Executive Summary: Key Legal and Evidentiary Issues

• Plaintiff's initial pleadings were insufficient to justify a proprietary claim, leading to the cancellation of a Certificate of Pending Litigation.

• Unjust enrichment was initially struck due to the simultaneous pleading of a contract and the absence of justification for non-monetary relief.

• At trial, the court found the construction management contract illegal due to the plaintiff’s lack of builder licensing under the Homeowner Protection Act.

• Despite the illegality, the court allowed recovery under quantum meruit to prevent unjust enrichment to the defendant.

• The court disallowed profit-based portions of the claim but permitted recovery of actual construction costs and part of the management fee.

• The outcome reconciles procedural defects from the earlier ruling with equitable relief granted at trial based on the evidence.

Facts and outcome of the case

The contractual and procedural background

1153765 B.C. Ltd., a company controlled by Abhishek Nayyar, entered into an oral agreement with Jeannette Ty Dee Dann to oversee the completion of her residential construction project in Burnaby, British Columbia. The agreement came after the defendant terminated two previous builders and needed a new party to manage the remaining 60% of the work. The plaintiff claimed the parties had agreed to a cost-plus contract with a $50,000 management fee, while the defendant alleged a fixed-price agreement capped at $400,000. The plaintiff also initially claimed entitlement to a constructive trust and filed a Certificate of Pending Litigation (CPL) against the property, asserting an interest in land.

In an earlier ruling, the court struck the constructive trust and unjust enrichment claims and cancelled the CPL. It found that the pleadings did not establish a proprietary interest and that the plaintiff failed to explain why monetary damages were inadequate. The court awarded ordinary costs to the defendant and dismissed the monetary claim of $183,231.32, allowing the plaintiff to refile or amend.

The trial and findings on the merits

At trial, the plaintiff no longer pursued a proprietary interest but sought recovery of unpaid construction expenses and the management fee based on quantum meruit. The court found that the oral agreement was indeed a cost-plus construction management arrangement, not a fixed-price contract. However, it held the agreement was illegal under the Homeowner Protection Act because neither the plaintiff company nor Mr. Nayyar held a residential builder's licence. As such, the contract was unenforceable.

Despite the illegality, the court determined that the defendant had clearly benefited from the plaintiff's efforts and expenditures. It applied the doctrine of quantum meruit to prevent unjust enrichment. The court reviewed the construction costs in detail and addressed objections raised by the defendant, including concerns over siding replacement and payments to a subcontractor. The court found the plaintiff’s conduct reasonable and the expenditures valid, with the exception of costs associated with improperly registering warranty insurance under the name of a third-party company.

Damages awarded and procedural reconciliation

The plaintiff originally sought $182,831.32. The court awarded $156,304.07 after deducting $1,527.25 for the improper home warranty expense and disallowing $25,000 of the $50,000 management fee as illegal profit. The court emphasized that while profit cannot be recovered from an illegal contract, the defendant was not entitled to retain the benefit of the services without compensation.

This outcome reconciles the initial procedural shortcomings with a fact-based equitable remedy. Although the plaintiff's earlier pleadings failed to justify a constructive trust or CPL, the trial allowed monetary recovery based on evidence of value provided. The court also awarded the plaintiff costs as the substantially successful party at trial, to be determined by agreement or assessment.