JMP Plumbing v. Heating Ltd, 2016 SKPC 110

IN THE PROVINCIAL COURT OF SASKATCHEWAN CIVIL DIVISION Citation: 2016 SKPC 110 Date: August 29, 2016 File: 569/2015 Location: Saskatoon _____________________________________________________________________________ Between: JMP Plumbing and Heating Ltd - and - Jamie John Marjoram Self-represented Plaintiff Self-represented Defendant ______________________________________________________________________________ JUDGMENT S.P. WHELAN, J ______________________________________________________________________________ Introduction [ 1 ] The Plaintiff’s categorized its claim for $24,273.98 under the following headings: i. Accounting for preparation of personal tax returns

ii. Legal invoice for restructuring of the corporation iii. Corporate assets in the possession of or used by the Defendant iv. Overhead and other claims for “side jobs” for which the Defendant obtained materials through the corporation With the exception of the invoice for legal fees in the sum of $936.89, the Defendant denied the claim. Mr. Marjoram, surprised the court when he sought to deny responsibility for the legal fees for the corporate restructuring but ultimately accepted responsibility when it was pointed out that he did so in his amended Statement of Defence. [ 2 ] These are the issues that arose in this cause of action:

a) At what point in time will the limitation period of two years apply to the Plaintiff’s claim and in that regard when was the claim discoverable?

b) Is the Defendant responsible for the Plaintiff corporation’s debt?

c) Is the Defendant contractually liable to reimburse the Plaintiff for overhead costs subsequently attributed to his “side jobs”? [ 3 ] The Plaintiff did not satisfy the court that the limitation period should run from the date of the Defendant’s resignation, in February 2015, rather than on the dates when the debt was incurred.

Further, much of what has been claimed as debt was not found to be owing as the Plaintiff sought to impose a contractual obligation after the transaction had taken place. [ 4 ] The Plaintiff’s claim was based on erroneous assumptions about the Defendant’s responsibility for the debt of the Plaintiff corporation and the responsibility of its two shareholders / directors, for the decisions of the corporation. [ 5 ] The Plaintiff’s claim was substantially unsuccessful. The Plaintiff was awarded the sum of $1,583.79.

No costs are payable. [ 6 ] The facts were discussed in the context of the three issues, after which this judgment turns to the specific claims of the Plaintiff. As in all civil cases, this judgment has been governed by the civil burden of proof, which is on a balance of probabilities. Background [ 7 ] As in many civil proceedings, the court was required to make findings of credibility and reliability with respect to the evidence presented. In this case credibility and reliability were both very much in issue.

The shareholders of the Plaintiff, Sheri Lynn Chartier and Mitchel Charles Preston, admitted to participating in practices which involved dishonesty. While they testified that the Defendant, Mr. Marjoram, was the person directing these practices, their participation raised concerns about their credibility. The Defendant made statements at trial that were inconsistent with his pleadings; hence his credibility was in issue.

Save for one exception discussed below, he did not address the allegations of dishonesty, many of which were related to claims that were rejected. [ 8 ] The Plaintiff has had the same two shareholders since its creation: Sheri Lynn Chartier, the President, Secretary and Treasurer, and Mitchell Charles Preston, Vice President. Ms. Chartier and Mr. Marjoram, the Defendant, were in a common-law relationship throughout most of the history to this action. The corporation was set up with Ms. Chartier rather than Mr.

Marjoram as a shareholder with a view to preventing the Defendant’s ex-wife from having access to company records. [ 9 ] At the time of the trial the Plaintiff was apparently in poor financial circumstances. Exhibits P-46 and 47, discussed by Ms. Chartier, disclose a total indebtedness as at March 1, 2015 of over $135,000.00 and net losses in each of 2014 and 2015 of $99,314.00 and $137,687.00, respectively. There was no evidence that Mr. Marjoram was a signatory to any of the corporate indebtedness or that he’d provided a personal guarantee. Consideration was given to filing for bankruptcy however, Ms.

Chartier advised that it was not being pursued as it would be personally disadvantageous.

[ 10 ] The Plaintiff was of the view that Mr. Marjoram should share in the indebtedness of the Plaintiff corporation, particularly as it held him responsible for many of the financial decisions which it believed had put the corporation in such difficult financial straits. Ms. Chartier repeatedly referred to Mr. Marjoram as an “acting owner” of the Plaintiff corporation and said that she deferred to Mr. Marjoram’s decisions because she was in a common-law relationship. She and Mr. Preston testified that they participated in some very questionable business practices, which they attributed to Mr. Marjoram.

They did not appreciate their role in these practices. Questionable Business Practices [ 11 ] Exhibit P-14 was presented by Ms. Charter as an example of Mr. Marjoram’s participation in an apparent fraud upon a “rebate” program. She said that it pertained to a “side job” done for Mr. Marjoram’s brother, Colin Marjoram, for which she prepared three invoices under Mr. Marjoram’s direction. The first invoice, dated January 14, 2010, in the sum of $8,716.46, was described by Ms. Chartier as a “fake invoice”; it is noted to have been paid in full.

She testified that she prepared a second invoice, dated May 19, 2010, in the sum of $2,103.19 which was presented for payment to Colin Marjoram and is noted to have been paid in full. Ms. Chartier presented a third invoice, dated March 25, 2010, in the sum of $4,586.77, which she said contained additions to the original invoice, presumably the invoice dated May 19, 2010, and it was marked paid in full. The services described in the March 25 th invoice appear to be included in the January 14 th , “fake invoice”. Ms. Chartier’s testimony around this transaction raised concerns about Mr.

Marjoram’s credibility or reliability. He did not address this allegation. This evidence also raised concerns about Ms. Chartier’s credibility and reliability insofar as the preparation of invoices, as she admitted to preparing a “fake invoice”. I was in no way certain as to what really transpired in this instance and made no findings of fact as it was not necessary to the issues presented in this cause of action. [ 12 ] Ms. Chartier and Mr.

Preston, the shareholders of the Plaintiff, testified that the corporation was set up to keep the Defendant’s ex-wife from accessing the corporate records and to control the reported income to Mr. Marjoram. In his Statement of Defence Mr. Marjoram stated with respect to paragraph 3 of the Statement of Claim: . . . the Defendant acknowledges a verbal agreement with S.L. Chartier was made; however, the terms of the offer made by S.L. Chartier was that she would hold the Defendant’s shares in her name to prevent the Defendant’s ex-wife from having access to company records. [ 13 ] Ms.

Chartier presented Exhibits P-39 and 40, which included T4s for Mr. Preston and Mr. Marjoram in support of the argument that the Defendant was an “actual owner” of the corporation. She testified that from 2011 onward she received Mr. Marjoram’s salary increases so as to keep his reported income low. She said this was done with a view to avoiding an increase to Mr. Marjoram’s child maintenance obligation. Mr. Preston testified that he was aware of the income splitting between Mr. Marjoram and Ms. Chartier, stating that Mr. Marjoram wanted to keep his wage the same all the time “no matter what”. Mr.

Marjoram did not respond to this allegation and it was not necessary to make a finding of fact in this regard. [ 14 ] Ms. Chartier’s daughter was called to testify on behalf of the Plaintiff. She worked for JMP Plumbing and Heating Ltd. from the summer of 2014 until the spring of 2015. She estimated that she worked 35 to 40 hours at the Defendant’s home. She said that Mr. Marjoram directed her to bill the time she worked on his home to other jobs. She named four separate jobs to which she billed her hours when in fact she was working at the Defendant’s home.

She produced Exhibit P-52, a time sheet for a two-week period in October and November 2014, which she said was inaccurate because some of the time posted to specific jobs was in fact worked at the Defendant’s home. She could not be precise about specific inaccuracies as no written record was kept. She said that she made her mother and Mr. Preston aware of this practice but didn’t tell them how often it was happening. In testimony Ms. Chartier said that her daughter worked (see Exhibit P-45) at the rate of $25.00 per hour in the fall of 2014. This issue is discussed further, under “Specific Claims”. Mr.

Marjoram did not respond to this allegation, save to admit that he owed the Plaintiff for $100.00 in wages which was awarded to the Plaintiff. [ 15 ] On cross-examination about a specific “side job”, discussed in Exhibits P-12 and P-15, Ms. Chartier was asked why she had written a personal cheque to pay supply costs. Somewhat surprisingly, she stated that as Mr. Marjoram didn’t want some of the “side jobs” to go through his account, cheques were written to her. Presumably, in this instance the $1,000.00 cheque written by the customer to Mr. Marjoram was deposited into her account.

When questioned further why she didn’t pay the balance owing of $28.37; she replied that Mr. Marjoram had already taken the excess. Mr. Marjoram did not respond to this allegation and no finding of fact was necessary. Discussion of the Issues

a) At what point in time will the limitation period of two years apply to the Plaintiff’s claim and in particular, when was theclaim discoverable? [16] The two-year limitation period began as at October 30, 2013 as the Statement of Claim was signed by the Plaintiff and the feefor issuance paid to the court on October 29, 2015. The Plaintiff acknowledged the application under The Limitations Act ofSaskatchewan but maintained that no aspect of its claim was statute barred based on the discoverability of its loss, which it said was notuntil February 3, 2015, the date of the Defendant’s verbal resignation.

The Plaintiff filed the Defendant’s letter of resignation, datedFebruary 3, 2015, Exhibit P-42, which was received later that month.

The Plaintiff’s position was premised on an erroneous argumentthat: i. the Defendant was an “acting owner”, despite having no standing as a shareholder or director, and as such wasresponsible for corporate decisions until his resignation on February 3, 2015; ii. had the Defendant followed through on becoming a shareholder, he would have been liable for his portion of thecorporate debt (presumably one third as an equal shareholder with the two existing shareholders); iii. it was only when the Defendant resigned and refused to become a shareholder that the corporation knew he wouldnot be assuming responsibility for his share of the debt and it was only then that the loss was “discovered”. [17] Sections 5 and 6 of The Limitations Act of Saskatchewan are set out below.

The underlined portions are the most pertinent. Basic limitation period 5 Unless otherwise provided in this Act, no proceedings shall be commenced with respect to a claim after two years from the dayon which the claim is discovered. Discovery of claim 6

(1) Unless otherwise provided in this Act and subject to subsection (2), a claim is discovered on the day on which the claimantfirst knew or in the circumstances ought to have known: (

a) that the injury, loss or damage had occurred; (

b) that the injury, loss or damage appeared to have been caused by or contributed to by

an act or omission that is the subject ofthe claim; (

c) that the act or omission that is the subject of the claim appeared to be that of the person against whom the claim is made; and (

d) that, having regard to the nature of the injury, loss or damage, a proceeding would be an appropriate means to seek toremedy it.

(2) A claimant is presumed to have known of the matters mentioned in clauses (1)(

a) to (

d) on the day on which the act or omission onwhich the claim is based took place, unless the contrary is proved. [18] As ss. 6(1) and (2) of the Act provide, the onus of proving that the claim was discovered at a date later than the actual date ofthe loss, rests with the Plaintiff in these proceedings. In Condominium Plan No. 81R14133 (c.o.b.

Sierra Village Condominium Assn.) vMuxlow Development Corp., 2008 SKQB 462, [2008] SJ No 698, Sandomirsky J. discussed “the discoverability principle”, referring atparagraph 26 to Central Trust Co. v Rafuse, (SCC), [1986] 2 SCR 147 which sets out this principle: . . . a cause of action arises for purposes of a limitation period when the material facts on which it is based have been discovered or oughtto have been discovered by the plaintiff by the exercise of reasonable diligence. . .

[19] See also Pepper v Zellers Inc., (ON CA), [2006] OJ No 5042 (ONCA) at paragraph 16, which providesthat discoverability is: A principle that provides that a limitation period commences when the plaintiff discovers the underlying material facts oralternatively, when the plaintiff ought to have discovered those facts by the exercise of reasonable diligence. [20] While s. 6 of The Limitations Act does not employ the same phraseology, this discussion of the discoverability principle isnonetheless helpful to an understanding of the presumption contained in the Act.

Sections 6(2) and 6(1) define discoverability as the datewhen the claimant “first knew or in the circumstances ought to have known” that the loss occurred. [21] The Plaintiff can be taken to have known of the loss on the day of the act or omission on which the claim is based. ThePlaintiff has erroneously maintained that it cannot be taken to have discovered the loss until the date in February 2015 when theDefendant refused to become a shareholder in the corporation.

This is based on the Plaintiff’s argument that the Defendant would thenhave become responsible for the corporate debt and it argued that the corporation would not have known of his refusal to assume it untilhis resignation. As will be discussed below, when an individual becomes a shareholder, she or he does not by virtue of becoming ashareholder assume a portion of the corporation’s debt. [22] There was nothing preventing the Plaintiff from pursuing a cause of action against the Defendant at any time that thenecessary facts of the loss were known to the corporation.

That the loss was known, was illustrated with reference to Exhibit P-3,discussed below, and evident from the description of the Plaintiff’s operations. [23] With respect to discoverability, the Plaintiff did not maintain it was not aware that losses were occurring; rather it argued itshould not be taken to have known of it until Mr. Marjoram resigned. [24] Ms. Chartier was the person most familiar with the day to day financial affairs of the corporation. She described herself as abookkeeper / office manager.

The evidence lead by the Plaintiff was that the two officers / shareholders of the corporation, Sheri LynnChartier, the President, Secretary and Treasurer, and Mitchell Charles Preston, the Vice President, met with the Defendant weekly todiscuss finances (See Exhibit P-51

Summary of Defence full participation in the company. . .). On cross-examination Ms. Chartier statedthat she brought piles of invoices to a number of their weekly meetings in order to receive precise information about the client’s nameand address. Mr. Preston confirmed that discussions about invoices and billings took place at weekly meetings and inferred that Mr.Marjoram routinely gave Ms. Chartier direction about billings. [25] When the corporation began business Ms. Chartier and Mr. Preston had joint cheque signing authority.

As time went on theauthority was changed so that only one of them need sign the cheque and Ms. Chartier signed most of the cheques. [26] Ms. Chartier provided the evidence on behalf of the Plaintiff concerning the invoices or statements which represented thePlaintiff’s claim. On cross-examination, Ms. Chartier agreed that she was aware that there were debts attributed to “side jobs”. She saidthat she didn’t know how bad it was until she really looked. She agreed that she reviewed the financial statements with the accountantannually. They were given to Mr. Preston and Mr.

Marjoram and they were discussed when their year-end was complete. Mr. Prestonconfirmed that he received and understood their financial picture as a participant in weekly meetings.

b) Is the Defendant responsible for the Plaintiff corporation’s debt? [27] Ms. Chartier discussed Exhibit P-51, items A to EE, which was filed to illustrate that Mr. Marjoram was an “acting owner”and should therefore be held responsible for the corporate debt. [28] It was evident that the Plaintiff’s claim was based on a failure to understand or refusal to accept the significance of acorporation as a separate legal entity.

The Business Corporations Act of Saskatchewan provides for the capacity of a corporation,management of its affairs, the appointment of officers and the duty of care of directors and officers at ss. 15(1), 97(1), 116 and 117(1). Itis clear from the reading of these sections of the legislation that the directors are responsible for the decisions of the corporation. Theymay not avoid their responsibilities simply because they gave Mr. Marjoram authority or permitted his exercise of authority and they areexpected to act with a degree of care.

Capacity of a corporation 15(1) A corporation has the capacity and, subject to this Act, the rights, powers and privileges of an individual. Power to manage 97(1) Subject to any unanimous shareholder agreement, the directors of a corporation shall: (

a) exercise the powers of the corporation directly or indirectly through the employees and agents of the corporation; and (

b) direct the management of the business and affairs of the corporation. Officers 116 Subject to the articles, the bylaws or any unanimous shareholder agreement: (

a) the directors may designate the offices of the corporation, appoint as officers persons of full capacity, specify their duties anddelegate to them powers to manage the business and affairs of the corporation, except powers to do anything referred to in subsection (3)of

section 110; (

b) a director may be appointed to any office of the corporation; and (

c) two or more offices of the corporation may be held by the same person. Duty of care of directors and officers 117(1) Every director and officer of a corporation in exercising his powers and discharging his duties shall: (

a) act honestly and in good faith with a view to the best interests of the corporation; and (

b) exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances. [29] The shareholders in JMP Plumbing and Heating Ltd., subject to a unanimous shareholders’ agreement, and in the absence ofhaving given a form of personal security, are not liable for the debt of the Plaintiff corporation. Personal liability for the corporate debtwould not have accrued to Mr. Marjoram by virtue of his becoming a shareholder. This is principally why the Plaintiff’s argument aboutthe discoverability of its loss, is wrong in law. The date Mr.

Marjoram resigned and backed out of becoming a shareholder is irrelevant tothe Plaintiff’s discoverability of its loss. See: Canadian Encyclopedic Digest, Business Corporations (Western) provides at II CorporatePersonality, 1- Incorporation, (

a) Advantages at paragraph 27: §27 One reason that many persons, including parent corporations, carry on their businesses as limited corporations and othersinvest their money in them is in order that, as shareholders, they will be under no personal liability in respect of the transactions of thecorporation, and that is a perfectly legitimate object. The corporation Acts expressly contemplate that people may substitute the limitedliability of the corporation for the unlimited liability of the individual, with the object that by this means enterprise and adventure will beencouraged.

See: Commissioners of Inland Revenue v. Sansom (1921), [1921] 2 K.B. 492 (Eng. C.A.); Dominion Royalty Corp. v.Goffatt (1935), (ON CA), [1935] 1 D.L.R. 780 (Ont. C.A.); affirmed (1935), (SCC), [1935] 4 D.L.R.736 (S.C.C.). Rainham Chemical Works Ltd. v. Belvedere Fish Guano Co. (1921), [1921] 2 A.C. 465 (U.K. H.L.); Clark v. Thomas J.Gaytee Studios Inc. (1930), (SK KB), [1930] 3 W.W.R. 89 (Sask. K.B.); affirmed (1930), (SK CA),[1930] 3 W.W.R. 489 (Sask. C.A.).

[ 30 ] Relief from an individual associated with a corporation, as an “actual owner” is ordinarily achieved, at the instance of a shareholder or third party asking a court to “pierce the corporate veil”. A court may grant such relief if the qualifying criteria are met, where not to do so would result in a flagrant injustice. Fraud or improper conduct must be alleged. This relief was not requested in these proceedings and would not have been available to the Plaintiff corporation in any event.

There was no fraud or improper conduct committed by the Defendant, that the Plaintiff and its director / shareholders were not aware of and did not participate in on an ongoing basis. As discussed above, Ms. Chartier and Mr. Preston, the directors and shareholders of the Plaintiff, testified that the corporation was set up to keep the Defendant’s ex-wife from accessing the corporate records and so that Mr. Marjoram could control his reported income.

They went into this arrangement with this knowledge and thereafter continued to make decisions in recognition of the structure of which they were the authors; they cannot now complain of an injustice. I considered the following: Sawah v Strategy Insurance Ltd., 2014 ONSC 1109 , Shur Transport Ltd. v Sweet , 2009 SKQB 33 , [2009] SJ No 152. CED Business Corporations II.10 (Western) Canadian Encyclopedic Digest Business Corporations (Western) II — Corporate Personality 10 — Disregard of Corporate Personality: Piercing Corporate Veil.

c) Is the Defendant contractually liable to reimburse the Plaintiff for overhead costs subsequently attributed to his “side jobs”? [ 31 ] Ms. Chartier described a “side job”, as a practice principally utilized by Mr. Marjoram. It was a job undertaken by him, often for friends and family, the materials and supplies for which were purchased through the Plaintiff corporation, at cost. Labour was usually a private matter between Mr. Marjoram and the persons for whom the work was performed and typically paid in cash. [ 32 ] Ms. Chartier testified with respect to the billings for “side jobs” taken on by Mr.

Marjoram, she took her instructions from him as to how they were to be handled. She received invoices from Mr. Marjoram, money and advice about payment and suppliers’ invoices and filed these records concerning his “side jobs” in a separate file. [ 33 ] Over time the Plaintiff became increasingly concerned that these “side jobs” were a drain on the corporation and discussions took place about applying an “overhead” charge to the cost of supplies and materials to compensate for the nonspecific overhead costs of running a business. According to Ms.

Chartier the supply costs in relation to some of these “side jobs” were not always recovered in full. She spoke generally about the very questionable practice that sometimes occurred of putting the invoices for supplies to a “side job” under a corporate job. Evidence was led by the Plaintiff about the billing of Ms. Chartier’s daughter’s labour on side jobs, to other jobs on which she was not employed. This was discussed elsewhere in this judgment. [ 34 ] According to Ms. Chartier, at a weekly meeting on November 12, 2014, Ms. Chartier, Mr. Preston and Mr.

Marjoram agreed that a 30% overhead cost would be applied to the total of suppliers invoices after GST and PST. Prior to this meeting, while there had been numerous discussions about the losses associated with “side jobs”, there had been no agreement with the Defendant and no decision by the corporation to implement the overhead charge. In its claim the Plaintiff purported to charge this overhead for “side jobs” dating back to 2010.

Insofar as a specific claim pertains to “side jobs” undertaken prior to the limitation period, discussed above, and or it predates the November 2014 meeting, it fails. [ 35 ] It is a basic principle of contract law that there must be agreement among the parties to the terms of the contract for it to be binding upon the parties. When the Plaintiff decided at its meeting of November 12, 2014 that it would impose a 30% overhead charge on “side jobs”, it was altering the contractual understanding that had existed between the Plaintiff corporation and Mr. Marjoram. Mr.

Marjoram was free to accept this new term by continuing to bill the supplies for “side jobs” through the Plaintiff corporation or he could walk away from their contractual arrangement and conduct “side jobs” and order supplies elsewhere. The Plaintiff could not alter the terms of the contract under which Mr. Marjoram had been operating prior to November 12, 2014; it could not impose an overhead charge on existing “side jobs” retroactively. Mr.

Marjoram said that he didn’t agree with the imposition of the overhead charge when it was discussed at the meeting; it matters not, as this was a business decision of the corporate Plaintiff and he had no authority within the corporation. As this new direction from the corporate Plaintiff was conveyed to Mr. Marjoram on November 12, 2014, it can only apply to “side jobs” commenced by him after November 12, 2014. To the extent that the Plaintiff sought to apply this overhead charge to any “side job” commenced earlier, it did so without regard to any contractual understanding with the Defendant.

Accordingly, claims for the 30% overhead charge on “side jobs” commenced before November 12, 2014 must fail. [ 36 ] Ms. Chartier told the court that at some point it was agreed that the person doing the “side job” would be held responsible to pay for the suppliers’ costs, plus taxes. She said that this was decided at a weekly meeting attended by the shareholders and Mr. Marjoram sometime between 2009 and 2014. She then suggested that it was agreed that there would be a 15% overhead charge as an interim arrangement.

Ultimately she agreed that she had no notes of such a discussion and that she could not say whether or not it was agreed to. Mr. Preston did not testify about there being a 15% overhead. This testimony around the overhead charge on “side jobs” was symptomatic of the very loose way in which the parties conducted business. Very little of their discussions or operations were put in writing. The parties relied largely on memory or oral discussions. This lead to misunderstanding and incomplete records.

[ 37 ] Ms. Chartier testified that there was agreement that a 30% overhead would be charged to “side jobs” but there was no evidence about who was to pay that to the Plaintiff corporation. Typically, the overhead would be charged to the person receiving the supplies, on the “side job”. I found it was implied that the charge would be passed on to the person working with the Plaintiff corporation to collect the supply costs and consequently the overhead charge and if they failed to collect within a reasonable time that it would be charged back to that person who authorized the purchase of the supplies.

Specific Claims [ 38 ] All of the specific claims were presented on behalf of the Plaintiff by Ms. Chartier and her evidence was considered together with the Exhibits presented to support these claims. There were no records to support some of these specific claims. Some of the invoices to the clients were marked “Final Total:” and “Paid in full” and there appeared to be some significance to whether or not “Paid in full” was bolded. This was particularly troubling when the invoice from the Plaintiff was dated after supply costs were marked entered or received. The court was told that prior to Mr.

Marjoram leaving the corporation, there had been no system in place to track inventory. Given the evidence from Ms. Chartier about some of the Plaintiff’s practices regarding billing of supplies to accounts other than for which they were used, these specific claims were carefully scrutinized. [ 39 ] With Exhibit P-3, the Plaintiff claimed reimbursement for the preparation of personal income tax returns in the amount of $165.00 in each of the years: 2011, 2012 and 2013 for a total of $495.00.

Putting aside for the moment whether this is a debt that would be owing by the Defendant, the Plaintiff, nevertheless had the necessary knowledge to commence a cause of action for reimbursement when the bills were first submitted to the Plaintiff. The Plaintiff’s President, Secretary and Treasurer, Ms.

Chartier, who was involved in the financial operations of the corporation and described herself as the bookkeeper / officer manager from the corporation’s inception, testified that she personally took the documents to the accountant for preparation of these returns and it was part of her role to see to the payment of invoices sent to the corporation. The original invoices were not provided; hence the date of the 2013 invoice has not been proven to the court. This claim fails as it was not pursued within the two-year limitation period, which would have been as at October 30, 2013, discussed above.

Had this claim not been statute barred, I would nonetheless have denied it as there was no evidence that this benefit given to the Defendant was in expectation of reimbursement at any time prior to his resignation from the corporate Plaintiff. Further, the Plaintiff did not file any invoices made out to Mr. Marjoram to support its claim that the Defendant was to reimburse the Plaintiff at the time.

The Defendant testified that he was never told that he was expected to reimburse for the accountant’s preparation of his personal tax return and his evidence in this regard was accepted; it was consistent with the practices of the Plaintiff over time. [ 40 ] Exhibit P-4 pertains to the legal fees, in the sum of $936.89, for the aborted restructuring of the corporation.

As the Defendant agreed to pay this sum in his pleadings, it was awarded to the Plaintiff. [ 41 ] Exhibits P-5, 6, 7 and 9 represent receipts for the purchase of a large tool chest, some cabinets, a snowblade and a router which the Plaintiff maintains the Defendant removed from the premises of the corporation over the weekend following his resignation on February 3, 2015. The Defendant maintained that he was the owner of the tool chest. Mr.

Marjoram also testified that he was not paid all the wages to which he was entitled in 2009 and that the cabinets, tool chest and other bill payments such as for his quad and mustang were received in lieu of those wages. [ 42 ] Exhibit P-5 is a receipt for the purchase of a tool chest, dated January 21, 2012 in the sum of $790.66 inclusive of tax. The Defendant did not acknowledge removing the large tool chest from the Plaintiff’s business premises; however, he did testify that it was his as he was paid with the purchase of the tool chest in lieu of wages.

This was surprising as the only wages that he claimed were unpaid were in 2009. I found on a balance of probabilities that the Defendant took the tool chest and that it was removed during the same time that the cabinets were removed. However, given the numerous examples in evidence of irregular transactions, and given that the Defendant disputed this claim, I was unable to accept either the Plaintiff’s or the Defendant’s version of this aspect of the claim; therefore, the Plaintiff’s claim in this regard fails.

In any event, the Plaintiff would not have been entitled to the replacement cost of the tool chest but rather its value as at February 2015. [ 43 ] Exhibit P-6 includes invoices for the purchase price of 17 “cabinets” in the spring of 2013. Despite his testimony that he was entitled to these cabinets as payment in lieu of wages, Mr. Marjoram admitted to removing six cabinets and undertook in his Statement of Defence to return them to the Plaintiff. It may be that the 17 pieces combined to make six or more cabinets; the court did not receive that information. Ms.

Chartier testified that the invoices provided to the court pertained to the cabinets that were taken. I found Mr. Marjoram’s testimony, insofar as he said that the cabinets were paid in lieu of wages, to be unreliable and it was not accepted. As the cabinets have not been returned the Plaintiff should be compensated. It was found on a balance of probabilities that the total of $945.32 (before tax) represented the replacement value of the cabinets that the Defendant took from the Plaintiff.

However, the Plaintiff was not entitled to replacement cost, but rather the value of the cabinets at the time they were taken, which was set at roughly 50% of the

purchase price before tax, in the sum of $475.00. [ 44 ] Exhibit P-7 contains a cheque stub, dated December 28, 2012, indicating payment to the Defendant in the sum of $250.00, which Ms. Chartier said represented a contribution to the Defendant by the Plaintiff for the purchase of a snowblade which attached to his quad. While it was accepted on a balance of probabilities that the Defendant had the blade in his possession, reimbursement of this sum was not ordered. A cheque stub is insufficient proof; the cancelled cheque should have been provided. This claim was barred by the two-year limitation period.

In any event, there was no evidence to suggest that the Plaintiff expected reimbursement. Rather it likely represented payment in acknowledgement that the quad with the snowblade would be used to clear snow from the alley adjacent to the garage. It is the understanding at the time of the payment or purchase of the snowblade that is material. [ 45 ] Exhibit P-8 pertains to a repair to the quad owned by the Defendant. The Plaintiff maintained that this repair was put on the corporate credit card so as to avoid paying GST and on the understanding with the Defendant that it was a loan.

This is one of the items which the Defendant has maintained he received in lieu of wages. I found this surprising given that the unpaid wages pertained to a period of time roughly four years earlier in 2009. The invoice is incomplete; there is no total and the items on the one page provided do not match the sum on the attached credit card receipt for which reimbursement was sought. The documentation is insufficient to prove this aspect of the claim. The invoice is dated October 8, 2013 and it was paid for by the Plaintiff on October 9, 2013.

This aspect of the claim fails as it is outside the two-year limitation period. [ 46 ] Exhibit P-9 is an invoice in the sum of $107.16 for the purchase of a router on May 6, 2013. The Plaintiff maintained that this was a personal purchase by the Defendant that was installed on the property where the Plaintiff conducts business. The date of loss being on the date of payment, May 6, 2013, this aspect of the claim is outside the limitation period.

In any event, there was no evidence that the router was not still in the possession of the Plaintiff. [ 47 ] Exhibit P-10 is an ATM statement indicating debits on or before April 30, 2013, totalling $560.00 for the installation of a Heat Recovery Ventilation system (HRV) installed in the house out of which the Plaintiff operates its business. It was withdrawn on the Plaintiff’s debit card. The HRV was installed when Ms. Chartier and the Defendant lived there as tenants when it was owned by Ms. Chartier’s father. The house has since been transferred into Ms. Chartier’s name.

This aspect of the claim is caught by the limitation period and is statute barred. [ 48 ] Exhibit P-11 is a cheque stub, representing payment for repairs to the Defendant’s vehicle. It is dated February 6, 2014. This aspect of the claim has not been admitted by the Defendant. There was evidence that the Plaintiff made endorsements in its records, after the fact, based on advice from the corporation’s accountant. The cheque stub provides scant information, only some of which is readable. There is no invoice. The Plaintiff has not provided adequate proof of payment.

This aspect of the claim fails. [ 49 ] Exhibits P-12 to 36 pertain to the Plaintiff’s claim for reimbursement of a 30% overhead charge, calculated on supplies, and unpaid supply costs for “side jobs” carried out by the Defendant from 2010 to 2015. These documents were pulled together in June 2015, after a meeting with the Plaintiff’s accountant. The cover document in each of Exhibits P-13 to P-36, called invoices, were understood in light of the information conveyed in Exhibit P-12 and the testimony of Ms. Chartier. The Defendant received this documentation in April 2016.

He was not invoiced for these alleged losses as they occurred. These Exhibits were examined with a view to the two-year limitation period, the adequacy of the proof and whether there was a contractual obligation. As noted, the Plaintiff maintained that these losses were not discoverable until after the Defendant gave notice in February 2015. Ms. Chartier testified that at a weekly meeting on November 12, 2014, she, Mr. Preston and Mr. Marjoram agreed that a 30% overhead cost would be applied to the total of suppliers invoices after GST and PST.

This was a general discussion; there was no evidence to indicate discussions about application to specific “side jobs”. [ 50 ] Exhibit P-13, which is an invoice, dated January 2010 for $272.89, was considered together with Exhibit P-12. In this regard, the Plaintiff purported to apply a 30% overhead charge after the fact, resulting in a claim in the sum of $354.76. The Plaintiff failed to produce a record of payment by the Plaintiff and there was no invoice from the supplier. This aspect of the claim failed as it was statute barred.

In any event this aspect of the claim did not meet the civil burden of proof on a balance of probabilities. [ 51 ] Exhibit P-14 was discussed above. There was no specific claim with this Exhibit. [ 52 ] Exhibits P-12 together with Exhibits P-15 to P-26 and P-29 to, P-36 concern “side jobs”. Exhibit P-12 refers to specific jobs in the name of the customer and can be linked to each of the Exhibits P-15 to P-36 by name.

The Plaintiff added a 30% overhead charge to supplier costs and after GST and PST to all “side job” accounts, after the fact and notwithstanding that the corporation first agreed to charge overhead on November 12, 2014. These Exhibits often included claims for unpaid supply costs.

[ 53 ] Claims evidenced in Exhibits P-12 and P-15 to P-26 concern losses claimed to have taken place before October 30, 2013. Whether these invoices are for overhead, unpaid labour and / or suppliers’ costs, they are statute barred. These claims, insofar as they include a 30% overhead charge on “side jobs” that commenced before November 12, 2014, also fail on the basis that they were not a part of the contractual obligation of the Defendant. [ 54 ] Exhibit P-12 together with Exhibits P-27 and P-28 were presented as examples of “side jobs” with respect to which Mr.

Marjoram directed a “family discount”; no claims were made with respect to these Exhibits. According to Ms. Chartier, Exhibit P-29 represented a “side job” for which no documentation was provided by the Defendant. She could not say that the supplies were billed through the Plaintiff corporation. On cross-examination Mr. Chartier agreed that Mr.

Marjoram had done “side jobs” for her father and that she was instructed to bill her father as she wished; she did not add a 30% overhead charge to this “side job”. [ 55 ] Exhibit P-12 together with Exhibits P-30 to P-36 at first appeared to represent claims for unpaid supplier costs that were within the two-year limitation period and / or for overhead charges imposed for jobs started after November 12, 2014.

These claims have been discussed individually. [ 56 ] Exhibit P-30, dated February 24, 2014, considered together with Exhibit P-12, indicating payment of $500.00, represents a claim for unpaid supplies in the sum of $69.09 ($569.09 - $500.00) and a 30% overhead charge on the sum of $569.09. The overhead charge predates November 12, 2014 and was not allowed.

The attached two invoices, dated February 4 and 6, 2014, are each marked with what appears to be an “entry” date of February 18, 2014 and pre-date the client invoice from the Plaintiff dated February 22, 2014, which states that the total is final and has been paid in full. While the two invoices total $569.09; the February 22 nd invoice indicates a charge of $476.00. There was no invoice for the difference and the discrepancy was not explained. The court was informed that there was no inventory control and it is possible that not all of the items on the two invoices were used on this particular “side job”.

The information available to the Plaintiff regarding the supplies to be charged to the client would have been freshest on February 22, 2014. I was not convinced beyond a reasonable doubt that there was an error in the February 22, 2014 invoice or that the sum owing should be replaced with the total of the two invoices from Acquifer Distribution Ltd. This aspect of the claim fails. [ 57 ] Exhibit P-31, dated March 27, 2014, indicates supply costs of $2,740.00 and it is marked “Final Total” and “Paid in full”, however the latter was not bolded.

Exhibit P-12 indicates total supply costs of $2,811.94. $2,740.00 was paid and the difference of $71.90 was claimed. While the reason for the difference was not explained, two things were noted of significance: the invoices from the supplier, National Energy Equipment Inc. were identified with the name of the client, “Purdy” and the invoices were not entered until July 2014, after the date of the March invoice to the client. This could well be one of those “side jobs” where Ms. Chartier did not receive the invoices in a timely fashion. The overhead charge of 30% predates November 12, 2014 and was not allowed.

The sum of $71.90 was allowed and is payable to the Plaintiff. [ 58 ] Exhibit P-32, dated March 11, 2014, considered together with Exhibit P-12, indicates payment of $80.00 and a supply cost of $76.19; however, there was no invoice to support this claim. The overhead charge predates November 12, 2014. The Plaintiff was not entitled to an award in this regard. [ 59 ] Exhibit P-33, dated July 21, 2014, indicates a cost, inclusive of one hour of labour and supplies in the sum of $1,000.00 and is marked “Paid in full”, but it was not in bolded letters and it was not marked “Final Total”.

Exhibit P-12, indicates payment of $1,000.00 and a supply cost of $1064.98, and a claim for the difference of $64.98. However, the two invoices attached to Exhibit P-12 were received May 2, 2014 and are marked “Entered” on July 15, 2014. The discrepancy between the invoice to the client and the amount claimed was not adequately explained. The claim for $64.98 was not allowed.

The overhead charge of 30% predates November 12, 2014 and was not allowed. [ 60 ] Exhibit P-34, dated August 25, 2014 indicates payment in the sum of $1,176.00 for labour and supplies and is marked “Final Total” and “Paid in full” in bold lettering. Exhibit P-12 shows a supply cost of $985.59, indicating that the Plaintiff did not incur a loss with respect to supplies. The Plaintiff is not entitled to the overhead charge of 30% as it predates November 12, 2014. [ 61 ] Exhibit P-35 contains a client invoice, dated November 22, 2014, and two suppliers invoices. Ms.

Chartier, referring to Exhibit P-12, claimed that the total supply cost after a credit of $1,150.38 was $1,456.80 and that $1,418.18 was paid, leaving a difference owing of $36.82. The principal invoice dated November 10, 2014 was not entered until February 7, 2015. The invoice dated December 12, 2014, which indicates a credit and restocking fee does not bear an entry date. This could well have been one of those cases in which Mr. Marjoram did not provide the invoice until a much later date; however, it is difficult to understand the basis for the supply cost on the client invoice of November 22, 2014.

The two invoices in Exhibit P-35 are marked “brothers unit heater”. The cheque is marked “gas line”. It appears that the Plaintiff had information when this client invoice was prepared that is not evident from the later calculations. In the circumstances, the Plaintiff did not convince the court beyond a reasonable doubt that the difference of $36.82 was owing. As this “side job” appears to have been started prior to the November 12, 2014 imposition of the 30% overhead charge, the

overhead was not allowed. [ 62 ] Exhibit P-36, dated February 1, 2015 indicates that the total labour and supply cost was $5,594.82 and it is marked “Final Total” and “Paid in full” in bold. The payment was supported by attached cancelled cheques. Ms. Chartier discussed this matter with the aid of Exhibit P-12 and in fact revised the figures while on the stand, indicating that the total supply cost was $6,087.17, and made no claim for unpaid supply costs. It was not clear to the court how Ms.

Chartier arrived at the figure of $6,087.17 having been paid (slightly more than the supply cost), given the calculations on the last page of Exhibit P-36. The Defendant made no claim in this regard. From the date of the invoices, ranging from November 6 to 14, I found that the work on these projects began prior to November 12, 2014. There was only one invoice dated after November 12 and it was for $112.02. In light of this the overhead charge of 30% cannot apply to any of the work included in P-36.

Very simply, the overhead charge on the supplies is a significant matter which would have to be agreed to before the parties agreed to undertake this work. Certainly the Defendant was entitled to that information before ordering the supplies. [ 63 ] The Plaintiff also sought payment of the 30% overhead charge on supplies for renovations that the Defendant undertook, according to the Plaintiff between March 2014 and February 2015. While Exhibit P-12 maintains that the cost of supplies was $7,252.27, invoices to support this amount were provided to the court. Ms.

Chartier testified that the supply costs were paid, but not the overhead charge which she calculates as $2,175.68. This aspect of the claim fails given that there is no supporting documentation and as the only evidence is that the work was carried out between March 2014 and sometime in February 2015. I infer from this that the work began well before the November 12, 2014 decision to impose the 30% overhead charge.

Having regard to the civil burden of proof, and very imprecise nature of the evidence tendered, the Plaintiff has failed to prove to the court that the cost of supplies was $7,252.27 or that the overhead charge of 30% was a condition of the renovation work undertaken by Mr. Marjoram. The Plaintiff also sought, referring to Exhibit P-12, reimbursement for wages that the Defendant should have paid while he and Ms. Chartier’s daughter worked on this home, estimated to be in the sum of $4,320.00 (36 hours) for Mr. Marjoram and $900.00 (36 hours) for the daughter. Ms. Chartier testified that Mr.

Marjoram did not keep time sheets. The Plaintiff did not produce supporting documentation with respect to this claim. The Defendant offered to reimburse the Plaintiff for four hours ($100.00) in this regard, for one day that the daughter worked at his home.

In the circumstances, as the Defendant has made this admission, there otherwise being insufficient evidence having regard to the civil burden of proof, the Plaintiff was awarded $100.00 in this regard. [ 64 ] Next follows a list of the specific claims for which it was found that the Plaintiff was entitled to payment: P-4 Legal fees $936.89 P-6 Cabinets reimbursement 475.00 P-31 Supply costs 71.90 P-12 Wage claim for daughter 100.00 Payable to the Plaintiff $1,583.79 [ 65 ] The Plaintiff shall have judgment against the Defendant in the sum of $1,583.79.

No costs are awarded as the Plaintiff’s claim was substantially dismissed. The Defendant was not entitled to costs as he took inconsistent positions between his pleadings and in his position at trial. ______________________ S. P. Whelan, J