1232837 BC Ltd. v. Horizon North Modular Solutions Inc., 2021 BCPC 150 (CanLII)
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2021 BCPC 150 |
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Date: |
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File No: |
2067300 |
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Registry: |
Vancouver |
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IN THE PROVINCIAL COURT OF BRITISH COLUMBIA
BETWEEN:
1232837 BC LTD.
CLAIMANT
AND:
HORIZON NORTH MODULAR SOLUTIONS INC.
DEFENDANT
REASONS FOR JUDGMENT
OF THE
HONOURABLE JUDGE W. LEE
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S. Mooney |
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Counsel for the Defendant: |
T. Topliss |
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Vancouver, B.C. |
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Date of Hearing: |
June 1, 2021 |
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Date of Judgment: |
June 10, 2021 |
INTRODUCTION
[1] The claimant 1232837 BC Ltd. seeks payment of $28,381.91 from Horizon North Modular Solutions Inc. (“Horizon North”) pursuant to the term of an agreement called a Project Promotional Services Agreement (the “PPSA”) dated for reference December 9, 2019.
[2] Horizon North agrees that it owes the claimant but says the amount is $881.09.
[3] This dispute turns on an interpretation of the PPSA.
THE EVIDENCE
[4] The facts are not in dispute and I will set them out briefly.
[5] The claimant is in the business of project management and consulting. Sean Mooney is the owner of the claimant.
[6] Typically, a property owner will retain the claimant for the planning and management of a construction project. The work may include dealing with government, finding a general contractor, sourcing bids and then monitoring the project.
[7] In this particular case, a property owner, 0951705 BC Ltd., hired the claimant in relation to a planned hotel development on Douglas Road in Richmond, B.C.
[8] In turn, the claimant contacted Horizon North with a proposal whereby Horizon North would pay the claimant what I would describe as a referral or finder’s fee if the property owner retained Horizon North as the general contractor.
[9] Starting in September 2018, Mr. Mooney had various email communications with representatives of Horizon North about a finder’s fee agreement. In October 2019, there were discussions about a possible 1% finder’s fee. On October 11, 2019, Sloan Challand of Horizon North emailed Mr. Mooney a draft of a Project Promotional Services Agreement setting out a fee payable of $50,000. Mr. Mooney responded on October 15, 2019, asking for a 1% fee. Further discussions followed and in December 2019, the parties arrived at an agreement, specifically the PPSA, setting a fee at .5%.
[10] The PPSA refers to the claimant as the “Consultant.”
[11] The specific wording in Article 4.1 of the PPSA setting out the compensation was as follows:
…Horizon shall pay to Consultant a fee of one half of a percent (0.5%) of the gross revenues, excluding with respect to GST and other taxes or levies, received by Horizon from time to time in connection with the Project…
[12] The payment was contingent on the following:
1. The property owner is made aware of the PPSA and consents to the payment of the fee.
2. Horizon North enters into a binding contract with the property owner to construct the hotel project
3. Horizon North is paid a non-refundable deposit in respect of the construction contract.
[13] The fee payable by Horizon North to the claimant was due in installments, with 25% due upon Horizon North receiving a deposit on the construction contract.
[14] The claimant provided a copy of a signed note dated July 10, 2020 from Bob Nijjar, owner of 0951705 BC Ltd., stating he had no objection to Horizon North paying a service fee to Sean Mooney. I accept this as evidence that the project owner consented to the payment of the fee.
[15] On January 31, 2020, 0951705 BC Ltd. paid to the lawyers for Horizon North a deposit of $1,000,000.
[16] On February 11, 2020, Horizon North entered into a contract with 0951705 BC Ltd. for the design and building of the hotel project (the “Design-Build Contract”). The contract price was $22,705,530.32.
[17] Based on these three conditions having been met, the claimant seeks payment of $28,381.91. The claimant calculates this sum on the basis that the gross revenue from the project was $22,705,530.22. A fee of .5% is $113,527.51 and the first installment of 25% is $28,381.91.
[18] The defendant disputes the calculation of the fee because the owner cancelled the hotel project. Part 7 of the Design-Build Contract gave the owner the right to suspend or terminate the contact. Joseph Kiss, then president of the defendant, testified that in April 2020, the owner gave verbal notice that it was unable to secure financing and was cancelling the project. According to Mr. Kiss, work on the project ceased at that point. Mr. Mooney introduced into evidence some invoices suggesting that work still occurred on the project after April 2020. Whether or not that did occur is not relevant though to determining the amount of any fee payable to the claimant.
[19] The owner formally cancelled the project by way of a letter dated July 24, 2020, from the lawyer for 0951705 BC Ltd. to Horizon North.
[20] Horizon North issued two invoices to 0951705 BC Ltd. The first was for $128,509.50 plus GST of $6,425.48, totalling $134,934.98. The second was for $39,737.50 plus GST of $1,986.88, for a total of $41,724.38. The two invoices totalled $176,659.36. The invoices were paid from the $1,000,000 deposit and the balance of the deposit was returned to the owner’s law firm in trust for the owner.
[21] Horizon North says the fee payable to the claimant should be based on the amounts paid to Horizon North not including GST. The exclusion of GST was pursuant to the PPSA, which excluded taxes in the calculation of the fee.
[22] According to the Reply filed by Horizon North, the defendant received a payment less GST of $167,826.39 and the fee payable to the claimant is $881.09. Horizon North calculated this amount based on .5% of $167,826.39 and has ignored the 25% installment amount due. I also note that .5% of $167,826.39 is actually $839.13.
[23] My calculation differs. In adding together the two invoice amounts less GST of $128,509.50 and $39,737.50, I arrive at $168,247. Using this figure, the .5% fee payable would be $841.24.
ANALYSIS
[24] The law regarding the interpretation of contracts is described in the decision Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53 (CanLII), [2014] 2 S.C.R. 633, where the court stated at paragraph 47 that:
[47] …a decision-maker must read the contract as a whole, giving the words used their ordinary and grammatical meaning, consistent with the surrounding circumstances known to the parties at the time of formation of the contract. Consideration of the surrounding circumstances recognizes that ascertaining contractual intention can be difficult when looking at words on their own, because words alone do not have an immutable or absolute meaning:
[25] I also refer to the decision Lind v. Storey, 2021 BCPC 2, where Judge Doulis stated:
[49] In 0746727 B.C. Ltd. v. Cushman & Wakefield LePage Inc., 2008 BCSC 415 (CanLII), aff’d 2008 BCCA 486, Justice Neilson (as she then was) summarized the principles of contractual interpretation [citations omitted]:
[16] The principles of contractual interpretation are clear . . .
[17] The goal is to determine what the intention of the parties was at the time the contract was entered into, looking first to the plain and ordinary meaning of the words in the contract. The words are to be interpreted in the context of the whole of the contract and in a manner that does not render one part of the contract ineffective.
[18] As well, the language of the contract must be read in the context of the surrounding circumstances at the time the contract was made. Such evidence will include evidence of facts known to both parties prior to the execution of the agreement, but not negotiations or evidence of the subjective intent of the parties. The context should not take priority over the words themselves.
[19] The standard is objective. What is a reasonable interpretation of the provision in question?
[20] If this examination reveals an unambiguous meaning, it is not necessary to go further. However, if it produces two reasonable interpretations, thereby creating ambiguity, or if the plain language leads to an absurdity, the court may look beyond the words of the contract to extrinsic evidence to assist in determining the parties’ intent. Such evidence will include facts leading up to the agreement, circumstances existing at the time of it, and evidence of subsequent conduct.
[50] Canadian courts have held that evidence of post-contractual conduct can be considered in the event of an ambiguity in a contract: British Columbia Hydro and Power Authority v. Cominco Ltd. (1989), 1989 CanLII 2667 (BC CA), 34 B.C.L.R. (2d) 60 (C.A.); Adtronics Signs Ltd. et al. v. Sicon Group Inc. et al., 2004 BCSC 1201 (CanLII) at paras. 142 and 143.
[26] The goal of the court is to determine objectively the intention of the parties. Evidence of the parties’ subjective or personal beliefs is not relevant.
[27] Turning to the calculation of the fee payable, Horizon North bases their calculation on the amount of funds actually received. Mr. Mooney bases his calculation on the price of the Design-Build Contract had it not been cancelled.
[28] The PPSA does not contain a definition of “gross revenue”.
[29] Black’s Law Dictionary (Fifth Edition) defines “gross revenues” as “receipts of a business before deductions for any purpose except those items specifically exempted.”
[30] Section 248 of the Income Tax Act, R.S.C. 1985, c.1, defines “gross revenue” as follows:
gross revenue of a taxpayer for a taxation year means the total of
(a) all amounts received in the year or receivable in the year (depending on the method regularly followed by the taxpayer in computing the taxpayer’s income) otherwise than as or on account of capital, and
(b) all amounts (other than amounts referred to in paragraph (a)) included in computing the taxpayer’s income from a business or property for the year because of subsection 12(3) or (4) or section 12.2 of this Act or subsection 12(8) of the Income Tax Act, chapter 148 of the Revised Statutes of Canada, 1952; (revenu brut)
[31] I find that the ordinary meaning of the term “gross revenue” contemplates the actual receipt of funds or at least the legal requirement that the funds are payable such that they would be taxable. A contract with a value of $22,705,530.32 does not mean this is the gross revenue amount when that contract was cancelled and the only sum received was $168,247 plus GST.
[32] Based on Article 4.1 of the PPSA and taking into account the actual amounts received by Horizon North, I find that the fee payable to the claimant is $841.24. In setting out this amount, I do not take into account the installment payment amount that was due pursuant to Article 4.2, as Horizon North has not raised this as an issue in its Reply.
DECISION
[33] Horizon North Modular Solutions Inc. will pay to 1232837 BC Ltd. the sum of $841.24, along with the filing fee of $156 and the service fee of $20.
_____________________________
The Honourable Judge W. Lee
Provincial Court of British Columbia