Higgins v. Gatti (Forever Memories Equestrian Centre), 2019 NSSM 11

Claim No: SCT 481891 IN THE SMALL CLAIMS COURT OF NOVA SCOTIA Citation: Higgins v. Gatti (Forever Memories Equestrian Centre) , 2019 NSSM 11 BETWEEN: TRACEY MARIE HIGGINS Claimant - and - SHELBY LYNN PEARL GATTI d.b.a. Forever Memories Equestrian Centre Defendant REASONS FOR DECISION BEFORE Eric K. Slone, Adjudicator Hearing held at Truro, Nova Scotia on January 7, 2019 Decision rendered on February 14, 2019 APPEARANCES For the Claimant self-represented For the Defendant self-represented

BY THE COURT : Introduction [ 1 ] The Claimant contends that she is owed several years of back wages for her work in the Defendant’s equestrian business. She also claims delivery to her of a particular pony which she said was promised to her. The claims on their face are worth many tens of thousands of dollars although, as the Claimant well understands, this court is limited to awarding $25,000.00. [ 2 ] The Defendant denies that the Claimant is owed any money. She admits that there were times when the Claimant was an employee, but that wages were paid for those times.

She says that the Claimant invested her time in what was hoped to become a partnership (or similar relationship) but for various reasons, that did not pan out and the Claimant simply stopped working for/with her. She also denies that she ever promised that particular pony to the Claimant. The Facts [ 3 ] The Claimant is a 31-year-old electrician by trade, married with two small children. She is an avid horse person. In 2013 she moved her horse to the Defendant’s equestrian barn. The initial arrangement was that in exchange for free board, the Defendant could have the use of the horse for public rides etc.

The Claimant naturally eased into an arrangement where she was spending time at the barn, helping out with chores. She also started to loan the Defendant the use of her truck and horse trailer to travel to events around the province. [ 4 ] All the while a close friendship between the Claimant and Defendant was developing, which friendship appears to have ended as this dispute began to take shape.

As I am sure the parties would now agree, friendship and business do not always mix together well. [ 5 ] The Claimant was on a maternity leave from her job as an electrician when she met the Defendant and had a little extra time on her hands. Eventually that time became full time, or something close to full time. [ 6 ] At some early point, the finances began to get complicated and the arrangement was far from clear. The Claimant says that occasionally the Defendant would pay her some money for her work. She began to lend money to the Defendant, including a $4,500.00 loan for the purchase of a horse.

This was eventually repaid. Other loans were made and repaid from time to time. [ 7 ] At some later point, as it was clear that the Defendant’s business was expanding, and as the Claimant was spending more time than she wanted or could afford to volunteer, the Defendant proposed that whatever money she would be owing the Claimant for her work could be rolled into a partnership arrangement.

The Claimant says that she was leery of going into business with the Defendant because of the latter’s poor credit, but the Defendant promised to work her way out of debt and reestablish her credit rating. [ 8 ] At some point the Claimant acquired another horse which she also boarded with the Defendant. [ 9 ] At one point, the Claimant says that she and the Defendant agreed that she would work full-time hours for $12.00 per hour.

She says that the low wage was, in part, to compensate for the fact that her horses were being boarded with the Defendant. As time went on, the business continued to expand. The Claimant was a public presence at the barn and people who came there (including part-time or seasonal employees) assumed she was a part owner, even if such an arrangement had yet to be formalized. [ 10 ] The promised pay rarely materialized, as the Defendant was consistently short of funds.

For two separate stretches of time, wages were paid through a government subsidy program, but the Claimant kept meticulous track of her hours and has put in evidence of the hours that she says were never paid to her, which evidence I have compressed into the following: year hours unpaid claimed pay at minimum wage 2013 468 $4,512.00 2014 984.5 $9,534.24 2015 (Jan - June) 520 $4,970.80 July 2016 to July 2017 approx 155/month $21,280.74 November 2017 2 weeks $818.49 $41,116.27 [ 11 ] During some of these times the Claimant was collecting EI and, while she put in the time, makes no claim for wages.

While the legality and ethics of this practice are dubious - one is, after all, supposed to be available and actively looking for work while collecting EI - this does not figure into my decision. [ 12 ] For all times in 2018 when she was not being paid, she has a case pending with Labour Standards, which body only has jurisdiction going back six months from the time a complaint is made. [ 13 ] The Defendant’s position is that the Claimant spent a lot of the time of her own volition, with no expectation of being paid.

She says that the Claimant at all times knew that the business could not afford to pay her a salary, except for those times when government program money was available. She also claims that there was a large quid pro quo in the sense that the Claimant received free board for her horses. Also, she says, a lot of the time spent was just friends having fun together. All the while, there were discussions about the Claimant becoming a partner in the business.

The Defendant says that she thought they were still working toward that goal when the Claimant refused to continue with the arrangement which brought everything to a halt. The claim for “Clover” [ 14 ] The Claimant says that there was a specific agreement that she could have the pony named Clover, which she wants for her daughter. The Defendant says that Clover was bought with another child specifically in mind. She says that the Claimant is welcome to take the pony Silver. [ 15 ] The evidence is that Clover cost $2,000.00 while Silver cost $800.00.

The Claimant does not want Silver because he is difficult for her daughter to ride. [ 16 ] I will deal with that claim later. Preliminary legal issues

[ 17 ] Quite apart from the factual merits of the case, there are some legal issues that I must resolve. These were not raised by the parties, but I have a duty to apply them as I am aware of them and their potential impact on rights and responsibilities. [ 18 ] One issue concerns the fact that the Claimant is pursuing a claim through Labour Standards for the last six months of her time working with/for the Defendant. She proposes to limit her case in this court to all of the time prior to that six-month mark.

This raises an issue of case splitting, and whether it is proper to use two separate courts/tribunals to pursue different parts of what was essentially one ongoing relationship. This involves a consideration of the effect, if any, of

Section 13 of the Small Claims Court Act : 13 A claim may not be divided into two or more claims for the purpose of bringing it within the jurisdiction of the Court. [ 19 ] The other question is limitations. In Nova Scotia there is a statute of limitations, namely the Limitations Act , that includes the following: 8

(1) Unless otherwise provided in this Act, a claim may not be brought after the earlier of (

a) two years from the day on which the claim is discovered; and (

b) fifteen years from the day on which the act or omission on which the claim is based occurred.

(2) A claim is discovered on the day on which the claimant first knew or ought reasonably to have known (

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

b) that the injury, loss or damage was caused by or contributed to by

an act or omission; (

c) that the act or omission was that of the defendant; and (

d) that the injury, loss or damage is sufficiently serious to warrant a proceeding. [ 20 ] In layman’s terms, a claim that is more than two years old may not be brought unless it was not known (i.e. discovered) until later. [ 21 ] In the case here this would mean that, assuming the Claimant can split her case, she may only sue for the 24 months of alleged work preceding the date when she filed her claim, which date was October 31, 2018, and from that the last six months must be excluded.

Case splitting [ 22 ] The thrust of s.13 is that people are not allowed to divide up their cases into multiple cases in order to create two or more smaller cases that are within the court’s monetary jurisdiction. This would defeat the purpose of having a maximum monetary jurisdiction. [ 23 ] Unfortunately, there are not a lot of cases that have applied this section, and none that I can find where a case has been split with part of it going to a tribunal (Labour Standards) and part to the Small Claims Court.

[24] One example of a case that has permitted what looks like case splitting is Johnston v. Wawanesa Mutual Insurance, 2013NSSM 47 , which concerned disability insurance benefits. The Claimant sued the insurance company for several months ofbenefits, with the full intention of suing again after a certain amount of time had elapsed, with each successive case being under $25,000.00. Adjudicator Gus Richardson wrote: A: What is the “Claim”? (

a) First, the total amount of the claim being advanced is well within the monetary jurisdiction of this court. The fact that there is apotential liability on the part of the defendant, if it pays benefits over the life of the policy, of $260,000.00 is not the same as saying that the claim is for $260,000.00. I come to this conclusion because of the nature of claims forongoing benefits under LTD and

Section B policies of insurance. Although the matter may not have been definitively resolved in NovaScotia: Welsh v. Wawanesa Mutual Insurance Co. [2002] NSJ No. 168, I consider the law with respect to claims for income lossindemnity under contracts of insurance to be reasonably clear. A claim–and hence a cause of action–arises each time an insurer denies aperiodic payment that is payable under a weekly indemnity contract of insurance. It is, in other words, a “rolling cause of action:”Zigouras v. Royal Insurance of Co. of Canada (ON SC), [1987] OJ No. 1173; LeBlanc v. Zurich Insurance Co. [2000] NBJ No. 411 (QB); Thornton v. Economical Insurance Group [2010] NSJ No. 495 (SC) at para.9ff. (

b) In effect then each period of payment–whether monthly or weekly–constitutes a separate claim for benefits under such policiesof insurance. The fact that an insurer has paid for the previous month or week does not mean that it is liable to pay for the next. Theinsured must establish that he or she was disabled within the meaning of that policy, not only for the initial denial but for each week ormonth thereafter. (

c) What this means then is that the claimant’s claim here is in fact a combination of, in effect, 19 separate claims, each in theamount of $250.00, for a total of $4,750.00. Both amounts are within the monetary jurisdiction established by s.9(

a) of the Act. [25] In Thornton v. Economical Insurance Group, 2010 NSSC 355 there is a good discussion of the concept of a “rollingcause of action.” There seems to be no question concerning disability payments, where an insurer must make a finding that a person isdisabled each time a payment is claimed, although the question has yet to be considered recently in the Supreme Court. [26] For the case here, I must ask whether there is a distinction between a disability case and an employment case.

As AdjudicatorRichardson put it, “[t]he fact that an insurer has paid for the previous month or week does not mean that it is liable to pay for the next ...[t]he insured must establish that he or she was disabled within the meaning of that policy, not only for the initial denial but for eachweek or month thereafter.” [27] While it is not a perfect fit, I think the case of an employee is close enough for the concept to apply. In order for an employeeto be paid, he or she must establish two things: that he or she has an agreement to be paid for the work, and that a certain number ofhours have been worked.

I am satisfied that employment gives rise to a rolling cause of action, and it is not case splitting for theClaimant here to seek a remedy for the period of time up to the date when her claim in Labour Standards begins. [28] The finding of a rolling cause of action also helps the Claimant defeat an argument that might be made, that her entire causeof action is statute barred because the relationship that she characterizes as employment began more than two years prior to thecommencement of her Claim. [29] The upshot of all this is that the Claimant has no legal barrier to a claim for work done after October 31, 2016, up to the datewhich marks the beginning of her claim to Labour Standards, or more accurately, up to six months before she commenced her claim inSmall Claims.

[ 30 ] I find that any claims for wages up to October 31, 2016 are statute-barred. Limitations, where applicable, is a complete defence to a cause of action and is independent of the merits of that cause of action.

The Claimant simply waited too long to assert her claim to be paid for work done prior to October 31, 2016. [ 31 ] As for work done after that date, the Claimant’s breakdown is not precise because it does not use that date, but it appears to me that the claim would be this: year hours unpaid claimed pay at minimum wage October 2016 to July 2017 9 months - approx 155 hours/mo $14,732.00 November 2017 2 weeks $818.49 $15,550.49 [ 32 ] Any claimed amounts in 2018 appear to be included in the Labour Standards claim. Findings of fact [ 33 ] The facts of this case are a muddle.

They are complicated by the fact that the parties were friends as well as in a business relationship. There was a lot of give and take. The Claimant appears to have a generous nature and became passionately involved without setting the ground rules in advance. The Defendant appears to have enjoyed and benefited from the Claimant’s involvement and may truly believe that she gave as much in return as she could. On the other hand, it is clear from the evidence that the Defendant has struggled with her finances for years. [ 34 ] The law tends to look at situations like this simplistically.

The first questions are to ask: Was there an agreement that the Claimant’s efforts would -10- be rewarded in some fashion? Or was this volunteer activity - a gift of time and effort? [ 35 ] I believe that the evidence overwhelmingly answers these questions as follows. The Claimant volunteered her time initially, and was generous with her time throughout, but she also spent vast amounts of time on the strength of vague promises that she would be paid either in money or in the form of a partnership interest in the business.

Having read the text exchanges that passed between the parties, it is difficult to conclude that the Defendant did not appreciate that she was significantly indebted to the Claimant. [ 36 ] Absent a clear understanding of what she would be paid, the Claimant is entitled under the principle of quantum meruit to a reasonable amount for her time. Quantum meruit is a so-called quasi-contractual principle that allows a “reasonable sum of money to be paid for services rendered or work done when the amount due is not stipulated in a legally enforceable contract.”

[ 37 ] In my opinion, minimum wage compensation is a reasonable measure to apply. I find that the Claimant has proven her case for $15,550.49 for her efforts in the 18 months in question. [ 38 ] On the question of the pony Clover, I find that there is insufficient evidence of a clear agreement that Clover would belong to the Claimant. This court has the power to order the return of property to its rightful owner. The Claimant has not proven that she is the rightful owner.

She refers to discussions about the possibility of Clover being given to her, which is a very different thing. [ 39 ] Obviously, there is nothing to prevent Clover being handed over as a partial payment of the monetary judgment. [ 40 ] In addition to judgment for $15,550.49 the Claimant is entitled to her costs of $199.35 to file the claim and I allow $200.00 for costs of copying documents which were helpful to the court. Eric K. Slone, Adjudicator