Poore v. Aimola et al Date:, 2014 BCPC 10

Citation: Poore v. Aimola et al Date: 20140127 2014 BCPC 0010 File No: 39364 Registry: Kamloops IN THE PROVINCIAL COURT OF BRITISH COLUMBIA BETWEEN: CHARLES D. POORE CLAIMANT AND: DILLON SERGIE AIMOLA, DSA AUTO REPAIRS, SERGIO AMERICA AIMOLA, DBA DSA AUTO REPAIRS DEFENDANTS REASONS FOR JUDGMENT OF THE HONOURABLE JUDGE S.R. HARRISON Appearing on their own behalf: Mr. C. Poore Appearing on their own behalf: Mr. D. Aimola and Mr. S. Aimola Appearing for DSA Auto Repairs : Ms. C. Etchart Place of Hearing: Merritt , B.C. Date of Hearing: December 11 and 12, 2013

Date of Judgment: January 27, 2014 [ 1 ] The Claimant, Mr. Poore, brings an action against the Defendants with respect to motor vehicle repairs he says were contracted to be performed by Dillon Aimola, his father, Sergio Aimola, and their firm, DSA Auto Repairs, a general partnership owned by the Aimolas. The Defendants perform mechanical repairs on motor vehicles in Merritt, B.C. For ease of reference I will refer to Dillon Aimola as Mr. Aimola. [ 2 ] Mr.

Poore claims that the Defendants agreed to provide him with a used van and that for the agreed price of $3,200, a rebuilt motor would be installed in the vehicle. Mr. Poore complained that the motor actually installed by the Defendants was not a rebuilt motor, but merely a used one which did not work as promised. He claimed that the quality of the work done by the Defendants was below any reasonable standard. He seeks the return of the $2,000 paid by him to the Defendants.

He also claims $3,149.24, being the cost of a replacement motor and transmission repairs to the vehicle performed at another garage in Merritt, as well as search and filing fees, for a total of $5,320.44. He is prepared to return the motor installed by the Defendants. [ 3 ] The Defendants deny the claims filed by Mr. Poore and have made a counter claim for $1200, being the unpaid balance on the Dodge Caravan received by the Claimant, with the replacement engine installed. [ 4 ] There is also an issue regarding the whether the agreement between the parties is illegal, and if so, whether it can be enforced.

THE EVIDENCE [ 5 ] Mr. Poore, a former professional driver who now sells fishing supplies, was the owner of a 1998 Dodge Caravan, which he brought to the Defendants for some mechanical work on May 3, 2012. That work included a change of transmission fluid and filter. As the Claimant described it, a few days later he was driving the van when the transmission began to fail. He concluded that the transmission had run out of fluid. The Claimant then topped up transmission fluid and drove the van back to the Defendants’ shop. [ 6 ] The Claimant said that Mr.

Aimola, on checking the van, found that a transmission gasket had not been installed properly at his shop, resulting in damage to the transmission. To be clear, Mr. Poore has not set out in his Notice of Claim filed August 20, 2012 any claim with respect to the work performed on May 3, 2012. [ 7 ] The parties were agreed that the transmission in the Claimant’s van needed to be replaced. A replacement was ordered by the Defendants. On May 11, 2012, the Claimant paid DSA Auto Repairs $1,500 in advance for the transmission. However, when Mr.

Aimola went to install the transmission in the Claimant’s van, he discovered that rust perforations in the suspension had rendered the van unfit for the planned repairs. The transmission work was stopped and on May 29, 2011, DAS Auto Repairs refunded the $1,500 to the Claimant. [ 8 ] The Claimant was interested in finding another Dodge Caravan. As chance would have it, another customer had earlier given Mr. Aimola a used 1998 Dodge Grand Caravan with a blown motor. It was agreed the Claimant should have this van. [ 9 ] Mr.

Aimola provided the Claimant with a motor vehicle transfer tax form and a gift of designated property form with signed by the van’s original owner. These documents, signed by the Claimant, declared the date of transfer to be April 16, 2012 for no value or consideration. The transfer tax form also displays an “authorized issuing office” stamp dated June 1, 2012, the date the vehicle was said to be insured in Mr. Poore’s name. According to the form, a “no value” transaction attracts no transfer tax. [ 10 ] Mr. Aimola and the Claimant agreed that the Claimant would receive the van after Mr.

Aimola installed another motor in it. The price agreed was $2,000, paid in advance, and a further $1,200 upon completion. Mr. Poore said that in coming to the terms of the agreement, Mr. Aimola had said to him, “Pay me the cash, I’ll save you the tax.” Mr. Poore paid Mr. Aimola $2,000 in cash. [ 11 ] The price of the van was acknowledged by a receipt dated June 4, 2012. This receipt was drawn by Ms. Etchart, the DAS bookkeeper, at Mr. Aimola’s request. This receipt was typed on plain paper and was not a standard DSA Auto Repairs business invoice or receipt.

Indeed it contained no reference to DSA Auto Repairs at all. [ 12 ] This rough receipt set out Mr. Aimola’s acknowledgement that he had received $2,000 from Mr. Poore for a “1998 Dodge Grand Caravan” and noted a balance owing of $1,200. The receipt made no mention of a replacement motor of any description. Neither did it make any reference to any tax paid or payable. The unsigned document was provided by Mr. Aimola to Mr. Poore and was accepted by Mr. Poore without comment. [ 13 ] Mr.

Aimola stated that the purpose of showing himself as vendor, rather than DSA Auto Repairs, was to avoid vehicle sales restrictions on DSA Auto Repairs imposed by the licensing provisions of the Motor Dealer Act. He denied the sale was structured that way to evade tax payments. [ 14 ] Mr. Poore said both that he understood that he was dealing with Mr. Aimola personally at this point, not DSA Auto Repairs, and that he thought he was dealing with DSA Auto Repairs. [ 15 ] The work on the van was subsequently performed at DSA premises by Mr. Aimola and another DSA Auto Repairs staff member.

On the evidence of both Dillon and Sergio Aimola, the work was clearly backed by DSA Auto Repairs. [ 16 ] The Claimant and Mr. Aimola disagreed as to whether the replacement van had been sold or given to Mr. Poore. Mr. Aimola

said the van was sold and relied on the June 4, 2012 receipt for a “1998 Dodge Grand Caravan” as evidence showing the vehicle hadbeen sold to the Claimant for $3,200. Mr. Aimola asserted the van plainly had a value. His obligation under their agreement, as he saw it,was to deliver the van to Mr. Poore in good running order for the agreed price. The receipt made no mention of any motor, used orrebuilt. [17] Mr. Poore, on the other hand, relied on the declarations made in the motor vehicle transfer tax and the gift of designatedproperty forms.

These showed the van was transferred from the original owner directly to Mr. Poore for zero dollars. Mr. Poore said thatthe total amount he was to pay, $3,200, was entirely for the rebuilt motor to be supplied and installed and that the van was a gift. [18] Mr. Poore stated in evidence that he could see that a used and not a rebuilt motor was being installed in the van. He said nothingabout it to Mr.

Aimola but determined that he would not to pay the $1,200 remaining on the balance said to be owed to the Defendants.He thought he might go to court to recover the money he had already paid, he said. [19] There is no issue that Mr. Aimola installed a used and not a rebuilt motor. Mr. Aimola’s evidence was that he didn’t andwouldn’t have agreed to install a rebuilt motor. He said rebuilds are too expensive to be justified in most vehicles. He said that DSAAuto Repairs gets a great deal of highway breakdowns and they replace about 25 engines per year with used, not rebuilt motors.

Theseused engines, he said, are obtained from reputable auto wreckers and come with a 90 day warranty. [20] The Claimant said he eventually took delivery of the replacement van and took it on a business trip to Prince George and Fort.St. John. During the trip, the Claimant said it became apparent that the engine was burning oil at an excessive rate and that thetransmission was not performing as it should. While in Kamloops, he said, the transmission ran out of transmission fluid.

He topped it upand drove back to Merritt. [21] The Claimant returned the van to the DSA Auto Repairs shop to complain about the vehicle’s performance. He said that heshowed Mr. Aimola the exhaust smoke and said to him, “You owe me a new motor and transmission.” Mr. Poore said that Mr. Aimoladid not refuse him but said “I’ve got 15 jobs ahead of you, so you’ll have to get in line.” [22] Without further discussion, the Claimant took the vehicle to Merritt Auto Wrecking.

The Claimant said in evidence he couldn’twait any longer and he was done talking to the Defendants. [23] The Claimant called as a witness Adam McDonald of Merritt Auto Wrecking. Mr. McDonald is a red seal journeymanautomotive service technician. He worked on the Claimant’s van on July 24 and 25, 2012 and billed him $1,891.44 for work on theengine, both parts and labour. This work included installation of a $500 used (not rebuilt) replacement engine and a further $884.23 fortransmission repairs, plus taxes and environmental fees. The total expenditure was just over $3,149. [24] Mr.

McDonald, whose expertise I accepted, examined the motor almost two months after Mr. Aimola installed it. He found theengine worn, the gaskets in poor shape, the spark plugs oil-fouled and the air filter oil-soaked on one side. This was old damage. Hedescribed it as evidence of excessive “blowby”, whereby faulty piston rings or valve seals allow increased crankcase pressure to force oilvapour through the air filter and air intake. He said the installation of an engine in this condition was not up to the standard of work hewould expect to see from a qualified mechanic.

ILLEGALITY OF THE CONTRACT [25] I am satisfied that the contract entered into between the Claimant and Mr. Aimola, either in his own right, or on behalf of theDefendants, included an understanding that the 12% harmonized sales tax ordinarily payable by the Claimant would be avoided, or moreaccurately, evaded. [26] Evidence supporting this conclusion is found in Mr. Aimola’s invitation to Mr. Poore to “Pay me the cash, I’ll save you thetax.” Mr. Poore went on to pay him $2,000 in cash. Further support is found in the creation by Mr. Aimola of the off-the-books receipt,accepted by Mr.

Poore, confirming the purchase of the van and the receipt of $2,000. The receipt contained no acknowledgement of anytaxes paid or owed on the transaction. When the Claimant took possession and ownership of the refurbished van he did so withoutpaying tax on either the repairs or the transfer of the van. This was the result sought by the parties. [27] Mr. Aimola explained the purpose of his sale of the van personally, rather than through DSA Auto Repairs. He asserted thiswas solely to avoid vehicle sales restrictions on DSA Auto Repairs imposed by the provisions of the Motor Dealer Act.

This is just notcredible given Mr. Aimola’s invitation to Mr. Poore to save him tax in exchange for cash. [28] I’m satisfied that the contract between the parties was an illegal contract. The purpose and effect of the agreement was to avoidthe payment of taxes due to the federal and provincial governments in the form of the harmonized sales tax. Both parties were engaged inthe conduct and both share the responsibility and the consequences: they are in pari delicto. [29] Contracts providing for cash payments in exchange for evading taxes are unfortunately not rare. In Prince Electric v.

Brar &Grewal 2004 BCPC 36 , 2004 B.C.P.C. 36 my brother Judge Gulbransen refused the parties a remedy after finding asimilar contract illegal. The Claimant contractor in that case had asked for and received $1,900 in cash payments from the Defendant forinstalling lights. The purpose of the payments had been the avoidance of PST and GST payments. As Judge Gulbransen said atparagraph 21, “The law is clear that a court will not assist a party in enforcing an illegal contract.” [30] Judge Gulbransen also referred to the case of Materiaux de Construction Castonguay Inc. v. Pelletier [1982] N.B.J. No. 68(Q.B.).

That case related to the purchase of construction materials by the Defendant. [31] At paragraphs 4 - 6 of that decision, Hoyt, J. found that: …an arrangement was made whereby there would be no invoices and [the defendant] would pay by cash so that no federal or provincialsales tax would be payable on the goods. Thus, the cost to him would be reduced by the amount of those taxes and the plaintiff would

make a sale that he might not otherwise have made. There was also a very strong inference that as the payments would be in cash the plaintiff might escape income tax. [ 32 ] These “cash under the table” schemes amount to revenue fraud. Hoyt, J. at paragraph 9 went on to set out the consequences of such illegality, quoting Cheshire and Fifoot in The Law of Contract (9th Ed.), at page 346: A contract that is illegal as formed and is therefore void ab initio is treated by the law as if it had not been made at all. It is totally void, and no remedy is available to either party.

No action lies for damages, for an account of profits or for a share of expenses. Thus, in the case of an illegal contract for the sale of goods, the buyer, even though he has paid the price, cannot sue for non-delivery; the seller who has made delivery cannot recover the price. [ 33 ] The general rule is that the courts will not enforce an illegal contract. While there are some exceptions to this rule, they do not apply in the circumstances here. RESULT [ 34 ] With respect to the case at bar, this contract was illegal from its inception. That is so whether it was between the Claimant and Mr.

Aimola in his own right or on behalf of the other Defendants. In either case, the contract is unenforceable. [ 35 ] In the result the Claimant’s claim against the Defendants is dismissed, as is his request for search and filing fees. [ 36 ] On the same footing, the Defendants’ counter claim for the unpaid balance on the van is also dismissed, as is the request for filing fees. __________________________ S.R. Harrison Provincial Court Judge