Lambert Everest Holding Ltd. v. Nicon Developments Limited, 2020 BCPC 254

Citation: Lambert Everest Holding Ltd. v. Nicon Developments Limited 2020 BCPC 254 Date: 20201215 File No: C-5503 Registry: Duncan IN THE PROVINCIAL COURT OF BRITISH COLUMBIA BETWEEN: LAMBERT EVEREST HOLDING LTD. CLAIMANT AND: NICON DEVELOPMENTS LIMITED DEFENDANT REASONS FOR JUDGMENT OF THE HONOURABLE JUDGE L. MROZINSKI Counsel for the Claimant: M. Mauro Counsel for the Defendant: J. Drozdiak Place of Hearing: Duncan , B.C. Dates of Hearing: January 27, November 6, 2020 Date of Judgment: December 15, 2020 I.

Introduction [ 1 ] In June 2017, the principles of Lambert Everest Holdings Ltd. (“Lambert Holdings”), Anna Robb and her father, Gary Robb, were contemplating the development of a property the company owned in North Cowichan. The Robb’s, who were new to the development business, hoped to build a nine-unit multi-family development on the property, ultimately called the “Aria Development”.

On June 8, 2017, Ms. Robb and Mr. Robb, met with Nick Woywitka, President of Nicon Developments Limited (“Nicon Developments”), at Nicon Developments’ Maple Bay office, to discuss their proposed development. In contrast to the principles of Lambert Holdings, Nicon Developments, and Mr. Woywitka in particular, were well experienced builders. [ 2 ] When the parties met to discuss the Aria Development, they knew that at a minimum the property, zoned as R3, had to be rezoned to R7A if the Aria Development were to proceed.

Lambert Holdings engaged Nicon Developments to try to obtain rezoning approval, for a fee of $10,000. [ 3 ] Nicon Developments did subsequently obtain the rezoning, resulting in a substantial increase in the value of the property – in Mr. Woywitka’s estimate, by some $120,000. In all, from approximately July 2017 through August 2018, Nicon Developments worked not just on the rezoning, but also obtained, among other things, a development permit, architectural building permit drawings, structural engineering drawings, building envelope drawings, a geotechnical report, landscape drawings and more.

Nicon Developments invoiced Lambert Holdings for all of this work, and Lambert Holdings duly paid each of the invoices. [ 4 ] In August 2018, Lambert Holdings was admittedly wrestling with financing. It queried whether Nicon Developments would be interested in a 50/50 partnership in the Aria Development. Mr. Woywitka, who had only recently drafted a detailed project budget for Lambert Holdings, offered a 70/30 partnership, with Nicon Developments assuming more risk, but also taking a greater percentage of the profit. Ms.

Robb rejected the offer on August 22, 2018, and, in her view, essentially terminated Lambert Holdings’ business relationship with Nicon Developments that same day. Still, on October 2, 2018, the parties were mooting the idea of working together however seriously. By October 5, 2018, Ms. Robb wrote to Mr. Woywitka formally but politely rescinding his status as “agent” on behalf of Lambert Holdings. Matters got less civil when Ms. Robb found that Lambert Holdings was unable to use the structural engineering plans it had paid for because they were prepared for the authorized use by Nicon Developments only.

Lambert Holdings demanded that Nicon Developments release the plans to it, stating that Nicon Developments was only ever contracted to obtain plans and permits for Lambert Holdings. Mr. Woywitka demurred. [ 5 ] In this small claims action, Ms. Robb, on behalf of Lambert Holdings, maintains the company incurred expenses totalling $13,670.95 as a result of not receiving the structural engineering plans, and receiving other incomplete plans that were not immediately useful.

Lambert Holdings also seeks compensation for mortgage payments it made over a period of five months when the project was stalled due to Nicon Developments’ “withholding” the plans. Additionally, in the course of this litigation, Ms. Robb reviewed the invoices paid to Nicon Developments and now maintains that Nicon Developments overcharged Lambert Holdings by $10,830.71. [ 6 ] Mr. Woywitka submits that Nicon Developments was contracted to build the Aria Development.

To that end, Nicon Developments obtained all necessary plans and permits necessary for the build up to the date Lambert Holdings terminated the relationship. After that, Mr. Woywitka submits, Nicon Developments had no obligation to release plans to Lambert Holdings for a project intended to be built by Nicon Developments, least of all without some compensation for losses incurred by Nicon Developments which was, as a result of the termination of the relationship, out of work for a time. II. The Issues [ 7 ] As this

summary indicates, this case raises a number of issues. [ 8 ] The first issue requires a determination as to the terms of the contract or agreement under which the parties were operating from July 2017 through August 2018. If, as Ms.

Robb submits, Nicon Developments was contracted solely to obtain permits and plans for Lambert Holdings, it must be determined whether Nicon Developments was in breach of contract by failing to obtain plans in the name of Lambert Holdings. [ 9 ] If so, the question remains whether Lambert Holdings has proven it suffered damages as alleged, or at all, as a result of this breach. [ 10 ] With respect to the alleged overcharges, there is no question Lambert Holdings accepted the work invoiced by Nicon Developments, even though the parties had never formally agreed on a price.

The only question is whether Lambert Holdings has proven on balance that the fees charged for the work are unreasonable. [ 11 ] Finally, with respect to the counterclaim, Nicon Developments bears the onus of proving it suffered damages as a result of the termination of the relationship by Lambert Holdings. The question is whether this claim has been made out on the evidence, even in part. III. Terms of the Contract or Agreement [ 12 ] This first issue concerns the terms under which the parties worked together on the Aria Development for over a year.

Was their agreement, as Lambert Holdings submits, an unwritten understanding that it would pay Nicon Developments for Nicon Developments’ procurement of development permits and the plans necessary for construction by Lambert Holdings? Or, was the agreement as Mr. Woywitka understood it to be, one in which the parties agreed Nicon Developments would build the Aria Development, undertaking all of the work necessary to break ground. [ 13 ] In considering this question, I am mindful of the legal principles involved. These are articulated conveniently at paras. 80 to 83 of Harry Froese Inc. v. 2731334 B.C.

Ltd ., itself consisting largely of passages from the reasons of Dickson J., as she then was, in Soleil Hotel & Suites Ltd. v. Soleil Management Ltd ., 2009 BCSC 1303 , as follows: 80 The law of contract seeks to uphold bargains between parties where the parties intended to create legal obligations to one another and agree as to what those obligations will be. As Dickson J. said in Le Soleil Hotel & Suites Ltd. v. Le Soleil Management Inc. , 2009 BCSC 1303 [Le Soleil ] at para. 322 : [322] For parties to be bound in a contractual relationship there must be a manifest meeting of the minds.

They must express themselves outwardly in a manner that indicates both an intention to be bound and reasonably certain mutually agreed terms: Klemke Mining

Corporation v. Shell Canada Limited, 2007 ABQB 176, affirmed 2008 ABCA 257. 81 The test of whether there has been a meeting of the minds is an objective one. The question is, have the parties conducted themselvesin a way that would lead an objective reasonably bystander to conclude they intended to form a binding contract (as noted in Le Soleil atpara. 324): ... The law is not concerned with the parties' intentions but with their manifested intentions.

It is not whether or not what an individualparty believed or understood was the meaning of what the other party said or did that is the criterion of agreement; it is whether areasonable man in the situation of that party would have believed and understood that the other party was consenting to the identicalterms. [G.H.L. Fridman, The Law of Contract in Canada, 5th ed. (Toronto: Thomson Carswell, 2006).] 82 The law is the same whether the contract is written or oral, as Dickson J. said in Le Soleil at para 328: [328] The

interpretation of oral contracts turns on the same essential principles: Lawson Graphics Pacific Ltd. v. Simpson (1987), (BC SC), 12 B.C.L.R. (2d) 126 [(S.C.)]. If the alleged agreement has not been reduced to writing, the Court must considerwhat the parties said and did and assess objectively whether, in context, their words and actions establish an intention to be bound:Periscan Financial Services Inc., [2008] B.C.J. No. 1024 supra; Leong & Associates, [2003] B.C.J. No. 2829 supra.

The genesis andaim of the transaction is an aspect of the relevant context for consideration: Canada Square Corporation, (ON CA),[1981] O.J. No. 3125 supra. ... 83 When determining whether a binding oral contract was created the Court may consider the conduct of the parties prior to and after thealleged agreement.

If, following the alleged agreement, parties have acted and incurred expenses on that basis, a court may be morelikely to find a binding contract was formed: Le Soleil at para. 334. [14] The parties agree that all of the work performed by Nicon Developments after it obtained rezoning was done pursuant to anunwritten understanding. Both submit that understanding was prefaced on terms discussed at their first meeting, and reflected in thewritten contract for work on the rezoning. In short, Mr. Woywitka was certain Nicon Developments was hired to build the project.

Ms.Robb, on the other hand, was ultimately not entirely sure that was the case. [15] To the extent anything was put in writing, it is a letter dated June 8, 2017 from Mr. Woywitka to Ms. Robb concerning NiconDevelopments’ proposal to rezone the property. In the letter, Mr. Woywitka sets out Nicon Developments’ scope of work for its proposalto get through the rezoning stage. There is no disagreement among the parties as to the terms of this proposal, which was accepted. [16] In the last full paragraph of the first page of the letter, Mr.

Woywitka writes as follows: Upon approval of rezoning, we will prepare a new contract detailing the next stages of the project such as the Development Permit &Building Permit applications and building contract. [17] Mr. Woywitka testified his understanding, as expressed in his first meeting with Ms. Robb and her father, Mr. Gary Robb, wasthat Nicon Developments would undertake the rezoning application only on the condition that it would build the project. Mr.

Woywitkaemphasized in his testimony that he would never have utilized his particular skills to obtain rezoning for the property for any otherreason. [18] I understand Ms. Robb’s evidence in direct to be that the only contract Lambert Holdings entered into with Nicon Developmentswas for the rezoning application. Ms. Robb testified she understood the parties would discuss the next phase after the rezoning. Thatunderstanding is consistent with the wording of the proposal above. At the same time, it is also consistent with Mr.

Woywitka’stestimony that the parties always intended that Nicon Developments would do more than simply try to obtain re-zoning. [19] Even without a written proposal, or any evidence of a further discussion as Ms. Robb recalled was to be the case, the partiescontinued on with the Aria Development well after rezoning was obtained. Ms. Robb testified that from time to time she would askquestions, and Mr. Woywitka would provide her with answers. He would indicate the kinds of planners and plans needed, and he wouldprovide the approximate cost.

As the evidence clearly indicates, Nicon Developments went much further and obtained the necessarypermits and plans and invoiced Lambert Holdings for those. In turn, Lambert Holdings paid each of the invoices without question. [20] In June 2018, as Lambert Holdings worked to obtain financing, Ms. Robb discussed timelines for the project with Mr. Woywitkain an email dated June 22, 2018. Among other things, Ms. Robb asked Mr. Woywitka whether he thought “we could start building rightafter the demo?” As Ms.

Robb countered in cross examination, the “we” could have referred to Lambert Holdings only, but it suggestsequally in my view that Ms. Robb intended Nicon Developments to engage in the building of the development. Ms. Robb was pressed onthe contents of this memo, in particular, on the last two sentences which read: “If you think the above timeline doesn’t work I can pusheverything by another month and give the tenants 3 months’ notice instead. Am I missing anything?” When was asked whether in writingthis she intended Nicon Developments to be the builder, Ms.

Robb replied “possibly, yes.” [21] This admission, and other elements of Ms. Robb’s testimony, particularly in cross examination, lend support to Mr. Woywitka’stestimony that all of the parties agreed at that first meeting in June 2017, that Nicon Developments would build the Aria Development,starting with the rezoning application, and proceeding through all the necessary steps to the actual build.

This is further supported by Ms.Robb’s signature on a Municipality of North Cowichan Agent Authorization document dated June 26, 2017, authorizing NiconDevelopments to act on Lambert Holdings’ behalf in any and all applications. Certainly this document underscores Mr. Woywitka’stestimony that from the outset it was understood Nicon Developments would build the Aria Development. Ms. Robb’s only response tothis evidence is that Mr.

Woywitka filled in the form, though she acknowledges signing it. [22] As the claimant, Lambert Holdings bears the evidentiary burden to prove on balance that Nicon Developments was nevercontracted to build the Aria Development. On balance, the evidence supports Mr. Woywitka’s testimony that it was always understood

Nicon Developments would build the Aria Development. I find this firstly because I believe Mr. Woywitka’s testimony that Nicon Developments would not have agreed to obtain rezoning without an understanding that it would build the development. All of Mr. Woywitka’s actions throughout are consistent with that understanding, including that Nicon Developments obtained the permits and plans necessary to enable Nicon Developments to do the build. Ms. Robb, on the other hand, hedged her testimony on this point, testifying, for example, that she did not recall if Mr.

Woywitka indicated clearly at their June meeting Nicon Developments would do the rezoning only if Nicon Developments would build the Aria Development. I have also referenced Ms. Robb’s testimony earlier in these reasons which in my view constitutes a guarded admission that Ms. Robb understood Nicon Developments would build the Aria Development. [ 23 ] Ms.

Robb’s actions, such as authorizing Nicon Developments to obtain all permits, and Lambert Holdings’ payment of all invoices without question, provide further support of a verbal agreement between Lambert Holdings and Nicon Developments that Nicon Developments would build the Aria Development. In that regard, I find that when Nicon Developments obtained the various plans in Nicon Developments’ name, it was doing so according to the parties’ verbal contract.

It follows, and I find, that Lambert Holdings has not proven on balance that Nicon Developments was in breach of its contract by obtaining the various plans necessary for the build in its name. IV. Breach by Withholding Plans [ 24 ] In the fall of 2018, after Ms. Robb effectively terminated Lambert Holdings’ working relationship with Nicon Developments, her efforts to proceed with the build were stymied when she and her father discovered they could not obtain the plans prepared by the structural engineer hired by Nicon Developments.

Additionally, at that juncture, the civil plans prepared for Nicon Developments for the Aria Development were only near completion. In that state, they were not utile for Lambert Holdings. [ 25 ] Mr. Robb wrote to Mr. Woywitka demanding that he find a way to have the structural plans released. As noted earlier in these reasons, Mr. Woywitka ultimately demurred, offering to do so only if Lambert Holdings paid Nicon Developments $20,000 in compensation for its losses due to the termination of the contract. Mr.

Woywitka offered to instruct and pay the civil engineer to complete the plans, and to reduce his compensation claim to $17,500 accordingly. [ 26 ] Ms. Robb testified that Lambert Holdings refused to pay Nicon Developments any more money. Rather, it opted to bring this action alleging that Nicon Developments breached its contract by refusing to release the structural plans, and refusing to arrange for the civil plans to be completed. Ms. Robb alleges nothing was done on the Aria Development from September 2018 to January 2019 until the company obtained new structural and complete civil plans.

Lambert Holdings alleges it suffered losses caused by this delay which it seeks to recover in this claim. [ 27 ] As Mr. Woywitka describes it, once Lambert Holdings decided to end their working relationship, Nicon Developments understood that the structural engineering firm it hired would not sign a

schedule B enabling Lambert Holdings to use the structural plans it had paid for because Nicon Developments was to be the builder, and Nicon Developments’ name was on the drawings. Issues also arose with respect to the civil drawings which the parties agree were incomplete. Mr. Woywitka testified the plans were about 75% complete when his consultant refused to carry on the work, again because Nicon Developments was no longer the builder on the Aria Development. [ 28 ] I have found that Nicon Developments was contracted to build the Aria Development.

To that end, it obtained the necessary plans in Nicon Developments’ name in order to do the build. In so doing, Nicon Developments was acting in accordance with the contract. I do not see how it follows that Nicon Developments was also contractually obligated to instruct its contractors and planners to release those plans, or to finish those plans, in order to enable Lambert Holdings to engage in the build either on its own, or with the assistance of another builder. In my view, Nicon Developments had no such contractual obligation.

For these reasons I find no breach of contract and would dismiss Lambert Holdings’ claim for damages on this ground. V. Overpayment [ 29 ] On August 22, 2018, Ms. Robb engaged with Mr. Woywitka by email at least twice. In the first, sent at 8:47 a.m. on August 22, Ms. Robb seeks information from Mr. Woywitka regarding the various plans. Oddly, given her evidence in this trial, Ms. Robb asks Mr. Woywitka at the close of that email where he is going with the project as time is of the essence. In any event, at 9:23 on that same day, Ms. Robb advises Mr.

Woywitka that Lambert Holdings will not accept his 70/30 offer, and that it intended to figure out other plans. Ms. Robb writes, “it sounds like we are all paid up with you, so once the plans have been completed I will submit the BP myself.” [ 30 ] Ms. Robb’s approach in her second email on August 22 is apparently consistent with a provision in Mr. Woywitka’s contract proposal of June 8, 2017 referred to earlier in these reasons. The provision states that if any work is abandoned by the client, the client will pay Nicon Developments for any services provided up to the point of termination. The thrust of Ms.

Robb’s email of August 22 is that the parties are all paid up and each can, therefore, go their separate ways. [ 31 ] I have found that the parties understood and agreed that Nicon Developments would build the Aria Development, and proceeded in accordance with that understanding or agreement up to at least August 22, 2018. Lambert Holdings received and accepted work done by Nicon Developments as necessary for the project and paid each invoice on time with no questions.

The parties had not, of course, formally put their minds to a price for Nicon Developments’ work on the development, apart from that necessary to try to obtain rezoning. Lambert Holdings now maintains that it was overcharged by Nicon Developments for the work done, apart from the rezoning work, from June 2017 to August 2018.

Lambert Holdings’ seeks a refund totalling $10,830.71. [ 32 ] This damages claim is based on a cross reference of the invoices paid by Nicon Developments for various plans which Nicon Developments subsequently billed to Lambert Holdings, albeit sometimes with a significant increase in price. [ 33 ] Examples include: (

a) An invoice from Ellins Architect Inc. made out to Nicon Developments totalling $14,000 which was then billed to Lambert

Holdings in the amount of $22,280; (

b) An invoice from Mystic Woods Landscaping which Nicon Developments paid $3,580 and billed Lambert Holdings $4,872; and (

c) An invoice from Cowichan Engineering Services for $2,372 which Nicon Developments billed to Lambert Holdings for $5,800. [34] At the same time, as Ms. Robb acknowledges, there are instances where Nicon Developments charged Lambert Holdings lessthan it paid on some invoices, or in other instances, a small percentage more and in other instances no more than Nicon Developmentsitself paid to the contractor or planner. [35] Lambert Holdings acknowledges it accepted the work performed by Nicon Developments; it submits only that it ought not tohave paid as much for it as Nicon Developments charged.

Given that, the question becomes whether Lambert Holdings can establish ona quantum meruit basis that it was overcharged. [36] In Fairwood Construction Ltd. v. Lin (BC SC), [1997] B.C.J.

No. 1123, 33 C.L.R. (2d) 111, at para 32,Satanove J. writes that …the elements required to be proven in a contractual quantum meruit action…are: 1. there was a contractual relationship between the parties; 2. the parties agreed that certain work was to be done but failed to agree on all aspects of the contract, for example, the price to be paid; 3. the defendants accepted the work; 4. both parties had, or should have had in the circumstances, an expectation that the work was not being rendered gratuitously; and 5. the payment sought was reasonable remuneration for the work done. [37] In Angus v.

Cheam Midwifery, 2019 BCPC 233, Judge G.J. Brown of this court writes at para. 37 that: A contractual quantum meruit claim is an appropriate cause of action where a valid contract exists between the parties for the provisionof goods or services, but the terms of remuneration have not been provided. It is really a principle of contract

interpretation orconstruction. See Infinity Steel Inc. v. B. & C. Steel Erectors Inc., [2011] BCJ No. 774(BC Court of Appeal). [38] As for proof of the elements in this case, I find it established that the parties agreed Nicon Developments would perform thework, i.e., obtain the plans necessary for the build, and that Lambert Holdings accepted the work. There is no serious question whetherthe work was intended to be gratuitous: it was not.

The question at this juncture is whether Lambert Holdings has proven on balance thatthe payments made were not reasonable given the work performed. [39] The central thrust of Ms. Robb’s case is that, as a general matter, a builder such as Nicon Developments might be entitled tocharge for its work something like cost plus 10 percent. Indeed, in some instances, Nicon Developments invoiced Lambert Holdings forits cost plus 10 percent, but only on very specific items. The bulk of Nicon Developments’ invoiced work to Lambert Holdings bears norelationship to any sort of cost plus arrangement. As Mr.

Woywitka testified, his intention ultimately was to make 10 percent on theproject overall. As the Aria Development had an approximate value of $3.6 million on completion, Mr. Woywitka expected NiconDevelopments to make slightly over $300,000. He billed accordingly. [40] It is, as Ms. Robb testifies, shocking at first glance to see an increase of up to 144 percent on one invoice to Lambert Holdingsrelative to what Nicon Developments paid. Others include increases of 36 and 59 percent. At the same time, as I have noted, in otherinvoices Nicon Developments billed less than it paid according to Ms.

Robb’s chart entered as Exhibit 3, or just slightly more, or nomore. There is no overall consistent pattern of overages. Additionally, as Mr. Woywitka testified, Nicon Developments providedLambert Holdings with a detailed construction budget at no cost. I accept it took a significant amount of Mr. Woywitka’s time, and wasbased on his considerable expertise. [41] Mr. Woywitka’s testimony on this issue is that the overages are the way in which he builds Nicon Developments’ fees into thework. It has the appearance of being somewhat arbitrary, and far from Ms.

Robb’s ultimate proposal in this trial that NiconDevelopments be entitled to cost plus 15 percent commission on every item invoiced. The question though is whether in thecircumstances the fees which Ms. Robb has highlighted as being excessive are unreasonable.

If, at the end of the Aria Development, forexample, Lambert Holdings could show Nicon Developments billed in excess of 100 percent of the value of the project, or even anythinglike 59 or 36 percent in total, it would have a case in contractual quantum meruit. [42] Here, it is clear that Nicon Developments billed significant overages on some items, but not on others. At the same time, there isno question that a significant amount of time was spent on this project by Mr. Woywitka and Nicon Developments staff.

On balance,given this billing occurred at the start of what was expected to be a long project, I find I am unable to conclude that the five invoicesidentified by Lambert Holdings out of the many paid are unreasonable such that Nicon Developments must be ordered to provide arefund. It is especially difficult to find, on balance, that these five invoices are unreasonable where, as here, other work is billed out atless than 10 percent, some provided at cost, and some provided at no cost.

There is, in addition, no evidence before this court that on acontract such as this, a builder is expected, by industry standard, to bill cost plus 15 percent for all of its work. There is no evidence thatMr. Woywitka’s hourly rates are unreasonable. [43] Viewed in isolation, the five invoices identified by Ms. Robb in her Exhibit 3 as constituting unreasonable charges do appearexcessive. When viewed in context, as set out above, and on the evidence before this court, I cannot be satisfied on balance that thecharges are excessive.

For this reason, Lambert Holdings’ claim for a refund of monies paid under the contract is dismissed.

VI. Counterclaim for Damages [ 44 ] When Lambert Holdings terminated the contract I find existed between the parties in August 2018, Nicon Developments was set to begin construction sometime in September or October. To that end, Nicon Developments had in place and ready to go its trades and other contractors. Mr. Woywitka testified that once the contract was terminated, certainly to his knowledge by no later than October 5, 2018, when Ms. Robb formally rescinded Nicon Developments’ status as agent, he was left to reorganize the company to try to find other work.

That is the basis of Nicon Developments’ counterclaim totalling $20,000. [ 45 ] Apart from claiming damages totalling $20,000, there is no evidence before this court that Nicon Developments actually sustained damages in that amount. It may be, and this is pure speculation given the lack of evidence, that some of Nicon Developments’ trades were without work for a period of time. There is, however, no evidence that Nicon Developments paid its trades in that interval, or incurred costs by, for example, failing to find other work for those individuals. Just as an example, Mr.

Woywitka testified that he started on a spec house after the termination though it took some time. [ 46 ] There is, in this case, a dearth of evidence specifying the actual damages suffered by Nicon Developments, though I accept as fact that Ms. Robb’s decision to terminate the contract did leave Nicon Developments stranded for however short a period of time. [ 47 ] Given the lack of evidence regarding actual losses by Nicon Developments, I would dismiss the counterclaim in whole. _____________________________ The Honourable Judge L. Mrozinski Provincial Court of British Columbia