thatwhatever other payments were due to Five Rivers, they were to be made by Mr. Zheng. [103] Mr. Zheng maintained he never had any kind of agreement with Five Rivers. He said he had no idea about the content of anagreement between the Builder and Five Rivers.

He also said he did not promise to pay Five Rivers any extra amount because he hadalready paid Mr. Sun. [104] Given the differing versions about who said what to whom, I must assess the credibility of the parties in determining whetherMr. Zheng made a verbal agreement to pay Five Rivers. In making this assessment, I will bear in mind the comments made by our Courtof Appeal in Farnya v. Chorny, (BC CA), [1952] 2 D.L.R. 354. The court said that trial judges must consider thepreponderance of probabilities evident in the surrounding circumstances and consider the evidence as a whole.

The court also noted thattruthfulness and reliability are not necessarily synonymous. In other words, a witness may be trying to be truthful but may neverthelessnot be reliable. [105] I found the testimony of Mr. Sidhu, Mr. Sun, and Mr. Zheng was self-serving at best. However, that is what often happens incases such as this where an agreement is not properly documented and the parties attempt to put the pieces together after the fact. Noneof them were particularly good or careful historians. During the trial, it took considerable time and effort to attempt to establish thechronology of what happened.

I am not suggesting any of them set out to be untruthful. However, it was clear their recollection ofevents was coloured by their self-interest. [106] Having considered the evidence of the parties and the responsibility which lies on Five Rivers to establish the existence of anagreement, I find Five Rivers has not established on a balance of probabilities that Mr. Zheng made a verbal agreement to pay FiveRivers $19,000 if they continued to work and completed the stucco and related work. The recollections of Mr. Sidhu and Mr. Sun aresimply not enough to establish the elements of a valid verbal contract with Mr.

Zheng. Given the difficulties Mr. Sun himself washaving with Mr. Zheng about payment for work done, difficulties which were known to Mr. Sidhu, the principal of Five Rivers, it strainscredulity that either Mr. Sun or Mr. Sidhu would simply accept Mr. Zheng's word. Accordingly, I dismiss Five Rivers' claim against Mr.Zheng because it has not established that he promised to pay if they did additional work. [107] Next, does Five Rivers have a claim against West Continent? I find that the original verbal agreement and the subsequentwritten agreement of July 17, 2012, was between Five Rivers and West Continent.

It was West Continent that brought Five Rivers to thejobsite, supervised their work, and paid for some of the stucco work they had done. In my view, West Continent cannot simply wash itshands of its contractual obligations to Five Rivers by entering into an agreement with Mr. Zheng to which Five Rivers was not a party.

Accordingly, I find that West Continent owes Five Rivers an additional $19,000 plus HST (because the agreement was made while HSTwas still in place) and $156 for filing fees, $100 for service fees, and court-ordered interest beginning today, February 26, as this is thedate the decision was made. [108] The last question - has Mr. Zheng established a claim for damages or extra costs against Five Rivers? On the evidence beforeme, I am satisfied that Mr. Zheng has not established a claim for $5,000 in damages against Five Rivers. [109] Those are my reasons. (REASONS FOR JUDGMENT CONCLUDED)