Citation: Housewise Construction Ltd. v. Whitgift Holdings Ltd. Date: 20150819
2015 BCPC 0297 File No: 12-41568
Registry: Vancouver
IN THE PROVINCIAL COURT OF BRITISH COLUMBIA
(Small Claims)
BETWEEN:
HOUSEWISE CONSTRUCTION LTD.
DBA SEGAL DISPOSAL
CLAIMANT
AND:
WHITGIFT HOLDINGS LTD.
DEFENDANT
RULING ON APPLICATION
OF THE
HONOURABLE ASSOCIATE CHIEF JUDGE N.N. PHILLIPS
Counsel for the Claimant: S. Au
Counsel for the Defendant: S. Petersen
Place of Hearing: Vancouver, B.C.
Date of Hearing: August 10, 2015
Date of Judgment: August 19, 2015
[1] This is the ruling of the court on an application filed by the Defendant company, Whitgift Holdings Ltd. (hereinafter “Whitgift”), to dismiss a claim against them brought by Housewise Construction Ltd. doing business as Segal Disposal (hereinafter “Housewise” or “Segal”).
[2] The original Notice of Claim in this case was filed on October 5, 2012 and sought $25,000 from the Defendant relating to outstanding charges for services rendered and liquidated damages. An amount in excess of the monetary jurisdiction of this court was abandoned to allow the matter to proceed in Small Claims. An amended Notice of Claim was filed on April 26, 2013 pursuant to an order by Judge Burgess made at a Trial Conference on April 16, 2013 granting the Claimant leave to delete a paragraph in the original Notice of Claim disclosing settlement negotiations. Judge Burgess cautioned the Claimant that if the amendment was not made by April 26, 2013 the Defendant could apply to dismiss the claim
[3] A reply to the original claim was filed on October 23, 2012 alleging fundamental breach and seeking damages with respect to deficient services by way of a $25,000 counterclaim.
[4] After the amended Notice of Claim was filed, the case was set for trial. A trial date of August 4, 2014 was adjourned and a two-day hearing was re-scheduled for February 24 and 25, 2015. On that date the Defendant made an application to adjourn the trial and Judge Bahen granted that application and ordered Whitgift to pay $200 in costs to the Claimant. Judge Bahen also provided that the Defendant could file an amended Reply by March 31, 2015 and that the Claimant could file an amended Notice of Claim within 14 days of receipt of the amended Reply.
[5] On March 23, 2015 the Defendant filed a substantially amended Reply denying the existence of any contract between Housewise and Whitgift and putting forward that any agreement for services was between Segal and Whitgift. The Reply states Segal Disposal is registered as a sole proprietorship with the Registrar of Companies in BC and carries on business as such. Housewise is the registered proprietor of the sole proprietorship. The Reply puts forward that Segal had no capacity to enter into a contract because it is not a legal entity. The Claimant did not file an amended Notice of Claim despite Judge Bahen granting it the opportunity to respond to the new defence. The case has been re-set for trial on October 8 and 9, 2015.
[6] On June 26, 2015, the Defendant filed the application at hand to dismiss the claim. The application briefly sets out that there is no contract between the Claimant and the Defendant and that the Claimant has no standing or capacity to claim for breach of contract against the Defendant.
[7] Housewise Construction, doing business as Segal Disposal, operates a waste disposal and recycling service. Whitgift owns and operates a large apartment complex. As set out in contract documentation included in the Trial Statements, Segal and Whitgift entered into a five year agreement for Segal to remove garbage and recycling materials from the Defendant’s apartment buildings. Customer Service Agreements were entered into on December 28, 2010 and on January 27, 2011 and are in the name of Segal Disposal. Nowhere in those agreements is there any reference made to Housewise Construction.
[8] On May 11, 2012, Segal sent a letter to Whitgift in response to on-going complaints about their disposal service. The letterhead on this document states it is from Housewise Construction Ltd. dba Segal Disposal. The words Housewise Construction Ltd. dba are in small print whereas Segal Disposal is written in larger characters and is similar in style and size as to what appears on the earlier contract documents. Other correspondence in 2012 bears the same reference to Housewise. No explanation was given as to the new involvement of Housewise in providing services to the Defendant.
[9] Segal provided the court with a single invoice for services to Whitgift dated July 30, 2012. The invoice only makes reference to Segal Disposal and not to Housewise. A copy of one cheque was also provided by Segal showing Whitgift paid Segal Disposal and not Housewise.
Law
[10] Section 27 of the Business Corporations Act, SBC 2002, ch. 57 requires that a company must display its name when conducting business. Section 426(2) of the Act makes it an offence to contravene s. 27.
27 (1) A company or extraprovincial company must display its name or, in the case of an extraprovincial company that has adopted an assumed name under this Act, its assumed name, in legible English or French characters,
(a) in a conspicuous position at each place in British Columbia at which it carries on business,
(b) in all its notices and other official publications used in British Columbia,
(c) on all its contracts, business letters and orders for goods, and on all its invoices, statements of account, receipts and letters of credit used in British Columbia, and
(d) on all bills of exchange, promissory notes, endorsements, cheques and orders for money used in British Columbia and signed by it or on its behalf.
[11] A non-party is not entitled to collect money owing pursuant to a contract entered into by two other parties (see Juddav Designs Inc. v. Cosgriffe, 2010 ONSC 6597 (CanLII) at paragraph 6). It is trite to say that if an individual wishes to take advantage of the limited liability of a company, that person must reasonably inform others that they are dealing with a corporation and not a sole proprietorship or person. Where the other party to a contract is not so informed, the individual cannot take advantage of the corporate shield and may be held personally liable. [See the Canadian Encyclopedic Digest, Contracts IV Parties to a Contract, Corporate versus Personal Liability at paragraph 190.]
[12] Further support for this law on privity of contract is found in Cass v. McCutcheon, 1905 CarswellMan 36 at paragraphs 8 & 16:
…There must be two parties to a contract, and the rights and obligations which it creates cannot be transferred by one of them to a third person who could not be bound by it at the time it was made.” There cannot be any dispute as to that proposition.
…
On the ground that the company, not being in existence, could not be bound by the agreement, at the time that it was entered into, and could not be bound afterwards, except by entering into new contracts with the defendant to be accepted in lieu of the contract in question, as provided for in the agreement, and as no such new contracts are alleged to have been entered into, I think the company can have no claim whatever against the defendant under the agreement in question, and that the plaintiff should not be permitted to amend his statement of claim so as to be allowed to claim damages for the company as well as for himself.
Submissions of the Parties
[13] Counsel for Whitgift submitted that Housewise, as a limited company, cannot own a sole proprietorship in that a sole proprietorship is a person who conducts business in their own name or under a name registered under the Partnership Act, neither of which is the case herein.
[14] Counsel on behalf of the Defendant also submitted the Court should not afford the Claimant company the opportunity to amend the Notice of Claim to bring the law suit in the name of Housewise for two reasons. Firstly, the Claimant company was put on notice by Judge Bahen that it might have to file an amended Notice of Claim but it declined to do so. Secondly, counsel for Whitgift argued that the fact Housewise did not comply with the requirements of section 27 of the Business Corporations Act should disentitle it to such a remedy.
[15] The Claimant’s representative submitted that he did not know how to amend a Notice of Claim as one of the reasons he had not done so despite Judge Bahen’s order. This is puzzling in light of the fact Segal had previously filed an Amended Claim in response to the order of Judge Burgess. The Claimant also submitted it had been unable to find a new lawyer when former counsel, who had been acting up to the time of the appearance before Judge Bahen, moved to a new law firm.
Analysis
[16] Based upon the uncontroverted evidence and submissions at this stage, it is abundantly clear that there was no reason for Whitgift to believe they were doing business or contracting with Housewise Construction. The Customer Service Agreements are in the name of Segal Disposal. The one invoice presented to the court was made out by Segal and Whitgift wrote a cheque cashed by Segal in reliance of that invoice. Other documentation only adds, in small letters, the words “Housewise Construction Ltd. dba…” There would be no basis upon which a trial court could find Whitgift would have thought it was dealing with a corporation with limited liability. There is also no evidence to suggest that the parties entered into a new agreement with Housewise or that they agreed Housewise had taken over the Segal Disposal contract.
[17] It is important to note that the Claimant has been aware since at least the time the amended Reply was filed in March 2015, that the defendant would be arguing the lack of privity of contract relating to Housewise. As noted by JP Baynham in Housewise Construction Ltd. (c.o.b.a. Segal Disposal) v. Nyuyen [2015] B.C.J. 1185 (at paragraph 9), Housewise is not a litigant unfamiliar with the Small Claims court process in that between April 2010 and April 2015, it commenced 135 actions, including 79 at the Robson Square Registry alone. Moreover, as noted by this Court (Nyuyen at paragraph 12):
“On more than one occasion in the past, actions commenced by Housewise based on the identical or similar contractual wording have been dismissed by this court on the basis that there was no enforceable contract because no mention was made of Housewise in the written form of agreement.”
[18] The Nyuyen decision was filed on April 23, 2015. Despite the cautionary note of JP Baynham in that case, and despite Judge Bahen’s order earlier in the year, the Claimant did nothing to amend its Notice of Claim to try to address the concerns relating to privity of contract. The court process must be followed and there are consequences when a party fails to do so.
[19] Finally, I have concluded this would not be an appropriate case to proceed to trial to allow Housewise to pursue a remedy based on unjust enrichment. According to the file materials, the Defendant paid for services provided by the Claimant until it firmly and repeatedly notified the Claimant in writing that the standard of service was deficient and terminating the contract based on fundamental breach. The amount claimed by Housewise relates to charges it billed after such notice was provided and to penalty provisions in the contract. From the Notice of Claim, there is no suggestion Whitgift did not keep current its obligation to pay any invoices rendered by Segal prior to the termination notice in the spring of 2012. Secondly, as noted in Nyuyen (supra at paragraph 1), the Claimant “…is one of a small group of companies that is heavily involved in the aggressively competitive commercial waste disposal business.” This court has previously commented on the aggressive and unfair nature of the contracts involved and yet Housewise apparently has not seen fit to adjust its business practices. It would not be appropriate in the circumstances to allow this case to go forward on the remote chance of success on an alternative claim for unjust enrichment.
[20] In the circumstances, I conclude the claim by Housewise against Whitgift discloses no triable issue. Accordingly, the Defendant’s application to dismiss the claim is granted and the trial date will be vacated.
___________________________
N.N. Phillips
Provincial Court Judge