SCCH 334738
IN THE SMALL CLAIMS COURT OF NOVA SCOTIA
Cite as: Bulletproof Solutions Inc. v. Genie Knows Inc., 2011 NSSM 17
Between:
Bulletproof Solutions Inc.
CLAIMANT
- and –
Genie Knows Inc. DEFENDANT
DECISION AND ORDER
Adjudicator:David T.R. Parker
Heard: December 15, 2010 and January 5, 2011
Decision: March 23, 2011
Counsel: Ryan Conrod represented the Claimant
Joseph M. Herschorn represented the Defendant
Parker:-this matter came before the Small Claims Court in Halifax and Province of Nova Scotia. Before the matter proceeded the parties were asked if there were any preliminary matters or motions they wish to make to the court. The parties were also asked if they wish to make any amendments to the pleadings. There being none, both matters proceeded accordingly. In this particular case the Claimant provided testimony and evidence through Andrew Graham Jefferies and the Defendant presented evidence and testimony through Barbara Manning.
The Claim:
The claim involves a contract dispute wherein the Claimant is seeking payment for IT services provided to the Defendant. A portion of the services provided has been paid and a portion of those services has not been paid and which forms the claim. The pleadings of the Claimant stated that $26,950.51 remains the unpaid portion for the services provided and for purposes of fitting within the monetary jurisdiction of the Small Claims Court the Claimant has reduced its claim to $25,000.00 plus prejudgment interest of 4% per annum, plus costs.
The Defence:
The Defendant acknowledged that the Claimant provided the Defendant with certain IT services and that the Claimant has invoiced the Defendant in the amount of $244,497.44. The Defendant stated it has paid for all amounts invoiced by the Claimant except $26,950.51 for the following reasons:
1. Services not requested
2. Rates not agree to by the Defendant
3. Excessive rates charged
4. Work not done, and
5. Unnecessary work that was not requested.
Andrew Graham Jefferies:
Mr. Jefferies is the Claimant's assistant support manager and founding partner of the Claimant company. Mr. Jefferies explained the work the Claimant performed as well as the work it did for the Defendant. He also explained the Defendant was an online advertising company which had to have a secure system. Mr. Jefferies stated initially the Claimant had revenue pattern activities that were suspicious and that was the reason for the Defendant calling on the Claimant to see if there was a security problem. Mr. Jefferies explained the ongoing work in general terms and the role the parties played as reflected in "Statements of Work" documents provided to the Defendant by the Claimant.
The first Statement of Work is dated October 22, 2008. Mr. Jefferies was on site at the beginning of November 2008. The services being provided went from a forensic investigation to revamping the Defendant’s IT system. Mr. Jefferies position as an analysis and in that revamping role turned into Chief Technical Officer for the Defendant. As the engagement continued and as Mr. Jefferies role morphed into a Chief Technical Officer for the Defendant company it began to look as though Mr. Jefferies would sign on full-time as an employee of the Defendant company. However in June of 2009 Mr. Jefferies explained to the Defendant that he would not become an employee and would in fact stay in Fredericton as his family and he were not prepared to move to Halifax. Mr. Jefferies then suggested to the Defendant that one of its own employees move into the Chief Technical Officer position and he sent out a transition plan to allow this to occur. The particular employee suggested by Mr. Jefferies was not the one however selected by the Defendant and from this point onward a schism developed.
The Defendant hired a new Chief Technical Officer and following this hire it asked for a detailed breakdown of Mr. Jefferies time and billing. Mr. Jefferies indicated that unlike some of the other members of the Claimant's team his time was not detailed. He did say "in retrospect it should have been and because it was not detailed the [Defendant] asked for the details." Mr. Jefferies explained to the court that it was the only job that he was working on and therefore unlike other members of the company that went from one service call to another he did not break down his time as the others were required to do. Mr. Jefferies stated the transition to the newly hired Chief Technical Officer was abrupt and as a result he provided "as much as I could on how the system worked and then completed ‘deliverables’ to the Defendant as required." The last deliverable was an IT strategic plan. The plan was taken from industry standard methodologies and was the template provided to the Defendant which was based on international standards that were commonly practice. Mr. Jefferies said that the Defendant felt the plan was incomplete, inaccurate and lacked detail. Mr. Jefferies explained it is a vision document not a detailed document. He said that the overall purpose of the plan is to meet quality control required and provide the right process. He said the plan was an international standard and this is common practice rather than inventing or reinventing the wheel. He said that "we spent time tweaking this to their [the Defendant] environment. Mr. Jefferies said" in the end we were there because the development plan in the beginning was not there." As this became a contentious issue the Claimant decided to eliminate the costs associated with this plan and not charge Defendant for this plan. He said that the final work that was done was cleaning up missing documents in completing the strategic plan as defined as a deliverable in the January contract. He said that they were billing on a daily rate not on the deliverable itself and in January there was a lot of things happening; that is going from a revamping of the system to a Chief Technical Officer role. Mr. Jefferies also addressed concerns the Defendant had with double billing and also overcharging on mileage. The double billing represented two separate days by the members of this team. It represented two days in February and the second day was not billed until the second invoice was sent out. While the second day amounted to the exact same time including travel time as the first day it did represent two distinct days of work and was not intended to capture one day twice. The other invoice that referred to a charge of $100 he indicated that it should have been $60 and that was later rectified and credited back on a subsequent invoice.
Barbara Manning:
Ms. Manning along with her husband are the principles of the Defendant company. Genie Knows Inc. is an IT company that had its own software and developed a mid-level search engine. The company employs 35 people and has its offices on Argyle Street, Halifax Nova Scotia. Around 2003 it noticed that traffic patterns were not supported by revenue. In 2008 this intensified, that is their clients were sending in advertisements which they were not receiving. Prior to this the company had used the resources of a university professor from Dalhousie University who moved on to become department head. He recommended the Claimant to the Defendant in order to investigate their problems. Ms. Manning indicated that they were concerned that there was internal fraud as this had happened in the past. Ms. Manning said that the initial contract was fine and when we received the initial billing she felt it was reasonable as it was under the estimate cost provided to her company. However the second billing was very high so she asked her husband to show her the contract. Ms. Manning's husband was the founding principle of Genie Knows Inc. and he was the one that contacted the Claimant in the beginning. Ms.Manning said when she received the second bill which was in excess of $25,000 she then was very concerned. The relationship between the two parties continued on and Ms. Manning said when she looked back at the invoices and comparing them with what the Claimant was supposed to do, she just “thought they were higher than I expected." She did not ask for a revamping of their entire system but after she received the "Statement of Work" from the Claimant I agreed to it. Ms. Manning said Mr. Jefferies took over everything involved in the technical department area. All decisions and all moves had to go through Mr. Jefferies. Ms. Manning indicated in her testimony that the Defendant received documents late however there were no issues with the documents other than the strategic plan which according to her new Chief Technical Officer the plan was not a useful plan for their purposes.
Ms. Manning said that by the end of March Andrew Jefferies was acting Chief Technical Officer with which she had no issue. She said she requested Mr. Jefferies to put together a job description for Chief Technical Officers and that Andrew said he would like to take the position and that is when the Statement of Work provided for a new role for Andrew Jefferies. The CTO or Chief Technical Officers role was provided in the Statement of Work dated March 23, 2009. Ms. Manning stated in the Statement of Work "indicated payment for the CTO at the rate of $700 per diem and that was taken to mean he worked eight hours a day. Ms. Manning stated that when she received an e-mail dated March 6, 2009 she became anxious as the January Statement of Work was paid for but the e-mail shows the items had not been delivered. She said she felt we were into the Statement of Work for March in good faith and we still do not have January's deliverables. She said in an e-mail dated July 6, 2009 Mr. Jefferies provided his report from the initial project. She said this report or document said they had not found anything regarding the fraud inquiry. She said I would have expected this document when they decided to move into the second Statement of Work. She then went on to say that Mr. Jefferies said the deliverable for January would be completed by July 17, 2009. On January 28, 2009 Ms. Manning wrote the Claimant where she indicated that one of the main deliverables of the January 26 contract was a three-year strategic plan including an architecture design. She said that we have not yet received even a draft of such a plan. She said despite this they have been invoiced $29,974.00. In this letter Ms. Manning also requested May and June invoices to be detailed by way of a monthly report showing the hours, description of work completed for those hours and associated charges and billings for July August and September. Ms. Manning indicated that there was no breakdown for any of the invoices and that the time breakdown was only later provided at her request. . The Claimant sent time entry reports for Mr. Jefferies for May and June which outline the days work by Mr. Jefferies but provided no detail as to what was done on those days.. On August 19, 2009 Ms. Manning e-mail back to Mr. Jefferies thanking him for the breakdown and saying they added nothing to the billing information with respect to Mr. Jefferies billing time. With respect to the other associates of the Claimant’s team Ms. Manning was satisfied with the detailed breakdown provided. On September 3, 2009 via correspondence Ms. Manning wrote to the Claimant wherein she indicated that the deliverables had been received and that the documents were useful excluding the template for the development plan which the Defendant viewed as too complex and not customize to the Claimant's needs. Ms. Manning stated that she was not allowing the invoice number 5139 for time submitted for the completion of the strategic plan as this was allowed for in the January 26, 2009 contract. In addition the letter outlined other invoices which were not being paid being invoice 4781, 4769, 4921, 4651 and 5047. The letter went on to outline credits which the Defendant felt were due on work that was done by the Claimant. These credits involved the following:
1. double billing on invoice number 4399--- $1500.00
2. over billing[allowed for two months recurring@4288-Re-Jan/09 contract 3.3--- $18,112.00
3. $4720 for serious lacking and not useful strategic plan--- $4720.00
4. application development--- $1695.00
5. invoice 5139-worked covered under January 20, 2009 contract.--- $1695.00
6. HST--- $3643.51
The Claimant's VP of operations in a letter dated November 10, 2009 outline the position of the Claimant with respect to nonpayment of invoices and credits outline in the Defendant's September 3, 2009 letter. Basically the Claimant rejected the position of the Defendant and asked for full payment of $73,809.63 less $4720.00 related to the IT Strategic Plan which the Claimant decided to credit the Defendant.
On cross examination Ms. Manning confirmed that until June 2009 all invoices were paid. She did state however that she was not happy with the makeup of the invoices, "you could not tell what was going on." She said that she stopped paying the invoices in June of 2009 following a meeting with the Claimant's Mr. Johnson. The whole point of the meeting was to get deliverables which the company had not yet received. Ms. Manning stated "I did not tell Johnson I wasn't going to pay but that was the intent of the meeting." Much of the rest of the cross-examination dealt with the credits the Defendant was seeking and the work comprised of the credit of $18,112.00.*
Analysis:
Counsel for the Defendant raised the critical issue of the beginning of his summation that he reminded the court that it is incumbent upon the plaintiff to prove on the balance of probabilities their case. Much of the Defendant's case was that the Claimant in particular Mr. Jefferies never provided details of what he did in the time it took him to do the work. The second argument for not paying the bill is that Mr. Jefferies in his billing for February and March were for things that he was paid for already pursuant to the January Statement of Work contract. This is an interesting argument but what was happening here between these parties was not a break down minute by minute hour by hour or whatever analytical component you wish to break it into. Mr. Jefferies for the time that he was doing work for the company did not break down everything into exactly what he was doing hour by hour. What I am convinced of based on the totality of evidence of what he was doing, was working on matters related to the Defendant Company. These matters involved moving from a fraud analysis on the internal components of the company to an overall plan involving IT services for the company and then into a role for a Chief Technical Officer which both parties thought would be Mr. Jefferies’ position. The question I have is did Mr. Jefferies do work with respect for the company whether he was off-site or on site. After listening to his testimony it is clear that he was working on matters related to the company and I believe this was confirmed by the Defendants evidence herself. It is true that deliverables due or arising out of the January contract were not completed until much later than January. But it is not clear that the actual completion of those deliverables was already billed earlier in the January contract invoices. The amount of the claim is supported by the work that was done, the agreements in place and the credit the Claimant did provide the Defendant in regards to the plan that was in dispute. This amount would exceed the monetary jurisdiction of this court however the Claimant has decided to reduce a claim to fit within the monetary jurisdiction the court.
It Is Therefore Ordered That the defendant pay the claimant the following sums:
$25,000.00
$ 86.25 service costs
$ 179.35 court costs
$25,265.60