Date Issued: November 30, 2021

File: SC-2021-003002

Type: Small Claims

Civil Resolution Tribunal

Indexed as: Belem v. Barry’s Tax Accounting and Company Inc., 2021 BCCRT 1259

Between:

PEDRO BELEM and IRONHAND INTERIORS INC.

ApplicantS

And:

BARRY'S TAX ACCOUNTING AND COMPANY INC.

Respondent

INTRODUCTION

1.      This dispute is about income tax preparation and related services. In March 2020, the applicant, Pedro Belem, hired the respondent, Barry’s Tax Accounting and Company Inc. (BTA), to prepare and file 6 years of personal income tax returns. BTA also filed an additional year of tax returns later. The applicant, Ironhand Interiors Inc. (Ironhand), says that it also hired BTA in March 2020 to prepare its tax returns and do bookkeeping work. I infer Ironhand is Mr. Belem’s company.

2.      The applicants say BTA incorrectly filed the tax returns, so they claim $840 for additional tax preparation fees they say they paid to a third party to file correct returns. The applicants also say they paid deposits for work that was never done or not authorized, and not fully refunded, and they claim BTA owes them $1,092.50.

3.      BTA says that the applicants cancelled the requested work, and BTA kept enough funds to cover its work to that date and refunded the balance. BTA also says it filed the personal tax returns based on Mr. Belem’s provided information and it owes nothing.

4.      Mr. Belem represents himself and Ironhand in this dispute. BTA is represented by its principal.

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. Here, I find that I am properly able to assess and weigh the documentary evidence and submissions before me. Further, bearing in mind the CRT’s mandate that includes proportionality and a speedy resolution of disputes, I find that an oral hearing is not necessary in the interests of justice.

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.

9.      During the CRT facilitation process, the applicants reduced their claimed remedy for tax services, bookkeeping, and filing tax returns, from $2,130 to $1,092.50. The difference in these amounts is $1,037.50. I find that this is the amount that BTA refunded to the applicants, because on balance, I find it likely that BTA rounded up that amount to $1,038 in its submissions.

ISSUES

10.   Did BTA file incorrect tax returns, including without Mr. Belem’s knowledge or permission, and if so does it owe $840 for additional tax preparation fees?

11.   Are the applicants entitled to $1,092.50 for tax services, bookkeeping, and tax filings BTA allegedly did not provide or was not authorized to do?

EVIDENCE AND ANALYSIS

12.   In a civil proceeding like this one, the applicants must prove their claims on a balance of probabilities (meaning “more likely than not”), apart from the exception noted below. I have read all the parties’ submissions but refer only to the evidence and arguments that I find relevant to provide context for my decision.

13.   There is no written agreement between the parties in evidence. There is also no correspondence or other documentation showing what work the parties agreed to or under what terms. However, it is undisputed that on March 18, 2020, Mr. Belem paid BTA $630 to prepare and file tax returns for him and his ex-spouse, CL, for the tax years 2013 through 2018, as shown on submitted invoices marked “paid”. It is also undisputed that in March 2020, Ironhand hired BTA to do tax and bookkeeping work. The parties agree that the applicants then paid BTA $1,500 in deposits for the requested Ironhand work and future personal income tax work, although it is unclear exactly when. In 2021, BTA undisputedly prepared and filed Mr. Belem’s and CL’s 2020 taxes and marked the 2 associated invoices ($80.85 each) as paid, because BTA paid them out of the deposit money.

14.   The parties agree that the applicants cancelled BTA’s requested Ironhand work in late March 2021. As noted, BTA only refunded $1,037.50 of the $1,500 in deposits paid by the applicants, meaning it withheld $462.50. Invoices dated March 29, 2021 say that BTA withheld $300 of this amount for work it says it had already performed for Ironhand, and $161.70 for 2020 personal income tax work, for a total of $461.70, not $462.50. On balance, I find the 2020 personal income tax invoices are more detailed and reliable, so I find BTA withheld $161.70 for that 2020 tax work and $300.80 for the alleged Ironhand work.

Did BTA file incorrect tax returns, including without Mr. Belem’s knowledge or permission?

15.   I find the parties’ agreement contained an implied term that BTA’s work would be of reasonable quality (see Lund v. Appleford Building Company Ltd. et al., 2017 BCPC 91 at paragraph 124). The applicants say BTA filed incorrect “$0” tax returns for Mr. Belem and CL. They also say BTA filed later tax returns without their knowledge or permission. I infer the applicants mean the 2 returns for the 2020 tax year. I find the applicants are essentially saying that BTA broke their contract by unreasonably filing incorrect tax returns and filing the 2020 returns after cancelling BTA’s services. They claim a refund of $840 in additional third party tax preparation fees they incurred.

16.   I find the evidence does not show any filed 2020 tax documents, or anything that shows when they were filed and whether they were filed without the applicants’ knowledge or permission. So, I find the evidence does not show that BTA filed 2020 returns after the applicants cancelled BTA’s services in late March 2021.

17.   Mr. Belem says that the filed tax returns are incorrect and false, and generally show that he and CL had little to no income. I infer he means all of the returns BTA filed for him, for all tax years, are incorrect.

18.   However, BTA submitted portions of Mr. Belem’s tax return documents for all of the tax years from 2013 to 2018, including signature pages and summary pages showing the tax owing or refunded. BTA also submitted excerpts and summaries of CL’s tax information for some of those years. I find not all of the returns filed were “$0” returns. BTA says, and Mr. Belem does not directly deny, that long after it filed the returns for the tax years 2018 and earlier, Mr. Belem said that he and CL had additional or different income in those years. BTA says that Mr. Belem provided no documentation supporting this allegedly different income, but it would have filed amended returns for free if Mr. Belem had provided adequate proof. I find there is no evidence before me showing that the tax returns filed for Mr. Belem were incorrect or should have been amended to reflect new information.

19.   Further, Mr. Belem does not deny signing the tax returns after BTA prepared them, and his signature appears on signature pages in evidence for the 2013 through 2018 tax returns. However, Mr. Belem says he signed the returns “under duress”. I infer Mr. Belem says that his signature was not an agreement with BTA that the returns were accurate because he signed under pressure from BTA.

20.   Duress is a defence to the enforceability of a contract. However, I find that there is no evidence of duress at the time the parties formed their contract, which I find is when the applicants requested work from BTA on March 18, 2020. The returns were signed on March 27, 2020. Further, I find it unlikely that Mr. Belem’s tax return signatures signalled his agreement with any new or changed BTA contract, because Mr. Belem had already hired BTA for that work and there is no evidence that the agreement had changed. Even if those signatures signalled new agreements with BTA, to establish duress Mr. Belem must prove that BTA put him in a position where he had no realistic alternative but to sign the returns (see Dairy Queen Canada, Inc. v. M.Y. Sundae, 2017 BCCA 442). I find he has not done so. I find there is no evidence that Mr. Belem objected to content or the filing of the 2013 through 2018 returns until nearly a year later. He says that he then had the returns prepared again by a different tax professional, which I find shows alternatives were available to him. I find the evidence does not show that BTA pressured him to sign the returns.

21.   Mr. Belem also says that BTA did not show him all of the tax return pages when he signed them. However, Mr. Belem does not adequately explain why he did not ask to see the allegedly missing pages or why he signed without seeing them. In any event, even if Mr. Belem was unaware of the tax returns’ full content, as noted the evidence before me does not show that the filed tax returns contained any errors or omissions.

22.   Having reviewed the evidence, I find that Mr. Belem has not met his burden of proving that BTA filed incorrect tax returns, or filed returns without Mr. Belem’s knowledge or permission. I dismiss his claim for $840 in additional tax preparation charges.

Is Mr. Belem entitled to $1,092.50 for tax services, bookkeeping, and tax filings?

23.   Although the parties’ submissions are not entirely clear to me, I find they agree that BTA quoted $3,500 for preparing taxes and doing certain bookkeeping work for Ironhand. The parties do not dispute that BTA would use the $1,500 in deposit money toward this agreed Ironhand work and any further, authorized personal income tax work after the 2018 tax year. I find that the deposits were likely a type of retainer, to be used for payment as necessary.

24.   As noted, I found that after the applicants cancelled BTA’s work, BTA refunded $1,037.50 and withheld $462.50 of the deposits. However, the applicants say BTA owes $1,092.50, without further breakdown or explanation. I find it is unclear how the applicants arrived at this claimed amount, what it consists of, and why it is greater than the unrefunded $462.50 of deposit money. I note that $462.50 plus the $630 Mr. Belem originally paid for the 2013 through 2018 tax returns equals $1,092.50. However, I found above that the evidence does not show BTA filed any incorrect tax returns or filed returns without permission, so there is no reason to refund that $630.

25.   I find there is no evidence before me showing that the applicants sustained any damages, fees, or expenses because of the cancelled BTA work. An invoice from an unidentified third party says that it charged Mr. Belem, not Ironhand, $60 plus GST for payroll processing work. I find the evidence does not support that the BTA cancellation or the withheld deposit funds resulted in this alleged charge to Mr. Belem.

26.   Overall, I find the applicants have not proven that they suffered any loss or damage other than possibly the $462.50 deposit amount BTA did not refund. BTA is the party alleging that it withheld this amount as payment for work it performed, so I find it bears the burden of proving that it performed work of that value.

27.   BTA says that although Ironhand gave it insufficient information to allow it to submit corporate tax returns to the CRA, it spent “many hours with the clients and on their corporate files.” I find there is no evidence before me showing how many hours BTA spent on Ironhand work, what work was performed, or the rates charged.

28.   A $300 March 29, 2021 BTA invoice to Ironhand, marked “paid”, was for “consulting services” with no further explanation. I find this invoice is not sufficient to show that BTA spent any time or expenses performing work on specific Ironhand tasks that the parties had agreed on. There is no other evidence of BTA performing any Ironhand work, or showing that BTA provided Ironhand any incomplete work product or anything else of value. I find the evidence does not show that BTA performed any work that justified the $300.80 it withheld for alleged Ironhand work.

29.   Turning to the 2 BTA invoices of $80.85 each for Mr. Belem’s and CL’s personal 2020 taxes, I found above that Ironhand withheld $161.70 for that work. The applicants do not dispute that BTA filed those tax returns. I found above that the evidence does not support those returns being filed after the applicants cancelled BTA’s work. The applicants do not directly say that BTA’s charges for the 2020 personal tax work were more than agreed or were excessive. So, on balance, I find that BTA was entitled to deduct $161.70 from the deposit money for the invoiced 2020 personal tax work.

30.   Overall, I find the evidence fails to show BTA was entitled to keep the $300.80 of deposit money it retained for Ironhand work. I allow the applicants’ claim for a tax and bookkeeping service refund in the amount of $300.80.

CRT FEES, EXPENSES, AND INTEREST

31.   The Court Order Interest Act applies to the CRT. The applicants are entitled to pre-judgment interest on the $300.80 owing, reasonably calculated from March 29, 2021, the apparent cancellation date of BTA’s services, until the date of this decision. This equals $0.92.

32.   Under section 49 of the CRTA, and the 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. The applicants were partly successful in their claims, so I find they are entitled to half the amount they paid in CRT fees, which equals $62.50. No party claims CRT dispute-related expenses.

ORDERS

33.   Within 30 days of the date of this decision, I order BTA to pay the applicants a total of $364.22, broken down as follows:

a.    $300.80 in debt for a deposit refund,

b.    $0.92 in pre-judgment interest under the Court Order Interest Act, and

c.    $62.50 in CRT fees.

34.   The applicants are also entitled to post-judgment interest under the Court Order Interest Act, as applicable. I dismiss the applicants’ remaining claims.

35.   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.

36.   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.