Date Issued: December 4, 2020

File: SC-2020-004473

Type: Small Claims

Civil Resolution Tribunal

Indexed as: Harmorg Properties Inc. v. Nanaimo’s Flooring Depot Inc.,
2020 BCCRT 1377

Between:

HARMORG PROPERTIES INC.

Applicant

And:

NANAIMO’S FLOORING DEPOT INC. and WADE GREEN

Respondents

REASONS FOR DECISION
Tribunal Member:	Julie K. Gibson

INTRODUCTION

1.      This dispute is about payment for hardwood flooring installation services.

2.      The applicant, Harmorg Properties Inc. (Harmorg), says it installed hardwood flooring at 2 residential sites for the respondents, Nanaimo’s Flooring Depot Inc. (Nanaimo’s Flooring) and Wade Green. Harmorg claims $672 it says the respondents failed to pay for the installation.

3.      Nanaimo’s Flooring says it “short paid” Harmorg by $672 because the invoices included unapproved extras, and aspects of Harmorg’s work were substandard. It asks me to dismiss the dispute. Mr. Green also asks me to dismiss the dispute against him, saying Harmorg’s contract was with Nanaimo’s Flooring, not him personally.

4.      Harmorg is represented by business contact Walter Anderson. Nanaimo’s Flooring is represented by business contact Wade Green, who also represents himself.

JURISDICTION AND PROCEDURE

5.      These are the formal written reasons of the Civil Resolution Tribunal (CRT). The CRT has jurisdiction over small claims brought under section 118 of the Civil Resolution Tribunal Act (CRTA). Section 2 of the CRTA states that the CRT’s mandate is to provide dispute resolution services accessibly, quickly, economically, informally, and flexibly. In resolving disputes, the CRT must apply principles of law and fairness, and recognize any relationships between the dispute’s parties that will likely continue after the CRT process has ended.

6.      Section 39 of the CRTA says the CRT has discretion to decide the format of the hearing, including by writing, telephone, videoconferencing, email, or a combination of these. In some respects, both parties of this dispute call into question the credibility, or truthfulness, of the other. In the circumstances of this dispute, I find that I am properly able to assess and weigh the evidence and submissions before me. I note the decision Yas v. Pope, 2018 BCSC 282, in which the court recognized that oral hearings are not necessarily required where credibility is in issue. Bearing in mind the CRT’s mandate that includes proportionality and a speedy resolution of disputes, I decided to hear this dispute through written submissions.

7.      Section 42 of the CRTA says the CRT may accept as evidence information that it considers relevant, necessary and appropriate, whether or not the information would be admissible in a court of law. The CRT may also ask questions of the parties and witnesses and inform itself in any other way it considers appropriate.

8.      Where permitted by section 118 of the CRTA, in resolving this dispute the CRT may order a party to do or stop doing something, pay money or make an order that includes any terms or conditions the CRT considers appropriate.

Claim Against Mr. Green Personally

9.      Harmorg submits that Mr. Green should be personally liable for the claimed $672. Harmorg says it was led to believe that the business was Mr. Green’s sole proprietorship, because its storefront and website was named Nanaimo’s Flooring Depot rather than Nanaimo’s Flooring Depot Inc. (my emphasis added)

10.   Harmorg says this understanding impacted its business practice. Harmorg says it usually gets a 50% up front deposit when “dealing with a customer limited in liability”. Harmorg says it did not ask for a 50% up front payment here because Nanaimo’s Flooring “…portrayed themselves to be a proprietorship”.

11.   To support its submission that Mr. Green should be personally liable, Harmorg cites Business Corporations Act section 27. Section 27 says that a company “must display its name” in a conspicuous position at each place in BC where it carries on business, and on all its contracts and invoices, among other things. Enforcing the Business Corporations Act is not generally a matter within the CRT’s jurisdiction, nor have I been asked to make any orders relating to it. Rather, I am deciding a debt claim.

12.   Harmorg also cites Pageant Media Ltd. v. Piche, 2013 BCCA 537. In Pageant, a UK media company sold advertising space in one of its magazines to Mr. Piche, who was president of CWC, a limited liability company incorporated in Costa Rica. Mr. Piche never told Pageant he was contracting with them on behalf of CWC. As well, nothing in the contract identified Mr. Piche as CWC’s agent. Put differently, the weight of the evidence indicated personal liability.

13.   As C.E. Hinkson J.A. (as he then was) wrote in Pageant, persons intending to rely on the limited liability status of a corporation are under a duty to notify third parties it contracts with, when it is apparent that the other party is under the impression it is dealing with an unincorporated entity.

14.   In Pageant, E.A. Bennett J.A. and Neilson J.A. concurred in the decision, using a different analysis. E.A. Bennett J.A. wrote that there is an “overwhelming body of law that states that a person who signs a contract as an agent for a limited liabilty company has the onus to advise the third party of this fact, or runs the risk of being personally liable.” Under this analysis, the obligation to disclose that one is acting on behalf of a corporate principal exists whenever one seeks to rely on that limited liability. The question is what the parties intended or must be fairly undertsood to have intended.

15.   Using either analysis, I reach the same conclusion here. I find the facts differ from those in Pageant. While Nanaimo’s Flooring did not include the “Inc.” on all of their work orders and invoices, I find that Harmorg knew it was dealing with Nanaimo Flooring Depot Inc., and not Mr. Green personally. Nanaimo’s Flooring used most of its corporate name, except the Inc., on its website. Nanaimo’s Flooring provided its complete corporate name, including the Inc., on the first work order and both cheques filed in evidence.

16.   I find that Mr. Green was acting as Nanaimo’s Flooring’s agent with respect to the claimed $672. I find that Nanaimo’s Flooring is a legal corporate entity that is separate and distinct from its employees. Because the disputed invoices were issued to Nanaimo’s Flooring and sent to Nanaimo’s Flooring’s sales email address, with Mr. Green’s name included as a contact, I find that Harmorg should have fairly understood that they were not contracting with Mr. Green in his personal capacity.

17.   For these reasons, I dismiss Harmorg’s claims against Mr. Green in his personal capacity.

ISSUE

18.   The issue in this dispute is whether Harmorg is entitled to payment of $672 for hardwood flooring installation work it completed for Nanaimo’s Flooring, or whether these charges were for unapproved extras or defective work.

EVIDENCE AND ANALYSIS

19.   In this civil claim, Harmorg, as applicant, bears the burden of proof on a balance of probabilities. I have reviewed the evidence and submissions but refer to them only as I find necessary to explain my decision.

20.   The parties agree that Harmorg completed hardwood flooring installation for Nanaimo’s Flooring, at two residential properties. For Harmorg’s work at the first residential property, Nanaimo’s Flooring underpaid its invoice by $511.35 (Residential Job 1). For Harmorg’s work at the second residential property, Nanaimo’s Flooring short paid its invoice by $160.65 (Residential Job 2). Taken together, these short-payments add up to the claimed $672.

21.   As noted above, Harmorg now submits that the $672 was wrongly charged either because it included unapproved extras, or due to defects in the installation work.

22.   When it comes to Nanaimo’s Flooring’s allegations of defective work, the law places the burden of proof on the party asserting the defects. This means that Nanaimo’s Flooring must prove on a balance of probabilities that Harmorg failed to satisfactorily complete the flooring work: Lund v. Appleford Building Company Ltd. et al, 2017 BCPC 91 at paragraph 124.

23.   I will now consider Residential Job 1 and 2 separately, below.

 

 

 

Residential Job 1

24.   On March 10, 2020, Nanaimo’s Flooring provided a work order to Harmorg for Residential Job 1 (Work Order 1). Work Order 1 refers to an installation “O/B; Nanaimo’s Flooring Depot Inc.”

25.   The Work Order does not provide a fixed price for the job, but an estimate. I find that Work Order 1 was an estimate, not a fixed price contract. This finding is consistent with Nanaimo’s Flooring’s submission that the labour needed to level a floor, for example, is not known precisely in advance.

26.   On April 28, 2020, HA, Harmorg’s flooring installer for Residential Job 1, emailed J and Mr. Green at Nanaimo’s Floors. HA’s email noted items he had completed. Based on HA’s email, I find that there were some extras to the “work order” but that the parties agreed to them verbally while the job was being completed. My finding is supported by phone records showing frequent calls between the parties while the installation work was being done.

27.   I considered Nanaimo’s Flooring’s submission denying that it agreed to extra work, if that authorization came verbally through J. Harmorg says J is Nanaimo’s Flooring’s sales manager. Nanaimo’s Flooring says J was a subcontractor and therefore was acting in his personal capacity. I disagree because the evidence does not show that J was operating personally. I find that any verbal authorizations from J were made in his role as agent for Nanaimo’s Flooring.

28.   On April 29, 2020, Harmorg issued a detailed invoice for $4,170.60 to “J and Mr. Green, Nanaimo’s Flooring Depot” (April 29 Invoice). The April 29 Invoice breakdown for Residential Job 1 included hardwood flooring installation, labour to level the subfloor and some other items.

29.   On May 21, 2020, Mr. Anderson wrote to Mr. Green and J at Nanaimo’s Flooring requesting payment of the April 29 Invoice.

30.   On May 29, 2020, Nanaimo’s Flooring paid $3,659.25 against the April 29 Invoice, which is $511.35 less than the total owing.

31.   Nanaimo’s Flooring submits that HA’s flooring installation was defective, causing a problem with electrical conduit installation. Nanaimo’s Flooring provided photographs showing an area of hardwood flooring that was either left open or re-opened to accommodate installation of an electrical conduit. Nanaimo’s Flooring submits that the self-leveler was not poured in a way that would accommodate the conduit, causing a need for additional work. Nanaimo’s Flooring submits that it should not have to pay for “an extra bag of self leveler” and repairing the board.

32.   Harmorg submits that the conduit pipe for the dishwasher wiring, situated in the concrete underneath the hardwood, was too short. Harmorg says this was a problem with the electrician’s work, and that Harmorg is not responsible for the cost of a fix to ensure wiring would run all the way to the dishwasher. Because expert evidence from a party is not generally admissible under Rule 8.3(7), I do not place any weight on this opinion evidence.

33.   In a May 28, 2020 email, Nanaimo’s Flooring wrote that it had its own installer, MB, replace a board to address a defect in HA’s install. However, Nanaimo’s Flooring did not provide evidence from MB about a defect in HA’s installation, or the cost of addressing it. I find that Nanaimo’s Flooring has not proven that this was a defect in HA’s installation, rather than in the electrician’s work running the dishwasher wiring.

34.   There is no admissible expert evidence before me about the alleged defects. I therefore find Nanaimo’s Flooring owes the invoice balance for Residential Job 1.

Residential Job 2

35.   On May 1, 2020, J from Nanaimo’s Flooring wrote to Harmorg attaching a work order with an estimate of $4,989.15 for a hardwood flooring installation at the second residential property (Work Order 2).

36.   Work Order 2 includes the word “QUOTE” to describe the work of installing a nail down hardwood floor with 12 flush mount heat vents and staining to match. Contrary to Harmorg’s submission, I find that Work Order 2 is an estimate and not a fixed price contract.

37.   On May 3, 2020, Harmorg invoiced Nanaimo’s Flooring for $5,345.03 (May 3 Invoice), which is $355.88 more than the estimate in Work Order 2. The May 3 Invoice describes grinding high spots on a subfloor, installing engineered hardwood flooring by nail-down application over a wood subfloor with spot glue down at the centre of every board, 6 custom transitions installations made flush to tile from flooring materials, and 11 units of installation and staining of custom flush mount vents.

38.   Nanaimo’s Flooring paid only $5,184.38 of the May 3 Invoice, $160.65 short of the total due. Mr. Green wrote a handwritten note on the May 3 Invoice that this deduction of about “$160” was for “2 transitions”.

39.   On another copy of the May 3 Invoice, I find that Mr. Green wrote that he reached the $160.65 shortfall by eliminating a $135 charge for grinding high spots on the subfloor, and an $18 charge for installation of transitions.

40.   In a May 28, 2020 email to Mr. Anderson, Mr. Green wrote that HA had installed only 11 transitions, not the 12 that were required. It is uncontested that HA later provided the 12^th transition.

41.   Because the May 3 Invoice only charges for installation of 11 transitions, I find Nanaimo’s Flooring was not entitled to deduct payment for a 12^th transition. For this reason, and because Nanaimo’s Flooring gave different justifications for the short payment at different times, I find that it has not proven a defect in Harmorg’s installation justifying the $160.65 short payment.

42.   I find that Nanaimo’s Flooring must pay Harmorg the claimed $672.

INTEREST, CRT FEES AND DISPUTE-RELATED EXPENSES

43.   Harmorg claims 3% monthly contractual interest on the claimed $672. While the invoices noted this contractual interest charge of 36% per year on overdue accounts, I find that Harmorg did not prove that Nanaimo’s Flooring agreed to this interest rate before the invoices were issued. I make this finding because neither work order refers to a contractual interest charge.

44.   There being no agreement about interest between the parties, the Court Order Interest Act applies. Harmorg is entitled to pre-judgment interest on the $672 from May 3, 2020, the date of the second invoice, to the date of this decision. This equals $7.75.

45.   Under section 49 of the CRTA and CRT rules, the CRT will generally order an unsuccessful party to reimburse a successful party for CRT fees and reasonable dispute-related expenses. I see no reason in this case not to follow that general rule. I find Harmorg is entitled to reimbursement of $125 in CRT fees. Harmorg did not claim dispute-related expenses.

ORDERS

46.   Within 30 days of the date of this order, I order Nanaimo’s Flooring to pay Harmorg a total of $804.75, broken down as follows:

a.    $672 in debt for unpaid flooring installation services,

b.    $7.75 in pre-judgment interest under the Court Order Interest Act, and

c.    $125 in CRT fees.

47.   Harmorg is entitled to post-judgment interest, as applicable.

48.   I dismiss the dispute against Mr. Green personally.

49.   Under section 48 of the CRTA, the CRT will not provide the parties with the Order giving final effect to this decision until the time for making a notice of objection under section 56.1(2) has expired and no notice of objection has been made. The time for filing a notice of objection is 28 days after the party receives notice of the CRT’s final decision. The Province of British Columbia has enacted a provision under the COVID-19 Related Measures Act which says that statutory decision makers, like the CRT, may waive, extend or suspend mandatory time periods. This provision is expected to be in effect until 90 days after the state of emergency declared on March 18, 2020 ends, but the Province may shorten or extend the 90-day timeline at any time. A party should contact the CRT as soon as possible if they want to ask the CRT to consider waiving, suspending or extending the mandatory time to file a Notice of Objection to a small claims dispute.

50.   Under section 58.1 of the CRTA, a validated copy of the CRT’s order can be enforced through the Provincial Court of British Columbia. A CRT order can only be enforced if it is an approved consent resolution order, or, if no objection has been made and the time for filing a notice of objection has passed. Once filed, a CRT order has the same force and effect as an order of the Provincial Court of British Columbia.