IN THE SUPREME COURT OF BRITISH COLUMBIA
|
Citation: |
Stevenson v. Katz, |
|
|
2008 BCSC 565 |
Date: 20080403
Docket: S070954
Registry: Vancouver
Between:
James
Stevenson and
J.D. Stevenson & Associates Ltd.
Plaintiffs
And:
Melvin
Katz, Triarc International, Inc., Suro Development Company and
Millennium Properties Ltd.
Defendants
Before: The Honourable Mr. Justice H.M. Groberman
Oral Reasons for Judgment
In Chambers
April 3, 2008
| Counsel for the Plaintiffs |
Frank R. Eadie |
|
| Counsel
for the Defendants Triarc International, Inc., Suro Development Company,
Millennium Properties Ltd. |
Andrew P. Prior |
|
|
Date and Place of Hearing: |
March 27 and 28, 2008 |
|
[1] THE COURT: On this summary trial application brought under Rule 18A, the individual plaintiff seeks compensation on a quantum meruit basis for services provided to the defendants in connection with the acquisition of a contract to develop a convention centre and related projects in Nanaimo. The parties are largely agreed on the underlying facts – in any event there are no factual disputes on essential aspects of this case. Both parties agree that the matter is amenable to determination under Rule 18A.
The Issues
[2] The parties are also, in most respects, in agreement as to the legal analysis that applies to the case. The defendants do not seriously contend that the plaintiff’s claim should fail, nor do they quarrel with the idea that the appropriate legal analysis of the claim is one of unjust enrichment. Both sides acknowledge that the appropriate remedy is one in quantum meruit. What divides the parties is their assessments of the value of the work performed by the plaintiff.
[3] The plaintiff says that his work should be valued as a percentage of anticipated profits or payments in respect of the development project. He claims entitlement to between $400,000 and $600,000. The defendants claim that the work is properly evaluated by comparison to what an employee or contractor would be paid for his or her labours in this case. They suggest that the work should be valued at between $40,000 and $65,000 depending on how the court treats the period from May 2004 through September 2004. The parties, then, are about an order of magnitude apart in terms of their assessment of the plaintiff’s entitlement.
The Plaintiff’s Work Up to May 2004
[4] Prior to November 2003, the City of Nanaimo became interested in developing a conference centre in its downtown area. By November of 2003, however, the proposal that it had been working on (which was at least the second such proposal) failed, and the City issued a media release seeking a new development partner. It provided some guidelines as to the nature of the project. The development was to be in a downtown location, with a water view and included a quality hotel. Two specific locations were under consideration. The conference centre itself was to be under City control and was to occupy approximately 40,000 square feet. The hotel was to have approximately 200 rooms. The City wanted the project to be “ready to go” by the spring of 2004 and to be complete by March 2006.
[5] Mr. Stevenson, who lived in Nanaimo, saw the media release. He thought Mr. Katz, for whom he had worked in the mid-1980s, might be interested. Mr. Katz lived in New York and his businesses, which included development of hotels, were centred there. On November 9, 2003 Mr. Stevenson sent Mr. Katz an e-mail in the following terms:
Dear
Mel,
Please review the attached info and see if you’re interested. I know the
City planner and can get you and/or your representative introduced to the
various players. The proposed budget is now 4.1 million (CDN funds). If
you can make a buck at it, great. It does not need to be contingent on my
involvement in any way. Let me know.
[6] I take the attachment that was included to be a copy of the media release. It appears that a map of Nanaimo and possibly a picture may also have been included. Mr. Katz responded by e-mail the next day saying:
[W]e would be interested but would require a local presence. If you have the time, we would work on it with you as our local representative. Let me know.
[7] Over the next few days Mr. Stevenson and Mr. Katz exchanged further information. Mr. Katz affirmed that he was interested in the development and Mr. Stevenson obtained further information from the City and passed it on to Mr. Katz. From this early stage, Mr. Katz identified Triarc International as the company through which he would work on the development, though he anticipated that it would create or acquire a single-purpose company for the project.
[8] Mr. Stevenson attended a meeting with City representatives in mid‑November, at which time he received more specific information as to what the City was looking for and what resources it was prepared to offer. He reported back to Mr. Katz. The next step taken by Mr. Stevenson was to review an existing feasibility study done by Grant Thornton with respect to the development, and to personally examine the proposed sites and report back to Mr. Katz. Mr. Katz considered that it would be helpful to obtain, as well, an earlier study performed by PKF. It is not entirely clear whether Mr. Stevenson ever received that early PKF report, but he did receive at least some limited information from PKF. Mr. Stevenson also made some preliminary inquiries to determine the feasibility of having a casino incorporated into the development, but these inquiries proved not to be fruitful.
[9] By early December, Mr. Stevenson was reaching the view that the development, as then proposed, might not be a viable one. The location and precise nature of the project had not been clearly established at that time. The economics of the hotel portion of the project were unclear. Given the uncertainties, Mr. Stevenson wished to obtain some sort of exclusive position as a development partner for Triarc before Triarc would commit to spending money on further feasibility studies or more detailed plans.
[10] On December 8, 2003 Mr. Stevenson drafted and sent a letter on behalf of Triarc to the City. The letter described Mr. Stevenson as Triarc’s “associate” and served to commence negotiations with the City over terms under which Triarc was prepared to explore the development opportunity. It wanted exclusive rights to assess the project for a period before it expended significant funds on efforts on development.
[11] There were extensive negotiations between Mr. Stevenson and the City over the ensuing months, though progress was fairly slow. Mr. Stevenson was attempting to obtain some exclusivity agreement for Triarc before it committed further resources, while the City wished to keep its options open. Mr. Stevenson also began pressing the City to pay Triarc for further work in assessing the feasibility of the project and performing initial conceptual design work.
[12] By March 2004, there was an agreement in principle between the City and Triarc that the City would pay Triarc to prepare a feasibility study on the project. Although there was no binding contract for the work, the parties acknowledged a general intention that Triarc would develop the project and would ultimately own and operate the hotel.
[13] The agreement in principle between Triarc and the City continued to be the subject of negotiations. On May 4, 2004, the parties entered into a memorandum of understanding. Essentially, this agreement committed Triarc to undertake feasibility studies and some initial design in return for exclusive rights to development and compensation in the amount of $100,000 plus the cost of independent consultants.
Initial Negotiations Between Mr.Stevenson and Mr. Katz
[14] By the time the agreement in principle was reached, Mr. Stevenson was interested in establishing the terms of his own compensation. On March 2, 2004 he sent an e-mail to Mr. Katz in the following terms:
My primary goal is to get the actual development signed between you and the City. I am assuming that this will take place either during or on completion of the consulting contract. If all goes well and the development agreement is signed I will also assume that I will have earned some type of finder’s fee. My $30,000 debt to you with interest is somewhere in the neighbourhood of $60,000 this year. I don’t know what you normally pay for a finder’s fee but I will assume that this debt will be adequately covered once a development agreement is in place.
As I told you when I originally talked to you this deal is not contingent on my involvement once the development agreement is signed. Although I would like to assume all or some of the development management responsibilities, you may have other resources in mind and that is not a problem. If you would like me to stay involved, I would like to get a better idea of the extent of my involvement, the time requirement and the fee proposed.
[15] I understand that the $30,000 debt that is mentioned was money advanced in 1994 in connection with a business venture that did not ultimately come to fruition. Having received no response by March 7, 2004 Mr. Stevenson again wrote to Mr. Katz. In the course of the e-mail he said as follows:
Your e-mails stopped last week while we were discussing the finders fee. I don’t know if this was a negotiating tactic or you were just too busy with other business. In any event, the matter remains unresolved and I need to know where the goal posts are in order to determine the extent of my discussions with the City. I am therefore expecting a number from you in order to set those goal posts.
To assist you in this endeavour I am going to give you my thoughts, reasoning and history on this matter as I see it. My original goal in contacting you about the conference centre was solely to repay my debt to you. I figured that if I could get you interested enough to do this deal my $60,000 obligation would be cancelled. I did not anticipate getting into protracted discussions with the City or to start negotiating on your behalf. I also didn’t anticipate being the middle man between you and the City. During the past few months there has been considerable discussion, promises made and obligations given. I was often forced to react when asked about certain issues and changes that may or may not take place. My only recourse was to react how I thought you might if you were there. I have no idea what the City thinks of me. To date my reactions have ranged from polite, reasonable and patient to demanding, arrogant and pissed. I’m sure a pro like yourself would have remained calm, cool and consistent throughout, but I am not anywhere close to being in your league; hell, I don’t even remember the last time I had to negotiate.
Needless to say I have gone far beyond my original scope of introducing you to the City to make your deal. If all goes as discussed you will not only have this deal but also have the land at no cost, the parking at no cost and the structural deck at no cost. I know the value of these items from my own experience and I am not being unreasonable in asking for a bonus over my original goal of repaying my debt. My sources have told me that a package deal of this scope would generate a fee in the range of $250,000+.
[16] Mr. Katz responded the same day as follows:
I was out of my office last week a good part of the time & that is the reason for not focusing on the response to your e-mails. It was not a negotiating tactic especially with you. To begin with, a person who earns a finder’s fee does more [than] introduce a party to a situation. To earn a finder’s fee the finder needs to do whatever is necessary to assure that the deal is consummated. Beyond that it was my impression (and intention) that you be part of the project or projects going forward. Although you have performed extremely well, keep in mind that it was & is credentials/track record of Triarc that will cause this deal to be made.
….
If you are prepared to be part of whatever development we do in Nanaimo until completion of the project or projects, I suggest that we discuss your total participation when & if I travel there. Advise me if this is acceptable to you. If not we will have to discuss it on the phone prior to my travelling there.
[17] There does not appear to have been any other discussion at that time on the subject of Mr. Stevenson’s remuneration.
The Plaintiff’s Work After May 2004
[18] Following the entering into of the memorandum of understanding, Mr. Stevenson’s time commitment to the project increased substantially. While he had previously been working on it only part-time, his work now became essentially full-time.
[19] He worked with the architects to develop a conceptual plan for the project. Once this was done, in consultation with Triarc he began the task of preparing cost and revenue projections, and then of engaging PKF Consulting to prepare a market study. Mr. Stevenson completed Triarc’s feasibility study in August 2004 and it was forwarded to the City.
[20] During the summer of 2004 Mr. Stevenson concluded that the project as planned was probably not feasible. He approached the City with a proposal that Triarc be given, as part of the development contract, the right to develop additional lands known as the “Foundry” or “Arena” Lands. Ultimately the City did agree to grant Triarc the right to purchase a portion of the Foundry Lands. The negotiations of the terms were conducted by Mr. Katz.
Further Negotiations between Mr. Stevenson and Mr. Katz
[21] In the summer of 2004, Mr. Stevenson again began to raise the issue of remuneration with Mr. Katz. He requested payment of a “finder’s fee” for his work to that date as well as an ongoing salary of $10,000 US per month continuing work. Beginning in September 2004, Triarc began to be paid a project management fee by the City. It also began to pay Mr. Stevenson $12,314 Canadian per month, which was the equivalent of $10,000 US, for his services.
[22] While there is some issue as to whether the payments started in respect of September or October of 2004, I accept that the first month that they covered was September. I conclude that Mr. Stevenson’s work from that point on was salaried and that there is no need to consider any quantum meruit claim beyond the period ending in August 2004.
[23] Mr. Stevenson received other payments from Triarc over the summer of 2004, though the exact nature of those payments is not entirely clear. It appears that they were advances intended to cover whatever salary or remuneration might eventually be negotiated. The total amount of these advances was $24,628. While this amount should be deducted from the quantum meruit claim as a setoff, I do not understand there to have been any actual salary agreement prior to September 2004 and I therefore find that a quantum meruit claim is not precluded up until that date.
[24] The issue of the “finder’s fee” was deferred, though it was evident that Mr. Katz was agreeable to paying Mr. Stevenson some sort of finder’s fee or bonus to compensate him for his work in the early negotiations over the deal. The City and Triarc continued to work together on the project, and a partnering agreement was entered into. Although not executed until later on, its terms were established and adhered to from October 2004.
[25] Mr. Stevenson raised the issue of the “finder’s fee” with Mr. Katz in November and December of 2004, but Mr. Katz indicated that it would have to await determination of Triarc’s ultimate profits on the deal.
[26] On February 16, 2005 Mr. Stevenson wrote to Triarc and Mr. Katz in the following terms:
I would like to get the issue of the finder’s negotiating fee behind us. Although our last conversation on this subject ended with your suggestion of waiting until we know how much profit is in the deal, I don’t think that has any bearing on my participation and/or contribution. My main contribution to date has been in selling Triarc to the City as the developer of choice, structuring the initial deal of the hotel (free land, free parking & structural deck) and initiating the development rights for the Arena site. Out of this foundation, you will receive development fees of $8,000,000 CDN during the development period based on your 5% calculation. As I am not involved in the further structure of your dealings, investments or partnerships I do not feel that the resulting profit participation is part of my deal or consideration.
I have therefore calculated the finder’s negotiating fee to be $400,000 CDN based on 5% of the development fees to be earned by Triarc for both developments. I feel that this is a very conservative fee considering the time and effort expended both before and since your involvement as well as the potential from the structuring of the deal. My previous loan from you was $30,000 at 6% since 1994. I therefore owe you $60,000 US or $72,000 CDN based on current exchange rates. My remaining fee is therefore $328,000 CDN or $273,000 US, and I will consider this earned upon your execution of the Development Agreement. I consider the monies owed to you from 1994 to be earned so far. In event of my release or withdrawal from the project for any reason whatsoever the fee will remain earned and payable.
[27] Mr. Katz responded:
I found your letter very disturbing & do not agree with your total analysis. To begin with, only reason we pursued the deal in such a remote area (for us) is that you would participate from start to finish. We have no problem paying the finder’s fee but it will not be earned until we actually go forward with the projects, which means construction is underway. Part of our deal was that you would manage the development locally for which you have been and will continue to be compensated as we agreed.
[28] While there was some further correspondence, it does not appear to have advanced the issue. At about this same period Mr. Stevenson was seeking a bank loan and requested a letter from Triarc to support the application. The letter, drafted by Mr. Stevenson, but approved and signed by Mr. Katz, states:
This is to confirm that Triarc International Inc. has contracted with J.D. Stevenson & Associates Ltd. of Nanaimo, BC for the provision of development management services in regards to the New Nanaimo Centre Project (NNC). The project includes the Vancouver Island Convention Centre, the Marriott Courtyard Hotel and the future development of two residential towers on the Arena lands.
It is anticipated that this contract will take JD Stevenson & Associates Ltd. approximately 4 to 6 years to complete. This letter will confirm that the fees payable for the provision of the above mentioned services is $120,000 US Dollars per year. In addition to the foregoing Developmental Management Fee, we are paying JD Stevenson & Associates Ltd. a lump sum bonus in excess of $250,000 US Dollars.
[29] Mr. Stevenson continued to work for Triarc until the fall of 2005 at which time there was a falling out between them, probably occasioned by Mr. Stevenson’s concerns that Triarc was not treating the project sufficiently seriously and was putting it in jeopardy. The project is proceeding, however, with a convention centre expected to be finished this summer.
Parties to the Action
[30] There are certain problems with respect to the parties to the proceeding. The corporate plaintiff was incorporated after September 2004, and it is common ground that it did not perform any work for the defendants during the period covered by the quantum meruit claim. That plaintiff’s claims, accordingly, have been abandoned and are dismissed.
[31] Mr. Katz is now deceased, and neither he nor his estate have ever been served with a claim. It is common ground that the claim against him ought also to be dismissed, and I am dismissing it.
[32] Suro Development Company is a single-purpose company which has taken over the Nanaimo project from Triarc. It does not operate at arm’s length from Triarc, and it is clear that any unjust enrichment of Triarc has also been to the benefit of the related company, Suro. Accordingly, for the purposes of this judgment it is not necessary to differentiate between those two companies. The judgment that is being granted will be in favour of Mr. Stevenson against those two companies jointly and severally.
[33] Millennium Properties Ltd., on the other hand, is an arm’s-length company that has entered into the development subsequent to Mr. Stevenson’s involvement. It is not suggested that it has been unjustly enriched. While the Statement of Claim does advance a trust claim against Millennium, that claim is not being pursued. The claim against Millennium is therefore dismissed.
The Quantum Meruit Claim
[34] The parties agree that for the period up until Mr. Stevenson began receiving a steady salary he had no contract with Triarc and that he is entitled to be compensated on a quantum meruit basis. While there is some dispute as to whether that compensation should extend to May 2004, September 2004 or October 2004, I am satisfied that the agreement to pay salary to Mr. Stevenson applied for the period from and including September 2004. The payments made for periods prior to that totalling $24,628 should be treated, as I have said, not as precluding a quantum meruit claim, but rather as amounts to be deducted from the claim as setoffs.
[35] I need not spend very much time analyzing the issue of liability, since both parties agree that quantum meruit liability is present. I can say that I am satisfied that they are correct in that view. The parties were in a special relationship. Triarc received the benefit of Mr. Stevenson’s services from November 2003 to August 2004 without an agreement for compensation. Mr. Stevenson suffered a deprivation corresponding to the benefit received by Triarc. There are no juristic reasons for that enrichment or to deny compensation. I agree with the parties that there has been an unjust enrichment of Triarc and of Suro and that the appropriate remedy for that unjust enrichment is an award based on quantum meruit.
[36] The real issue here is not entitlement or the legal principle but rather the quantum. The parties do not disagree that Mr. Stevenson is entitled to be compensated for the value of his services for the period before he had a contract of employment. They just disagree what the value of those services is and what methodology should be used to calculate or assess it.
[37] Counsel arguing this matter have attempted, at times, to draw distinctions between principles of quantum meruit claims in contract and in unjust enrichment, and between quantum meruit claims based on “value received” and “value survived” (see, for this latter distinction, Swanson v. Dwyer, 2004 BCSC 793, 11 R.F.L. (6th) 148 at paragraphs 28 and following). I do not find these distinctions to be particularly helpful in deciding the case at bar. I also do not find the plaintiff’s contention that it is the value of the services to the defendant that governs the amount of the award to be a particularly helpful observation. For unjust enrichment to exist, there must, by definition, be a correspondence between the enrichment of the defendant and the deprivation to the plaintiff.
[38] The value of the service to the defendant then, is exactly equal to the value to the plaintiff. Both, it seems to me, are assessed by determining, in the context of the individual case, the market value of the services provided by the plaintiff to the defendant. “Market value” must take into account the context in which the service is provided. For example, in Campbell v. National Trust Company Limited, [1931] 1 D.L.R. 705, [1931] 1 W.W.R. 465 (PC from Ontario) the Privy Council held that a quantum meruit claim could be properly assessed in terms of a commission. At D.L.R. p. 711, W.W.R. p. 472, Lord Russell of Killowen observed:
[T]he remuneration should not be determined by reference to the labour of Campbell. Beyond going to Toronto and introducing Clarke his labour was nil. His work began and ended there. The remuneration should be determined by reference to the value to Walberg of what it produced, viz., the contract of December 29, 1926.
[39] I take from this case, and others that have been cited, the proposition that whether a quantum meruit claim is to be assessed on the basis of an hourly or a monthly payment for labour on the one hand, or on a commission basis on the other, will depend entirely on the context. In industries where hourly rates are usual, those will almost always prevail. Where commissions are the norm, those are also likely to prevail in quantum meruit cases. The difficulty arises in situations that are not clearly governed by an ordinary market. Where transactions are unique, or made other than in the ordinary course, or where there may be different methods of calculating payment, there may be difficulty in assessing the value of the quantum meruit claim.
[40] Counsel have referred me to a number of such cases, including Bond Development Corp. v. Esquimalt (Township), 2006 BCCA 248 and 2007 BCSC 539; Bancorp Mortgage Ltd. v. Sicon Group Inc., [1990] B.C.J. No. 1477, 2 B.L.R. (2d) 161 (S.C.) and Lettuce Serview Ltd. Partnership v. Western Delta Lands Partnership, 2007 BCSC 528. Each of these cases deals with a difficult question of valuation of quantum meruit claim.
[41] In the case at bar I have two expert reports before me, one from William G. Beavis, a developer and former banker who gives evidence on behalf of the plaintiff, and one from H.E. Charters, a commercial realty consultant who gives evidence on behalf of the defendants. Mr. Beavis bases his estimate on a percentage of fees paid to date to Triarc. His estimate, based on 15 to 20 percent of Triarc’s billings to date, is $450,000 to $600,000. He says that a fee of this magnitude would not be considered unreasonable by a banker or lender given the size of the project. Mr. Beavis’s report lacks any detailed analysis. His experience as a banker is very dated, and I am not satisfied that his current work as a shopping centre developer provides a very sound basis for his estimate. In short, I do not find his report to be helpful.
[42] Mr. Charters, on the other hand, bases his assessment on the value of Mr. Stevenson’s work on the monthly fee that would be charged by a project consultant. He opines that Mr. Stevenson’s work comes within the normal work of such consultants. He says that a fee of $12,000 to $15,000 per month would be usual for a full-time project consultant. The defendants say that based on his report the amount actually negotiated by Mr. Stevenson for his work beyond September 2004 of $12,314 per month is the most appropriate basis for determining proper compensation. The defendants argue that Mr. Stevenson should be given half that amount for months in which he worked part-time and the full amount for months in which he worked full-time.
[43] While I find Mr. Charters’ report to be better reasoned and supported than that of Mr. Beavis, I find that he does not adequately deal with the fact that Mr. Stevenson was taking a considerable risk in working for Triarc up to September 2004. I find that there was no expectation that he would be paid at all if the project did not go forward. It appears to me to have been understood that payment would only be made if the project proceeded. He needs to be compensated, therefore, not only for the labour that he performed, but also for the considerable risk he took when he started that he would receive no payment at all. That risk had diminished by the summer of 2004 when Mr. Stevenson received some advances, but it did not vanish entirely until he successfully negotiated a salary.
[44] In Lettuce Serview Ltd. Partnership and Western Delta Lands Partnership, 2007 BCSC 528 at paragraph 165 Justice Sigurdson says as follows:
In determining what is reasonable compensation it is permissible to refer to what the parties considered was reasonable compensation for deals that did not complete: Way v. Latilla, [1937] 3 All E.R. 759, where Lord Atkin said at 764:
Services of this kind are no doubt usually the subject of an express contract as to remuneration, which may take the form of a fee, but may also take the form of a commission share of profits, or share of proceeds calculated at a percentage, or on some other basis. In the present case, there was no question of fee between the parties from beginning to end. On the contrary, the parties had discussed remuneration on the footing of what may loosely be called a “participation” and nothing else. The reference is analogous to the well known distinction between salary and commission. There are many employments the remuneration of which is, by trade usage, invariably fixed on a commission basis. In such cases, if the amount of the commission has not been finally agreed, the quantum meruit would be fixed after taking into account what would be a reasonable commission, in the circumstance, and fixing a sum accordingly. This has been an everyday practice in the courts for years. But, if no trade usage assists the court as to the amount of the commission, it appears to me clear that the court may take into account the bargainings between the parties, not with a view to completing the bargain for them, but as evidence of the value which each of them puts upon the services.
[Emphasis added by Sigurdson J.]
[45] While I find the discussions of the parties over the so-called “finder’s fee” to be of some assistance, they do not provide, in and of themselves, a firm basis for determining the market value of services. For his part, Mr. Stevenson’s numbers appear to have been thrown out as opening bargaining positions. They changed substantially over time, as well. Mr. Katz, on the other hand, refused to supply numbers except in a letter to the bank written for him by Mr. Stevenson. It is apparent that he saw a lump sum payment as something Mr. Stevenson was entitled to but only in the form of a “bonus” for working with the company through to the completion of a successful project. The amount, in his mind, appears to have depended both on the amount of profit and on loyalty.
[46] It is tempting, in view of the minimal assistance that I have obtained from the expert evidence, and in view of the inadequacy of the negotiations of the parties as showing value of the work, to say that this matter cannot be determined on a Rule 18A application and should go to trial. Both counsel have candidly told me, however, that the evidence before me is not likely to be any different from the evidence at trial. The difficulties are not really caused by an absence of evidence, but rather conceptual difficulties in valuing the work.
[47] Counsel invite me to make a decision based on the expert and other evidence that has been presented. I accept that invitation in this case. It does appear to me that I am in as good a position as a trial judge would be to make the determination, and that it would not be in any sense unfair to do so.
[48] This is not, I think, a case where the appropriate basis for payment is a percentage of the potential profits or fees collected by the developer under its agreement with the City. Neither of those are particularly tied, in my view, to the value of Mr. Stevenson’s work. Further, they were the subject of detailed negotiations taking into account many different considerations having nothing to do with the value of Mr. Stevenson’s work.
[49] There is no scientific or mathematical precision in the way that risk can be compensated for, as can be seen by the assessments in cases like Bond Development Corp. v. Esquimalt (Township), 2007 BCSC 539, particularly at paragraphs 38, 39 and Bancorp Mortgage Ltd. v. Sicon Group Inc., supra. Shaw J., in Bancorp, at pp. 177-78 of the B.L.R. report said:
In all the circumstances, I do not think the award should be in the range of the $100,000 which would have been the fee had Bancorp actually raised the funding directly from funding sources, i.e. lenders. On the other hand, I think that the $10,000 reduction in the commitment fee Sicon paid to CCFL is far too low an indicator, because that reduction was based upon advice given by Mr. Kennedy aimed at denigrating the services performed by Bancorp. In the circumstances of the present case, my best estimate of a fair fee is $40,000.
I do not suggest that Mr. Justice Shaw’s decision is in any sense arbitrary, but it does show the difficult nature of the estimation.
[50] Similarly in the Lettuce Serview case at paragraph 195 Mr. Justice Sigurdson said:
I find that the evidence shows that the possible range for a fair and reasonable fee for the value that Mr. Cogan brought to the defendants is in the neighbourhood of $400,000 or $500,000 on the low side to about $1.3 million or so on the high side. Taking into account all of the considerations that I have set out and giving the fee arrangements the weight that I described, I have concluded that fair and reasonable compensation for Mr. Cogan is the sum of $800,000. From that amount will be deducted the payments already made by the defendants that are set out in the previous paragraph.
[51] I take as my starting point the numbers negotiated for Mr. Stevenson’s salary, which is some indication of the proper market value of his services, ignoring the contingency aspects of his earlier work. It is also supported by the Charters’ report. In my view Mr. Stevenson should be compensated for one-half of the month of November 2003, and for the months of December 2003 through April 2004 inclusive on the basis that he worked half-time. He will also be compensated for the months of May 2004 through August 2004 inclusive for full-time work. At $12,314 per month that works out to an amount of $33,864 for the part-time months and $49,256 for the full-time months. I think that the risk of non-payment was reduced significantly by May 2004. From that point on, Triarc was being paid for a feasibility study. Indeed, shortly after that, Mr. Stevenson did begin to be paid an advance for his work.
[52] I would adjust for the risk of non-payment by multiplying the amounts for the November to April period by four, since I think that Mr. Stevenson was taking a very considerable risk that his efforts would be unrewarded for that period. For the months of May through August there was far less risk and I would apply a multiplier of only 1.5.
[53] The total compensation, then, will be $135,454 for the part-time months and $73,884 for the full-time months. As Mr. Stevenson received $24,628 in advances, those must be deducted. The total damages that I am awarding amount to $184,710. That judgment will be in favour of Mr. Stevenson against both Triarc International and Suro Development Company. As I have already indicated, the claims of the corporate plaintiff are dismissed, as are the claims against Mr. Katz and against Millennium. Unless there are matters of which I am not aware, Mr. Stevenson is entitled to costs against the unsuccessful defendants on scale B. Is there anything further, counsel?
MR. PRIOR: Prejudgment interest from what date?
[54] THE COURT: Prejudgment interest should be calculated from October of 2004. As I have said, there was risk of non-payment until such time as the contract came into being. October 25, 2004 is the appropriate date from which interest will accrue.
{Further Submissions by Counsel}
[55] THE COURT: I have given you my methodology. If I have erred in the arithmetic or in the amount deducted for the part payments, then you can adjust the award accordingly. If you need to, of course, you can arrange to appear before me to settle any matters that are unclear.
The Honourable Mr. Justice H. M. Groberman