Niedermayer v. Wahlund Holdings Ltd., 2023 BCPC 140

Citation: Niedermayer v. Wahlund Holdings Ltd. 2023 BCPC 140 Date: 20230621 File No: C-2158950 Registry: Prince George IN THE PROVINCIAL COURT OF BRITISH COLUMBIA BETWEEN: LINDA NIEDERMAYER dba A&R MOBILE ACCOUNTING AND TAX SERVICES CLAIMANT AND: WAHLUND HOLDINGS LTD. DEFENDANT REASONS FOR JUDGMENT OF THE HONOURABLE JUDGE C. MALFAIR Appearing on her own behalf: L. Niedermayer Appearing for the Defendant: L. Wahlund and C. Wahlund Place of Hearing: Prince George, B.C.

Dates of Hearing: November 18, 2022, April 18, May 19, 2023 Date of Judgment: June 21, 2023 [ 1 ] The Claimant, Linda Niedermayer, claims $28,945.99 plus interest “to be determined” from the Defendant, Wahlund Holdings Ltd. (“Wahlund”). Wahlund retained Ms. Niedermayer to provide accounting services in 2015. Wahlund sought new financing and

needed its financial statements and tax returns brought current to qualify for the loan. The parties agreed Wahlund would make monthly payments to Ms. Niedermayer for providing these services until financing came through, upon which Wahlund would pay out any remaining amounts owing to Ms. Niedermayer. [ 2 ] Both Wahlund and Ms. Niedermayer agree the principal amount owing by Wahlund for accounting services is $3,741.01. The parties disagree on the issue of whether or not Wahlund owes Ms.

Niedermayer $25,204.98 of contractual interest, in addition to any interest accruing between the time of filing the Notice of Claim and date of Judgment. Ms. Niedermayer says the parties’ contract provided interest would be charged “retroactively” on late or missed payments at a rate of 24% per annum. Wahlund denies there was any agreement for payment of contractual interest. [ 3 ] When the agreement was made in 2015, the parties were friends, but that relationship has significantly deteriorated.

At trial neither party was represented by counsel, and much of the evidence adduced related to matters that were ultimately not relevant. I have focused my reasons on the limited live issue in this case and have declined to make findings of fact unnecessary to the determination of whether or not there was an agreement to pay contractual interest. [ 4 ] Ms. Niedermayer and the Wahlunds knew each other through bowling. Wahlund owns a bowling alley frequented by Ms. Niedermayer, and Ms.

Niedermayer had provided some accounting services to Wahlund prior to 2015. [ 5 ] In or around July 2015, Cathy Wahlund, Les Wahlund and Ms. Niedermayer had a discussion at the bowling alley about retaining Ms. Niedermayer to provide accounting services. Wahlund was trying to secure a new bank loan and needed its 2009 to 2015 tax returns and financial statements prepared and filed in order to qualify. Ms. Niedermayer provided these services over the course of 2015 to 2018. Ms.

Niedermayer also prepared tax returns and financial statements for 2016 and 2017 as the loan application process dragged on. [ 6 ] At the time of the parties’ discussions, the amount of work involved to bring the company’s financial filings current was unknown. Wahlund was hoping to reduce its tax and penalty liabilities through loss and hardship claims. The accounting work comprised of research and bookkeeping services. The parties contemplated Ms. Niedermayer would charge by the hour, but there was no discussion about her rates. Ms.

Niedermayer says she typically charges around $45 per hour for non-tax related work and $60 to $75 per hour for tax related work. She told the Wahlunds to expect each taxation year to cost in the neighbourhood of $1,300 to $1,600. [ 7 ] The parties agreed Wahlund would make monthly payments to Ms. Niedermayer of $500 while the work was ongoing until Wahlund secured the bank loan. Any remaining balance of Ms. Niedermayer’s account was to be settled from the loan proceeds. Ms. Niedermayer says Wahlund promised to always pay a minimum of $500 every month. Wahlund says the agreement was more flexible, and Ms.

Niedermayer agreed Wahlund could sometimes make reduced payments when business was slow. The monthly payments were intended to be pre-payments towards Ms. Niedermayer’s final bill, which would be paid out by the loan. [ 8 ] Between August 2015 and February 2019, Wahlund made most of the $500 monthly payments and sometimes paid more. However, there were several months in which Wahlund missed a payment or paid a reduced amount, such as $200. In total Wahlund paid $16,180 to Ms.

Niedermayer. [ 9 ] At the time of the parties’ discussions in July 2015, the goal was to get tax filings and financial statements current to 2015. Discussions with the bank were ongoing during 2016 and 2017. Ms. Niedermayer did not file Wahlund’s 2015 tax return until December 12, 2017. Due to the passage of time, Wahlund needed to update its financial information to include its 2016 tax return and 2017 financial statement to qualify for the loan. Ms. Niedermayer agreed to prepare those additional financial records in furtherance of getting the bank loan to pay out her account.

Wahlund continued to make monthly payments. [ 10 ] Ms. Niedermayer filed Wahlund’s 2016 tax return in February 2018. At that time she issued a bill for the outstanding balance owing for all work to date of $12,621.50. However, Wahlund still needed the 2017 tax return filed to bring its filings current. Ms. Niedermayer filed the 2017 tax return on June 19, 2018, for which she charged $1,534.50. In the interim Wahlund continued to make monthly payments. [ 11 ] The relationship between the parties started to strain in the spring of 2018.

Wahlund was still trying to secure the bank loan and was told the 2017 year-end financial statements needed to be done as part of that application. The Wahlunds started to pressure Ms. Niedermayer to get that work done. Ms. Niedermayer experienced some personal and health issues, so the filings were delayed. In July 2018 Ms. Niedermayer raised the issue of her pay out. Ms. Wahlund responded that, at the moment, her hands were tied. [ 12 ] On July 19, 2018, Mr. Wahlund wrote Ms.

Niedermayer stating she had put them in a dilemma by not filing the last tax return, as Wahlund could not get the loan approved until all the filings were complete. He said Wahlund could not pay her balance until the reports were filed and they got the bank loan. Ms. Niedermayer felt she had worked long enough in promise of being paid out and was concerned the loan was continuously getting delayed, so she did not prepare the May 31, 2018 financial statement as requested. Rather, she demanded payment of the remaining balance for all work performed to date. [ 13 ] On August 10, 2018, Ms.

Niedermayer issued Wahlund an invoice for $8,233.50 which she claimed represented the outstanding balance on the work she performed. [ 14 ] On August 19, 2018, Mr. Wahlund advised Ms. Niedermayer the bank had reviewed the 2017 financial statements and concluded Wahlund’s available cash was too low to qualify for a loan. The bank invited Wahlund to re-apply if its May 31, 2018 financial statements showed an improvement in cash flow. Mr. Wahlund said the loan would not be approved unless the latest reports were filed. [ 15 ] On August 21, 2018, Ms.

Niedermayer advised Wahlund that if her August 10 invoice was not paid in full by the end of the month she would “retroactively calculate interest on the amounts unpaid.” At trial Ms. Niedermayer explained that by “retroactive,” she intended to identify any missed, late or short monthly payments between 2015 to 2018, and calculate interest on those amounts back to the date the impugned payment was due.

[ 16 ] In response to Ms. Niedermayer’s demand for payment, Ms. Wahlund complained Wahlund had to get someone else to handle its financial matters while Ms. Niedermayer was ill, and that Ms. Niedermayer’s financials were prepared incorrectly which had caused delays at the bank. Ms. Wahlund said the agreement was to pay $500 per month until Wahlund secured the bank loan and that had not come through yet. [ 17 ] Wahlund did not pay out the August 10, 2018 invoice. On September 30, 2018, Ms. Niedermayer issued Wahlund an invoice for “retroactive interest” in the amount of $2,843.74.

No calculation, details or statement accompanied the invoice. The invoice just states, “accumulated interest on outstanding invoices due to lack of payment in full as at August 31, 2018. Interest has been calculate at 24% per annum.” The total balance owing as of September 30, 2018, indicated on that invoice is $11,077.24. [ 18 ] Ms. Niedermayer did not perform any more work after issuing the August 10, 2018 invoice. Following the September 30, 2018 invoice, Ms. Niedermayer issued three more invoices in the amounts of $308.01, $300.08, and $303.41 claiming accrued monthly interest to January 31, 2019.

Wahlund paid $2,700 towards Ms. Niedermayer’s account between September 30, 2018 and January 31, 2019, however, Wahlund did not admit it owed any of the interest claimed by Ms. Niedermayer. [ 19 ] On February 1, 2019, Ms. Niedermayer issued an invoice stating “Total Balance Outstanding and Due Immediately: $15,557.33.” No calculations or account statement were attached to the invoice. Given the amounts invoiced to that date and payments made by Wahlund, the $15,557.33 demand was inexplicable. [ 20 ] Wahlund asked Ms. Niedermayer to provide accounting details supporting the invoice. Ms.

Niedermayer did not provide the information requested, rather, she dismissively told the Wahlunds “you have my invoices.” Relations further soured. Ms. Wahlund asked for an invoice setting out the details of Ms. Niedermayer’s charges without interest and Ms. Niedermayer responded by demanding to be paid. She accused the Wahlunds of defamation, harassment, and obtaining her services “by fraudulent means.” [ 21 ] Ms. Niedermayer continued to send Wahlund monthly invoices approximating $300 per month for “interest accrued on overdue amount.” Wahlund made its last payment in February 2019, following which Ms.

Niedermayer continued to invoice Wahlund ever- increasing monthly sums for accrued interest. [ 22 ] Wahlund retained counsel in an effort to compel Ms. Niedermayer to disclose the basis of her invoices. After some demands, Ms. Niedermayer finally provided the information. The Wahlunds took Ms. Niedermayer’s calculations to their own accountant in an effort to determine how much they actually owed on the principal amount and what was being claimed as interest. Wahlund did not pay Ms. Niedermayer’s invoice while the calculation dispute was ongoing. Ms.

Niedermayer filed this Notice of Claim on February 3, 2021. [ 23 ] Ms. Niedermayer was uncooperative with Wahlund’s inquiries into the basis of her monthly invoices, and she did not provide her calculations until compelled to do so. Ms. Niedermayer expected Wahlund to meet her payment demands without question. During cross- examination Ms. Niedermayer was often combative and adopted an air of superiority. She repeatedly responded to the Wahlunds’ relevant questions in a dismissive manner on the basis she was the accounting professional and they were unknowledgeable laypersons. In cross-examination Mr.

Wahlund put to Ms. Niedermayer that all he wanted was a record setting out where she got her numbers from to come up with the $15,557.33 she demanded in her September 2018 invoice. Ms. Niedermayer indignantly replied that she did not have to submit her timesheets to him and she was not his employee. [ 24 ] The agreement between the parties was oral and not evidenced in writing. The agreement arose from a single meeting. Ms.

Niedermayer says when they discussed the terms of her retainer at the bowling alley she told the Wahlunds if they did not pay out her bill once the work was complete they would be charged interest “retroactively” at a rate of “24% per annum.” By “retroactively,” Ms. Niedermayer says she meant if her bill was not paid out at the end, she would go back in time to 2015 and charge interest on any monthly payments that were missed, short, or late. [ 25 ] Wahlund denies this conversation occurred. Both Cathy and Les Wahlund agree they discussed monthly payments and that Ms.

Niedermayer would be paid out by the bank loan, but the subject of interest never came up. The first time Ms. Niedermayer ever mentioned interest was three years later when Ms. Niedermayer sent the email demanding Wahlund pay out her August 10, 2018 invoice by the end of the month or she would “retroactively calculate interest.” [ 26 ] As the Claimant, the burden of proof lies on Ms. Niedermayer. I find she has not met her burden and I am not satisfied on a balance of probabilities there was ever an agreement between the parties about payment of interest.

In coming to that conclusion I have considered the following:

a) Neither party conducted itself in a manner consistent with there being an agreement for payment of interest. Prior to September 30, 2018, Ms. Niedermayer had never charged interest. Wahlund never once paid interest.

b) Wahlund had historically retained Ms. Niedermayer to provide accounting services prior to entering into the July 2015 agreement. Ms. Niedermayer had never charged or mentioned interest in the course of any of those dealings.

c) Not a single document prior to August 2018 makes reference to the subject of interest. It does not appear in any communication or invoice. Ms. Niedermayer’s invoices provide no customary caption indicating, for example, that interest will be charged on overdue amounts. No such caption appears on any of Ms. Niedermayer’s pre-2015 historical invoices to Wahlund. Ms. Niedermayer says this was due to a problem in her invoicing software. I do not believe Ms. Niedermayer went years issuing invoices to customers without ever noticing, or fixing, her invoices to state that interest will be charged.

d) Wahlund initially missed its first few monthly payments in 2015. Despite Wahlund missing and underpaying several monthly payments over three years, Ms. Niedermayer never brought up the subject of interest until August 2018. She never made a payment demand for interest until September 30, 2019.

e) The verbal contract was formed in circumstances that made an agreement for interest unlikely. This was a single casual and informal meeting amongst friends at the bowling alley. The Wahlunds owned the bowling alley Ms. Niedermayer had bowled in for

years. Flexible payment terms were negotiated. Nothing was reduced to writing or confirmed in follow up correspondence. I find it unlikely that the topic of interest on overdue payments, and the precise terms of that interest obligation, would be raised in such an informal, convivial verbal discussion.

f) Ms. Niedermayer’s account of the negotiated terms of interest is inconsistent with the expectations of the parties at the time. Ms. Niedermayer says Wahlund agreed if she was not paid out in full Ms. Niedermayer could go back to 2015 and “retroactively” charge interest on any short or missed monthly payments to date. At the time of the 2015 discussion the parties fully expected Wahlund to secure the bank loan and pay Ms. Niedermayer from the proceeds. There was no reason to expect Ms. Niedermayer would not be paid out. Ms.

Niedermayer was under the impression Wahlund’s loan had already been pre-approved, the bank just needed the tax filings. Further, these were discussions between friends and there was no reason to expect Wahlund was going to fail to meet its monthly payment obligations to Ms. Niedermayer. Given these expectations, it is unlikely Ms. Niedermayer would anticipate Wahlund would both fail to meet its monthly payments and fail to get its bank loan, such that she prospectively negotiated a special “retroactive” interest term to address those two eventualities.

g) Ms. Niedermayer claims the agreement was Wahlund would pay interest at a rate of 24% per annum. In fact, that is not what she purported to charge in her invoices, which calculates interest at a rate of 24% per annum compounded monthly. That equates to an interest rate of 26.82% per annum. As an accountant, presumably Ms. Niedermayer would know the difference between an interest rate of 24% per annum and 24% per annum compounded monthly, as well as the provisions of s. 4 of the Interest Act which require an enforceable agreement for payment of interest to expressly set out the annual rate. Ms.

Niedermayer’s conduct in charging Wahlund a different interest rate than the one she asserts was negotiated supports Wahlund’s position there was no discussion about payment of interest.

h) Ms. Niedermayer agrees that she often accepted reduced or missed monthly payments at Wahlund’s request. I find these monthly payments were intended to act as pre-payments towards Ms. Niedermayer’s final bill once all the work was done, so there was room for flexibility. That arrangement is not consistent with Ms. Niedermayer’s assertion that the parties agreed she could go back and retroactively charge interest on short or missed payments. If Ms.

Niedermayer agreed to accept reduced payments at the time, there is no grounds to go back and “retroactively” charge interest on such amounts as they were not, in fact, overdue. [ 27 ] Ms. Niedermayer gave varying and sometimes inconsistent accounts of the alleged terms of the parties’ agreement to pay interest. She vacillated between suggesting that interest accrued upon Wahlund defaulting on payment of the final bill, and suggesting it as accruing the whole time from the moment of each missed or short payment. For example:

a) Early on in her direct testimony, Ms. Niedermayer said the agreement was as follows: “it would be 24% if he defaulted, there was no further discussion about it because they were sure they would get a bank loan.” In this part of her testimony, Ms. Niedermayer makes no mention of any agreement for interest to be compounded or calculated retroactively. When asked about billing and invoicing, Ms. Niedermayer said “it was discussed it would be billed at the end after all the work ” and that Wahlund would make monthly payments towards that bill.

b) In cross-examination, Ms. Niedermayer was asked why she did not raise the issue of interest on late payments until 2018. Ms. Niedermayer said no interest was due until Wahlund had defaulted.

c) When asked by the Court to explain her calculation of interest, Ms. Niedermayer said the agreement was for 24% interest at the end of the agreement , and payments of no less than $500 per month until the job was done. If Wahlund defaulted on payment it would be charged 24% per year.

d) In cross-examination it was put to Ms. Niedermayer she never charged the 2% monthly interest claimed on any late payments on her invoices. She replied that she was expecting to be paid in full in the end, and that the agreement was if Wahlund defaulted at the end they would pay interest.

e) When confronted about her evidence that interest was not payable until Wahlund defaulted on payment, Ms. Niedermayer claimed Wahlund’s date of default was not August 2018, but August 2015 when Wahlund missed its first monthly payment. When asked why she did not alert Wahlund to the interest charge which accrued for the “defaulted” August 2015 payment until three years later, Ms. Niedermayer avoided the question and complained she does not work for free. [ 28 ] Ms. Niedermayer also gave inconsistent testimony about the parties’ alleged discussion about payment of compounded monthly interest and applying such interest “retroactively.”

a) In response to a question about what exactly was said about interest at the July 2015 meeting, Ms. Niedermayer testified she told the Wahlunds “my standard practice is I charge compounded interest at 24% per annum.” Ms. Niedermayer makes no reference to interest being charged retroactively.

b) In cross-examination, when confronted with the suggestion there had been no discussion of interest, Ms. Niedermayer said “it was a generalized expression” that if Wahlund failed to pay interest then, as was her regular practice, she would be charging interest at a rate of 24% compounded. She again makes no mention of it being applied “retroactively.”

c) When asked again for details about the discussions around compounding interest, Ms. Niedermayer changed her previous testimony and admitted that compounding interest was not discussed with the Wahlunds. [ 29 ] In

summary, Ms. Niedermayer was questioned extensively about the alleged discussions around payment of interest. Her recollection of the discussions sometimes included reference to compounded interest, sometimes not. They rarely included reference to interest being charged “retroactively.” [ 30 ] Ms. Niedermayer claimed the July 2015 discussions about interest included a reference to her “standard practice” or “usual practice” to charge interest on late accounts. Ms. Niedermayer testified that “anyone and everyone” she works for realizes if they don’t

pay they will be charged interest. She also complained during cross-examination that in late 2018 some of her other clients had not paid her. However, when asked why she never fixed her invoicing software to include a customary caption that interest will be charged on late accounts, Ms. Niedermayer claimed she never noticed the omission because none of her clients from 2015 to 2018 had ever been late on their payments. [ 31 ] In short, Ms.

Niedermayer changed and contradicted her own evidence multiple times in the course of both her direct and cross- examination about what the parties discussed concerning the calculation, application and payment of interest. I do not believe Ms. Niedermayer was drawing from an actual memory of a real conversation she had with the Wahlunds in July 2015 about interest. I do not believe any such discussion occurred. [ 32 ] I am not satisfied the parties ever negotiated or agreed interest would be payable, retroactively or otherwise. I find the parties were friends and negotiated an arrangement whereby Ms.

Niedermayer would provide accounting services with a flexible payment arrangement in furtherance of Wahlund getting a bank loan that would benefit all involved. The relationship broke down and Ms. Niedermayer was unhappy when the Wahlunds failed to secure the loan, which she believed the Wahlunds could have obtained if they had offered any of their real property as security. Ms. Niedermayer was also offended the Wahlunds appeared to be blaming her for not getting the bank loan. As the friendship broke down, Ms.

Niedermayer likely felt Wahlund should pay her interest as is customary in many arm’s length commercial transactions. [ 33 ] While interest charges on overdue accounts may be typical in the service industry, there must be an advance agreement for payment of that interest. An interest term cannot be imposed after the fact. The authorities establish that "a party cannot 'unilaterally foist' the obligation to pay interest on another simply by adding such wording to its invoice, and sending it to the other party": H2S Solutions Ltd. v. Tourmaline Oil Corp , 2019 ABCA 373 at para . 11 . [ 34 ] In Go Transport Ltd. v.

Moore , 2021 BCSC 1099 , Justice MacDonald said at par. 60: In N.B.C. Mechanical Inc. v. A.H. Lundberg Equipment Ltd ., 1999 BCCA 775 , the court stated at para. 35: "A right to charge interest cannot be based simply on a unilateral assertion in an invoice." Rather, there must be some agreement to pay interest, whether oral, in writing, or implied by conduct, the nature of the parties' business relationship, or dealings concerning outstanding debts: Hardwoods Specialty Products LP v.

Rite Style Manufacturing Ltd., 2006 BCCA 139 . [ 35 ] I find there was no agreement between the parties for payment of interest, “retroactive” or otherwise. The parties did not discuss interest at the time payment terms were negotiated. The parties were friends, not arm’s length commercial actors. The payment arrangement was atypical, involving relatively flexible monthly pre-payments towards Ms. Niedermayer’s final account. The agreement was informal. The parties did not discuss Ms. Niedermayer’s hourly rates and their agreement was not reduced to writing. Wahlund had never been charged interest in the past.

Over the course of three years in which there were several missed or short payments, Ms. Niedermayer never once raised the subject of interest and Wahlund never paid it. There is nothing in the parties’ words or conduct consistent with an agreement to pay interest. [ 36 ] There is discretion for the Court to determine an appropriate interest rate where there is no agreement for contractual interest: Hardwoods Specialty Products LP v. Rite Style Manufacturing Ltd. , 2006 BCCA 139 . However, I decline to order an interest amount exceeding Court Order Interest Act rates in this case.

Wahlund continued to make good faith payments towards Ms. Niedermayer’s August 10, 2018 invoice for the outstanding principal debt until February 2019. Wahlund stopped making payments after Ms. Niedermayer purported to issue an invoice for $15,557.33 then refused to provide an accounting of the amount demanded, even though her hourly charges would solely be within her knowledge. Ultimately it was determined Wahlund only owed $3,741.01, which was not settled upon until trial.

Wahlund was not acting unreasonably in withholding payment in circumstances where the principal debt was unknown and incapable of being ascertained without Ms. Niedermayer’s cooperation. As such, I find only pre-judgment Court Order Interest Act interest is payable on the principal amount owing. [ 37 ] For the purposes of calculating pre-judgment interest, I must determine when the cause of action arose. Ms. Niedermayer says the date of default was August 2015 when Wahlund missed its first monthly payment. Wahlund says there was no default, and that Ms.

Niedermayer’s right to claim full payment of the balance of her account was contingent upon Wahlund receiving the bank loan that would fund that payment. That loan having not materialized, Wahlund says it was entitled to keep paying instalments of $500 per month towards that debt. [ 38 ] Wahlund’s monthly payments were intended to be pre-payments towards Ms. Niedermayer’s bill, which would be payable upon the bank loan being secured. These payments were not fixed monthly instalments towards a pre-determined debt. I find Ms.

Niedermayer often accepted reduced payments or waived payments because she was not truly being paid on an instalment plan. The agreement contemplated that upon the work being complete and the bank loan issuing, the remainder of Ms. Niedermayer’s account, whatever it may be, would be paid out in full. [ 39 ] I do not agree with Wahlund’s submission that full payment of Ms. Niedermayer’s account was solely contingent on Wahlund getting the bank loan.

The monthly payment arrangement was intended to address the reality that the parties could not pre-estimate how many hours of work it would take to get the company’s financial statements and tax filings current. The monthly payment term provided some ongoing financial compensation to Ms. Niedermayer in circumstances where she would be unable to render Wahlund a final bill for a long time. Ms. Niedermayer completed the work and her final bill was fully realized and ascertainable by August 2018. Upon Ms.

Niedermayer completing the work and being advised Wahlund was no longer anticipating loan proceeds, her account became payable in full because there was no longer any outside date the parties were working towards. [ 40 ] I find the cause of action arose August 31, 2018, when payment of the balance of Ms. Niedermayer’s account became due. Pre- judgment interest is payable from that date. JUDGMENT [ 41 ] I find judgment in favour of the Claimant, Linda Niedermayer in the following amounts:

a) The agreed principal amount owing under contract: $3,741.01

b) Filing fees: $156

c) Service fees: $20 [ 42 ] The Defendant, Wahlund Holdings Ltd. shall pay the Claimant, Linda Niedermayer, the sum of $3,917.01 plus pre-judgment interest prescribed by the Court Order Interest Act for the period September 1, 2018 to date of Judgment. Pre-judgment interest shall be calculated by the Registrar. The Honourable Judge C. Malfair Provincial Court of British Columbia