Date Issued: March 6, 2023

File: SC-2022-003994

Type: Small Claims

Civil Resolution Tribunal

Indexed as: KNH Contracting Ltd. v. Dennis, 2023 BCCRT 181

Between:

KNH CONTRACTING LTD.

Applicant

And:

STEPHEN DENNIS

Respondent

REASONS FOR DECISION
Tribunal Member:	Sherelle Goodwin

INTRODUCTION

1.      The applicant, KNH Contracting Ltd. (KNH), says the respondent, Stephen Dennis, purchased 3 heat pumps from a third party wholesaler (WWG) at wholesale prices, by fraudulently using KNH’s commercial account with WWG. KNH claims payment of $4,165.30, which it says is the difference between the wholesale and retail price for the heat pumps. KNH is represented by an owner or employee, KW.

2.      Mr. Dennis admits he used KNH’s commercial account with WWG to buy the heat pumps at the wholesale price. However, Mr. Dennis said he did so at KW’s suggestion, and that KW authorized the sale over the phone with a WWG employee when Mr. Dennis ordered the heat pumps. Further, Mr. Dennis says he paid WWG the $8,015.68 wholesale cost for the heat pumps and so he owes KNH nothing. Mr. Dennis represents himself.

JURISDICTION AND PROCEDURE

3.      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.

4.      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 this dispute, the parties call into question the credibility, or truthfulness, of the other. Here, I find that I am properly able to address and weigh the documentary evidence and submissions before me. Further, keeping in mind the CRT’s mandate of proportionality and speedy dispute resolution, I find that an oral hearing is not necessary in the interests of justice. I also note that the BC Supreme Court, in Yas v. Pope, 2018 BCSC 282, recognized the CRT’s process and found an oral hearing is not necessarily required where credibility is at issue.

5.      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.

6.      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.

ISSUE

7.      The issue in this dispute is whether Mr. Dennis must pay KNH the invoiced $4,165.30.

EVIDENCE AND ANALYSIS

8.      In a civil proceeding like this one the applicant, KNH, must prove its claim on a balance of probabilities (meaning “more likely than not”). I have read all the parties’ submissions and weighed the evidence, but only refer to that which is relevant to explain my decision.

9.      Mr. Dennis says that he and KW were friends and had worked together over the years in the construction field. KW does not dispute this and so I accept the parties were at least colleagues, if not work friends.

10.   The parties agree, and I find, that Mr. Dennis spoke with KW and asked for advice on what type of heat pump he should install in his residence. Mr. Dennis says KW advised him to use Carrier heat pumps, while KW says he advised to use a “North American brand”. I find nothing turns on this slight difference and accept that KW gave Mr. Dennis advise about heat pump types or brands.

11.   Mr. Dennis says that KW advised him to order the heat pumps from WWG and to use “his name” at WWG to obtain wholesale pricing and save some money. Mr. Dennis also says the parties agreed that Mr. Dennis was experienced enough to install the heat pumps, but that KNH would do the “final hook up” and prime the heat pumps with refrigerant.

12.   KW says that Mr. Dennis said he had obtained a quote from another contractor, who had sized 3 heat pumps for Mr. Dennis’ house. As noted, KW says he recommended a general type of heat pump. KW denies recommending WWG and says that Mr. Dennis told KW that he had already decided to buy the heat pumps directly from WWG. Finally, KW specifically denies authorizing Mr. Dennis to use the KNH commercial account to obtain wholesale pricing from WWG. I address the discrepancies between these 2 accounts of the same conversation later in this decision.

13.   It is undisputed that Mr. Dennis ordered 3 heat pumps through WWG under KNH’s commercial account, for a total price of $8,0158.58. Based on invoices and documents provided by both parties, I find Mr. Dennis ordered the heat pumps on March 18, 2022 and that the heat pumps were shipped, or picked up by Mr. Dennis, on March 30, 2022.

14.   It is also undisputed, and I find, that Mr. Dennis paid WWG $8,0158.58 on April 4, 2022. This is supported by Mr. Dennis’ submitted credit card statement.

15.   I pause here to note that the invoices submitted by KNH are from Carrier Enterprise Canada L.P. (Carrier), which I infer is the heat pump manufacturer. The invoice submitted by Mr. Dennis contains the names of both Carrier and WWG. As I find nothing turns on the name of the third-party wholesaler, I will continue to refer to the wholesaler as WWG for the purposes of this dispute.

16.   As noted above, KNH invoiced Mr. Dennis $4,165.30 on April 30, 2022, which KNH says is the difference between the WWG wholesale price, and KNH’s retail price, for the heat pumps. I find this is the amount of profit KNH would have made, had it obtained the heat pumps from WWG, and sold them to Mr. Dennis.

17.   KNH does not argue, and I do not find, that the parties agreed Mr. Dennis would buy the heat pumps from KNH. I find such an agreement would be inconsistent with either party’s version of their conversation, given that Mr. Dennis was either directed to, or had already decided to, buy the heat pumps directly from WWG. Further, I find KNH did not provide the service usually associated with a retail market price, that being ordering, paying for, obtaining, and delivering the heat pumps. So, I find there was nothing for Mr. Dennis to pay KNH for.

18.   On balance, I find KNH is not entitled to payment of the invoice under any express or implied contractual agreement between the parties.  

19.   As noted above, KNH says Mr. Dennis fraudulently obtained the heat pumps. To the extent KNH alleges civil fraud, also known as fraudulent misrepresentation, I find its claim cannot succeed. This is because fraudulent misrepresentation requires the applicant to prove that the respondent intentionally or recklessly made a false representation, that the falsehood caused the applicant to act, and that the applicant’s actions resulted in a loss (see Bruno Appliance and Furniture, Inc. v. Hryniak, 2014 SCC 8, at paragraph 21). Even if KNH proved that Mr. Dennis misrepresented to WWG his authority to use KNH’s commercial account, there is no indication that this caused KNH to act in any way that resulted in a loss to KNH. As noted above, there is no suggestion that Mr. Dennis would have purchased the heat pumps through KNH and so I find KNH did not lose out on any business or profit. So, I find KNH has not made out a claim of fraudulent misrepresentation.

20.   As KNH essentially argues that Mr. Dennis misrepresented a connection with KNH to WWG, I have considered whether KNH has established the tort (civil wrong) of “passing off”. The elements of the tort are the existence of the applicant’s goodwill, the respondent’s misrepresentation causing deception of the public, and actual or potential damage to the applicant (see Vancouver Community College v. Vancouver Career College (Burnaby) Inc., 2017 BCCA 41). As described in Greystone Capital Management Inc., v. Greystone Properties Ltd., 1999 CanLII 5690 (BC SC), the question to be answered is whether the respondent misrepresented to the relevant public some business association or connection with the plaintiff to take advantage of the applicant’s goodwill. Goodwill can be described as the benefit and advantage of the good name, reputation, and connections of a business (see Visa International Service Association v. Visa Motel Co., 1984 CanLII 517 (BC CA)).

21.   I find KNH had goodwill, that being its business connection and commercial account, with WWG. Mr. Dennis admits he used KNH’s business connection with WWG to obtain the advantage of wholesale heat pump prices. However, Mr. Dennis disputes that he made any misrepresentation. As noted, he says KW told him to use “his name”, which KW specifically denies.

22.   Mr. Dennis also says that, while he was ordering the heat pumps, a WWG employee telephoned KW, who approved the purchase through KNH’s account with WWG. KW does not dispute this, or address whether he received such a telephone call.

23.   KW says that a WWG employee called him for an explanation about payment by credit card, after Mr. Dennis paid, as credit card payment was unusual for WWG. KW says he then called Mr. Dennis, who suggested that KW tell WWG that Mr. Dennis was a KNH apprentice. I find this cannot be the same telephone call Mr. Dennis described, as I found Mr. Dennis ordered the heat pumps on March 18, 2022 and paid for them by credit card on April 4, 2022.

24.   Mr. Dennis denies having that second conversation with KW, and specifically denies telling KW to tell WWG that Mr. Dennis was an apprentice. In Mr. Dennis’s June 5, 2022 emails and text message to KW, he says he tried to call KW several times, was confused about KNH’s invoice, that he paid WWG directly, asks if he “missed something”, and apologized if he had done something to upset KW but that he did not believe that he owed KNH any money. Mr. Dennis reminded KW that he told Mr. Dennis to use his account and that Mr. Dennis had paid for what he ordered. In his reply emails on June 7, 2022, KW did not deny telling Mr. Dennis to use KNH’s commercial account with WWG, although I acknowledge KW denies it in this dispute.

25.   The difficulty is that it is up to KNH to prove that Mr. Dennis made a misrepresentation. I do not find such a misrepresentation obvious on the facts before me. I do not find Mr. Dennis misrepresented himself as a KNH employee, or otherwise, at the time of the order. Although KW says he did not give Mr. Dennis authority to use the KNH account, or the “name”, Mr. Dennis says he did.

26.   KW says he knew Mr. Dennis did not have an account with WWG. Given that the parties discussed Mr. Dennis buying the heat pumps directly from WWG, I find it more likely than not that KW authorized Mr. Dennis to use KNH’s account with WWG. KW has provided no other explanation how Mr. Dennis could order from WWG without an account. So, I find Mr. Dennis’ version of events is more consistent with the parties’ initial conversation.

27.   Further, I find Mr. Dennis’ version of events is also more consistent with his later email to KW, which KW did not dispute at the time. Finally, I find Mr. Dennis’ version of events is reasonable, given that he and KW had a prior work history, and also had an agreement for KNH to perform the final hook up for Mr. Dennis in the future. On balance, I find KNH has not proven any misrepresentation.

28.   Even if I had found that Mr. Dennis misrepresented to WWG his authority to use KNH’s commercial account to order the heat pumps, I would have found KNH failed to prove the misrepresentation caused any actual or potential damages. As noted above, I find KNH did not lose out on the profit it would have made from any retail sale to Mr. Dennis as I find the parties had no agreement about a retail sale. Further, there is no indication KNH expected Mr. Dennis to purchase the heat pumps from KNH at retail prices, given KW says Mr. Dennis had already consulted with another contractor. Finally, there is no indication that WWG has closed or limited KNH’s commercial account or penalized KNH in any way because of this transaction. So, I find KNH has not shown that its goodwill, reputation, or business relationship with WWG was damaged, or potentially damaged, by Mr. Dennis’ purchase of heat pumps through KNH’s commercial account.

29.   In summary, I find KNH has not proven the tort of passing off, fraudulent misrepresentation, or that Mr. Dennis owes $4,165.30 under contract, or for any services provided. So, I dismiss KNH’s claims against Mr. Dennis.

30.   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. As KNH was unsuccessful in its claims, I find it is not entitled to reimbursement of its paid CRT fees. As the successful respondent, Mr. Dennis paid no CRT fees and claimed no dispute-related expenses.

ORDER

31.   I dismiss KNH’s claims and this dispute.