IN THE SMALL CLAIMS COURT OF NOVA SCOTIA
Citation: Bauer v. Hartmann, 2018 NSSM 15
Claim: SCY No.471583
Registry: Yarmouth
Between:
SAM BAUER and ESTHER BAUER
CLAIMIANT
– and –
MANFRED HARTMANN and BARBARA HARTMANN
DEFENDANT
Adjudicator: Andrew S. Nickerson, Q.C.
Heard: March 8, 2018,
Decision: March 12, 2018
Appearances: The Claimants, Mr. Nicholas H. Comeau
The Defendants, Self-represented
DECISION
Facts
[1] At the outset I will make a brief comment with respect to language. It was clear from the proceeding that the Claimants fluently spoke the German language. The Claimants however gave their evidence in English and from my observations were fluent in English and were unquestionably able to clearly explain their position to the court. The Defendant’s first language is German. They brought with him Jeanette Hoffmann to assist them with translating should it be necessary. I questioned the Defendants, and in particular Mr. Hartmann, who was the only proposed witness for the defence, as to his ability in the English language and whether he was able to express himself sufficiently to explain his position to me. He said that he believed he was and that the Defendant Barbara Hartmann would not be giving evidence. I offered him the opportunity to have his evidence translated verbatim but he opted to proceed in the English language. Because of this I did not inquire of Mr. Comeau whether he would have objected to Ms. Hoffman’s participation as a translator. After hearing Mr. Hartmann on the stand it was clear to me that he certainly was not fluent in the English language, but through the rephrasing of questions when necessary, I am satisfied that he was able to explain the facts and circumstances he wanted to explain and conveyed his position sufficiently clearly to the court. I am confident that I was able to understand what he wanted the court to know.
[2] Mr. Bauer was the primary witness for the claimants. Mrs. Bauer gave evidence as well but primarily in the nature of confirming what her husband had said. Mr. Hartmann testified for the Defendants and Mrs. Hartmann did not testify as stated above.
[3] I found all of the witnesses to be reliable and truthful. I do not believe that any of them made any attempt to mislead the court and I have not found it necessary to make a detailed assessment of credibility. The facts that they related were essentially the same. What distinguished the parties was their interpretation and understanding of what their conversations amounted to and what was going to happen when the Hartmann’s arrived in Canada. I therefore will not set out each witness’s testimony and assess each witness’ credibility but I will set out the facts as I determine them from a consideration of the whole of the evidence.
[4] In January 2017 the Claimants had been advertising for someone to take over and operate a small café in Wedgeport, Nova Scotia that they had operated for several years through a closely held company called Briochedor Inc. that was known as “Café Brioche D’Or”. Mr. Hartmann is an experienced professional baker who says that he had operated a bakery business in Europe successfully for an extended period of time. He was interested in immigrating to Canada and was attracted to this opportunity.
[5] As a result of this the Defendants and the Claimants came in contact and entered into an agreement between them written in the German language which has not been produced to me. However all of the evidence indicated that this agreement was that the Hartman’s would take over the complete operation of the café on their own account and would under some arrangement eventually become the owner. I am satisfied that an essential element of this arrangement was that Mr. Hartmann would be fully responsible for the financial success or failure of the operation once he took over and would suffer the losses and be the beneficiary of the profits. The language Mr. Hartmann used to describe this on the witness stand was “on my responsibility”. I am satisfied from his evidence that by this he meant what would typically described as “on his account”.
[6] Mr. Hartmann suggested that they use a Canadian immigration lawyer in Nova Scotia which he knew of and believed was experienced and competent. The Claimants agreed that they should jointly use this lawyer, however upon consulting this immigration lawyer it was found out that Mr. and Mrs. Hartmann would not qualify to come to Canada unless the arrangement between the parties was that of employer and employee. Apparently there was an investment threshold which would have been necessary for Mr. and Mrs. Hartmann to come to Canada as entrepreneurs and they were unable to meet this criterion. Following the advice of the immigration lawyer they had an employment agreement drafted which was signed by Mr. Bauer on March 17, 2017, and in counterpart by Mr. Hartmann on March 18, 2017. This agreement is before me as Exhibit 1.
[7] Exhibit 1 makes no reference whatsoever to the purchase of the business or any part of it or that Mr. Hartmann was to be responsible for any expenses or be the beneficiary of any profit. It is a straightforward employment contract requiring him to work 40 hours a week, five days a week at a fixed salary of $40,000 per year. The job title assigned to him was “head baker” and his duties described in the contract related to hiring, training, and supervising bakery personnel and staff, obtaining the necessary supplies to produce breads and pastries, to maintaining the café equipment, and determining the type and quality of goods to be produced. Because this agreement was in the English language, I questioned Mr. Hartmann on the witness stand whether he had reviewed this employment agreement and whether he understood it. He replied to me that he had read it and that he was confident that he understood it at the time he signed it, despite the fact that he did need to look up some words and phrases on the internet to ensure that he understood the meaning of the English used. I am satisfied that he did understand the nature of the document and the duties and responsibilities of each party under the agreement.
[8] Nevertheless the parties mutually proceeded on the assumption that Mr. Hartmann would be completely operating the business on his own account. In furtherance of that, immediately prior to Mr. Hartmann’s opening of the café for the season, the accounts of the business were brought to zero. There was a bank account from which Mr. Bauer removed all funds and a credit card that Mr. Bauer fully paid off. Authority over the operation of the bank account and the use and responsibility for the credit card was given to Mr. Hartmann despite the fact that these technically remained in the name of an incorporated company owned by Mr. and Mrs. Bauer. Both parties agree that at, or just before opening of the café for the season, Mr. Hartmann injected $4,590 in to the company bank account from his own funds. In addition to this Mr. Hartmann paid the sum of $1,200 for the use of the premises and equipment. The evidence is unclear to me whether this was intended to be a monthly payment or an annual payment or precisely what it was intended to cover.
[9] The Hartmann’s arrived in Nova Scotia in approximately May 10. The café eventually opened on May 31, 2017 for the season. The parties had disagreed as to the opening date. When the Hartmann’s arrived there was a reality show film crew with them for several days. The Hartmanns also wanted to take some time to get settled and make arrangements for their children at school. It appears to me that Mr. Bauer’s expectation was that the café would open sooner than it did and that he would take the Hartmanns into the café very soon after arrival, review all operations with them train them on the existing menu and staff and then let them take over. There is a slight difference between the parties as to how much training was actually done, but I do not find it necessary to determine that question. It only related to the preparation of certain meals that the café had previously offered and the operation of the espresso machine.
[10] The parties also agree that Mr. Hartmann made his position very clear that he expected the Bauers to simply let him take over and do things in the manner that he deemed appropriate. The phrase he used in respect of this was that he expected the Bauers to “step back”. Exhibit 8 contains an email dated May 22, 2017 wherein Mr. Bauer stated “we discussed everything in detail and realize that our stepping back (Zurücktreten) is important to the success of you running the café as you envisioned”. I am satisfied that from that date at least Mr. Hartmann understood he was to be on his own to operate the café and that was the way he wanted it. Both parties agreed that from May 31, 2017 at the operation of the café was to be on the account of the Defendants in the sense that they would be entitled to any profits and would be responsible for any losses.
[11] At some point in May of 2017 the Mr. Bauer presented a draft “Lease to Purchase” for the café prepared by the law firm of Pink Star Barro for which the Claimant paid legal fees of $1,393.00. Mr. Hartmann did not respond to this document. Mr. Hartmann testified that he expected that both parties would attend the lawyer together and set out the agreement and viewed this procedure as the wrong way to proceed.
[12] I have been provided with the daily sales for the café from May 31 to June 25, 2017. The opening day went well with daily average sales of $635.88 during the first week but over the next 25 days the sales did slowly decline such that in the last week Mr. Hartmann was there the daily average sales were $274.70.
[13] This fact together with days when the café was not open, reports from staff which the Bauers felt were negative, led to a meeting between the parties. That did not lead to an agreement between the parties and then there was a series of emails from Mr. Hartmann to Mr. Bauer on June 21, 22 and 23 wherein Mr. Hartmann stated that he was turning responsibility for the café back to Mr. Bauer and would only be an employee (Exhibit 4). This lead Mr. Bauer to issue and deliver a “notice of termination of employment” on June 26, 2017. The parties then went their separate ways.
[14] Mr. Hartmann acknowledged that when he left he did take the cash funds which were in the till in the amount of $1,294. He gave these funds to his lawyer Ms. Kathryn Dumke Q.C.. He then sought the advice of the law firm of Cox & Palmer and the sum was transferred to the trust account of that law firm, where it remains at the time of this decision.
[15] Mr. Hartmann testified that he did obtain other employment at another restaurant establishment at the same salary shortly after these events. He says that he could not take that employment up until November 2017 because he had to redo his entire immigration applications and obtain new immigration approvals.
Issues, Law and analysis
[16] I will say at the outset that the circumstances of this case are regrettable in that we appear to have, on both sides, talented people, who had honestly held beliefs about what the arrangement was, but who, when problems arose, allowed their frustrations to get to the point that they could not compromise and they ended up before me. In my view, this entire matter was caused by the fact that these parties never clearly communicated their expectations to the other side before the arrival of the Hartmanns. Then they both felt stuck with an unsatisfactory situation that they could not end easily. The Bauers’ expectation that the Defendants would learn the existing operation and gradually incorporate Mr. Hartmann’s baking skills was not clearly explained to or understood by Mr. Hartmann. It appears to me that Mr. Hartmann did not clearly explain what he meant and how he intended to proceed with the operation of the business. I believe both parties honestly believed that things would go in the manner that they envisioned but neither party was careful to ensure that the other party understood their intentions and expectations. Consequentially they never did reach mutually agreed and understood terms. A lot of the problem is that both parties did not accept the immigration advice and limit the relationship to pure employment until permanent residence had been established. Then when things did not go well they blamed the other party and both sought compensation.
[17] I am left to determine how to apply the law to the facts of this case and, where I do have discretion, to do what is fair. Neither party is likely to be happy with my decision, but in my view both parties need to share responsibility for what happened. As in so many cases, it is the failure of clear communication that brings these parties before me. I am convinced that both parties have much to contribute to society and I hope that both of them will be able to put this matter behind them and continue to make those contributions.
[18] There clearly was a written contract of employment signed between the parties. This was drafted with professional assistance. As noted, I have concluded that language did not impair Mr. Hartmann’s ability to understand its contents. Mr. Comeau suggested that I apply the doctrine of contra proferendum because Mr. Hartmann had suggested the lawyer they would use. I do not find merit in this submission because that doctrine only relates to the interpretation of ambiguous phrases in a contract and I do not believe it has any application to the circumstances. I find that this employment agreement is an operative agreement which I must take notice of, interpret and give effect to.
[19] I find that the agreement signed in January, that I have not seen, was superseded by the arrangements and employment contract made in March 2017. The nature of that agreement as described to me was such that it was frustrated by the fact that was not enforceable in accordance with Canadian immigration law. I find that the parties abandoned that agreement and agreed to move forward afresh based on the immigration advice they received, but each retaining quite vague ideas how they would achieve the original intention in the face of the immigration laws.
[20] It was urged upon me that there was some kind of other contract made even after the employment contract which would eventually lead to Mr. Hartmann acquiring the business as an owner operator. I have difficulty with this proposition. Both parties had what I presumed to be competent immigration law advice. They both acknowledged that the clear advice was that the entrepreneur or investment route for entering Canada was not available under the Hartmann’s circumstances. They both made representations to the Canadian immigration authorities that Mr. Hartmann was to be an employee and nothing more. They both must accept responsibility for proceeding in a manner contrary to the immigration advice, and potentially the immigration laws. I make no finding as to whether they violated any immigration law or condition of the Hartman’s immigration as that is not my function and I do not base any portion of this decision on any potential violation. On the other hand, I do not see how I can uphold an alleged verbal contract which may be in violation of immigration law or commitments made to the immigration authorities.
[21] In addition to my observations in the prior paragraph, I find that the parties never really had a meeting of the minds and formed a binding agreement as a result of their verbal communications. They had very different perspectives as to what their respective duties and responsibilities were to be. There was too much left undecided and unclear for me to conclude that there was any consensus as idem.
[22] Nevertheless the principles of unjust enrichment, quantum meruit and simply fairness require me to determine how the funds removed from the account by Mr. Hartmann now held by Cox & Palmer should be accounted for. Although the Small Claims Court Act does not grant this court jurisdiction in equity per se, the Supreme Court of Nova Scotia has held that this court does have the authority apply these principles and make decisions based upon them.
[23] There were a number of claims made by both parties. I will set out each of them and my ruling with respect to each claim.
Return of equipment
[24] The initial claim requested the return of a 12 kg dough mixture and seven utensils having a value of $2,134. On the night of trial I was advised that this item had in fact been returned to the Bauers. Mr. Comeau on behalf of the Bauers, indicated the machine had a value of approximately $2,100. The utensils were never described to me and Mr. Bauer did not assert any further claim for their return. I therefore consider this aspect settled by the parties and I will not allow anything in respect of this claim.
Claimants’ claim for the costs of immigration legal services $1,150.00
[25] The Claimant seeks $1,150 paid to the immigration lawyer by him. I do not have an itemized bill with respect to this account and I cannot determine how much of it related to immigration advice and how much related to the employment agreement. Both parties benefited from the advice and indeed from the employment agreement.
[26] Mr. Hartmann alleges that the Claimants cannot seek this from him because the employment agreement provides a prohibition of the recovery of any “fees they have paid to a third party recruiter or recruitment agency… for services related to hiring and retraining the employee.” In my view legal advice does not fall under this description since a lawyer is not a recruiter. This clause does not assist the defendants. It is clearly there to satisfy an immigration requirement to prevent abuse by employers in the immigration process.
[27] I therefore find that the parties were equally responsible for this account and I am prepared to allow one half of this claim and find the Defendants liable for $575 in respect of this claim.
Claimant’s claim for cost of compliance fee
[28] In addition the Bauers paid a “compliance fee” of $230 to the immigration authorities. I find that Mr. Hartmann and Mrs. Hartmann received a benefit from the payment of this fee as it resulted in their ability to enter Canada. I am prepared to allow this claim in the amount of $230.
Preparation of the draft Lease Purchase Agreement
[29] I see nothing in the evidence to indicate that the Hartmanns requested or knew that the Bauers were going to have this document drafted. I think Mr. Hartmann’s reaction highlights his expectation that things would be done as in the European style legal system. He did not seem to understand that offering a draft with negotiation to follow is a fairly standard way to proceed in Canada.
[30] In any event this claim cannot be allowed. There is no obligation to pay the legal fees of the other side in the absence of agreement.
Missing receipts $285 (Exhibit 6)
[31] When the Bauers reviewed the credit card statement and reconciled it with the expense receipts that were left at the café after the Hartmanns had left, they determined that they did not have sufficient receipts to justify the amounts charged to the credit card. The claim stated that they sought “25% of this $1,443” in paragraph 10 and in their summary in paragraph 13 of the claim it is stated that they seek $285.
[32] There were a number of receipts submitted to the court on the evening of trial which are contained in Exhibit 8. I arranged for these to be copied and provided to counsel for the Claimant. I then granted the Claimant a recess of the proceedings to allow Mr. Comeau and the Claimants to review these and determine whether they were sufficient for the purposes.
[33] Mr. Comeau submitted that the receipts did not add up to an amount sufficient to respond to the claim and specifically noted one receipt in the amount of $30 which he says did not relate to the café operation.
[34] Not counting the $30 receipt, the receipts submitted total $816.18. I am satisfied that the receipts provided are more than sufficient to respond to this claim put forward as $285. I disallow this claim.
Wrongful dismissal
[35] I find that there was a contract of employment between the parties. I do not find it necessary to determine whether Mr. Hartmann’s dismissal was wrongful or not. Even though the agreement was signed in March of 2017, he did not actually begin employment until May 31. He worked only 26 days. Under the Nova Scotia Labour Standards Code. R.S., c. 246 the threshold for damages for wrongful dismissal starts after employment for three months. The relevant sections read as follows:
Termination of employment by employer
72 (1) Subject to subsection (3) and Section 71, an employer shall
not discharge, suspend or lay off an employee, unless the employee has been guilty
of wilful misconduct or disobedience or neglect of duty that has not been condoned
by the employer, without having given at least
(a) one week’s notice in writing to the person if his period
of employment is less than two years;
(b) two weeks’ notice in writing to the person if his period
of employment is two years or more but less than five years;
(c) four weeks’ notice in writing to the person if his period
of employment is five years or more but less than ten years; and
(d) eight weeks’ notice in writing
…………
(3) Subsections (1) and (2) do not apply to
(a) a person whose period of employment is less than three
months; [my emphasis]
…………
[36] That section precludes me from making any award under the Labour Standards Code.
[37] I have also considered whether damages are payable pursuant to the common law. Although not a rule or a law a commonly used starting point rough estimate of the damages for wrongful dismissal is one month for each year of employment. As I have stated this is only a rule of thumb guide typically used amongst members of the legal profession and does not have the force of law. I only cite it because it gives me a bit of a broad estimate of what might be payable for wrongful dismissal under the common law. Using this to give me a sense of the order of magnitude of what damages might be I find that the defendant would not be able to establish damages under the common law for an employment of less than one month.
[38] As a result of the necessity to reprocess all of the immigration procedures once he had obtained alternate employment Mr. Hartmann claims losses of income of over $17,000 until he could begin work again in November 2017. I do not find this delay is due to his dismissal but rather his particular immigration status. Being an employee of less than one month standing, the employer would have had the right to dismiss him without cause or notice at any time during that three month period. I find nothing in the employment agreement that restricts the claimants’ ability to exercise their rights under Nova Scotia Labour law.
[39] I therefore dismiss this element of the claim
Funds invested in the business
[40] The court and the parties cannot ignore the fact that Mr. Hoffman placed $4,590 of his personal funds into the bank account and that he used the credit card that was eventually returned to the Claimants. Both parties agreed that the operation of the café was to be on the account of the defendants, and Mr. Hartmann freely acknowledged that he was responsible for both the profits and losses of the operation. Exhibit 6 entered by Mr. Bauer is a breakdown of the revenues received and expenses incurred during the time that Mr. Hartmann operated the business. Mr. Hartmann did not challenge the accuracy of this accounting and I have no reason to doubt its accuracy.
[41] The statement shows a loss of $4,248 which results in a difference of $342 between the $4,590 deposited by Mr. Hartmann and the loss for which he was responsible.
[42] I make these calculations on an unjust enrichment/quantum meruit basis as I have found that there was no specific contract with respect to the transactions. That $342 must remain the property of Mr. Hartman.
[43] In the result I will allow a counterclaim by the Defendants in the amount of $342.
Legal fees to immigration lawyer
[44] Mr. Hartmann claims, he should be paid the legal fees paid to his immigration lawyer. I cannot agree with this claim. I repeat my finding in reasoning noted above that this should be divided equally between the parties.
Legal fees of Kathryn Dumke Q. C., Cox and Palmer
[45] Mr. Hartmann claimed reimbursement of legal expenses that he incurred to Kathryn Dumke Q.C. and to Cox and Palmer. I have reviewed these accounts. It appears that some of the amounts in these accounts relate to the giving the advice with respect to this matter and some with respect to other matters. It is not necessary for me to determine the allocation between various matters in these accounts because I cannot lawfully allow them anyway. The part that relates to something other than this matter is not relevant to this proceeding, and I cannot lawfully allow fees for the services of a lawyer or paid agent pursuant to the Small Claims Court Act and its Regulations. The Small Claims Court Act R.S.N.S. 1989, c. 430 sets out my jurisdiction to award legal and other costs:
29 (1) Subject to the provisions of this Act, not later than sixty days after the hearing of the claim of the claimant and any defence or counterclaim of the defendant, the adjudicator may
(a) make an order
(i) dismissing the claim, defence or counterclaim,
(ii) requiring a party to pay money or deliver specific personal property in a total amount or value not exceeding twenty-five thousand dollars, and any pre-judgment interest as prescribed by the regulations, or
(iii) for any remedy authorized or directed by an Act of the Legislature in respect of matters or things that are to be determined pursuant to this Act; and
(b) make an order requiring the unsuccessful party to reimburse the successful party for such costs and fees as may be determined by the regulations.
(2) No costs other than those authorized by this Act or the regulations may be awarded by an adjudicator.
[46] Small Claims Court Forms and Procedures Regulations O.I.C. 93-110 as amended to O.I.C. 2015-96 reads as follows:
15 (1) The adjudicator may award the following costs to the successful party:
(a) filing fee;
(b) transfer fee;
(c) fees incurred in serving the claim or defence/counterclaim;
(d) witness fees;
(e) costs incurred prior to a transfer to the Small Claims Court pursuant to Section 10;
(f) reasonable travel expenses where the successful party resides or carries on business outside the county in which the hearing is held;
(g) additional out of pocket expenses approved by the adjudicator.
(2) No agent or barrister fees of any kind shall be awarded to either party.
[My underlining throughout]
[47] I note for the benefit of the parties who are used to the European legal system and the terminology for lawyers in that system that the term “barrister” in this context refers to a lawyer giving advice, doing preparatory work with respect to a claim before or proposed to be made before any court, or representing a person in court. It is similar to but not exactly the same as “Rechtsanwalt” or “Prozessanwalt” in German.
Lease payment of $1,200
[48] The defendant sought reimbursement for the $1,200 that have been paid in respect to the use of the premises. As I indicated the evidence was not clear what this represented and for what it was to be paid. In my view it was part of the operations cost that Defendant was responsible for. Since neither party gave me a clear breakdown and the burden was on the Defendant’s to establish on a balance of probabilities that they were entitled to it. I have come to the conclusion I cannot order repayment.
[49 ] In this regard I want to make it clear to Mr. Hartmann that the Canadian legal system is based on the British common law which is referred to as an “adversarial” system. That means that the presiding judge does not act as judges do in the continental European systems as an investigating officer. I did my best to facilitate Mr. Hartmann telling me what he wanted to tell me but I could not act in any way to assist him and it was his burden to bring forward all aspects of his case. I have done my best to balance, ensuring that Mr. Hartmann was able to present his case, and maintaining my complete independence and neutrality.
Summarization of claims
[50] In total I have allowed claims of the claimant in the amount of $805 and claims of the defendant in the amount of $342.
Funds at Cox & Palmer
[51] For the same reasons set out under “Funds invested in the business” in my view these funds have to belong to Mr. Hartmann. They were part of the operations he undertook and put his money in and do not represent any contribution from the Claimants.
[52] As to the funds remaining in trust at Cox & Palmer, sections 9 and 15 of the Small Claims Court Act authorizes me to make orders “requiring a party to pay money or deliver specific personal property ….”. I find that the funds held in trust by Cox & Palmer are “specific personal property”. I will order that the defendants forthwith give specific instructions to Cox & Palmer to pay the sum of $805 in trust to the law firm of Pink Star Barro for the benefit of the claimant to satisfy the order I will make. The sum of $489 shall be the defendant’s funds.
[53] I expect the Defendants will comply with my direction and order but the Claimant may apply to me, upon notice to both the defendants and Cox & Palmer, for a determination of whether or not I have jurisdiction to directly order to Cox & Palmer to make the payment. Should the claimant wish to make such a motion, the Claimant must serve Cox & Palmer with a copy of this decision, knowing that I will not make an order against Cox & Palmer with respect any funds disbursed prior to that law firm receiving a copy of this decision or without hearing Cox & Palmer in any event.
Costs
[54] Since, in my view, the success of the competing claims has been relatively equal, I will order no costs to any party.
Dated at Yarmouth, Nova Scotia this 12th day of March, 2018.
Andrew S. Nickerson Q.C., Adjudicator