Dartana v. Minto Communications Date:, 2014 BCPC 150

Citation: Dartana v. Minto Communications Date: 20140625 2014 BCPC 0150 File No: 39707 Registry: Kamloops IN THE PROVINCIAL COURT OF BRITISH COLUMBIA BETWEEN: PETER DARTANA CLAIMANT AND: MINTO COMMUNICATIONS SOCIETY DEFENDANT REASONS FOR JUDGMENT OF THE HONOURABLE JUDGE L.S. MARCHAND Appearing in person: Mr. Peter Dartana Appearing for the Defendant: Mr. David Watkins and Mr. Chris Donald

Place of Hearing: Lillooet , B.C. Dates of Hearing: May 22 and May 23, 2014 Date of Judgment: June 25, 2014 INTRODUCTION [ 1 ] Peter Dartana co-founded the Minto Communication Society (“MCS”) in 2008 and was its first President and Treasurer. Mr. Dartana and other community-minded volunteers founded the MCS to bring high speed internet to five remote communities in the Upper Bridge River Valley, west of Lillooet.

The MCS obtained funding from three levels of government and ultimately succeeded where others had failed in “lighting up” the communities in 2010 and 2011. [ 2 ] The primary movers behind the high speed internet project were Mr. Dartana, Bob Chow and Chris Donald. Collectively, they brought an impressive mix of education, experience and passion to the project. Each served on the Board of Directors of the MCS and provided design, project management and installation support services to the MCS.

Their contributions exceeded what would normally be expected of volunteer Directors and were instrumental in the delivery of high speed internet to the Valley. The project would not have been successful without their efforts. [ 3 ] There was no written agreement between the MCS and Mr. Dartana, Mr. Chow and Mr. Donald regarding payment for their professional services but each received discounted compensation for their efforts up to the end of September 2010. Mr. Donald left the Board in February 2011 and, in June 2011, received further discounted compensation for his efforts as a consultant. Neither Mr.

Dartana nor Mr. Chow received any further compensation for their efforts between October 2010 and the end of their involvement with the MCS in the summer/fall of 2011. [ 4 ] In this claim, Mr. Dartana seeks $22,000 in professional fees plus HST from the MCS for his efforts from October 1, 2010 to July 24, 2011. Mr. Dartana’s invoice was rendered on October 12, 2011 but was not delivered to the MCS until early 2013. It contains general descriptions of the work done by Mr. Dartana on the project and time entries associated with work completed on specific dates. [ 5 ] The MCS denies that it owes any money to Mr.

Dartana. Briefly, the MCS says that Mr. Dartana volunteered his time. The MCS specifically says that Mr. Dartana knew the MCS had limited resources and would only consider compensating him for his efforts if project funds remained after the project was completed. Ultimately, no project funds remained so no payment was made to Mr. Dartana. In the alternative, if I find the MCS agreed to pay Mr. Dartana for his efforts after September 30, 2010, the MCS says that Mr. Dartana has overstated his time and charged an unreasonably high hourly rate for the work completed.

ISSUES [ 6 ] The issues before me are straightforward: 1. Was there an agreement that the MCS would compensate Mr. Dartana for his design, project management and installation support work on the high speed internet project after September 30, 2010? 2. If so, how much does the MCS owe Mr. Dartana? [ 7 ] Before tackling these two issues, I will make some comments on the credibility and reliability of the witnesses who testified. ANALYSIS Credibility and Reliability of the Witnesses [ 8 ] I heard from two witnesses for Mr. Dartana and four witnesses for the MCS. [ 9 ] Mr. Dartana and Mr. Chow testified for Mr.

Dartana. Their testimony was generally consistent with one another’s. They testified that they both put in substantial time on the high speed internet project beyond what would normally be expected of volunteer Directors. Both were of the view that the MCS was well informed of their activities and their expectation of being paid for their efforts. Both also testified that the MCS had not in fact paid them for their design, project management and installation support work on the project after September 30, 2010. [ 10 ] Mr. Donald, Russ Oakley, Merle Hoch and Michelle Nortje testified for the MCS.

Each has served on the Board of Directors of the MCS, including, in the case of Mr. Donald, Ms. Hoch and Ms. Nortje, in executive positions on the Board. Collectively, their testimony was to the effect that the MCS agreed to make one time payments to each of Mr. Dartana, Mr. Chow and Mr. Donald for their design, project management and installation support work up to the end of September 2010 based on what the MCS could afford and a further payment to Mr. Donald as a consultant after he had resigned from the Board. The MCS’s witnesses testified that any project work performed by Mr. Dartana and Mr.

Chow subsequent to September 2010 was done voluntarily by them and would only have been considered for payment at the end of the project if any project funds remained. It turns out that no project funds remained so no further payments were made to Mr. Dartana and Mr. Chow. The MCS’s witnesses also gave testimony that questioned the extent and was critical of some of the work done by Mr. Dartana and Mr. Chow. [ 11 ] The parties and some of the witnesses spent quite a bit of time and energy on efforts to discredit and, in some cases, even disparage one another.

It was disheartening to see upstanding, committed and community-minded citizens who had accomplished the unlikely goal of bringing high speed internet to the Upper Bridge River Valley airing out their personal differences in court rather than focusing on the legal issues before me. The reality is that each of the witnesses who testified before me was bright, articulate and, within

the context of testifying several years after the events, reasonably credible and reliable. There was not much dispute between the witnesses regarding what happened. The differences lie in the inferences drawn by the opposing sides based on what happened. [ 12 ] Though there was no written agreement between the MCS and Mr. Dartana, Mr. Chow and Mr. Donald regarding payment for their professional services, the parties presented a fairly comprehensive documentary record of their dealings with one another.

The result is driven largely by this documentary record and by the conduct of the parties that is not in any serious dispute. Did the MCS Agree to Pay Mr. Dartana After September 2010? [ 13 ] The testimony of the witnesses and the documentary record presented to me make the following key facts clear: 1. The grants received from all three levels of government were to be used exclusively for the capital costs associated with bringing high speed internet to the Valley. 2. From the outset, the MCS capital budget contemplated paying professional fees for design, project management and installation support work.

As early as October 16, 2009, Mr. Donald (who was by then the President of the MCS) confirmed with Industry Canada that professional fees paid to Directors of the MCS (which included Mr. Dartana, Mr. Chow and himself) would be eligible costs under the “Broadband Canada” grant program. 3. Until July 2011, the MCS did not require written contracts with its suppliers and service providers. It is, therefore, not surprising that no written agreements were in place between the MCS and Mr. Dartana, Mr. Chow and Mr. Donald regarding payment for their professional services. 4.

By the late summer of 2010, it was apparent that capital cost overruns might limit the ability of the MCS to pay full value for the professional design, project management and installation support work performed by Mr. Dartana, Mr. Chow and Mr. Donald. In an email dated August 25, 2010, Mr. Donald wrote the following to Mr. Dartana: Make sure that you and Bob are tracking your “installation” hours over the past several weeks. I sincerely hope that we don’t have to personally “absorb” installation and engineering services in order to push the build forward.

If we are short then hopefully our operations income in 2011 will fill the shortfall. Hopefully there is some buffer it ( sic ) not putting up the Flag tower. (Emphasis added.) 5. Discussions between Mr. Dartana, Mr. Chow and Mr. Donald over whether they might be paid for their design, project management and installation support work continued through the fall of 2010. A Chartered Accountant and MCS Director named Douglas Blakeney was part of the discussions. On November 9, 2010, Mr. Donald emailed Mr. Blakeney. A copy of the email was sent to Mr. Dartana.

The email stated, in part: On the issue of billing for time, this is something that Peter and I want to talk to you about sometime. There is funding for engineering in the grant estimates - that’s if we don’t end up spending it on the solar install over- runs!!

We want to ensure that if funds are available to cover engineering design, that perhaps you and maybe Dave review what, how much, and how we invoice MCS… … I am concerned that some people will not be able to differentiate between the professional engineering design work covered by the grants for capital expansion, and what MCS pays for regular customer service support… Once the funds start flowing from IC (Industry Canada), and we get a handle on our final capital expenses and contract labour, we will be in a better position to see what is left to pay for some of the engineering work performed by Peter, Bob and myself. (Emphasis added.) 6.

In view of the financial situation facing the MCS, Mr. Dartana (who continued to serve as the Treasurer of the MCS) proposed that he, Mr. Chow and Mr. Donald heavily discount the value of their professional services. In a November 19, 2010 email to Mr. Donald, Mr. Dartana proposed that each of them invoice the MCS $11,700 for their work to September 30, 2010. Mr. Dartana specifically wrote: As much as I believe I’m entitled to more, the reality is that I need to write off about 62.5% of the cost for MCS’ ( sic ) benefit and survival. I’m okay with that.

That said, I convinced Bob to do the same and he responded favourably by charging the same amount as I did. I encourage you to consider seriously to do the same ( sic ) for all the work so far. 7. Ultimately, each of Mr. Dartana, Mr. Chow and Mr. Donald invoiced the MCS $11,700 for their work to September 30, 2010. 8. On February 24, 2011, the MCS Board approved payment of this amount “in full” to Mr. Dartana. The minutes of the Board meeting on that date reflect that Mr. Chow and Mr. Donald agreed to be paid half of the invoiced amount at that time and the balance later.

Presumably, this was to assist the MCS manage its cash flow. The Board minutes also reflect that Mr. Dartana was “willing to reimburse MCS in the future if needed”. 9. Mr. Donald resigned as President of the Board effective February 25, 2011. He was replaced by David Watkins.

10. On June 3, 2011, Mr. Dartana emailed Mr. Donald expressing his frustration over Mr. Watkins’ leadership and other issues. In the following passage, Mr. Dartana asked Mr. Donald to send MCS an invoice: Given that many people haven’t been paid properly for their professional skills, time and dedication, and that it’s seen as “hauling lots of cash out of the Valley”, Bob and I urge you to send us an invoice for what you think is fair for your time. We’re of the opinion that since you are no longer a director, you are a consultant and need to be reimbursed accordingly . (Emphasis added.) 11. Mr.

Donald responded to Mr. Dartana by email on June 19, 2011. Mr. Donald indicated that he would issue an invoice and also addressed another of Mr. Dartana’s concerns, namely that the Board did not appreciate that the grant money received by the MCS could only be used for capital work and not for operational expenses. Mr. Donald put it this way: I think only you, Bob and Doug understand the contractual obligation MCS has with NetBC (the source of provincial grant money) and IC for the funding MCS received.

The grants were exclusively for network expansion and not an operational subsidy or to reduce subscription fees. 12. On June 22, 2011, Mr. Donald issued an invoice to MCS for 25.5 hours of professional time between January 1 and May 31, 2011 at a rate of $135 per hour. Mr. Donald then applied a 35% discount to his hourly rate and the MCS paid Mr. Donald’s discounted invoice by cheque dated June 30, 2011. 13. Through the summer and fall of 2011 disputes arose between Mr. Dartana, Mr. Chow and the MCS which resulted in Mr. Dartana and Mr.

Chow leaving the Board and in the MCS initiating an action in Supreme Court against Mr. Dartana and Mr. Chow. 14. On October 12, 2011, Mr. Dartana rendered an invoice for professional services provided to the MCS between October 1, 2010 and July 24, 2011 in the amount of $22,000 plus HST. The invoice was not delivered to the MCS until 2013. By that time, the MCS had already submitted its final claim to Industry Canada. Even if inclined to do so, it was too late for the MCS to submit Mr.

Dartana’s invoice to Industry Canada to receive the 50% reimbursement for eligible capital expenses that had been available through the Broadband Canada grant program. 15. On March 23, 2012, the MCS finalized its Financial

Summary for Industry Canada. The Financial

Summary shows that the MCS spent $322,719.56 to complete the project with $318, 719.56 coming from grants from the three levels of government and $3,871.46 coming from the MCS itself. [ 14 ] In a civil claim like this, the onus is on Mr. Dartana to prove on a balance of probabilities that the MCS agreed to pay for his professional services after September 30, 2010. [ 15 ] There are a number of factors which support Mr. Dartana. [ 16 ] The original capital budget assembled by the MCS contemplated paying for professional services provided by Mr. Dartana, Mr. Chow and Mr. Donald.

Further, the MCS did not require contracts for services to be in writing until July 2011. Next, given the makeup and interest level of the Board, it is hard to imagine that the Board was not aware of Mr. Dartana’s efforts after September 30, 2010. In addition, the MCS paid Mr. Donald’s second professional fee account, including some time incurred while Mr. Donald served as President of the Board. Finally, the MCS itself contributed to pay for the capital costs of the project which included professional design, project management and installation support work.

Clearly, the MCS was responsible for any capital costs that exceeded the grant money available. [ 17 ] There are, however, a number of factors which satisfy me that there was no agreement that the MCS would pay Mr. Dartana for his professional services after September 30, 2010. [ 18 ] From the outset, it was clear to Mr. Dartana, Mr. Chow, Mr.

Donald and probably other Board members that the MCS was required by the terms of the grants it received to draw a distinction between grant money which was to be used exclusively for the capital costs of expanding the network (including associated professional services) and operational revenue which was to be used to run the network. Though the MCS made a very small financial contribution to complete the network expansion, the intention was always to keep capital grants and expenses separate from operational revenues and expenses. [ 19 ] The email exchanges in the fall of 2010 establish that Mr.

Dartana always knew that professional services provided by Board members would only be paid if there were no cost over-runs and grant money remained at the end of the project to pay for these services. In the event of cost over-runs, I find that Mr. Dartana was - admirably - prepared to volunteer his professional time to fulfil his vision of bringing high speed internet to the Upper Bridge River Valley. This was reflected in the Minutes from the February 24, 2011 Board meeting which record that Mr. Dartana was prepared to reimburse the MCS for fees he was paid to the end of September 30, 2010.

The only rational inference is that Mr. Dartana would have reimbursed the MCS if necessary to complete the project. There may have been a hop e that the MCS would be able to pay for additional professional services but, in the end, the grant money was spent in full on other items associated with the project.

[ 20 ] The only document presented at the trial that hinted at Mr. Dartana expecting payment for his work after September 30, 2010 was his November 19, 2010 email to Mr. Donald. In that email Mr. Dartana suggested that he, Mr. Chow and Mr. Donald provide heavily discounted invoices to the MCS “for all the work so far”. This was hardly an unequivocal expression that Mr. Dartana expected to be paid for any further work on the project. In fact, the first document which clearly expressed Mr. Dartana’s expectation to be paid for the professional services he provided after September 30, 2010 was prepared after Mr.

Dartana had completed his work on the project and when he was already embroiled in a dispute with the MCS. [ 21 ] As the Treasurer of the MCS, Mr. Dartana was in the best position to understand whether there would be grant money available to pay for his professional services after September 30, 2010 and, if not, it was his duty to raise the issue of how he would be paid with the Board at the earliest possible time. It was apparent in the fall of 2010 that there may be a shortfall of grant money so, if Mr.

Dartana expected to be paid for further work, I find that he should have and would have raised the issue with the Board and done so in writing. That Mr. Dartana did not do so, leads only to the conclusion that he did not expect to be paid for his further work - unless grant money remained at the end of the project. [ 22 ] I also find it unlikely that, if Mr. Dartana expected to be paid for his professional services after September 30, 2010, he would not render a further invoice to the MCS until October 2011 and not deliver that invoice to the MCS until 2013. Particularly in view of his duties as Treasurer, if Mr.

Dartana expected to be paid, I find that he should have and would have rendered interim invoices to the MCS so that the Board would know the true cost of the project and make whatever financial adjustments needed to be made to meet the Society’s financial obligations and see the project through to completion. [ 23 ] Mr. Dartana also had special knowledge of the Broadband Canada grant program. Under the terms of the program, Industry Canada reimbursed 50% of eligible expenses actually incurred. Again, if Mr.

Dartana expected to be paid for his services after September 30, 2010, I find that he should have and would have rendered interim invoices to the MCS to enable the MCS to recover half the cost of his services from Industry Canada. [ 24 ] Finally, Mr. Dartana encouraged Mr. Donald to submit an invoice for his professional services - but only after Mr. Donald had stepped down from the Board. Mr. Dartana drew a clear distinction between Mr. Donald as a “consultant” and Board members such as himself. In view of this distinction, it may be that Mr.

Donald should not have invoiced the MCS for the professional time he spent on the project from January 1 to February 25, 2011 while he was still serving as President. It was, however, Mr. Dartana as Treasurer who reviewed and paid Mr. Donald’s invoice, including professional time Mr. Donald spent on the project while he was still President. [ 25 ] In the end, after carefully considering all of the evidence and arguments, I have concluded that Mr. Dartana has failed to establish that the MCS agreed to pay for his professional services after September 30, 2010. The Value of Mr.

Dartana’s Work for the MCS After September 30, 2010 [ 26 ] The parties spent a significant amount of trial time on the value of Mr. Dartana’s work for the MCS after September 30, 2010. I have found that the MCS did not agree to pay Mr. Dartana for this work but, given the time spent by the parties on valuing the work, in my view, they deserve a finding on the issue. [ 27 ] If there had been an agreement for the MCS to pay Mr. Dartana for his work after September 30, 2010 and if no personal differences had arisen between Mr. Dartana and other members of the MCS Board, in my view, Mr.

Dartana would not have sought payment, and the MCS would not have agreed to pay, for all of his time on the project at his full hourly rate. For the same reasons Mr. Dartana discounted his invoice to the MCS for his work up to September 30, 2010, in my view, Mr. Dartana would have provided the same substantial discount for his work after that date, namely 62.5%. This would have reflected the special status of the MCS as a not- for-profit society and Mr.

Dartana’s personal passion for the high speed internet project while also eliminating any questions about the amount of time he put into the project and the hourly rate he employed. [ 28 ] In short, if I had found in Mr. Dartana’s favour, I would have valued his claim at $8,250 plus HST. CONCLUSION [ 29 ] The residents of the Upper Bridge River Valley can be thankful that Mr. Dartana dedicated so much of his time, skill and energy to bringing high speed internet to the Valley.

His contributions were essential to the success of the project and residents of the Valley continue to benefit from his efforts every day. [ 30 ] My conclusion that there was no agreement between the MCS and Mr. Dartana to pay for his professional services after September 30, 2010 is not intended to diminish Mr. Dartana’s contribution. Mr. Dartana’s work was in fact of great value to the residents of the Valley but, for the reasons outlined above, his claim is dismissed. ______________________________ L.S. Marchand Provincial Court Judge