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Richmond firm, Merritt hotel operator both lose in botched furniture sale lawsuit

A B.C. Supreme Court judge ruled the two companies failed to substantiate their claims
bcsupremecourt
A judge has dismissed claims from a Richmond furniture company and a Merritt hotel operator over a failed furniture sale. Rob Kruyt/Business in Vancouver

A court battle over a botched furniture sale between a Richmond furniture design company and the operator of a Merritt hotel ended with both sides losing.

A representative of Coquihalla Motor Inn Ltd. (CMIL), which operates Ramada Limited Merritt, had ordered furniture including dining chairs, headboards, tables and nightstands from Richmond-based Very Jazzroo Enterprises Incorporated (VJEI).

In a 2022 lawsuit filed by CMIL in B.C. Supreme Court in Vancouver, it accused VJEI of breaching the contract by allegedly overcharging and failing to deliver goods and sought $68,662.07 in damages.

VJEI, on the other hand, said CMIL was not a party to the contract and had no right to sue. It also claimed for payment of $854,216.84 allegedly owing under the contract signed with CMIL’s general manager Anoop Sekhon.

Both claims were dismissed by B.C. Supreme Court Justice Warren Milman in a summary judgment issued Tuesday, Nov. 14.

Hotel manager refused delivery, delayed payment

In September 2020, Sekhon entered into contracts with VJEI to purchase 28 dining chairs for $4,390.09 plus the cost of freight and other pieces of furniture totalling $63,355.81.

Sekhon had signed and initialed the quotations from VJEI and CMIL’s name did not appear in the contract. VJEI’s name was not mentioned in the contract either as it was doing business under the name “Hospitality Designs.”

Half of the purchase price was paid several days after the contract was signed.

A few months later, in January 2021, a VJEI employee contacted Sekhon about the design and Sekhon ultimately agreed to pay extra to make changes to the designs, bringing the total price to just over $67,000.

Three invoices were then issued to Sekhon in February and March for the payment of all furniture and freight costs for the chairs, and he was also asked to confirm the delivery timing for the chairs.

Although Sekhon approved the proposed delivery timing, he did not respond to requests for payment of the final amount until May, when VJEI told him they would have to impose monthly storage charges because they could not ship the order without the final payment.

In response to the storage charges, Sekhon refused to make further payments and said his interpretation of the contract meant payment was due after the furniture arrived in Vancouver from Asia and before they were shipped to Merritt.

CMIL ultimately paid the final amounts in May and June and the chairs were delivered by the end of June.

Later in July, VJEI told Sekhon the rest of the furniture was estimated to arrive at the end of the month.

Sekhon, however, refused delivery until end of August and said the hotel was “fully occupied by wildfire evacuees and all of the storage containers in Merritt were full,” reads the judgment by Milman.

The furniture ultimately arrived on Aug. 24, 2021 and VJEI issued two invoices to Sekhon for alleged additional freight costs for shipping the furniture from Asia to Vancouver and for costs allegedly incurred for moving and storing the goods after Sekhon refused to take delivery.

Sekhon refused to pay the invoices, arguing he only had to pay the cost of shipping them from Vancouver to Merritt, and VJEI refused to release the shipment.

CMIL sold shares in hotel, VJEI sold the furniture

During the lawsuit in October 2022, a B.C. Supreme Court justice granted an order for VJEI to release the furniture to CMIL if CMIL paid $20,000 into the court.

However, wrote Milman, CMIL didn’t end up paying nor did it take delivery because CMIL and Sekhon sold their interest in the hotel in late November 2022, “leaving them without any need” for the furniture.

CMIL then dropped the request for delivery and instead sought damages for non-delivery.

VJEI then sold the furniture to a third party for $40,420 in April 2023. It also amended its counterclaim against Sekhon to add a claim for interest, an administration fee and penalty for storage, making it a total of $854,216.84.

Companies failed to substantiate their claims

In his judgment, Milman dismissed CMIL’s claim because it failed to prove Sekhon had signed the contract on its behalf and not in a personal capacity.

He explained although CMIL made wire payments under the contract, it was not enough to persuade him CMIL was the buyer instead of Sekhon.

He added CMIL also failed to establish VJEI wrongfully neglected or refused to deliver the furniture when CMIL was willing and prepared to take them, as the delay in delivery was “attributable essentially to Mr. Sekhon’s refusal to effect payment in full prior to shipment, as required by the contract.”

Although Sekhon may have had good reason to refuse to accept the goods in late July due to “unforeseen impacts of the wildfires,” Milman said it did not give him the right to make VJEI bear the costs of delivering later.

He concluded Sekhon breached the contract by refusing to reimburse VJEI for handling and storage costs and was in no position to demand release of the furniture.

Milman acknowledged his decision meant Sekhon would be left with nothing in return after paying the entire purchase price, while VJEI would effectively have been paid twice — once by CMIL and once from selling the furniture earlier this year.

“Nevertheless, it does not follow that the buyer is entitled by virtue of those facts to a refund of the purchase price,” he said, adding that CMIL sought damages for failure to deliver rather than claiming for restitution.

He also rejected VJEI’s counterclaim for the “fatal flaw” of failing to show it had the contractual right to refuse to release or deliver the furniture without prior payment of the freight from Asia to Vancouver.

It had not quoted and invoiced a separate shopping cost for delivering the furniture to Vancouver and instead offered an “all-inclusive price” including freight to Vancouver.

Milman added VJEI had no right to charge additional amounts to ship the goods to Vancouver and showed no evidence that it incurred any additional costs.

“In the absence of any basis for a finding of liability in favour of VJEI, it is unnecessary to decide whether and to what degree VJEI’s heavily inflated damages claim consists of an unenforceable penalty,” wrote Milman.

CMIL and VJEI will have to bear their own legal costs unless they ask the court for a different order within 30 days from the summary judgment.

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