Taguinod v. Westra, 2016 BCPC 488

Citation: Taguinod v. Westra 2016 BCPC 488 Date: 20160329 File No: C-76912 Registry: Surrey IN THE PROVINCIAL COURT OF BRITISH COLUMBIA Small Claims Court BETWEEN: SEVERINO TAGUINOD CLAIMANT AND: IAN WESTRA MANPREET KAUR DEFENDANTS ORAL REASONS FOR JUDGMENT OF THE HONOURABLE JUDGE D. GAFFAR Appearing on his own behalf: S. Taguinod (Claimant) Appearing on their own behalf: I. Westra and M. Kaur (Defendants) Place of Hearing: Surrey , B.C. Date of Hearing: February 3, 2016 and March 29, 2016 Date of Judgment: March 29, 2016

[ 1 ] Mr. Taguinod seeks reimbursement for various funds relating to an agreement for the sale and purchase of his business the Love Gift Thrift Store Incorporated in August of 2014.

The defendants are Ian Westra and Manpreet Kaur, who entered into an agreement for the sale and purchase of the business. [ 2 ] The claimant seeks as follows: the unpaid funds for the sale price; funds relating to the security deposit on the lease for the premises of the business; funds relating to credit card equipment which he states remained with the business on the premises after he was no longer in operation of that business; and reimbursement for insurance paid for the year 2014 on the premises that extended from his assumption of the business and premises in March of 2014 through December of 2014 and into March of 2015.

The total amount of the claim sought is $14,725 with filing fees, service fees a total of $14,911. [ 3 ] The claimant submits that there was a valid contract for the sale and purchase of the business and that essentially the defendants breached the contract by not paying the full price of the sale and costs associated with the sale and with the business. [ 4 ] The claimant submits that the cost of the sale, which was a total of $15,000 for the price of assets, was unfulfilled, that the defendants paid $7,500 at various times in the month of August but did not complete all of their payments. [ 5 ] The defendants indicated that they were unable to complete the sale of the business because they were unable to obtain necessary financial information about the status and financial state of the company, therefore the company was never transferred to them and the sale was incomplete, so they did not forward any further funds. [ 6 ] The first issue I will deal with is: was this a valid contract for the sale and purchase of the business?

It appears that there was no formal agreement documented and signed by all parties. It appears that there are comments on photocopies of various cheques that were paid in August of 2014. The first is a payment of a thousand dollars by Manpreet Kaur to Love Gift Thrift Store Incorporated, on August the 14th, 2014. Under the memo line it reads "advance deposit, balance $14,000". There is writing on the photocopy that indicates a signature both of Manpreet Kaur and Mr.

Taguinod that reads, "Received the amount of $1,000 as advance payment for Love Gift Thrift Store sale and balance 14,000 to be paid until the end of the month as is." Underneath that is written, "None (sic) refundable," with, then, the name of the company and the names of the two signatories. [ 7 ] The next document that speaks to the terms of the contract or the agreement for this sale is a photocopy of two cheques each dated August the 18th, 2014, one for $2,500 (cheque number 56) and the other cheque for $1,500 (cheque number 36).

There is various writing above and below the photocopied cheques which reads, "Acknowledgement received the amount $4,000 as per issued cheque for additional payment of sale Love Gift Thrift Store Incorporated." That is signed by both Mr. Taguinod and what looks like the name Manpreet in the top left corner. "Acknowledgement and acceptance of payment until full settlement balance of $10,000 on August 21st, 2014." That is written in the left margin. At the bottom of the page, "Acknowledgement received payment $4,000 sale payment," and that appears to be signed by Mr.

Westra. [ 8 ] The last photocopy, the cheque is dated August the 22nd, 2014, for $2,500. The memo line reads, "deposit for business 7500 remaining". It is a cheque drawn on and signed by Mr. Westra and it reads, We (Manpreet Kaur and Ian Westra) have given a first payment of $1,000, second payment of 4,000 and a third payment of 2500 for a total of 7500. And then it is written out in words, altogether for Love Gift Thrift Store Inc. as a deposit. As we are told by Severino, owner of Love Gift Thrift Store Inc. the business does not owe any money or have any loans as of today.

While the business is not in our name there will not be any new business opened or loans taken by Love Gift Thrift Store Inc. We owe Love Gift Thrift Store Inc. $7500 which will be given the day the business will be transferred on Ian Westra's name. The payment of $7500 is irrevocable. We have taken over the business August 18, 2014 and are responsible for the rent every month beginning September. Accepted. -- with Ian Westra's signature, Manpreet Kaur's signature, "Signed today, August 22nd, 2014." This is also signed by Mr.

Taguinod on behalf of the store, with the same date. [ 9 ] What these documents appear to tell me is that the purchase price for the sale of the business was $15,000 of which $7,500 was a deposit. These documents also tell me that Ms. Kaur and Mr.

Westra took over the business August 18th, 2014 and understood that they were responsible for the rent every month, beginning September. [ 10 ] The second set of documents that indicate the terms of this sale of the business are contained in Exhibit 9, which is a booklet (the defendants' booklet) and it relates to two sets of e-mails, two separate e-mail documents but within those documents are three e-mails. The first one is dated Sunday, August 24, 2014 at 11:35 p.m. by Ian Westra to the lawyer Donald Moir, in which Mr.

Westra refers to the meeting that they had with the lawyer of the Love Gift Thrift Store Inc., and that there was confusion at the meeting, and in which he writes: We agreed to purchase Love Gift Thrift Store Inc. with all of its improvements (lease, inventory, fixtures, et cetera) as the business was represented by Severino for $15,000. He has told us there are no outstanding liabilities. We are open to the transfer occurring how he wants, but we want to make sure the business is was (sic) he said it was. [ 11 ] The response by Mr. Moir is dated August 27th, 2014 at 3:35 p.m. It is written to Mr.

Westra's e-mail address and then it is copied to two other e-mail addresses, [omitted for publication @yahoo.ca; omitted for publication@yahoo.com. The e-mail, in the addressee line, says "to Ian Westra and Severino Taguinod". The e-mail reads: Thanks for your e-mail. We'll need a fair bit more information before things can be finalized which is mostly to be provided on Severino's part but because it's my understanding that Ian Westra and his wife are actually in the store right now, things will go quickest

if the two of you can work together. [ 12 ] The very first paragraph enumerated number 1 in this e-mail indicates quite clearly that Donald Moir is not acting for Ian Westra or his wife, but that he is acting for the seller Severino Taguinod. [ 13 ] The remainder of the e-mail is quite clear with regards to the following things. Mr. Moir, in his e-mail, refers to specific information coming directly from Mr. Taguinod. The e-mail contents confirm that the lawyer learned, presumably from Mr. Taguinod, that Mr. Taguinod was leaving for Dubai the next Monday, which would be in a few days from the date of the e-mail.

The e-mail also confirms that it is Mr. Taguinod's lawyer who is drawing up the purchase agreement in accordance with Mr. Taguinod's instructions. It is clear from this e-mail that information was provided to the lawyer at the meeting with the parties in which Mr. Taguinod had said that the buyers had been running the shop since roughly mid-August. The lawyer was under the understanding that $5,000 had been paid and $10,000 was owing.

Based on the evidence of the photocopies of the cheques as well as the evidence in court, it appears that this understanding was incorrect and that the source of this information is unknown but presumably from the lawyer's client Mr. Taguinod. [ 14 ] The e-mail, interestingly enough, for the first time refers to a hundred percent transfer of shares from the seller (Mr. Taguinod) in the company to the buyers (the defendants). The e-mail refers to issues surrounding shareholder loans to the company by Mr. Taguinod. The e-mail also refers to the huge uncertainty over financial records of the company.

The lawyer, also in the e-mail, instructed the parties to draw up a list of the included assets in the sale. I note that a shareholder loan, which is confirmed in the e-mail, was not mentioned by Mr. Taguinod at all in any of the written documents or in his evidence. I also note that Mr. Taguinod, in his evidence and throughout these proceedings, has never referred to the fact that the sale of the business involved a transfer of shares in the company from Mr. Taguinod to the defendant Mr. Westra. That is exactly the type of financial arrangement that could affect the financial status of a company.

For example, with a shareholder loan to the company, such an arrangement is money owed by the company to the outgoing shareholder. That also affects the value of the shares and how the sale proceeds are allocated. These were important considerations for the purchase agreement. [ 15 ] The lawyer also refers to possible monies that are owed or possibly due. This occurs both in his first e-mail and in his second e- mail dated August 27th, 2014 at 9:05 p.m. The lawyer also refers to possible monies that are owed or possibly due for GST, PST and income tax for the year 2014.

The lack of a financial statement is significant regarding these inevitable liabilities. The buyers would not know which accounts were receivable or accounts payable with regards to all the taxes, as well as any other suppliers. [ 16 ] I find that there was a valid sales agreement but that it was incomplete. There were payments made for $7,500. These were deposits for the business. I find that the sale agreement was not limited to the inventory or the contents of the business, but also included, most importantly, the shares in the business so that the company would be transferred to the defendant Westra.

I find that the prerequisites or preconditions for the sale of the business necessarily included the disclosure of financial information to the defendants concerning any taxes owing, shareholder loans and any other liabilities as well as accounts receivable and payable. Prior to the payment of all funds to complete this sales agreement, this information had to be provided. It would be imprudent of any buyer to not receive this information. That is amply supported by the two e-mails from Mr.

Taguinod's own lawyer. [ 17 ] I asked myself whether either or both parties repudiated or broke this contract for sale and purchase. I find that Mr. Taguinod did not fulfil the requirement for disclosure of the financial state of the company. However, I also do find that the defendants did move into the business premises before they received those financials, on the promise that they would.

This is confirmed by the August 22nd cheque, where they have confirmed in writing that they have taken over the business on the 18th of August 2014 and are aware that they are responsible for the rent every month beginning September 2014. So when did they move in? [ 18 ] According to Mr. Taguinod, he gave the key to them on the 18th of August. According to the photocopy of the cheque, there is a reference to them taking over the business on the 22nd of August. Mr. Taguinod, in his evidence, said that he stopped on the 22nd of August and they started on the 23rd of August.

According to the lawyer, in his e-mail he made reference to the defendants having moved in prior to the 27th of August 2014. [ 19 ] The claimant testifies that he left inventory racks, clothing, merchandise and that sort of thing inside the premises. The defendants say that when they moved into the premises they did not have merchandise or very many racks or other inventory. I am unable to determine who is more accurate or reliable or credible on this issue.

I am going to assume there were more things than described by the defendants but less things than described by the claimant. [ 20 ] The most important question is: is there any money owing to Mr. Taguinod? Mr. Taguinod has claimed the unpaid sale price of $7,500. Based on all of the evidence, particularly the evidence of the e-mails from the lawyer as well as the evidence of Mr. Taguinod and the defendants, in answer to that question, the answer is: no. There was no transfer of the shares, the company or the company name.

The defendants did not use the company name and they opened their own business, had it registered and obtained their own business licence. They obtained no benefit from the previous company. [ 21 ] Mr. Taguinod seeks, on behalf of the company, the security deposit on the lease. In response to that claim, my answer is: no, that is not forthcoming. The defendants paid their own damage deposit per the lease agreement they filed with the court. Any outstanding amount owed to Mr. Taguinod for a damage deposit must be sought from the landlord. The defendant is not a party to Mr.

Taguinod's lease agreement with the landlord. Any issues with regards to the lease are between Mr. Taguinod and the landlord. [ 22 ] This is also another reason why I have found that the defendants probably moved in prior to September the 1st. It is at September the 1st that they knew they had to pay rent, and therefore they sought out the landlord, but I do find that they moved in earlier than that day. [ 23 ] Mr. Taguinod seeks reimbursement of $4,325 for the credit card equipment and Elavon contract. In response to that claim, I note that Mr.

Taguinod's own letter, which is a final demand letter from the company in New York State, United States, has a value amount that is much less than $4,325. Also, although the letter refers to an equipment lease agreement, it does not refer to what exactly that equipment is. I am unable to rely on this document as establishing that there was equipment left and I cannot find from this document that the defendants owe any money to Mr. Taguinod for the equipment.

[ 24 ] Mr. Taguinod seeks insurance funds to be reimbursed to the amount of $700, because he continued to pay out the insurance contract for the year in which he assumed it, March of 2014 to March 2015. In response to that claim, my answer is: no. I note from the insurance documents filed by Mr. Taguinod that the risk location on the insurance document is not the location of the thrift store itself. The thrift store was located at 1105 7360-137th Street in Surrey, British Columbia. The insurance document filed by Mr.

Taguinod indicates that the risk location is suite 302 15190-152nd Street in Surrey, British Columbia. The insurance appears to be attached to the company Love Gift Thrift Store Inc., but it cannot be said to have transferred to the actual location at 1105 7360-137th Street. It was Mr. Taguinod's decision to continue to pay the insurance. That is not something that the defendants should be thrust with. [ 25 ] I have to ask myself whether there were any benefits enjoyed by the defendants before September 1st, 2016.

In my view, the defendants did obtain access to the store, its location and therefore any previous clientele that visited the store prior to the September 1st date. But, in my view, any benefits that were enjoyed by the defendants were amply paid for by the $7,500 that Mr. Taguinod obtained and that was never returned to the defendants even though this sale obviously fell through. In this incomplete sale, Mr. Taguinod obtained that $7,500.

In my view, it covers any value of any inventory that was left and any benefits that the defendants already enjoyed when they moved into the premises. [ 26 ] In conclusion, I dismiss the claim in its entirety. [ 27 ] I am not going to award costs to anyone on either side. (REASONS FOR JUDGMENT CONCLUDED)