H. Y. Engineering Ltd. v. Siemens Date:, 2014 BCPC 22

Citation: H. Y. Engineering Ltd. v. Siemens Date: 20140225 2014 BCPC 0022 File No: 21146 Registry: Abbotsford IN THE PROVINCIAL COURT OF BRITISH COLUMBIA BETWEEN: H. Y. ENGINEERING LTD. CLAIMANT AND: LUCAS SIEMENS DEFENDANT REASONS FOR JUDGMENT OF THE HONOURABLE JUDGE K. D. SKILNICK Counsel for the Claimant: D. Moseley

Appearing in person: L. Siemens Place of Hearing: Abbotsford , B.C. Dates of Hearing: December 4, 2013, February 20, 2014 Date of Judgment: February 25, 2014 [ 1 ] The Claimant H. Y. Engineering Ltd. brings this claim against the Defendant for the sum of $3,665.14 which is alleged to be owing to the Claimant by the Defendant for engineering services provided to the Defendant by the Claimant. The Defendant has filed a statement of defence alleging two defences to the claim: (

a) that he did not authorize the work to be performed, and (

b) that the work was not performed. [ 2 ] In early February of 2012, the Defendant contacted the Claimant about the preparation of a plan for the development of a piece of property on Townline Road in Abbotsford, BC. The Claimant prepared a detailed written proposal that spelled out the scope of the work it was prepared to do for the Defendant, on what terms the work would be performed, how the Defendant would be billed and an approximate cost of the work, so that the Defendant could budget accordingly.

The proposal was broken down into five stages, but the Claimant’s services never advanced beyond the first stage. [ 3 ] A written proposal was prepared, dated February 13, 2012. The proposal was addressed to a company known as Rockhill Properties Ltd.

A meeting was arranged and the parties got together on March 16, 2012 to review the written proposal that the Claimant had prepared. [ 4 ] Although the agreement was prepared for Rockhill Properties Ltd., when the parties met, they both agree that at that time the Defendant was unsure whether or not Rockhill would be the entity that the services would be performed for. At end of the contract, the Defendant admits that he signed his name below the following: “I, Lucas Siemens of _________ hereby authorize H. Y.

Engineering Ltd. to proceed with engineering services as outlined above and agree to the payments and terms set out.” [ 5 ] It may have been that the Defendant meant to contract with the Claimant in the name of Rockhill Properties Ltd. or some other corporate entity, but the contract which binds the parties is the one they actually made, not the one they may have individually intended. It is clear from the evidence of both parties that the Defendant did not enter into the contract on behalf of Rockhill Properties Ltd.

When asked why he didn’t sign the agreement on behalf of that company, he testified “I wasn’t sure if I was going to put it in a different company or what.” This is an admission that, at the time the agreement was signed, the Defendant was not contracting on behalf of Rockhill. If this had been the case, the contract would have been signed on behalf of Rockhill. By his own admission, the Defendant had not made up his mind which entity would conduct the project, and when he signed the agreement, he did so in his personal capacity. [ 6 ] This Claim concerns a written agreement.

Many small claims cases involve situations where the parties have not set out any lasting record of their agreement on paper, leaving it open to arguments about precisely what the terms of the contract are. This is not the case here. The written agreement sets out the terms of the contract made by the parties. Words in a contract are construed according to their usual and ordinary sense.

In this case, the Defendant agreed that “I, Lucas Siemens… agree to the payments and terms set out.” It is clear from a plain reading of the written contract that it was Lucas Siemens personally who was agreeing to pay for the services performed by the Claimant. [ 7 ] The next issue is what it was exactly that the Defendant was agreeing to pay for. On page 1 of the agreement, in the

section entitled “Planning and Project Management Services”, the Claimant listed thirteen services it would perform, set out in bullet points. Of these items, only three were commenced before the contract was terminated for non-payment. Richard Brooks, Vice-President of the Claimant and Project Manager for this project, testified that of the thirteen services listed: (

a) the preparation of site layouts, concepts and revisions had begun; (

b) the preparation of a Preliminary Site Servicing Concept to include in the Subdivision Application was partly done; and (

c) some liaison with the Project Environmental Consultant to assess on-site watercourses and protection requirements had taken place. [ 8 ] This

section of the agreement concluded as follows: “Our fees for this aspect of our services are on an hourly basis due to the variable nature of this task. To assist in your budgeting for this work, we have estimated a total fee for budget purposes and is predicated on you interacting with the City of Abbotsford, our firm and other consultants, and doing a large portion of the detailed negotiations and discussions with the City Planning Department. Estimated Planning Services Subtotal: $8,500.00.” [ 9 ] The agreement states, in the

section entitled “Part IV Method of Payment”, on page 5: “Progress invoices for works completed to date in part or in full will be issued on or about the last day of the month and payment will be due 30 days thereafter. Payments not received after 30 days will be subject to our standard 12% per annum interest charges. Should the client fail to adequately maintain their account status, H. Y. Engineering Ltd. reserves the right to suspend work on the project until the account status has been addressed.

[ 10 ] Under the terms of the contract, the Defendant was agreeing to pay the Claimant for its time, on an hourly basis. Mr. Brooks testified that he never told the Defendant what the hourly rate was at which the Defendant would be billed. The agreement did not set this out and both of the parties agree that the Defendant never asked what rates he would be billed at. Mr. Brooks testified that the hourly rate for each of his company’s employees is calculated by a cost analysis of that employee’s time. The hourly rate is 120% of the employee’s hourly cost. So, for example, under this cost analysis, Mr.

Brooks’ time is valued at $117.50 per hour, and is billed out at 120% of this amount, or $141 per hour. [ 11 ] An invoice was sent out the Defendant dated March 31, 2012. According to email correspondence, this was not received by the Defendant until April 25, 2012, and it includes some work that was performed in April, before the 25th. The invoice was addressed to the Defendant personally. It does not contain a breakdown of the hours worked or the rate at which those hours are billed. It simply says that it is a bill for 37.9% of the budgeted amount of Phase One of the contract.

The invoice is for 37.9% of $8500, or $3,223.50, plus expenses in the sum of $48.95 and taxes of $392.69 for a total of $3,665.14.

The services billed are described in the invoice as follows: “For Planning services including liaison with the City of Abbotsford Planning and Development Department, review the servicing and developmental potential of the subject property, discuss with the owner regarding the existing site conditions and the comments obtained from the Area Planner, obtain the as-built information from the City of Abbotsford for preparation a [sic] the Base Plan drawing, preparation of a layout concept to determine potential lot configurations and road networks.

For Project Management including liaison with the project sub-consultants, discussion with the Legal Surveyor regarding the available topographic survey information and associated drawing files, review the watercourse locations and classifications with the Environmental Consultant, request information sketches from the Environmental Consultant regarding the top of bank and setback requirements, client liaison and expenses including printing, etc.” [ 12 ] On April 25, 2012, upon receiving this invoice, the Defendant immediately expressed his displeasure with the Claimant, with its services and with its invoice.

He complained that “nothing has happened for several months” although he admitted that this was an exaggeration, since the Claimant had only been on the job for less than six weeks. He complained that his phone messages were not being returned. He felt that the services described in the billing exaggerated what the Claimant had actually done. No complaint was made about the party to whom the bill was addressed to.

There is no complaint that the bill was addressed to the Defendant personally rather than to Rockhill Properties Ltd. [ 13 ] In his email the Defendant asked the Claimant to amend the bill or he would be finding a new engineering firm. Mr. Brooks replied the following day with an email answering the Defendant’s complaints. One of the areas of contention concerned compliance with environmental legislation. The Claimant felt stymied because it did not have current survey information regarding the location of watercourses on the property. The last survey information was over a decade old.

The Defendant felt that the Claimant should have relied on that information and made changes after it obtained a current survey. The Claimant was of the opinion that it needed current survey information first, in order to head off potential problems with the environmental regulatory agencies. In Mr. Brooks’ opinion, it was necessary to locate those watercourses and to obtain the necessary clearance from the Department of Fisheries and Oceans concerning how much of a setback from the watercourse would be required to comply with environmental laws.

The Fisheries Act of Canada and other statutes contain provisions which create offences that can result in very large fines for non-compliance, something Mr. Brooks saw as his professional duty to avoid. [ 14 ] In order to convince the Defendant that the bill submitted was fair, the Claimant disclosed its internal time records and its billing cost analysis. I accept that in doing so, the Claimant wanted to be honest and transparent, but the effort probably added to the confusion.

Lori Joyce, the planner on the project, testified that, although hours were recorded internally, the Defendant was not billed for the preparation of the proposal. The hours that the Defendant was charged do not exactly match the invoiced amount. Mr. Brooks attributes this to his discretion to make adjustments to the bill.

The following table shows the internal cost hourly rate for the Claimant’s employees who worked on this project, the rate at which each were billed out (i.e. internal cost plus 20%), the amount of hours recorded on the time sheet between the time when the contract was signed until April 25 th and the amount owing based on those hours at the billed rate: Employee’s name Cost Rate Billed Rate (120% of Cost) Hours Recorded Amount Owing Richard Brooks $117.50 $141 3.5 $493.50 PGH $100 $120 0.5 $60.00 Lori Joyce $80 $96 13.0 $1,248.00 JV (Draftsperson) $70 $84 0 0 CG (Draftsperson) $62.50 $84 14.50 $1,218.00 MK (Project Assistant) $62.50 $75 2.25 $168.75 Misc.

Services $47.50 $57 0 0 TOTAL $3,188.25 [ 15 ] If one accepts that a total amount owing on this project, based on the Claimant’s usual hourly rates of billings, is $3,188.25, then if one adds the expenses of $48.95 plus sales taxes at 12% of the total of these two amounts for a further sum of $388.46, the total amount owing by the Defendant under the terms of the contract would be $3,625.66 (about $40 less than what he was billed.) [ 16 ] On behalf of the Claimant, three witnesses testified:

(1) Richard Brooks, the Claimant’s Vice-President and Project Manager;

(2) Lori Joyce, the Claimant’s planner, and

(3) Chris Goldswain, the Claimant’s planning technician (or draftsman). Each of these witnesses testified as to the time spent by each of them on the Defendant’s project. They testified as to the hours that each worked, what was done during that time, and the hourly rate that each billed out at. Nothing in their evidence suggests any inflation of the Defendant’s

invoice. [ 17 ] In a case like this where a client has agreed to pay for a professional person’s services, but the precise rate at which those services are being billed at is not specified, the law allows the professional person to charge a reasonable rate for his services. [ 18 ] The time spent by each of the employees of the Claimant on this project and the hourly rates charged by each appear to be reasonable. No evidence was called by either party as to what a reasonable hourly rate for a professional engineer is, other than within the testimony of Mr. Brooks himself. In this case I would note that Mr.

Brooks is an experienced engineer. He has billed his time out at a rate of $141 per hour. When one considers all of the responsibility that attaches to an engineer’s certification of a project of this nature, this is not an unreasonable rate. [ 19 ] The Defendant alleges that he has been “taken advantage of” by the Claimant. On a review of the work documented by the Claimant including the time spent, there is no evidence to support this assertion. With the benefit of hindsight, there are ways in which the Claimant could have communicated better with the Defendant.

For example, if the Claimant had said to the Defendant, “these are the hourly rates at which you will be charged for each of my employees” then the Defendant might have better anticipated the size of the bill. The use of the percentage figure in the invoice was misleading because it gave the Defendant the wrong impression that 39% of the work contemplated in the 13 bullet points in phase one of the contract had been performed, when this was obviously not so.

The Defendant also bears some responsibility for this situation because he signed a contract in which he agreed to pay for the Claimant’s employees’ time, but did not concern himself with learning what that time was actually costing him.

It was also wrong of him to rely on his expectation of how the environmental aspects of the project would be addressed, rather than on the expertise of the professional that he had hired. [ 20 ] It was wrong for the Defendant to expect that he would have the use of the Claimant’s employees’ time, but would only pay a pittance for that time rather than a reasonable rate for a professional engineering firm. The Defendant agreed to pay the Claimant for its services on an hourly basis, with the implied understanding that those services would be billed out at a reasonable rate, according to the industry standard.

Taking into account the experience of the Claimant’s engineer and the responsibilities which attach to a project of this nature, I find that the Claimant has billed the Defendant at a reasonable rate and it is entitled to judgement for the sum of $3,625.66 (which includes expenses and GST), calculated in accordance with the table set out earlier in these reasons. [ 21 ] The Claimant is also entitled to interest on this amount from May 25, 2012 at the rate of 12% per annum pursuant to

Part V of the contract between the parties. I calculate this at 1 year and 9 months (or 1.75 years), multiplied by 12% per year, multiplied by $3,625.66, for total interest owing of $761.39. [ 22 ] The Claimant is entitled to its costs under

section 19 of the Small Claims Act and Rules 10.1 and 20 of the Small Claims Rules, calculated as follows: (

a) Filing fees: $156.00 (

b) Service fees: $80.00 (

c) Costs for rejection of an offer to settle, pursuant to Rule 10.1: 20% of $3000=$600 [ 23 ] The Claimant also seeks an order for costs under Rule 20(5) of the Small Claims Rules. That rule permits an award of costs of up to 10% of the Claim if the matter proceeds through trial “with no reasonable basis for success.” In this case I would note that two full days of trial time were utilized, without any clear reason for non-payment of the Claimant’s bill other than a general dissatisfaction and a failure to meet the Defendant’s expectations. The Defendant admitted signing the contract.

He did not present any evidence suggesting that the hourly rate he was charged was excessively high according to industry standards. Any accusations of dishonesty on the part of the Claimant were unsubstantiated. There was no suggestion of professional negligence and no evidence of any professional malfeasance. The matter proceeded to trial because the Defendant did not get the result he expected, not because the Claimant had committed any breach of contract or any other wrongful act. While the Defendant did not get the result he wanted, he did get what he contracted for.

I agree with the Claimant that this is a proper case for an award of costs pursuant to Rule 20(5) in the sum of $362.56. Order [ 24 ] For the foregoing reasons, the Claimant is entitled to judgement against the Defendant as follows: (

a) Claim: $3,625.66 (

b) Interest: $761.39 (

c) Costs: $1,198.56 for a total of $5,585.61. Dated at the City of Abbotsford, in the Province of British Columbia this 25 th day of February, 2014. ____________________________________________________

(The Honourable Judge K. D. Skilnick)