2022 BCPC 60, 2022 BCPC 60

Citation: 1197059 BC Ltd. v. Nibbler Technology Inc. 2022 BCPC 60 Date: 20220405 File No: 30046 Registry: Cranbrook IN THE PROVINCIAL COURT OF BRITISH COLUMBIA (Small Claims Court) BETWEEN: 1197059 BC LTD. CLAIMANT AND: NIBBLER TECHNOLOGY INC. DEFENDANT REASONS FOR JUDGMENT OF THE HONOURABLE JUDGE K. D. SKILNICK Appearing for the Claimant: N. Hordziejko Counsel for the Defendant: S. G. Price Place of Hearing: Cranbrook , B.C. Date of Hearing: March 29, 2022 Date of Judgment: April 5, 2022 A Corrigendum was released by the Court on April 11, 2022. The corrections have been made to the text and the Corrigendum is

A Corrigendum was released by the Court on April 11, 2022. The corrections have been made to the text and the Corrigendum isappended to this document. [1] The Claimant 1197059 BC Ltd. brings this action against the Defendant Nibbler Technology Inc. seeking a judgement in theamount of $35,000. The Claimant retained the Defendant as a consultant and service provider in order to obtain a nursery license fromHealth Canada.

It paid the Defendant $30,000 on June 28, 2019, and it ultimately did receive the nursery license on May 1, 2020. [2] In spite of this, the Claimant alleges in its Notice of Claim that “Nibbler consulting took our money and did not complete theirend of the contract.” The Claimant is alleging that the Defendant was in breach of its contract and say that this occurred in four ways. Inthe Notice of Claim, the Claimant says that the Defendant breached its contract in the following ways:

a) Nibbler “did not pay for our Health Canada License”; b) “They stalled our application by not paying bills on time”; c) “They also did not provide us with any documents or updates relating to our application”; and d) “They also pretended to be Nicholas Hordziejko (Responsible Person in Charge) to ensure that any communication from HealthCanada did not get to our Company.” [3] In its Reply to the Claim, the Defendant did not disclose what its defence was to this action, other than to file a general denial, inwhich the Defendant wrote “Dispute the claim for original contract fee” and “Dispute the claim for additional expenses.” The Replyfiled was not in keeping with the purpose of the Small Claims Act, which seeks to allow people to have their claims resolved in a “just,speedy, inexpensive and simple manner” because it did not explain to the Claimant exactly what the defence was and what case it had tomeet.

This was better explained by Justice Stromberg-Stein, then a Justice of the British Columbia Supreme Court, in Absolute BailiffsInc. v. Wangensteen, , as follows: [19] Proceedings in Small Claims Court are conducted as informally as possible to permit lay litigants to have access to the Courts. Pleadings may be informal to conclude matters in a "just, speedy, inexpensive and simple manner". However, a party is entitled to haveproper notice of the claims being made against it. In the interests of fairness and justice, a party is entitled to know the case to be met.

This is particularly true where the party whose pleadings are incomplete is represented by counsel. It is inappropriate, and perhaps unjustand unfair, to try an issue that has not been properly raised in the pleadings since a party will not have proper notice of the issue and willbe unprepared and disadvantaged at trial. (Emphasis added). [4] At the trial of this matter, a number of defences were raised. The principal officer of the Defendant and the Defendant’s counselboth alleged that there was no contract between the parties.

They also alleged that the Claimant had not suffered any damages because itdid receive its license from Health Canada. The Defendant also said that even if there was a breach of contract, the Claimant had notproven any damages because it is refusing to provide documents and other evidence to prove the amount it alleges was required tocomplete the contract. [5] The relationship between the parties broke down in early 2020, before Health Canada issued the license to the Claimant. TheClaimant had wanted to convene a meeting with Health Canada and wanted to invite another consultant to the meeting.

The Defendantrefused to do so because it did not want to disclose its business practices to one of its competitors. On February 27, 2020, the Claimantsent an email to the Defendant, which contained mixed messages.

The email said “Your services will no longer be required” but in thenext sentence said “However we expect you to honour your end of the agreement.” [6] The Defendant testified that by this point in time it had done what was required of it for the Claimant to obtain its license andjust over two months later, the license was issued. [7] The outcome of this action depends on the answer to a number of questions: 1. Was there a contract between the parties? 2. If so, did the Defendant breach that contract? 3. If the Defendant was in breach of the contract, what is the remedy available to the Claimant? 1.

Was there a Contract? [8] In June of 2019, the Defendant sent a document to the Claimant which it asked the Claimant to review and sign. The document,which is on the Defendant’s letterhead, is entitled “Project Details” and it lists a number of services, the timing of the application, asummary of the fees and how they can be paid.

At the conclusion of the document there was also a place for the Claimant to check a boxindicating its acknowledgement that the Defendant’s standard terms and conditions (accessible at an internet address) “shall apply to thisagreement, and in the event of a conflict between the standard terms and conditions and any terms and conditions of this agreement, theterms of this agreement will prevail to the extent of any such conflict.” [9] Mr. Hordziejko signed the agreement on behalf of the Claimant and his signature is dated June 27, 2019. This signature pagewas then returned to the Defendant.

Yet for some inexplicable reason, Ms. Xu, the principal officer of the Defendant, testified that therewas no contract because the Claimants had not produced a copy of it signed by her. [10] While the law of contract can be much more nuanced that the following

summary, in order for the existence of a valid contractbetween the parties, the following must be present: 1. The Intention to create legal relations: There are times where, although the discussions between two parties may otherwise meetthe requirements of a contract, they do not intend to create legal relationship. This often occurs in discussions between family members

such as parents and children. This was not the case here. Clearly this was a business relationship, not an informal one among friends or family members, and the document which the Defendant sent to the Claimant was one that each party intended to be bound by. 2. An offer containing the essential terms of the contract : An offer is defined as an expression of willingness to contract, made with the intention that it will bind the person making it as soon as it is accepted by the person to whom it is addressed. An offer is not the same thing as negotiations, or an agreement to agree in future.

Here it is clear from the language of the document sent by the Defendant and signed by the Claimant that this was not mere negotiation. The Defendant was offering to provide its services as a consultant on the terms set out in the document. Offer and acceptance can occur by conduct. Although neither party has provided a copy of the document signed on behalf of the Defendant, the Defendant’s agreement to its terms are found in the fact that it was the one who offered these terms, it has accepted and kept the $30,000 promptly provided to it by the Claimant, and that for the most

part it subsequently conducted itself according to the terms of the agreement. 3. An acceptance of the offer and its terms : Acceptance is the final and unqualified assent to the terms of an offer. Acceptance of the Defendant’s offer by the Claimant is found in the signature of the Claimant’s principal officer, and from the subsequent conduct of the parties in operating under the terms of the contract for the most part. 4.

Consideration (i.e. something given by each party to the contract) : A contract consists of an exchange of promises, acts, or acts and promises, as a result of which each side receives something from the other. Here there is no doubt that consideration was exchanged. The Claimant paid the contract price and the Defendant did sufficient work such that the Defendant obtained its license. 5. Certainty of the agreed terms : Before a binding contract can exist, the parties must agree on all essential terms and express themselves so that their meaning can be determined with a reasonable degree of certainty.

The contract doesn’t have to be perfectly drafted, so long as it has an ascertainable meaning. In this case, the terms of the agreement were set out with sufficient clarity and certainty. [ 11 ] It is clear that these parties had a contract and unclear why the Defendant alleges that there was no contract. What is more concerning is the questionable logic of the Defendant in tendering written terms of a contract to its client, taking the client’s money, acting on the terms of that agreement, only to later to deny the existence of the contract in testimony.

In this case I find that the parties had entered into a contract on the terms set out in the document signed by Mr. Hordziejko on June 27, 2019. 2. Was the Defendant in Breach of the Contract? [ 12 ] The Claimant alleges four breaches of their contract with the Defendant. The first is that the Defendant refused to pay for the Claimant’s Health Canada License, as it was obligated to do under the June 2019 agreement. The Defendant says that it was not obligated to pay for this for two reasons. Ms.

Xu testified that the written document was varied by an oral agreement in which the Claimant agreed to pay for this cost, but she did not provide specifics of this oral agreement. Secondly, she notes that when the Claimant received a request it did not protest, and in fact Mr. Rioux, a Director of the Claimant, emailed back to her on October 19, 2019, stating “arrangements will be made to pay the bill.” [ 13 ] On behalf of the Claimant, Mr. Rioux testified that by making arrangements, he was referring to his intention to discuss the matter with a Mr. Wentworth, an employee of the Defendant’s.

He said that he had always understood that the license fee was included in the contract price because this was what the contract expressly stated. He said that he had understood this misunderstanding to be cleared up following his discussion with Mr. Wentworth. Mr. Wentworth did not testify at trial to either confirm or deny this. [ 14 ] The agreement is clear that the Health Canada licensing fee was included in the contract price which the Claimant paid to the Defendant.

The contract clearly reads: $20,000 (Health Canada Licensing Fee Included.) The Defendant attempted to unilaterally change the terms of the contract. In an email from Ms. Xu to Mr. Rioux dated February 28, 2020, Ms. Xu writes: “It was supposed to [be] reflected on the licensing proposal that Nibbler is going to cover the security clearance fee, but not the licensing fee. However the proposal stated the other way around that we are going to cover the licensing fee instead of the security clearance fee. I think that was a miscommunication on our end.

With that being said, we have always expected you to pay for you (sic) licensing fee and you have stated that arrangement will be made to pay that bill.” [ 15 ] The Defendant has acknowledged its error in the offer it made. However it cannot unilaterally change the terms of the agreement. This change requires the agreement of the Claimant and it is unwilling to do so. The other difficulty is that, according to the evidence, the Claimant paid an additional $10,000 on top of the contract price of $20,000. The $10,000 was intended to cover the cost of the security clearance fees, as well as some other expenses.

So while Ms.

Xu says that the Claimant was to pay one of these costs but not the other, it appears that they have paid both. [ 16 ] The Defendant cannot unilaterally change a term of the contract and by doing so and making the Claimant pay the $1,675 Health Canada fee, when it had agreed that this was to be included in the contract price, the Defendant is in breach of its contract. [ 17 ] The second breach alleged by the Claimants was that the Defendant “stalled our application by not paying bills on time.” In a civil case, the burden of proof rests with the Claimant to prove its case on a balance of probabilities.

The Supreme Court of Canada summarized the law in F. H. v. McDougall , 2008 SCC 53 ; [2008] 3 S.C.R. 41, at para. [49] : [I]n civil cases there is only one standard of proof and that is proof on a balance of probabilities. In all civil cases, the trial judge must scrutinize the relevant evidence with care to determine whether it is more likely than not that an alleged event occurred. [ 18 ] The burden rests with the Claimant to prove, firstly, that the application was intentionally delayed by the Defendant, and secondly that it suffered a loss as a result of this. In this case, neither assertion was proven.

The only evidence tendered was by the Defendant to show that the license was granted well within the projected timeline. No guarantees were given by the Defendant as to how long the application would take or even if the application would be successful. The Claimant has not produced any evidence of how long the application was delayed, if at all, or of any loss it suffered as the result of this breach. The Claimant has failed to prove a breach of

contract on this ground. [ 19 ] The Claimant says that the Defendant did not provide any documents or updates relating to their application. A review of the contract and the description of the services that the Defendant agreed to provide does not include providing any documents. The Defendant cannot be said to be in breach if this was never a term of the contract. [ 20 ] It also appears from the evidence that the Claimant led the Defendant to believe that this would not be an issue. Mr. Rioux and Ms. Xu had a text message exchange on August 29, 2019 in which Mr.

Rioux asked about when he would receive a copy of the application. When he was told that he would not receive it until after the license was obtained, he agreed that this “makes sense.” The Claimant did not produce the entirety of the text message exchange, but the portion it did present in evidence reads as follows: Rioux: Good afternoon Elva. Will we be obtaining a copy of the completed application? Exactly what is sent to Health Canada? Xu: Hi Phil. We can do it once the license is issued. Rioux: Why not when it’s submitted? Xu: That’s just our policy. Rioux: Ok.

Makes sense that modifications could be required and the completed documents won’t (end of portion of the text submitted into evidence.) [ 21 ] On this ground therefore, the Defendant has not been proven to have breached the contract. [ 22 ] The final breach alleged is that the Defendant “pretended to be Nicholas Hordziejko” in its communications with Health Canada. This is referring to an email account set up for Mr. Hordziejko and other principles of the Claimant that was used in communications with Health Canada.

The Claimants say that this was done without their knowledge or consent, while the Defendant says that the Claimant knew of this and that this was done in order that the Defendant could manage communication with Health Canada. In support of their assertion, the Defendants produced several pieces of correspondence signed by officers of the Claimant, with the email addresses for these accounts appearing below the signature line of the letters. No attempt was made to conceal their existence.

These letters include correspondence to Health Canada, to the Cranbrook Fire Department, the Mayor of Cranbrook, the Cranbrook RCMP Detachment Commander all dated August 2, 2019. [ 23 ] When asked to explain this, Mr. Hordziejko testified that he simply didn’t pay attention. Either he is being disingenuous about his knowledge of the email addresses or he was being careless. If it was the latter, some diligence on his part was called for to pay attention to what he was signing and to ask any questions if he did not understand why those email addresses were present.

In any event it has not been shown that the Claimant suffered any direct loss because this method of communication was used. There is no evidence that this was done in furtherance of any dishonest purpose, and it did not prevent the issuance of the license that the Claimant obtained, and likely assisted in the process. There is also no evidence that the email address was used for any purpose other than to receive responses from the letters signed by the Claimant’s officers. [ 24 ] No breach of contract has been proven on this ground. 3. The Remedy for the Breach [ 25 ] On February 29, 2020, Mr.

Rioux on behalf of the Claimant emailed Ms. Xu to tell her that “From now on all communication and exchanges will be handled by our lawyer, who will be in contact soon.” This does not appear to have been an honest statement. The Defendant was not contacted by any lawyer acting on behalf of the Claimant “soon” or at any time. This is unfortunate, as if the Claimant had sought out some legal advice, it may have acted very differently.

Many litigants who end up in Small Claims Court do so because they wish to proceed “on the cheap” when in fact paying for legal advice may ultimately be the less costly option for them. [ 26 ] The Claimant had concluded that by failing to act according to their satisfaction, the Defendant had breached their contract and that this entitled them to terminate their contract. They did have that option of course, but not without consequences.

As far as the Defendants were concerned, it is understandable that they would be content with the matter because they had received their consideration and had also done the work required to submit the application.

Their contract required them to do certain things after the license was issued, but if the Claimant chose to end their business relationship unilaterally, then they were no longer obliged to perform those services because the Claimant’s actions frustrated their ability to do so. [ 27 ] The Defendant has been found to be in breach of one aspect of the contract, namely its obligation to pay the Health Canada Licensing Fee as part of its contract fee. But not every breach of contract entitled the aggrieved party to rescind the contract. What happens when a breach of contract is found? [ 28 ] In Inmet Mining Corp. v.

Homestake Canada Inc ., 2003 BCCA 610 , the British Columbia Court of Appeal summed up the applicable law as follows: [203] The law is clear that an innocent party to a breach of contract may accept the breach, treat the contract at an end and sue for damages, or not accept the breach, keep the contract open and sue for specific performance, or in the alternative, damages in lieu thereof… [ 29 ] In this case, the Claimant chose to treat the contract at an end and sue for damages.

A “breach” of contract means that one of the parties did something they should not have done, or failed to do something they were required to do under the terms of the agreement. The remedy for such a breach is as stated by the Supreme Court of Canada, in its decision of Langille v. Keneric Tractor Sales Ltd. , [1987] S.C.J. No. 61 :

[29] …The general rule for the assessment of damages for breach of contract is that the award should put the plaintiff in the position he would have been in had the defendant fully performed his contractual obligations… [ 30 ] In this case, if the Defendant had not breached the contract, it would have paid the Health Canada licensing fee of $1,675. The Claimant is out that money and is entitled to recover this amount as damages. [ 31 ] The Claimant has asked for its money back ($20,000) and also asks for the Defendant to compensate it for over $15,000 that it says it had to pay to complete the contract.

There are a number of problems with this claim. [ 32 ] Firstly, the law doesn’t allow the Claimant to have its cake and eat it too. In other words, it doesn’t get to keep the license, not pay for it and also get its money back. If the contract had been performed as it should have, the Claimant would have its license (which it has) and the Defendant would have its contract fee (which it has).

The only difference is that the Claimant shouldn’t be responsible for the Health Canada license fee, and it will be awarded damages for that amount. [ 33 ] The Claimant cannot be awarded damages for the $15,000 it says it paid to complete the contract. This is so for two reasons. Firstly, it was the Claimant who prevented the Defendant from performing those services by deciding to terminate the contract.

The Defendant did not refuse to perform those services, the Claimant prevented it from doing so by ending the contract.. [ 34 ] The Claimant also cannot be compensated for those damages because it has not proven them. The Claimant testified that these services were performed by another numbered company from Alberta controlled by Mr. Hordziejko, but he would not disclose any of the supporting documents to show what services were performed, who performed them, and what they actually cost.

When asked why it would not do so, both officers of the Claimant testified that their Alberta numbered company “is not on trial here.” This is disingenuous reasoning. When Party A seeks an order of the court compelling Party B to pay Party A a sum of money, Party B is entitled to demand proof of the claim. Party A cannot simply say “we won’t produce the supporting proof, you’ll just have to trust us.” If the Defendant had brought a counter-claim against the Claimant for $15,000, it is doubtful that that the Claimant would have accepted the Defendant’s right to the judgement without requiring them to prove it.

This goes both ways. [ 35 ] For these reasons, the claim for the work allegedly performed by the Alberta numbered company is dismissed. Order [ 36 ] For these reasons, the Claimant will have judgement against the Defendant in the amount of $1,675. [ 37 ] There has been divided success in this Claim and each party will bear its own costs, unless there has been an Offer of Settlement made that is in compliance with Rule 10.1 of the Small Claims Rules.

If Rule 10.1 applies, the party entitled to costs will be awarded a penalty equal to 20% of the amount set out in the offer to settle, in accordance with Rule 10.1 (7) of the Small Claims Rules, upon their filing proof that an Offer to Settle in Form 18 was served on the other party in accordance with Rule 10.1(1) and if the offer was open for acceptance at the time of trial. Otherwise, no costs will be awarded. ________________________ K. D.

Skilnick Provincial Court Judge CORRIGENDUM – April 11, 2022 In the Reasons for Judgment dated April 5, 2022, the following changes have been made: [ 38 ] Paragraph 33 should read: [33] The Claimant cannot be awarded damages for the $15,000 it says it paid to complete the contract. This is so for two reasons. Firstly, it was the Claimant who prevented the Defendant from performing those services by deciding to terminate the contract. The Defendant did not refuse to perform those services, the Claimant prevented it from doing so by ending the contract. _____________________________ K.D.

Skilnick Provincial Court Judge