Piechnik v. McFarlen Date:, 2016 BCPC 245

Citation: Piechnik v. McFarlen Date: 20160815 2016 BCPC 0245 File Nos: C74372 & C74701 Registry: Nanaimo IN THE PROVINCIAL COURT OF BRITISH COLUMBIA BETWEEN: ADAM J. PIECHNIK CLAIMANT AND: KILEY McFARLEN DEFENDANT REASONS FOR JUDGMENT OF THE HONOURABLE JUDGE GOUGE Appearing in person: Mr. Piechnik Appearing in person: Mr. McFarlen Place of Hearing: Nanaimo , B.C.

Date of Hearing: August 5, 2016 Date of Judgment: August 15, 2016 Background [ 1 ] Mr. Piechnik is a professional photographer and website designer. Mr. McFarlen is an arborist. The two men had been friends for some time before the events in issue. [ 2 ] In late October, 2014, Mr. Piechnik and Mr. McFarlen had discussions and exchanged e-mails with a view to a contract under which Mr. Piechnik would design and implement a website to promote Mr. McFarlen’s arborist business. In an e-mail to Mr. McFarlen dated October 24, 2014, Mr.

Piechnik said: I’m pretty sure that I can roll this out for $3500, but we’ll start with a 50% deposit at $2000 just to be safe. Mr. McFarlen replied the same day, expressed his enthusiasm for the project, and said: If you think you can come in around that price point for that site - I am down. If there is possibility of unexpected expense overages in the process I need to know before. Later that day, Mr. Piechnik replied, and said: I can guarantee it won’t go over $4000 and I’m planning on less than $3500. Mr.

Piechnik prepared and submitted a document dated October 14, 2014, entitled “Invoice”, which gave a very cursory description of the scope of work, and called for payment of two instalments, $1500 on delivery of the invoice and the balance of $2175 on November 30, 2014 (described as the completion date). The total of $3675 represented the agreed contract price of $3500 plus GST of $175. [ 3 ] Mr. McFarlen paid the sum of $1500 to Mr. Piechnik on receipt of the invoice. [ 4 ] Mr. Piechnik set to work on the website. In an e-mail dated December 4, 2014, he described it as “… at about 99% completion …”.

However, there were problems. In early December, the website was up and running. Mr. McFarlen asked friends and family to test it by accessing it from their personal computers and smartphones. The website was easily accessible and smooth-running from some devices and quite the opposite from others. Mr. Piechnik concedes that it was not running properly as at December 10, 2014. These problems led to heated exchanges of e-mails between Mr. McFarlen and Mr. Piechnik. [ 5 ] During the course of building the website, Mr. Piechnik took a number of photographs of Mr.

McFarlen in arborist garb, the idea being that a selection of them would be posted on the website as a promotional tool. He sent those photos to Mr. McFarlen by e- mail. [ 6 ] On December 10, 2014, Mr. Piechnik spoke by telephone with Mr. McFarlen’s wife. Mr. Piechnik told her that the final total price would be a little more than $5000, and that he would take Mr. McFarlen to court, if necessary, to collect it. [ 7 ] On December 11, 2014, Mr. McFarlen sent an e-mail to Mr. Piechnik, in which he said: Let me be absolutely clear to you. You are fired.

For reasons previously explained, I am not prepared to allow my company to be presented by you to the public in any form. [ 8 ] Mr. McFarlen then set about building his own website, which was up and running on December 16, 2014. He posted on his new website four of the photos which he had received from Mr. Piechnik, and also posted those four photos on his FaceBook page. He took the photos off the website and the FaceBook page on January 24, 2015, after Mr. Piechnik threatened to sue him for infringement of copyright. [ 9 ] In action #C74372, Mr.

Piechnik sues for $4191, being the balance which he alleges to be due (after giving credit for the $1500 payment made in October, 2014) under the contract for design and construction of Mr. McFarlen’s website. It will be observed that the total contract price alleged by Mr. Piechnik was $5691. During the course of the trial, Mr. Piechnik acknowledged that he had guaranteed that the contract price would not exceed $4000, and reduced his claim to $2500. In the same action, Mr. McFarlen counterclaims for the return of the $1500 payment. [ 10 ] In action #C74701, Mr.

Piechnik sues for $4000 as damages for copyright infringement. The Conflict [ 11 ] Mr. Piechnik and Mr. McFarlen agree that, as at December 10, 2014, the website ran well on some devices and very badly on others. Mr. Piechnik explained that it is impossible to create a website with the features sought by Mr. McFarlen which will run well on older versions of software. In an e-mail to Mr. McFarlen dated December 6, 2014, he said: Unfortunately, it’s impossible to retroactively support all legacy versions of software that people may be using.

On the following day, he sent Mr. McFarlen an e-mail containing a list of the operating systems used by the devices of family andfriends of Mr. McFarlen who had attempted, unsuccessfully, to use the website. In relation to those operating systems, Mr. Piechniksaid: You’re currently 8 versions and 14 months behind - so once again, we don’t support legacy software. In his evidence at trial, Mr. Piechnik said that the industry standard among website designers is to design only for the current version ofthe most popular operating systems. [12] Despite the difficulties, Mr.

Piechnik continued to work on the website, with a view to remedying as many of the problems ashe could. He had some success in that endeavour, and would have continued those efforts if Mr. McFarlen had not terminated theproject, as he did on December 11, 2014. The First Issue: Was Mr. McFarlen entitled to terminate the contract? [13] Mr. McFarlen asserts a right to terminate the contract on either or both of two grounds. He says that: a. the deficiencies in performance of the website, apparent to both men on December 11, 2014, were sufficiently serious to amountto a fundamental breach of contract; b. Mr.

Piechnik’s unilateral increase in the contract price to a figure in excess of $5000, coupled with his threat to sue if it were notpaid, constituted a repudiatory breach of contract. [14] The governing authorities support the proposition that either a fundamental or repudiatory breach of contract will entitle theinnocent party to terminate the contract. A fundamental breach is one which deprives the innocent party of "... substantially the wholebenefit which it was the intention of the parties that the innocent party should receive ..." under the contract: Hongkong Fir Shipping CoLtd v.

Kawasake Kisen Kaisha Ltd [1962], 2 Q.B. 26 @ pages 65-66; Bridgesoft Systems Corp vs British Columbia [1998], B.C.J. No.2445; 60 BCLR (3d) 106 @ paragraph 106. A repudiatory breach occurs when “… one party so acts or so expresses himself, as toshow that he does not mean to accept and discharge the obligations of a contract any further ...": Heyman vs Darwins, Ltd [1942] AC356. The principles were expressed in the following terms in Mentor Holdings Ltd vs 0858370 B.C.

Ltd 2014 BCCA 361; [2014] BCJ No. 2480; 34 BCLR (5th) 49 at paragraph 11: Although circumstances constituting a fundamental breach of contract may sometimes also constitute a repudiation of the contract, thedoctrines of fundamental breach and repudiation are distinct. A fundamental breach of a contract occurs where the failure of one of thecontracting parties to perform a primary obligation under the contract has the effect of depriving the other party of substantially thewhole benefit which the parties intended that party to receive: see Hunter Engineering Co. v.

Syncrude Canada Ltd., (SCC), [1989] 1 S.C.R. 426 at 499, 57 D.L.R. (4th) 321. Repudiation occurs when a party to the contract, either by words or conduct,evinces an intention not to be bound by the contract: see Guarantee Co. of North America v. Gordon Capital Corp., (SCC), [1999] 3 S.C.R. 423 at para. 40, 178 D.L.R. (4th) 1. The remedy for fundamental breach and repudiation is effectively the same -- the innocent party may elect to terminate the contract or to accept the repudiation bringing the contract to an end.

In either case, theparties are discharged from future obligations under the contract, and the innocent party may look to the other party for damages. [15] Several challenging issues would arise if it were necessary to determine whether the deficiencies in performance of the websitewere so severe as to be “fundamental”. Those issues include the question whether Mr.

Piechnik’s position that the contract did notrequire the website to respond to “legacy” operating systems was justified by the terms agreed or by a term customary in the industry(Georgia Construction Co vs Pacific Great Eastern Railway (SCC), [1929], SCR 630), and whether Mr. McFarlenprovided Mr. Piechnik with a sufficient opportunity to remedy the deficiencies before terminating the contract (Antons vs Singla [1996],BCJ No. 2544). Because of the conclusion which I have reached on the issue of repudiatory breach, I need not decide those issues. [16] Mr.

Piechnik guaranteed that the contract price would not exceed $4000. Some five weeks later, he demanded a contract pricein excess of $5000, and threatened to sue if it were not paid. By so doing, he plainly expressed himself in such a way as to show that hedid not intend to perform the contract according to its terms. Mr. McFarlen was therefore entitled to terminate the contract as and whenhe did. The Second Issue: What are the consequences of termination? [17] An innocent party faced with a repudiatory breach of contract has a choice. He may: (

i) decline to “accept” the repudiation,affirm the contract and insist that the other party continue to perform the contract on its original terms; or (ii) “accept” the repudiation,treat the contract as at an end, and sue for damages: Heyman vs Darwins Ltd; Moschi vs Lep Air Services Ltd [1973] AC 331; [1973] 2All ER 393. If he makes the latter choice, neither party is obliged to perform any of his contractual obligations after the acceptance ofthe repudiation. [18] In this case, Mr. McFarlen accepted Mr. Piechnik’s repudiation on December 11, 2014.

After that date, neither party wasobliged to perform any of the terms of the contract and Mr. McFarlen was entitled to sue for damages, as he has done. It necessarilyfollows that Mr. Piechnik’s claim for the balance of the contract price fails. [19] Where: (

i) there has been a repudiatory breach of contract; (ii) the innocent party has elected to terminate the contract becauseof the repudiatory breach; and (iii) as a result of the termination, the innocent party has received no benefit from the contract, theinnocent party is entitled to recover a sum of money sufficient to put him in the position which he would have occupied if the contracthad never been made: Kiss Estate vs Kiss (SCC), [1983] 1 SCR 623; 146 DLR (3d) 285; Karini vs Gu 2016 BCSC1060; [2016] BCJ No. 1193 at paragraphs 205 – 211.

[20] In this case, Mr. McFarlen received no benefit from the contract - the website, as it existed on December 11, 2014, was of nouse to him. He is therefore entitled to recover the sum of $1500 which he paid to Mr. Piechnik in October, 2014. The Third Issue: Copyright Infringement [21] Mr. Piechnik asserts, and Mr. McFarlen accepts, that Mr. Piechnik owns the copyright in the photos which Mr. McFarlenposted on his new website and on Facebook in December, 2014. If Mr. Piechnik had not repudiated the contract, or if Mr.

McFarlen hadnot elected to terminate the contract because of the repudiation, it would be necessary to consider whether Mr. McFarlen’s use of thephotographs was authorized by the contract. However, because Mr. McFarlen terminated the contract on December 11, 2014, he cannotclaim any rights under it after that date. It follows that Mr. McFarlen is liable for infringement of copyright. [22] In many cases, it is very difficult to assess damages for breach of copyright, whether one assesses damages by reference to theloss suffered by the owner of the copyright or by reference to the benefit received by the infringer.

In this case, Mr. Piechnik sufferedno loss by reason of Mr. McFarlen’s use of the photos, and the benefit received by Mr. McFarlen was probably very small. Parliamenthas addressed the issue by enacting a right to “statutory damages”. The owner of a copyright who is unable or unwilling to undertake theburden of proving actual loss by the owner or actual profit by the infringer may elect to claim statutory damages in lieu those available atcommon law. [23]

Section 38.1(1) of the Copyright Act RSC 1985, c C-42 provides: … a copyright owner may elect, at any time before final judgment is rendered, to recover, instead of damages and profits referred to insubsection 35(1), an award of statutory damages for which any one infringer is liable individually, or for which any two or moreinfringers are liable jointly and severally, (

a) in a sum of not less than $500 and not more than $20,000 that the court considers just, with respect to all infringements involved inthe proceedings for each work or other subject-matter, if the infringements are for commercial purposes; and (

b) in a sum of not less than $100 and not more than $5,000 that the court considers just, with respect to all infringements involved in theproceedings for all works or other subject-matter, if the infringements are for non-commercial purposes. [24] Mr. Piechnik says that Mr. McFarlen used each of four photos for commercial purposes in two different media (Mr. McFarlen’swebsite and FaceBook page), and that he is accordingly entitled to eight awards of not less than $500 each. I think that he hasmisconstrued the section. The

section entitles him to an award of not less than $500 and not more than $20,000 “… with respect to allinfringements involved in the proceedings …” before the court. If I were to give those words their plain meaning, I would concludethat: (

i) the award of statutory damages cannot be less than $500 nor more than $20,000, no matter how many works are involved, orhow many infringements are alleged or proven in respect to each work; and (ii) the minimum award in this case is $500. [25] However, the words of the statute have not been so interpreted.

Rather, it has been held the range of statutory damages is $500to $20,000 for each work, regardless of how many times or in how many places the work was published by the infringer: TelewitzPolsat S.A. vs Radiopol Inc. 2006 FC 584 , [2007] 1 FCR 444; [2006] FCJ No. 738; Century 21 Canada Limited Partnership vs Rogers Communications Inc 2011 BCSC 1196; [2011] BCJ No. 1679; 26 BCLR (5th) 300; 2011 SCC 21 , 338 DLR (4th) 1 @paras 419 - 420. Applying that principle, the minimum award in this case would be $500 for each of four photos, or a total of $2000. [26] Mr. McFarlen relies on

section 38.1(3) of the Copyright Act, which provides: In awarding statutory damages under paragraph (1)(a) … , the court may award, with respect to each work or other subject-matter, alower amount than $500 or $200, as the case may be, that the court considers just, if (

a) either (

i) there is more than one work or other subject-matter in a single medium, or (ii) the award relates only to one or more infringements under subsection 27(2.3); and (

b) the awarding of even the minimum amount referred to in that paragraph or that subsection would result in a total award that, in thecourt’s opinion, is grossly out of proportion to the infringement.

Section 38.1(5) provides: In exercising its discretion under subsections (1) to (4), the court shall consider all relevant factors, including (

a) the good faith or bad faith of the defendant;

(

b) the conduct of the parties before and during the proceedings; (

c) the need to deter other infringements of the copyright in question …. [ 27 ] I do not think that it can be said that Mr. McFarlen acted in bad faith. During his cross-examination, Mr. Piechnik did not confront him with the proposition that he was aware of the copyright issue when he published the photos. On balance, I doubt that he was conscious of the issue until Mr. Piechnik drew it to his attention late in January. Mr. McFarlen removed the photos from his website and his FaceBook page immediately upon receipt of Mr. Piechnik’s demand that he do so.

There is no need to deter others from breach of “… the copyright in question …” - I can’t imagine that anyone else would want to publish photos of Mr. McFarlen in his work clothes. I observe that the Copyright Act , unlike the Criminal Code , makes no reference to general deterrence. It is not suggested that Mr. Piechnik suffered any loss, or that Mr. McFarlen received any material benefit, by reason of the infringement. In all of the circumstances, an award of $2000 would be grossly disproportionate. An award of $500 would be proportionate and fair. Disposition [ 28 ] In the result: a. in action #C74372, Mr.

Piechnik’s claim is dismissed, and Mr. McFarlen is entitled to: (

i) judgment in the amount of $1500 on his counterclaim; (ii) court order interest at the Registrar’s rate from November 1, 2014 to August 14, 2016; and (iii) the court registry fees paid by him; b. in action #C74701, Mr. Piechnik is entitled to: (

i) judgment for $500; (ii) court order interest at the Registrar’s rate from January 31, 2015 to August 14, 2016; and (iii) the court registry fees paid by him. August 15, 2016 _____________________ T. Gouge, PCJ