Date: 19980313 Docket: CA022714 Registry: Vancouver COURT OF APPEAL FOR BRITISH COLUMBIA ORAL REASONS FOR JUDGMENT: Before: The Honourable Mr. Justice Lambert March 13, 1998 The Honourable Madam Justice Newbury The Honourable Mr. Justice Hall Vancouver, B.C. BETWEEN: NORTHWEST DRYWALL AND BUILDING SUPPLIES LTD. PLAINTIFF (APPELLANT) AND: FLAMING BROTHERS CONSTRUCTION LTD. DEFENDANT (RESPONDENT) AND: IMPERIAL PACIFIC BUILDING CORP. DEFENDANT W.E. Knutson appearing for the Appellant E.J. Rice, Q.C. appearing for the Respondent [1] NEWBURY, J.A.: The plaintiff appeals from the dismissal of its actions, framed in contract, unjust enrichment, and quantum meruit, against Flaming Brothers, the owner contractor on a project on Chester Street to which the plaintiffs supplied drywall. It did so pursuant to a supply contract it had with the defendant Imperial Pacific Building Corporation ("Imperial"). [2] In his reasons for judgment, Mr. Justice Hood reviewed the evidence and found in particular that there was no evidence the Flaming Brothers knew the plaintiff had begun supplying drywall for Flaming's benefit and in the expectation that Flaming Brothers would be paying for it. To the contrary, the Court found the materials were supplied for and at the request of Imperial and that Flaming Brothers' practice of issuing joint cheques at the plaintiff's request did not change that fact. [3] The Court also found Flaming Brothers had not promised to pay the plaintiff's account at any time, except with respect to some direct orders it did place later with the plaintiff. This inference was supported in part by the fact that joint cheques would not have been necessary if Flaming Brothers had been obliging itself to pay the plaintiff directly. Nor had Flaming Brothers guaranteed Imperial's indebtedness to the plaintiff or indeed changed the essential relationship between itself, Imperial, or the plaintiff. [4] Finally, the trial judge rejected the unjust enrichment claim on the basis that the "state of accounts" (in which I assume Mr. Justice Hood included the existence of the contract of supply between Imperial and the plaintiff) was a juridical reason for the enrichment of Flaming Brothers so that the elements of that cause of action were not established. [5] In this court, Mr. Knutson on the plaintiff's behalf said he was not going to try to displace the findings that Flaming Brothers had made no promise to pay the plaintiff in the place of Imperial or that Flaming Brothers had given no guarantee to the plaintiff of Imperial's indebtedness to it. Instead, he sought to challenge one particular finding, which he said if set aside would open the door to the conclusion that the owner had made a promise, enforceable in some manner, to the plaintiff which it, the owner, had not lived up to. [6] The finding in question refers to a payment of some $4,370 made by joint cheque by the owner to Imperial and the plaintiff on January 10, 1994. This payment was made at a time when everyone knew Imperial was in financial difficulty and in fact the plaintiff was owed roughly $31,000 by Imperial. The plaintiff and Flaming Brothers had certain discussions the characterization of which is at issue here. Mr. Flaming in discovery said he "indicated a willingness" to make a joint cheque that month, which he expected would be about $31,000. He said that his company was "always willing to do that to make sure they [the plaintiff] got paid". [7] However, when the cheque was actually issued it was as I have said, for some $4,370. That figure appears to have been calculated by one "George", Flaming Brother's accountant, in the exhibit at p.359 of the Appeal Book. That calculation, headed "Imperial Pacific's account with Northwest Drywall" simply takes the contract price of the product that had been supplied by the plaintiff since July to the project, subtracts from it the payments made to Imperial, and shows a balance as of November 30, 1993 of $4,370.10. Included in the amounts paid to Imperial was a joint cheque paid at the end of August, 1993 of $30,685.88. The plaintiff emphasises, however, that it did not in fact receive that amount in total as payment for drywall supplied to this project because $10,000 of it had been supplied to another project it had going with Imperial and only $4,000 was outstanding in August on the Chester project. The plaintiff says it was not only unfair to credit the entire $31,000 but that having said it would "make sure the plaintiff got paid" (Mr. Knutson's words), the owner was bound to pay another $27,000 odd to the plaintiff. [8] Mr. Knutson took us to the testimony of Mr. Flaming as to the calculation of the $4,370.10, on which the plaintiff puts what in my view is a rather strained interpretation. In chief, Mr. Flaming said before seeing George's calculation that he had told Mr. Behrend "that was all that was remaining of Imperial's draw at that time. That's all that Imperial was due." He gave no assurance, he said, that the balance would be paid by Flaming Brothers. Then in cross-examination Mr. Flaming responded as follows to Mr. Knutson's questions: QNow, you -- when you said that in early January when you were having to decide how much to pay Northwest Drywall and you made the decision to treat the entire 30,000 as a credit against what was payable to Northwest Drywall. You did that because you didn't believe Northwest Drywall's explanation as to what had happened with the money; was that -- did I put that properly -- what didn't you believe? AAbout what? QWell, didn't you say earlier you didn't believe them and that is why you credited the whole 30,000 against Northwest Drywall? AIf -- during that time we asked numerous times we requested of Imperial Pacific and Northwest Drywall what amount they had been paid on their accounts and where -- we asked of Imperial Pacific what had happened to all the money that they had received on their job. Okay. That information was never gotten 1 to us. Therefore, that was one of the pieces of information that we took into consideration when we made that cheque, or with the quantity surveyors information, also that that was the balance of monies owed to Imperial Pacific on the contract for work done up to that date. * * * QYou were frustrated with that company, weren't you? AThat's fair to say, yes. QNow, the second part of your answer that was read out just a moment ago related to, I think you said you talked about the amount of this payment, the 4300, being linked to the balance due for the work done by Imperial to that point? AYes. QRight? AYes. QNow, sir, this payment has nothing to do with that sort of calculation, does it? AYes. QThis has nothing to do with a calculation by the quantity surveyor about the value of the work on the job provided by Imperial? AIt does. QAll you did was to say Northwest has supplied 60,000, we have written two joint cheques to them, they add up to 54, we subtract the whole and the result is $4300? AThat is the way you put that, but it does have something to do with the total amount that they were owed at that time, yes. QNow, if you are wrong in the belief that you had that Northwest Drywall had got the whole 30,000 in August, then your payment to Northwest Drywall was an incorrect number, wasn't it? AIf I am wrong? AYes. [9] Based on his reading of this exchange, Mr. Knutson says the trial judge erred in saying (at paragraph 4 of his reasons) that "Flaming Brothers' quantity surveyor had certified the amount due to Imperial on its contract as $4,370.10". In fact it appears to have been Flaming Brothers' accountant instead of its quantity surveyor. I am not convinced much turns on that. [10] Mr. Knutson also says that the calculation done by "George" could not possibly purport to represent an accounting of the many credits and debits that existed on the entire project between Imperial and the owner. That may be, but again for purposes of figuring out the amount of the joint cheque it would seem reasonable to me for George to have proceeded as he did. More importantly, the approach taken in the calculation is consistent with what the trial judge found was the understanding between Flaming Brothers and the plaintiff: that to the extent Flaming Brothers owed money to Imperial for drywall at the end of the month, it would pay that amount by a joint cheque payable to Imperial and the plaintiff. This was, in my view, something the owner did not have to do - and perhaps it regrets now that it did - but it did keep things on the rails for a while and it did benefit the plaintiff, in all likelihood. But in my view the trial judge was correct in finding that no direct contract or enforceable promise of any kind arose out of this conduct between Flaming Brothers and the plaintiff. If this is correct, the deduction of $30,000 or $31,000 in January was not a mistake and it cannot, in my view, be said Flaming Brothers somehow reneged on a promise, even a gratuitous one. [11] It must follow in my view that the claim for unjust enrichment also fails, there being a juristic reason for the benefit conferred on Flaming Brothers by the plaintiff's supply of drywall and there being no "breach of good conscience" that would support a remedy of this kind. [12] Last, on the question of interest (which was not addressed by the trial judge in his judgment) chargeable on the roughly $2,000 for which the plaintiff did obtain judgment for drywall supplied directly to the owner, I think it may be inferred from the course of dealings and invoices between the parties that the owner accepted an obligation to pay the stated rate of 24% per annum on overdue amounts. I am sure counsel can calculate that amount if they have not done so already. [13] I would dismiss the appeal except to the extent of allowing interest as I have described. [14] LAMBERT, J.A.: I agree. [15] HALL, J.A.: I agree. [16] LAMBERT, J.A.: The appeal is dismissed, except that interest at 24% per annum simple interest is added to the amount payable under the judgment of Mr. Justice Hood. [17] The costs of the appeal are payable by the appellant to the respondent, notwithstanding the small success on the question of interest. "The Honourable Mr. Justice Lambert" "The Honourable Madam Justice Newbury"