IN THE SUPREME COURT OF BRITISH COLUMBIA
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Citation: |
Pure v. BC-Alta, |
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2019 BCSC 390 |
Date: 20190320
Docket: S172309
Registry: Victoria
Between:
Pure Engineering Ltd.
Plaintiff
And
BC-Alta Development Ltd.
Defendant
Before: The Honourable Mr. Justice Jenkins
Reasons for Judgment
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Representative of the Plaintiff: |
Bradley Cook |
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Counsel for the Defendant: |
Michael Velletta and Caderyn Christie |
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Place and Date of Trial/Hearing: |
Victoria, B.C. July 9-13, 2018 and July 19-20, 2018 |
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Place and Date of Judgment: |
Victoria, B.C. March 20, 2019 |
[1] The plaintiff, Pure Engineering Ltd. (“Pure”) sues for unpaid fees for engineering services provided to the defendant, BC-Alta Development Ltd. (“BC Alta”) which owned and was in the process of developing a phased construction project (“Wishart project”) in Colwood, British Columbia. The proposed development included twenty-two residential lots, four commercial/residential buildings, site services and related infrastructure.
[2] As well, Pure seeks damages flowing from the failure of BC Alta to pay its invoices which in turn, Pure alleges, has lead to the impecuniosity of the plaintiff and its principals.
[3] In the alternative, Pure claims quantum meruit for the value of the services provided to BC Alta and the project.
[4] Pure also seeks a declaration of Builders’ Lien against title to the property and the project which is owned by BC Alta.
[5] Pure ceased work on the project after BC Alta refused to pay its invoices.
[6] BC Alta alleges Pure has failed to perform the services which it agreed to provide for the project and alleges that there was but one contract between the parties for the production of specific drawings to eventually be submitted to the City of Colwood (“City”; “Colwood”). Pure submits there was also a contract referred to as an “umbrella contract” or “full meal deal” encompassing all aspects of the engineering work required for the project.
[7] Complicating the progress of the proposed work on the project was the inclusion in the development permit issued by the City to BC Alta which provided that the first phase of the project must be 50% complete before work, including reviews and permits, for subsequent phases of the project could begin. Upon commencing work on the project, Pure was not aware of the “50% condition”, as it was commonly referred to by the parties.
[8] Finally, the defendant submits that even if it were responsible to pay for services of Pure, Pure was not registered or licensed in British Columbia to provide engineering services until after the date of its first invoice to BC Alta, nor compliant with the Engineers and Geoscientists Act, R.S.B.C. 1996, c. 116 [Engineers and Geoscientists Act; Act], and therefore Pure is not entitled to payment. As the issue of compliance with the registration requirements with the Association of Professional Engineers and Geoscientists of British Columbia (“APEGBC”) is central as to whether the plaintiff was able to claim payment for engineering work performed in British Columbia, I will proceed with that issue first.
[9] The statutory requirements for the practice of engineering in British Columbia are detailed in the Act, specifically s. 22 to 24.
[10] Section 22 states, in part:
22(1) Except as permitted under this Act, an individual or corporation, partnership or other legal entity must not do any of the following:
(a) engage in the practice of professional engineering or professional geoscience;
. . .
(2) Subsection (1) does not apply
. . .
(b) to a corporation, partnership or other legal entity that has on its active staff members or licensees who directly supervise and assume responsibility as this Act provides for the practice of professional engineering or professional geoscience undertaken by the corporation, partnership or other legal entity.
[11] Interpreting those portions of s. 22 above, a company may practise professional engineering if it has active staff who are members or licensees, and who directly supervise and assume responsibility under the Act for the practice of professional engineering undertaken by the corporation. Section 22(2)(b) expressly authorizes a company to practise professional engineering if it has active staff members or licensees who directly supervise and assume responsibility for the work.
[12] It is not in issue that the work performed by Pure on the Wishart project is included in the definition of the “practice of professional engineering” as defined in s. 1 of the Act.
[13] Mr. Mohan testified as to being registered to practise engineering in all provinces of Canada and also in some of the United States of America. He was licensed to practise professional engineering in British Columbia at all times relevant to the project in question.
[14] He also testified that as of June 2016 he was responsible only for the Wishart project, but as of February 2017 he took over the role of overall responsibility for the company.
[15] His involvement in this project began in early June 2016 after he was contacted by Mr. Cook. Mr. Mohan continued to perform engineering services on this project through April 2017.
[16] The defendant has referenced an email message of Mr. Cook to Mr. Mohan dated December 22, 2016 in which Mr. Cook, stated the following, referencing at first a new project other than Wishart:
New Project – The job I was talking to you previously about needs your review, comment and stamp. I also need a Schedule B and to insure you professionally through Pure, as the MD for that job will require that proof. To achieve that, requires me to ask you several things on my end:
1. Our permit in Alberta has lapsed, and I need it to be able to operate in BC. I fired our original permit holder, and we’ve been lapsed about a year. Are you willing to hold our permit for us, and at what cost? I know what it means, as I am sure you do.
2. 2. To operate as a corporation in BC, I need the RP that holds the Alberta P2P to provide a LOA to APEGBC.
[17] On February 1, 2017, Mr. Mohan executed a Letter of Undertaking to the APEGBC in which he stated:
I, Prosanna Mohan. Licence No. 38997, am actively employed by Pure Engineering (the “Company”).
I undertake to directly supervise and assume responsibility for the practice of professional engineering services and / or by the Company.
I also undertake to advise APEGBC, in writing, if and when my professional involvement with the Company is terminated.
[18] On February 24, 2017, the APEGBC wrote to Mr. Mohan at Pure, regarding “Registration of Proposed Company Name: ‘Pure Engineering Ltd.”, stating:
We acknowledge receipt of our Declaration and Letter of Undertaking.
The Association of Professional Engineers and Geoscientists of British Columbia (“APEGBC”) is pleased to approve your proposed company ‘Pure Engineering Ltd.’ which contains the restricted word “Engineering”.
. . .
[19] Based upon all of the above evidence relating to licensing of Mr. Mohan and Pure under the Act, and the testimony of Mr. Cook, Ms. Trost and Mr. Mohan, Mr. Mohan was at all material times licensed to practise as a professional engineer in British Columbia and directly supervised and assumed responsibility for the practice of professional engineering undertaken by Pure. He was authorized to affix his seal as a professional engineer on drawings as required under the Act.
[20] Pure was entitled to engage in the practice of professional engineering because Mr. Mohan was on Pure’s active staff (at one point becoming a director of Pure), he was a licensee, and he directly supervised and assumed responsibility as required by the Act for Pure’s provision and practice of professional engineering.
[21] Section 24 of the Act, under the heading “No unregistered person to recover fees” states:
(1) Except as provided in this Act, a person is not entitled to recover any fee or remuneration in any court of law in British Columbia for any work done or service rendered that is within the definition of “practice of professional engineering” or of “practice of professional geoscience” unless the person is a member of the association and holds a certificate of registration or is licensed under the provisions of the Act at the time the work is done or service rendered.
(2) Except as provided in this Act, a corporation is not entitled to recover any fee or remuneration in any court of law in British Columbia for any work done or service rendered that is within the definition of “practice of professional engineering” or of “practice of professional geoscience” in this Act.
[22] Reading the statute for internal consistency suggests that as a corporation, Pure is not bound by the provisions of s. 24(1) of the Act, which limits an unlicensed person from recovering a fee or remuneration for professional engineering services. Corporations are dealt with specifically and separately in the next provision. Pure was bound by s. 24(2) which prohibits a corporation, “except as provided for in this Act” from recovery of a fee or remuneration.
[23] The defendant has submitted that under s. 24(1) of the Act, that Pure was unable to sue to “recover any fee or remuneration in any court of law in British Columbia” for work in professional engineering unless the person was a member of APEGBC or is licensed under the Act “at the time the work is done or service rendered”.
[24] The prohibition to sue for payment in s. 24(2) of the Act, would, at first glance apply to any corporation that has provided professional engineering services, which, respectfully, could not be an expression of the legislature in light of permitting a corporation to practise professional engineering as provided for in s. 22(2)(b). The opening words of s. 24(2) of the Act, “[e]xcept as provided in this Act”, recognizes the right of a corporation to sue if under s. 22(2)(b) the corporation is authorized to work in “the practice of professional engineering”.
[25] Mr. Mohan was a licensee. The Court notes Mr. Mohan’s reference to his licence number which indicates he had been licensed in British Columbia prior to the date of the application to assume responsibility for all of the professional engineering services of Pure.
[26] Mr. Mohan was active staff of Pure, and at one point also became a director of Pure.
[27] Mr. Mohan directly supervised and assumed responsibility for the practice of professional engineering undertaken by Pure. On or about March 9, 2017, Mr. Mohan executed a Schedule “A” in which he agreed, as a representative of Pure, to be the Coordinating Registered Professional for all engineering consultants acting on the project and a Schedule “B”, a commitment to the City of Colwood of assurance of professional design, which were executed after receipt of authorization from the APEGBC. Those documents are requirements of an owner as to who the Coordinating Registered Professional was on the project and that he would provide design and a commitment for field review. (Tab #245)
[28] The prohibition in s. 24(2) does not apply to Pure because s. 24(2) is qualified by the words “except as provided in this Act”. Pure is acting as provided in the Act because it had active staff licensee Mr. Mohan supervising, enabling them to carry on engineering work in compliance with the Act. Pure therefore falls outside of the prohibition contained in s. 24(2). Interpreting the Act with mind to its internal coherence suggest that if a corporation is entitled to carry on engineering work and service under the supervision of a staff licensee, it is entitled to recover fees with respect to provision of those services.
[29] I accept the submissions of Pure that it is authorized to sue for payment of fees and remuneration under the Act.
[30] Pure is a company owned and managed by Mr. Bradley Cook and Ms. Melissa Trost, both of whom represented Pure at trial. Mr. Cook is an experienced project manager with several years of experience in large projects in Alberta, however, he has no formal qualifications or training in engineering or construction industry professions. Melissa Trost is a senior design technologist with fifteen years experience, especially in geotechnical and civil work and had previously obtained certification as an engineering technologist in Alberta. The Wishart project was the first substantial project undertaken by Pure in British Columbia.
[31] BC Alta is owned and operated by Parminder Saroya who is a resident of Calgary. The Wishart project was the first venture of BC Alta into British Columbia but it had been responsible for the development of several projects in Alberta over several years. Mr. Saroya was primarily based in Calgary during the course of the time the parties worked together on the Wishart project.
[32] Work on the first phase of the Wishart project began before Pure and BC Alta became acquainted in early June 2016. Previously, in or about March 2015, Mr. Gwynn Griffiths, a very experienced surveyor and inspector on civil projects had commenced layout surveys for the project under contract to BC Alta. Mr. Griffiths testified for the plaintiff and stated that he had been busy, was frustrated with the work and stopped work in the summer of 2015 after explaining his frustrations to Mr. Saroya. Later, in November 2016 Mr. Griffiths undertook a further survey for BC Alta directly of an area to the south of the Veterans Memorial Parkway (“VMP”) which was to be part of the infrastructure of the project which was survey work performed on site.
[33] During June 2016 Mr. Griffiths introduced Mr. Cook and Pure to Mr. Saroya. Mr. Griffiths testified he was aware that Mr. Saroya was seeking a new engineering firm for the project following problems with the original firm. Negotiations ensued, continuing through the summer of 2016 during which time Pure engaged an architect to prepare preliminary drawings and Pure personnel became more acquainted with the project which included site visits and exchanges of text messages and emails. Mr. Cook testified that he made clear to Mr. Saroya that Pure wished to secure a contract to provide all engineering services required for the project, which work would continue over at least two years if the project proceeded as anticipated.
[34] Mr. Cook testified as to discussions continuing between him and Mr. Saroya regarding a possible “umbrella” contract which would have included site supervision and administration and the work of consultants in specific engineering and construction fields.
[35] On September 5 and 6, 2016, Mr. Saroya and Mr. Cook were exchanging text messages regarding entering into a contract which included the following:
Mr. Saroya: If you like to do that line please we have to put in the paper all how you going to give me full Mall deal please. No misunderstanding. Please let me know this week when we can get together.
Mr. Cook: No problem, I’ll write something up and bring it when I see you.
Mr. Saroya: Please don’t forget to talk to me with contract if we can get something going please.
Mr. Cook: I will no worries. Working on it. I will come see you tomorrow with contract. Design is underway.
Mr. Saroya: Please let us sing contract please that way all the understanding is there. Please I am looking for full male deal no surprises please. Let us start from somewhere.
[36] It was understood between the parties that “full male deal” and “full Mall deal” was in error and should have read “full meal deal”, which was slang for the entire project.
[37] In his cross-examination, Mr. Saroya was referred to the term, “full meal deal” and the following exchange:
Q: For this full-meal deal, lump sum price, at the second meeting are you discussing the entirety of the remaining project?
A: Yeah. Time to time we discuss this . . .
[38] Further text messages reflected Pure commencing work on testing the water services in place by that time, a meeting between Mr. Saroya and an architect, Ms. Hemna Marwah, who worked with Pure and was to meet Mr. Saroya in Calgary and Victoria. (#242) The Calgary meeting took place, Ms. Marwah made a site visit to Colwood and subsequently commenced preliminary drawings for the condominium tower.
[39] The first written agreement between the parties was a letter agreement dated September 7, 2016 on Pure letterhead (#230) stating:
Further to our recent conversations, we agree to perform the following work on the VMP sewer extension for the lump sum price of $18,000, as follows:
1. Complete detailed design of VMP sewer extension;
2. Make necessary changes resulting from current design review comments from Colwood;
3. Make any changes resulting from future design review comments from Colwood;
4. Issue IFC drawings when design review is complete;
5. Perform necessary field reviews during construction;
6. Review construction records, including camera, to confirm compliance with drawings;
7. Issue stamped record drawings;
8. Provide all required information necessary to the satisfaction of Colwood upon completion.
The following is not included in the lump sum pricing:
1- Any survey work
2- Any compaction testing.
[40] “VMP” stands for work adjacent to and including the nearby Veterans Memorial Parkway.
[41] A second written agreement, again authored by Mr. Cook, was entered into on November 9, 2016 (#233) which exceeded three pages but included the following:
Pursuant to our conversation on September 28, 2016, we are pleased to offer consulting engineering services on Phase IV and V of your development at 3476 Wishart Drive, Colwood.
We are confident this will be a sufficient level of effort to achieve approvals from the municipality to confidently proceed with detailed design. We will assist with the Colwood approval process if you request us to do so, and shall utilize generally the JE Anderson concept issued in 2014.
This is a fixed price contract and there will be no change to the scope of work or the price.
From our previous meetings and discussions, we have determined your remaining engineering work to entail the following:
1.VMP Sewer Extension
Deliverable: Provide detailed design of the VMP sewer extension per the Sept 7 2016 agreement as follows:
. . .
2.Commercial Subdivision – East Side of VMP
(a) Deliverable: Provide 50% Architectural siting, form and character details on four commercial / residential ‘mixed use’ structures including and limited to:
. . .
3.Residential Subdivision – West Side of VMP
. . .
The scopes of work 1-4 above specifically excludes the following:
a) Any survey work
b) Any compaction testing
c) Any construction management, supervision or contract administration
d) Any geotechnical, structural, detailed architectural, mechanical or electrical design or engineering
e) Any storm water modelling
f) Any archaeological, environmental or First Nations impact studies
The agreed price for this week is as follows:
The document continued and listed the agreed prices for the listed areas of work referred to above which totalled $140,000.
[42] Essentially the document called for the preparation of design drawings for the phases of the work described in the agreement, specifically excluding construction management and other necessary areas of work which, according to Mr. Cook, would be included in the proposed “umbrella” or “full meal deal” contract.
[43] Melissa Trost testified that she participated in a telephone discussion by speaker phone with Mr. Saroya in which she became aware of an agreement in principle for Pure to perform the remainder of the detail design and engineering work for the rest of the project in addition to the work called for in the agreement of November 9, 2016. She stated “we were to give the concept level design for the remainder of the design and to get the detail design for the rest” and also arranged for a geotechnical report to be prepared.
[44] As the November 9, 2016 agreement included and repeated the scope of work for the VMP Sewer Extension which was the scope of work in the September 16, 2016 agreement, the only written agreement of relevance after November 9, 2016 was the agreement of that date.
[45] Although Pure had been provided with only some of the preliminary drawings prepared by their predecessor, BC Alta never did provide Pure with a geotechnical report for the property nor the detailed drawings prepared by the previous engineering firm. The result, based upon the testimony of Ms. Trost, was that Pure was required to start “from scratch” and eventually commissioned a geotechnical report.
[46] In December 2016, BC Alta made a payment of $10,000 to Pure which was accepted as a payment on account. That was the only payment Pure would receive for their work on this project.
[47] Document #242 is a lengthy exchange of text messages between Mr. Cook and Mr. Saroya which disclose to Mr. Saroya the extent to which Mr. Cook and his personnel were working on his project. Included in those hundreds of text messages were:
Nov. 10/2016
p.8/29 – Saroya – Sorry boss I fucked up. Lawyer have some problem he was not in the office . . . I will get it done Monday.
Nov. 12/2016
Cook - If we’re only waiting for a contract I’m happy enough to start.
Saroya – OK let he do it
Nov. 15/2016
Cook – Have you made any progress on the contract? We’ve started. I need some survey along the VMP sewer alignment. Can I get Gwynn to do it?
These together suggest that Mr. Cook was awaiting a form of “umbrella” or “full meal deal” contract and it was known that he was retaining a surveyor to continue with work.
Dec. 20/2016
Mr. Saroya – I got contract and cheques please let me know city waiting for what [we] need to give them.
. . .
Mr. Saroya – What time you want to see me I am going to have contract in 45 minutes.
This exchange also refers to a pending contact which, seeing the contract of November 9, 2016 was already in place, would most likely refer to the “umbrella” contract and the intention of Mr. Saroya to retain Pure as the consultant for the entire project.
Jan. 16/2017
Mr. Saroya – Boss, again please 5 or 6 story condo building please keep that in loop in case city says what’s going to happen with [phase] 2 I got to build it anyway.
. . . .
Mr. Cook – No worries man, you will have a stack of drawings in a week or so. I’m trying to meet with Colwood this week, have you heard anything about it?
These messages indicate knowledge that Pure was proceeding with architectural drawings with the architect retained by it who had met with Mr. Saroya.
Jan. 28/2017
Mr. Cook – We did geotechnical investigation yesterday, civil drawings for all 3 areas will be issued IFC around the end of February.
Jan. 29/2017
Mr. Saroya – No can you see me in the morning please before we go to city.
Mr. Cook – Of course
Feb. 1, 2017
Mr. Cook – Pari, I’ve had 4 people working on your project for 45 days straight, including through my Christmas holiday. VMP is done, and the other 2 phases are 30% complete – you’ve seen the drawings. I have employees to pay and the work claimed is actually done. If you have questions about that, I’ more than happy to sit down and discuss it. I’m not billing for any of my time with Colwood trying to get your planning approvals. Any other engineer would be trying to charge that time. I invoice once a month for what work is actually complete, that is standard business practice. I’ve spent over $30,000 completing your 30% drawings and that is not including my time or Melissa’s time. Area 1 and 2 will be issued IFC by the end of the month per our contract agreement. I think you’re underestimating how much has actually been done. I’m happy to discuss is but disappointed you feel I’m billing you for work that was not done.
[48] Regarding the foregoing statements by Mr. Cook that Pure was not charging BC Alta for his time and the time of Ms. Trost for working on BC Alta’s behalf in trying to obtain planning approvals, in his testimony he stated that he was willing to waive payment for that work on the understanding Pure would be able to complete the “umbrella” contract which would have provided substantial fees and that Pure was looking to the project to assist it in establishing a successful reputation in the Victoria construction market.
[49] On January 31, 2017, Pure issued an invoice (#256) to BC Alta claiming payment of $50,450 plus GST of $3,033.50 for a total of $53,472 describing the work claimed as:
Lump Sum contract completion claimed per Attached SOQ – Period of Dec 2016 – Jan 3, 2-17.
[50] A second invoice was issued March 1, 2017 claiming “Lump Sum Contract Completion per Attached SOQ” and was in an amount of $84,850 plus GST and a late fee for a total of $90,161.94.
[51] Each of the above invoices refer to items of work in the November 9, 2016 contract for which specific amounts were assigned for the completion of specific work including detailed design of the VMP sewer extension, drawings to certain percentages of completion for all of the described work and providing drawings to the City of Colwood for detailed review and comment.
[52] Pure employees and consultants continued to prepare plans anticipating work commencing in the field early in 2017.
[53] On February 1, 2017, Mr. Cook met with Mr. van der Kamp during which he was informed of the previous transgressions of BC Alta in connection with the development. Mr. Cook sent an email message to Mr. van der Kamp later on February 1, 2017 in which he continued to pursue relief from Colwood, which from the email indicates Mr. Cook had been informing and been instructed by Mr. Saroya to continue his dealings with Colwood. The email message of February 1, 2017 to Mr. van der Kamp included the following statements of Mr. Cook:
Thanks for your patience with my client this morning – I met councillor Logan yesterday who has filled me in on some of the issues with Phase I and II and it is apparent to me that Colwood has been very patient and more than accommodating on this development. It’s pretty clear to me that most of the patience has been from you and your department.
Please – no rush on formal response to my request. The condition in issue (and reluctance of staff to support a variance) is completely understandable.
I believe it would be helpful for Colwood if we can get the other phases designed and ‘permit ready’ so that when my client is allowed to proceed, the major planning and engineering hurdles have already been dealt with and you guys only need worry with the construction.
. . . .
Similarly, I’d like some input on our concept Architectural so that I can start on detailed design – particularly important for us if construction is stalled for permit constraints.
I have authorization to meet without the owner present, and that’s what I prefer at this point – nothing formal or on record or anything to do with Phase 1 or 2.
[Emphasis added]
[54] From the email of February 1, 2017 including the underlined portion above, the many text messages exchanged between Mr. Cook and Mr. Saroya (#242) and the meetings referred to in that correspondence it is very clear that Mr. Cook had been informing his client, Mr. Saroya, of the efforts Mr. Cook was making in order for the development to proceed, that he had instructions from Mr. Saroya to so proceed, informed Mr. Saroya of the extent of progress with the drawings and that Mr. Cook’s activities in that respect were not limited to the scope of work included in the agreement of November 9, 2016.
[55] Failing any agreement being reached with the Colwood staff, Mr. Cook continued to pursue an exemption through Mr. Logan, the city councillor. The efforts included a detailed four page email dated February 2, 2017 to Mr. Logan setting out a compromise solution of the dispute between Colwood and BC Alta and stated: (#202)
So, with the above in mind, I have been working to formulate a possible solution from a ‘Colwood perspective’ that my client would be willing to live with. I have discussed this at length with my client, and he is agreeable in principle to the following should Colwood be willing to vary terms of the original DP [ie. Development Permit]
Mr. Cook proceeded to detail terms upon which he was hopeful work could re-commence in lieu of the 50% condition keeping Colwood’s concerns and emphasizing the benefits of the project proceeding which included Colwood’s agreement to allow the VMP work to proceed on site. Considerable effort was made by Mr. Cook to put forward a proposal which could be accepted by Colwood and which was necessary due to the earlier breaches of the by-law by BC Alta.
[56] The application for an exemption or variance from the 50% condition was rejected by Colwood as communicated in a letter from Mr. van der Kamp to Pure on February 8, 2017 (#205) which included the following statement:
Thank you for your letter dated November 21, 2016 in regards to the development at 3476 Wishart Road. In your letter you request that the City of Colwood consider relief from the 50% construction performance condition and permit approval to proceed with clearing, stripping and grubbing on Areas 1 and 2 as soon as possible.
. . . .
A development variance permit application (DVP-15-007) was made in 2015, along with the request to get relief from the aforementioned condition of the development agreement. This request was denied by Council on July 13, 2015. Therefore, I cannot support your request to get relief from the ‘50% construction performance’ condition at this time.
You may submit your request to Council, however, please note that staff will recommend that the request be denied.
[57] In 2015, BC Alta obtained a development permit from the City of Colwood which contained the 50% condition, the text of which was as follows:
14. Site clearing including the cutting of trees and / or blasting for a phase shall only commence once construction is 50% complete (minimum 50% of dwelling units or developable commercial floor space constructed) in the previous phase as shown in the attached Phasing Schedule to the satisfaction of the Director of Planning.
15. Council approval is required to clear land in additional phases if construction is not 50% complete in previous phases.
[58] The purpose of the 50% condition was explained at trial by Gordon Logan, who is a councillor for the City and had been a councillor for approximately nineteen years.
[59] Mr. Logan testified that the project in question “came on the heels of” a phased project with which council was not pleased due to the project having been clear cut and left for several years. When an application for a development project was submitted for the Wishart project, council decided to implement what became the 50% condition, hoping to avoid problems of the past when incomplete work remained in that state for an extended period of time. Mr. Logan continued and testified when referencing the Wishart project that “before 50% of phase 1 was complete, workers had started blasting on phase 2 and removing soil from excavations which were placed on phase 3 (parkland) contrary to the city’s requirements”, i.e., the 50% condition. He testified that the violation had come before council which resulted in “in camera” hearings and litigation between the City and BC Alta following a report of December 2015. Council resolved it was in the city’s best interests to allow phase 2 works to continue, i.e., site services, and the City required an arborist report regarding trees impacted by dumping. He stated council was irritated but allowed some of the servicing work to be completed. Mr. Logan testified that Phase 1 was substantially built out, planning was underway for phase 2 and that there was friction between the City staff and Mr. Saroya as a result of the unauthorized work.
[60] The evidence of Mr. Logan was relevant in that Mr. Cook, upon Pure beginning work on the project, was not made aware of the history of the project which resulted in the friction referenced by Mr. Logan which included a period of litigation resulting from breaches of the 50% condition by BC Alta.
[61] Also, the position of the City of Colwood was that 50% of a phase had to be complete before work could start on the next phase and that Colwood would not review design drawings for the subsequent phase until the preceding phase was 50% complete.
[62] In his testimony, Mr. Saroya stated that one of the reasons he retained Pure was that he was told that Ms. Trost had a special relationship with the City of Colwood and would be able to obtain a waiver of the 50% condition from the City. Both Mr. Cook and Ms. Trost deny such a statement, however, admit Mr. Saroya was told that Ms. Trost had a good relationship with the planning department at the City. The suggestion by Mr. Saroya that Ms. Trost could effectively guarantee a waiver or exception to the 50% condition likely is incorrect, especially since Mr. Cook and Ms. Trost were not aware of the dispute which had been ongoing between BC Alta and Colwood until late 2016 or early 2017 when advised of the dispute including litigation by Mr. van der Kamp of Colwood. For Mr. Saroya to suggest that Ms. Trost or Mr. Cook were responsible to obtain an exemption from the 50% condition is not credible in the circumstances.
[63] The Court also accepts that neither Mr. Cook nor Ms. Trost represented to Mr. Saroya that either of them was a professional engineer.
[64] Being made aware by Mr. Saroya that work on phases 1 and 2 was not proceeding due to phase 1 not being 50% complete, on the instructions of Mr. Saroya, Pure wrote to the City of Colwood on November 21, 2016 (#98) seeking a release or variance of the 50% condition. That request followed a meeting between Mr. Cook and Mr. Ivo van der Kamp of the City and indicated to Mr. van der Kamp that designs packages for phases 1 and 2 were underway. The letter of November 21, 2016 stated, inter alia:
. . . .
To summarize our discussion, Mr. Saroya has indicated that he wishes to ‘fast track’ and re-sequence the design and construction of the remaining development. Specifically, Mr. Saroya wishes to design and construct Areas 1 and 2 in the 2017 construction season. You advised that this would require the ‘buy in’ of several others, and suggested a written document would be appropriate to facilitate the conversation.
On behalf of Mr. Saroya, we would respectively request that Colwood consider a release or variance on the ‘50% construction performance’ condition and permit approval to proceed with clearing, stripping and grubbing on Areas 1 and 2 as soon as possible. As discussed, we understand that actual construction would not be permitted until design for both phase is complete and approved by Colwood.
For it to be practicable to complete design and construction of Areas 1 and 2 in the 2017 season, it is imperative that tree removal, stripping and grubbing are completed prior to avian nesting activity in the spring and that geotechnical conditions, / rock horizons become known as soon as possible. Similarly, the hydrology and storm water management for these two phases ought to be considered as a single phase and the transportation design and development access to VMP would be best addressed as a whole.
Design on these phases has commenced and we expect to have a 30% package to Colwood mid-late January. We are more than willing to make representations to Colwood council if necessary in the furtherance of this request.
[65] Also during June of 2016, Mr. Cook had retained a registered civil engineer who was licensed in British Columbia and several other provinces, Mr. Prasanna Mohan. Mr. Mohan had worked previously with Mr. Cook and Ms. Trost in Alberta. Mr. Mohan also testified for Pure and described Mr. Cook as his “eyes and ears on the site, Mr. Cook makes sure my drawings are correct but I take responsibility as a professional engineer”.
[66] Mr. Mohan testified as to the work he performed which included a detailed review of the previous engineer who had been employed by BC Alta. From the correspondence between Mr. Cook and Mr. Mohan entered at trial and the testimony of both and Ms. Trost, it is apparent that there were extensive communications and meetings between them and the City of Colwood regarding design issues which had to be resolved to be able to move the project forward and that Mr. Saroya was aware of the involvement of Mr. Mohan through advice from Mr. Cook. Mr. Mohan’s work included revisions to the VMP traffic circle and related work. He testified as to his understanding that in order to achieve completion of all phases of the project it would require approximately three years of work and expected to receive all of the engineering work in his discipline once having proven to be capable.
[67] Mr. Mohan testified as to the design work which he had completed as was contemplated in the November 9, 2016 agreement between Pure and BC Alta, that he did not receive any geotechnical reports for the project and did not know why he had not received any such reports, which are common and often necessary.
[68] Regarding the extent of his work completed as described on the November 9, 2016 agreement so far as he was aware as others were also working on the project, he testified:
a) All of the VMP Sewer Extension work was done save sub-items e) through h) as there was no work done on site regarding this part of the project.
b) Commercial subdivision, item a) was complete, items b) and c) were not completed however, he had reached 60% completion of the work which was not submitted to the City as he was told to stop as they were not getting paid.
c) Residential Subdivision, item a) was complete, item b) was 60% complete but not submitted due to being told to stop work.
[69] Regarding the requirement for certification of drawings and specifications by a professional engineer, he testified that the requirements in British Columbia is that a company must have a designated professional engineer registered with the Association of Professional Engineers and Geoscientists of British Columbia who would be required to seal all drawings. He testified that he was the person designated by Pure whose responsibility it was to seal the drawings and accept responsibility for the same. He became what was referred to as the coordinating professional engineer.
[70] Mr. van der Kamp testified for the plaintiff and stated that there had been a previous application by BC Alta for a waiver of the 50% condition which had been denied. Mr. van der Kamp also testified that a decision was made by Colwood not to agree to the request for a variance to City Council as the previous application had been rejected less than one year before the November 21, 2016 request. He added that the planning department at Colwood was taking a hard line with the developer due to the history of infractions by the developer, i.e., BC Alta, on this project.
[71] Mr. van der Kamp described how, prior to the involvement of Pure, BC Alta had performed work on Phase 2, the townhouse area, which was outside the boundaries of the permit which had been issued to that date and contrary to the 50% condition, which had also been referred to by Mr. Logan in his testimony. Clearing and site servicing had been installed in contravention of the development permit. Also, BC Alta had wanted, among other things, to move the boundary of proposed parkland after they had deposited some waste and clearing in the area of the park. Phase 1 had not been completed by the time the above work was performed.
[72] Melissa Trost was questioned at length in direct and cross-examination as to the work that Pure completed under the November 9, 2016 agreement. The Court found Ms. Trost’s testimony to be credible as she was prepared to make admissions when necessary, clearly had a good memory of the events and gave clear and concise answers consistent with the documents. Regarding her evidence on the work performed under the agreement, I summarize the same as follows:
· The phase III siting, mistakenly referred to as phase V siting, was completed and the contract amount payable to Pure was $10,000.
· VMP Sewer Extension – Ms. Trost testified that Mr. Knutson of Colwood asked Pure to include access in the design to parcels of land on either end of the VMP in addition to the work described in the agreement. She added that items a) through d) inclusive were completed, i.e., detailed design, changes made as requested verbally by Colwood on review and IFC drawings prepared for Colwood, however, not reviewed due to Colwood’s refusal to review the drawings at that point due to the dispute with BC Alta over the 50% clause and due to the development permit at that time not being finalized. When asked what portion of the work under this heading was completed, she estimated 95% of the contract price of $18,000 or $16,200.
· Commercial Subdivision – East side of the VMP
a) All of this item valued at $12,500 was completed according to Ms. Trost which included a review after receiving verbal comments from Colwood.
b) Regarding the 90% architectural siting, form and character details on four mixed use buildings, Ms. Trost testified “we were not able to do that as we did not receive comments back from Colwood to advance the drawings beyond the 50% stage” and previously they had agreed to review that work but due to a change in policy the staff would not review the work. The policy was related to the 50% condition.
c) Regarding item c) under this heading, i.e., completion of the 100% architectural siting, form and character details, Ms. Trost testified as Colwood would not review the 50% drawings they never did get to this stage.
d) Regarding item d), the same considerations applied as described above, i.e., Colwood would not review so they never attained this stage.
· Residential Subdivision – West Side of VMP
a) a) and b) provide 10% architectural siting, form and character details on 22 townhouses, all drawings were done and submitted to Colwood for review. The value of that work under the contract which was completed was $10,000, however, Ms. Trost testified to the effect it was not common to submit 10% drawings which would be very basic and not of use to the owner and so would have completed drawings to a level of 50% which were the subject of para. 3(b) and at 50% the contract value was $15,500. In effect, as the Court understands the evidence of Ms. Trost, the work required under both a) and b) was done, the total value of which would be $25,500 and required two weeks work for her and staff.
b) Regarding c) and d), this work could not be completed since Colwood would not review drawings beyond 50%.
[73] Ms. Trost was asked about work which was performed but was specifically excluded from the contract price on p. 3 of the agreement. She testified as to the necessity of a geotechnical report which was ordered by the owner, work performed to survey, perform storm water modelling and related work, much of which was completed by Mr. Mohan. Mr. Mohan was being paid by Pure and at times was working full time on the project including the work originally excluded from the contract. This work was required and Mr. Saroya was made aware of the work of Mr. Mohan and others to allow the project to move forward in the future.
[74] The total value of work items in the November 9, 2016 contract to which Ms. Trost has testified as having been complete total $74,200.
[75] In addition to Ms. Trost, the only other witnesses who testified regarding the work performed under the various “deliverables” included in the November 9, 2016 agreement were Mr. Cook and Mr. Mohan.
[76] During submissions, Mr. Velletta provided a table referencing the various headings in the November 9, 2016 contract, the value of each deliverable, whether on the evidence he summarized the work was billable (i.e., completed), and comments including whether the listed work was performed. His summary, based upon the evidence, which reflects the defendant’s position, was that the contract value of work performed and delivered was $31,650 plus 5% GST for a total of $33,232.50, which included expenditures made for the architect of $950, one-half of the geotechnical report ordered by Pure amounting to $4,000 and $4,000 for architectural concept drawings and renderings prepared by the architect. That position taken by the defendant was subject to the plaintiff being able to succeed on the issue of compliance with the Engineers and Geoscientists Act.
[77] The submission by the defendant referred to above did not include areas in which the Pure witnesses testified to work having been done but not submitted or not complete for various reasons, principally that the City of Colwood was declining to review submissions due to the conflict with BC Alta relating to the 50% condition.
[78] Pure continued to work on the project through to early May 2017 when they received a letter on May 3, 2017 from the solicitor for BC Alta in which the solicitor stated:
Mr. Saroya is prepared to pay the invoices that include work that was completed up to and including the meetings held at the City of Colwood in January. He is not prepared to pay for any work done after that as he says that you were aware that he could not move forward with the projects until 50% of the units in Phases 1 and 2 were sold; therefore, the work you conducted after the meetings at the City of Colwood were done without his authorization. Moreover, Mr. Saroya maintains much of what you did after the meetings with Colwood staff in January is not in accordance with the terms of the contract.
[79] The effect of that letter is to the effect that work done by Pure up to the time of the meetings in January 2017 as “you”, i.e., Pure, “were aware he could not move forward with the projects . . .”. That statement presumes the owner was prepared to pay for work done up to the meetings with Colwood and also of great significance is that at no time on the evidence did Mr. Saroya or anyone on his behalf order Pure to stop work on the project. A statement in the letter from defendant’s counsel after the fact that BC Alta would only pay for work done up to a previous date would only be effective if there had been some agreement to stop work by that date or the plaintiff had been directed to stop work, neither of which events occurred.
[80] Pure’s principals represented it at trial. They adduced evidence and argument about how Pure could not deliver its contractual obligations due to an unforeseen event that substantially altered its ability to perform, i.e., the 50% condition. While they did not use the legal terminology, they are effectively arguing the contract has been frustrated. In British Columbia, restitution for part performance of frustrated contracts is governed by the Frustrated Contract Act, R.S.B.C. 1996, c. 166 [FCA].
[81] Contracts are frustrated when a supervening event occurs that radically changes the nature of the parties’ contractual obligations. Supervening events that suffice to frustrate a contract are those not contemplated nor provided for in the contract, not the fault of the parties, not self-induced, and not foreseeable: KBK No. 138 Ventures Ltd. v. Canada Safeway Ltd., 2000 BCCA 295 at paras. 13-14.
[82] If frustration is established and the contract provides no guidance on what to do in the event of frustration, the FCA may apply: FCA, ss. 1(1)(a), 2. The FCA does not apply if the course of dealing between the parties, business custom, or express or implied terms suggest the risk of loss has been allocated between the parties: FCA, s. 6(1).
[83] If applicable, the FCA has the effect of severing the contract into two: those parts that have been frustrated and now impose radically different obligations on the parties, and those parts that were wholly performed before the contract was frustrated or for which proper payment can be ascertained under the contract: FCA, s. 4. The latter parts are treated as though the contract did not suffer frustration: FCA, s. 4. The parties are relieved from their now-frustrated obligations under the former parts: FCA, s. 5(3).
[84] Every party to a contract to which the FCA applies is entitled to restitution from the other contracting party for benefits created by the party’s performance or part performance of the contract: FCA, s. 5(2). “Benefits” are something done in the fulfillment of contractual obligations, whether or not the person for whose benefit it was done received the benefit: FCA, s. 5(1). If the party required to make restitution in respect of full or part performance suffered loss to the value of benefit received under the contract, the value of that loss is split equally between the parties: FCA, s. 5(4). When calculating restitution for full or part performance, insofar as the claim is based on expenses incurred performing the contract, only reasonable expenditures are recoverable: FCA, s. 7(1).
[85] In his direct testimony, Mr. Saroya stated that the City of Colwood refused to relax the 50% condition and that he put the onus on Pure to have the condition removed so work could proceed. None of the correspondence or agreements include a statement to the effect that removal of the 50% condition was a burden which Pure had to bear. The fact that no mention of the need to remove the 50% condition before work on site could proceed supports the evidence of Mr. Cook and Ms. Trost to the effect that the condition and the outstanding dispute with Colwood was not made known to them when they agreed to work on the project. Mr. Saroya also testified that if the 50% condition was significant to BC Alta and Mr. Saroya and a hurdle to proceeding with the project, then it would be expected he would include a reference to that condition in the contract or contracts which Pure wished to undertake.
[86] From a review of all of the evidence including that of representatives of Pure, Mr. Mohan and the City of Colwood and the documents entered at trial including multiple drawings, renderings, correspondence and other documents, Pure was working diligently to prepare drawings for the project when work could proceed and for approval by Colwood. Based upon the same evidence, Mr. Saroya and his associate, Mr. Bains, were fully aware of the work which was being carried out by Pure. Mr. Saroya admitted that Mr. Cook had a “whole team working for him”. Mr. Saroya referred to the necessity for Pure to compete each of the “deliverables” listed in the contract before payment for any of the same would come due to Pure.
[87] Mr. Saroya was aware that Colwood would not review or approve drawings until Phase 1 was 50% complete due to the dispute including litigation between BC Alta and Colwood. The result was that until BC Alta complied with the 50% condition and Colwood reviewed and approved the drawings, he had no intention of making payment to Pure. Mr. Saroya stood idly by allowing Pure to attempt to move forward with the project knowing he had no intention of making payment.
[88] Mr. Saroya also testified that he had never seen any drawings from Pure but on his examination for discovery. He said Pure “didn’t deliver anything”, “that there was nothing to be paid”. I do not accept his evidence on this point.
[89] If Mr. Saroya was concerned that there was no production and no work emanating from Pure since they had started to contribute to the project commencing in June 2016, if Mr. Saroya was concerned that Pure was not able to get a relaxation of the 50% condition and he testified was their obligation, then it would have been expected that he would have told Mr. Cook and Pure to stop work. Not once did Mr. Saroya take steps to order Pure to stop work.
[90] Mr. Saroya did not pay Pure for their work.
[91] Mr. Saroya testified that he had never seen the second Pure invoice issued March 1, 2017 in an amount of $90,161, however, his solicitor, Mr. Emberton, in advising what BC Alta would pay, referred to invoices in the plural. As only two invoices were issued, it is apparent that Mr. Saroya had seen both invoices or Mr. Emberton would not have referred to the same.
[92] He also testified that he had wanted to do all buildings in the project at once, and that it was a tight or difficult site to work on and that compliance with the 50% condition was difficult due to the site conditions. He also agreed that Colwood would not relax the 50% condition.
[93] Mr. Saroya also testified that although not a part of the contract, Pure was obligated as a condition of the November 9, 2016 contract to obtain relief for BC Alta from the 50% condition.
[94] Considering all of the evidence as to the work performed under the November 9, 2016 agreement which was limited primarily due to the limitations arising from compliance with the 50% condition, the submissions of the defendant to the effect that $31,650 plus GST of 5% or $33,232.50 is likely the best estimate and I accept that amount and grant judgment in that amount to Pure. I accept there was substantial other work performed by Pure but many of the contract deliverables or milestones were not met due to reasons beyond the control of Pure. The additional work performed by Pure could only be compensated on a finding of quantum meruit which is discussed below.
[95] Previously in these reasons, reference was made to the submission of Pure that there was an “umbrella” contract, also referred to in correspondence as the “full meal deal”.
[96] The documents, including the text messages and email messages between Mr. Cook and Mr. Saroya, make clear that there were discussions between them in which Pure was seeking to obtain an agreement for the entire Wishart project and not just the scope of work included in the November 9, 2016 contract.
[97] After a review of those documents and the testimony of both Mr. Cook and Mr. Saroya, the Court is satisfied on a balance of probabilities that no agreement was ever concluded. Mr. Cook did make clear to Mr. Saroya that Pure was pursuing a consulting contract for the entire project, however, Mr. Saroya, having referenced the possibility of Pure being given overall responsibility for the project, typically delayed and avoided continued discussion, likely because he was aware that there were considerable hurdles to overcome with the City of Colwood before the project could proceed.
[98] An agreement in principle or hope alone is not a valid and subsisting contract. Where agreements are silent on the essential terms, there can be no contract.
[99] Mr. Saroya encouraged Pure to continue working, however, he never did commit to a further contract and never did indicate to Mr. Cook that he would commit to an overall, or “umbrella” contract with Pure.
[100] Having found that an “umbrella” contract was never agreed to between the parties, is the plaintiff entitled to remuneration on a claim for quantum meruit which was alleged as a basis of claim in the notice of civil claim?
[101] Restitutionary quantum meruit is a monetary remedy for unjust enrichment. This equitable remedy is appropriate where there is no “explicit mutual agreement to compensate for services rendered” but “the services in question were furnished at the request, or with the encouragement or acquiescence, of the opposing party in circumstances that render it unjust for the opposing party to retain the benefit conferred by the provision of the services”: Jassar v. Kim, 2009 BCSC 782 at para. 23, citing Consulate Ventures Inc. v. Amico Contracting & Engineering (1992) Inc., 2007 ONCA 324 at para. 99; see also Nygard v. Continental Steel Ltd., 2018 BCSC 541 at para. 80 [Nygard].
[102] The oft-cited passage from Infinity Steel Inc. v. B&C Steel Erectors Inc., 2011 BCCA 215 [Infinity Steel] remains instructive and is analogous to the present case. The Court of Appeal referred to the trial judge having decided the parties had not reached an enforceable contract writing:
[12] My reading of the reasons as a whole persuades me the trial judge was considering the counterclaim as it was pleaded, a claim for a monetary award as a remedy for unjust enrichment. Nowhere in his reasons is there a reference to an implied term for reasonable payment arising from a contractual relationship between the parties. That is not surprising, given the evidence that each party believed it had made a complete and enforceable agreement. It would be difficult, if not impossible, for any court to imply an agreement for reasonable payment terms into the contract when both were seeming to enforce a contract that included payment terms. And if he had been able to do so, the trial judge would be granting a contractual remedy and would not have dismissed the breach of contract claims. A recent decision not available to the trial judge nor to counsel when they prepared their factums for the appeal helpfully clarifies this point: CH2M Hill Energy Canada, Ltd. v. Consumers’ Co-operative Refineries Ltd. 2010 SKCA at paras. 23 to 27:
[23] The appellant’s argument on appeal is based primarily on the following passage from G.H.L. Fridman, The Law of Contract 4th ed. (Ontario: Carswell, 1999) at pp. 12-13. Fridman confirmed that, while a contract stems from an agreement between the parties, restitution operates in the absence of a contract based on the doctrine of unjust enrichment. He continued:
A complication or confusion arises from the fact that there is a contractual quantum meruit as well as a restitutionary quantum meruit. In some circumstances, where, for example, there is a contract between the parties but they have not agreed upon a price for goods or services to be delivered or rendered by one party to the other, the court must award money to the unpaid party on the basis of a reasonable amount for the goods and services. This is a liability that arises from a truly contractual relationship, and the situation between the parties is founded upon the concept of contract as it has been expounded earlier. Where no contract exists between the parties, or such contract as there is cannot be recognized or enforced, for example, because it does not comply with the provisions of the Statute of Frauds, the courts have allowed the deserving party to recover something on a quantum basis, which is not the same as what might have been recovered had there been a valid, enforceable contract upon which the successful party could have sued. The distinction between these cases, as between contract and quasi-contract, lies in the idea that there has to be an agreement, between the parties, and such agreement must be in the form of an enforceable contract, to which the law will give effect.
[Emphasis added]
. . .
[19] If it was not well-settled when the trial judge rendered his decision in July 2009, it is now firmly established that a claim alleging unjust retention of a benefit conferred in an ineffective transaction is a discrete category of the doctrine of unjust enrichment, which may attract a personal monetary remedy (Kerr v. Beranow, 2011 SCC 10 at para. 31) and that remedy must match, as best it can, the extent of the enrichment unjustly retained by the defendant (at para. 73).
[103] In order to access the remedy, the plaintiff must show the defendant’s unjust enrichment. Unjust enrichment has three requirements: Kerr v. Baranow, 2011 SCC 10 at para. 32 [Kerr]:
(1) An enrichment of the defendant;
(2) A corresponding deprivation of the plaintiff; and
(3) An absence of the juristic reason for the enrichment.
[104] The first two considerations involve a “straightforward economic approach – enrichment and corresponding deprivation”: Kerr at para. 37. The Court requires some evidence as to the value of the services provided to determine if enrichment has taken place: Han v. Yan, 2018 BCSC 1450 at para. 119 [Han].
[105] The third consideration is the absence of any juristic reason for the enrichment: Kerr at para. 40. The plaintiff must show absence of a juristic reason, which include contracts, disposition by law, donative intent, and other valid common law, equitable or statutory obligations. If none are present, the defendant may rebut the plaintiff’s prima facie case by showing another reason, including reasonable and legitimate expectations of the parties, to deny recovery: Kerr at paras. 41-44.
[106] If successful in showing the defendant would be unjustly enriched by the plaintiff’s work and the circumstances justify the equitable remedy of restitutionary quantum meruit, the Court has wide discretion “deal with different circumstances according to principles rooted in fairness and good conscience”: Infinity Steel at para. 20, quoting Pacific National Investments Ltd. v. Victoria (City), 2004 SCC 75 at para. 13.
[107] The Court’s award of restitutionary quantum meruit may be “assessed in various ways, including the cost to the claimant of providing the service, the market value of the benefit, or even the value placed on the benefit by the recipient”: Infinity Steel at paras. 20-22. The court in Infinity Steel wrote:
[21] From this recent judgment, I derive the lesson that a trial judge's first task after rejecting a contractual remedy and finding unjust enrichment is to determine what measure is appropriate to remedy the unjust enrichment in all the circumstances of the case. Judges have described the appropriate measure in many ways: "the amount [the claimant] deserves" or "what the job is worth" (Ketza Construction Corp. v. Mickey, 2000 YTCA 4 (Y.T. C.A.) at para. 13); "the value of the benefit obtained by the defendant" or "the reasonable market value of the services" (Bond Development Corp. v. Esquimalt (Township), 2006 BCCA 248 (B.C. C.A.) at paras. 22 and 37); the "fair value of the services rendered" (Deglman v. Guaranty Trust Co. of Canada, [1954] S.C.R. 725 (S.C.C.) at 735; Consulate Ventures Inc. v. Amico Contracting & Engineering (1992) Inc., 2007 ONCA 324 (Ont. C.A.) at para. 105); "the value of his services to the defendants" (Palethorpe v. Bogner, [1995] B.C.J. No. 2311 (B.C. C.A.) at para. 23). Recently, in Aerovac Systems Ltd. v. Darwin Construction (Western) Ltd., 2010 BCSC 654 (B.C. S.C.), Savage J. came to this conclusion at para. 49:
[49] In my view these authorities support the view that the court has a broad discretion in determining the appropriate method to apply in calculating a quantum meruit claim. Estimates, reasonable costs and expenses, quoted rates, abortive negotiations on price, and expert opinions are all methods which a court can utilize in determining a fair value for the services rendered. This is not a closed list. The appropriate method or methods to use in any individual case will depend on the evidence before the court.
[22] I respectfully agree. As I understand the authorities cited to this Court, in the light of Kerr, the appropriate measure for restitutionary quantum meruit is to be selected to meet the circumstances of the particular case. Important factors will include but not be limited to, the course of dealings between the parties, any estimates obtained, the costs incurred, the scope of work, the actual work done, the market value of the services provided.
[108] Justice Thompson recently cited the approach for valuing services compensated by restitutionary quantum meruit: Nygard at paras. 82-83. He cited the aforementioned authorities and identified the relevant factors in the case before him as being: “(a) the nature and extent of the services; (b) their reasonable market value; (c) [the plaintiff’s] special expertise and personal connections; (d) the negotiations between the parties; and (e) any other facts bearing on the benefit of the services to the defendants.”: Nygard at paras. 83-97.
[109] Also recently, Justice Skolrood in Han cited Justice Hinkson (as he was then) in Craigdarloch Holdings Ltd. v. Syscon Justice Systems Canada Ltd., 2010 BCSC 1186 [Craigdarloch]. In Craigdarloch, the court delineated an approach for valuing restitutionary quantum meruit claims:
[174] The plaintiff rendered valuable services to Floyd Sully and 0787223 B.C. Ltd. that were rendered at the request of and accepted by Floyd Sully both personally and on behalf of his company. Floyd Sully was clearly aware that the plaintiff expected to be paid for those services, and that Floyd Sully expected to have to pay for those services.
[175] In Malik, at paras. 44 - 46, Lowry J.A., for the Court held:
[44] The court may consider any applicable custom with respect to the value of the service. In the absence of such, the court may have regard for the bargaining between the parties, not to complete the bargain for them but as some indication of the value each placed on the service.
[45] There may, in any given instance, be other factors to be taken into account.
[46] The court must ultimately focus on the value of the service to the benefitting party rather than on the cost to the other party of providing the service. It is the value to the benefitting party at the time the fee is earned that is to be considered; later profits enjoyed or losses experienced are generally of no consequence.
[176] In Malik, the plaintiff identified nine factors that it argued should be considered in assessing the value of its fee based upon quantum meruit:
a. prior dealings of the parties and negotiations as to fees;
b. the expectations of the vendor and the value perceived by the vendor for the service;
c. the nature of the fee the parties could be said to have anticipated;
d. the value of the opportunity realized;
e. what was required to realize the business opportunity;
f. the market value of the service provided;
g. what amount the job “deserves”;
h. applicable “custom in the industry”; and
i. that the “value” must be assessed at the time the service was performed.
[177] While the approach in Malik is not the only way to assess a claim in quantum meruit, I consider that it is the appropriate approach to determine the plaintiff’s claim in this case.
[110] This analysis is relevant when determining if the defendant has been unjustly enriched by the plaintiff’s work: Han at paras. 118-119, and the value of the remedy of restitutionary quantum meruit awarded if unjust enrichment is ultimately established: Craigdarloch at para. 177.
[111] The plaintiff performed work in the expectation that the parties would be entering into an “umbrella” contract to cover the engineering and consultants’ work for the entire project. The plaintiff is not entitled to damages for lost revenue or profit as would be the relief under a contract. No contract exists.
[112] Restitutionary quantum meruit is available where there is no contract. The work at issue was contemplated and done in mutual anticipation of, but absence of, an explicit written agreement concerning the “full meal deal”. According to Mr. Saroya, they discussed it “from time to time”. Referencing subject matter captured under the “full meal deal”, Mr. Saroya repeatedly made requests, gave encouragement, and communicated acquiescence to the plaintiff’s work, e.g., electronic communications of November 10, 2016 and January 16, 2017. The equitable remedy of restitutionary quantum meruit is appropriate in the circumstances. The plaintiff may be entitled to the remedy if the defendant has been unjustly enriched.
[113] The defendant has been unjustly enriched by the plaintiff’s work on the Wishart project. The evidentiary record is silent on the precise cost of the services, but those services provided have objective value. The work included the studies, calculations and plans prepared by Mr. Mohan as described in his testimony, and the many hours undertaken by Ms. Trost and in particular Mr. Cook in negotiating with the City of Colwood in attempts to obtain a relaxation of the 50% condition – work which continued after the refusal of the City on February 8, 2017 to grant relief from the 50% condition. Even the work of Mr. Mohan continued in April of 2017. The plaintiff did not have any express or implied instruction to stop working up to this point. The defendant retained these benefits, pushing the project forward, as a result of Pure’s outlays of time and money. There is no juristic reason for the entitlement. The defendant has not shown there is any other reason for the enrichment.
[114] In the case at bar, the plaintiff performed considerable work which was not compensable under the November 9, 2016 contract but related to the “umbrella” discussions at a considerable cost to the plaintiff and benefit to the defendant. Having found the defendant has been unjustly enriched by the plaintiff’s labours, the remedy of quantum meruit is available.
[115] Despite their best efforts, the plaintiff’s principals did not provide complete records concerning the fair market value of services rendered in respect of the Wishart Project. In his testimony, Mr. Cook discussed the rates he expected to charge should Pure have been able to continue with the entire project which were based upon square foot rates for residential and commercial portions of the work, and rates per lot for single family homes and an anticipated mark-up. Those figures may have been helpful in quantifying a claim for damages but do not necessarily reflect the work Pure actually performed on a quantum meruit basis up to the time they terminated work for non-payment in May of 2017.
[116] There is more than one way to assess a claim in quantum meruit: Craigdarloch at para. 177. The Court has broad discretion to determine the appropriate method to apply when calculating quantum meruit: Aerovac Systems Ltd. v. Darwin Construction (Western) Ltd., 2010 BCSC 654 at para. 49. The appropriate method will depend on the case before the Court and the list of factors that may be considered is not closed: Infinity Steel at para. 22.
[117] Value to the defendant must be assessed at the time the service was performed: Craigdarloch at para. 176. Adopting a similar approach as taken in Nygard at paras. 82-97, the appropriate method in the current case is based on the evidence before the Court.
[118] In the absence of evidence regarding the applicable custom regarding the value of a service, the Court may consider the comparative bargaining power, level of sophistication, and course of dealings as between the parties: Malik (Estate of) v. State Petroleum Corporation, 2009 BCCA 505 at para. 44; Infinity Steel at para. 22; Nygard at para. 89. These parties are sophisticated, both having run successful projects in the past. Mr. Saroya was likely familiar with expenses incurred at various stages of the project and the value of the services BC Alta would obtain at what cost. Mr. Saroya had worked with engineers on the Wishart project before. Mr. Saroya encouraged Pure to continue to working. From this I infer that the costs of the actual work done and costs incurred by Pure align with the value Mr. Saroya anticipated would flow to BC Alta, indicating the extent of BC Alta’s benefit at the time the Pure provided services.
[119] As in Infinity Steel at para. 22 regarding the scope of the work, actual work done, and costs incurred, Mr. Cook, Ms. Trost and Mr. Mohan all testified to having performed considerable detailed design in anticipation that the project would ultimately proceed. The services include surveys, drawings, coordination, review of some of the drawings with Colwood where noted in the evidence, and more. Pure was required to “start from scratch” and incurred costs as required to safely and effectively meet Mr. Saroya’s requests, e.g., geotechnical report. Pure dedicated significant human resources to the Wishart project.
[120] The correspondence suggests the nature of the fee the parties could have anticipated: Craigdarloch at para. 176. There is a record of electronic correspondence, invoices sent by Pure, and Pure asking for approval to do, buy, hire, or commission as required to proceed through the project stages. Mr. Cook kept Mr. Saroya appraised. Mr. Cook kept Mr. Saroya informed about expenses that he could expect. In texts date-stamped January 28, 2017, Mr. Cook texted Mr. Saroya telling him that they had geotechnical investigations, and “civil drawings for all three areas would be issued IFC around the end of February”. On February 1, 2017, Mr. Cook lists work done and the costs so far (e.g., $30,000 spent completing the 30% drawings) giving Mr. Saroya a metric through which to anticipate the cost of similar work. The evidence shows a lengthy exchange of text messages whereby Mr. Cook disclosed to Mr. Saroya the extent to which Mr. Cook’s personnel were working on the project. Mr. Cook’s February 1, 2017 text message indicates 4 people working 45 days straight, including through Mr. Cook’s Christmas holiday. Mr. Saroya testified to that Mr. Cook had a “whole team working for him”. Mr. Cook gave evidence that he regularly invoiced Mr. Saroya which would have vested Mr. Saroya with ongoing knowledge of the fees Mr. Saroya could have expected.
[121] The nature of negotiations as to fees (Craigdarloch at para. 176; Nygard at para. 89) contemplated a lump sum award. In his cross-examination, Mr. Saroya said that from “time to time” the parties discussed the full meal deal and lump sum price, which he confirmed meant the entirety of the remaining project.
[122] The Court also considers special value to the benefitting party, BC Alta, based on the special expertise or personal connections of the deprived party, Pure: e.g. Nygard at para. 88. Mr. Saroya testified that one of the reasons he hired Pure was because he thought Ms. Trost had a special relationship with the City and could thereby secure BC Alta a waiver of the 50% condition. Mr. Saroya’s belief is useful in determining the value he anticipated to flow to him and the extent of his enrichment: Craigdarloch at para. 175.
[123] This question remains: What would be an appropriate and reasonable amount of the remedy for unjust enrichment? The Court of Appeal discussed that problem in Infinity Steel at paras. 20-22, concluding the court has a wide discretion, must meet the circumstances of the particular case and other factors delineated in para. 22. Unfortunately, details of the cost of the work performed and the market value of the same are not available. In this case the lack of disclosure on the part of the defendant which limited the progress of the work due to its relationship with the City of Colwood is a consideration.
[124] Previously in these reasons, I referred to the total cost of the work which was to be performed by Pure under the November 9, 2016 agreement as $140,000. Previously in these reasons, I have found Pure entitled to $31,650 plus GST totalling $33, 232.50 on a contractual basis.
[125] It is apparent from the evidence that Pure performed considerable work of potential value to BC Alta in addition to the items referenced in the November 9, 2016 agreement related to the Wishart project.
[126] Considering all of the evidence regarding the work performed by Pure, which included efforts to obtain relief from the 50% condition, drawings and other documents prepared but not reviewed by the City, estimating $20,000 as the cost of efforts to obtain relief from the 50% condition, and considering Pure incurred other costs for engineering, survey, arborists and environmental consultants, Pure’s total costs would approximate $100,000. Deducting the value of the contractual award would result in an award rounded to $65,000 in quantum meruit and I award that sum to Pure.
[127] The plaintiff is not entitled to a Builders’ Lien.
[128] In the decision of Stanley Paulus Architect Inc. v. Windhill Holdings Ltd. 2014 BCSC 1816 [Stanley Paulus Architect Inc.] I held that I was bound by the decision of Chaston Construction Corp. v. Henderson Land Holdings (Canada) Ltd., 2002 BCCA 357 [Chaston] in which the Court of Appeal decided that even with the amendments to the Builders’ Lien Act, S.B.C. 1997, c. 45, which came into force in 1997, architects and engineers are not able to prove a claim of lien in cases where they performed pre-construction work when the construction of the improvement never commences. At para. 58 of Stanley Paulus Architect Inc. I expressed agreement with the decision in Chaston, however, express concern that the result was not the intention of the legislature when drafting the amendments to the Builders’ Lien Act.
[129] The plaintiff is not entitled to a Builders’ Lien.
[130] For work contemplated and done under the November 9 2016 written agreement, the plaintiff is entitled to $33, 232.50. The plaintiff is entitled to interest as provided in the Court Order Interest Act, R.S.B.C. 1996, c. 79, on this amount.
[131] As a remedy for unjust enrichment for work concerning the “full meal deal”, the plaintiff is entitled to restitutionary quantum meruit of $65,000.
“Jenkins J.”