Written by Xiyuan Feng
Contracting with an employee of a company does not automatically suggest that the company itself intends to enter into the contract. In Kassam v Dream Wines Corporation,  a recent judgment of the Supreme Court of British Columbia, the Court found that a corporation was not bound by the contract to which its vice-president had agreed.
Kassam, the plaintiff, was a wine collector residing in Ontario. Dream Wines Corporation (“Dream Wines”) is an Alberta corporation (though headquartered in Vancouver) that is in essence a wine broker, connecting wineries to business purchasers in British Columbia and Alberta without handling the wine it sells. In late 2020, Kassam agreed to purchase 138 bottles of wine for $85,000 from the then vice president of Dream Wines, Mr. Gunsten. He paid directly to Gunsten’s bank account via wire transfer, yet Kassam never received his wine. In early 2021, Kassam became aware that Gunsten’s employment had been terminated and started to pursue Gunsten for repayment, but it has not been paid in full before Gunsten’s bankruptcy. Kassam therefore sought to recover $85,000 in damages from Dream Wines for breach of contract, arguing that the contract was made between an agent of Dream Wines and himself. Alternatively, Kassam sought to have Dream Wines held vicariously liable for conversion committed by Gunsten.
Two months prior to the transaction under consideration by the Court, there had been another transaction between Gunsten and Kassam. In the September 2020 transaction, Kassam had agreed to purchase 18 bottles of wine to Kassam for $50,000 through his company. In the invoice presented in this earlier transaction, there was no reference to Dream Wines at all. In the transaction at issue before the Court, Kassam asked for a receipt that was “like that last time”.
The Court dismissed the claim that Dream Wines was bound by the wine purchase agreement since Gunsten entered into this agreement in his personal capacity. It confirmed that a company is responsible for its employee’s performance when the employee was given express or apparent authority by the company, or the employee’s conduct is customary in the business. In this case, the Court held that there was no evidence to suggest that express authority existed, nor is the conduct of selling wine directly to an individual in Ontario so that Gunsten’s actions would be the usual or customary practice of Dream Wines.
In addition to agency, the Court also analyzed the circumstances before and after the wine purchasing agreement to determine who were the parties in the agreement. Through balancing factors in the view of a reasonable objective bystander, including Gunsten’s Dream Wines email address to communicate with Kassam, Gunsten’s employment status with Dream Wines, Dream Wines’ general practice, the language in correspondence, no calculation of sales tax in payment, and requesting reimbursement from Gunsten personally, the Court concluded that Dream Wines was not a party to the agreement.
With respect to the vicarious liability of Dream Wines for the allegedly tortious conduct of its employee, the Court was not satisfied that conversion has been committed. Gunsten’s conduct of holding $85,000 was permitted by Kassam. (a permission to receive the money means that the receipt is not wrongful). Without wrongfulness, there is no conversion; and Gunsten did not convert the fund or the wine to his own use.
While the Court took a narrow view of the actual authority of a corporate officer, and also what would constitute “usual for the agent or customary in the business”, (after all, an officer of a wine selling business is selling wine in the transaction), the fact that is any reasonable person in the position of Kassam would likely have been put in notice by the unusual features of the transaction (discussed above) to inquire further as who was providing the supply of wine (Dream Wines or Gunsten). Given this, it would unfair that the corporate employer would be liable when Kassam knew or ought to have known that this might not be the case, and chose not to inquire.
This case confirms that, overall, before entering an agreement, people sitting on the table ought to clarify parties involved, i.e., whether one acts for a company or oneself. If agency is disclosed by one person, the others ought to request proof of authority from the corporation before proceeding. In this way, parties can be clear from whom they can obtain remedies if and when breaches occur.
 2022 BCSC 1069 [Kassam].
 Ibid at para 9.
 Ibid at para 10.
 Ibid at para 14.
 Ibid at para 16.
 Ibid at para 17.
 Ibid at para 2.
 Ibid at para 12.
 Ibid at para 14.
 Ibid at para 29.
 Ibid at para 24 (citing G.H.L. Fridman, Canadian Agency Law, 3rd ed. (Markham, Ontario: LexisNexis Canada, 2017) at 25).
 Kassam, ibid at para 27 (citing Business Corporations Act, SBC 2002, c 57 s 146(c)(ii)).
 Kassam, ibid at para 28.
 Ibid at para 25.
 Ibid at para 26.
 Ibid at para 29.
 Ibid at para 33.
 Ibid. See also, Canadian Laboratory Supplies Ltd. v. Engelhard Industries of Canada Ltd.,  2 SCR 787 and 373409 Alberta Ltd. (Receiver of) v. Bank of Montreal,  4 S.C.R. 312.
 Kassam, ibid at para 38.
The views and opinions expressed in the blogs and case reporter are the views of their authors, and do not represent the views of the Desautels Centre for Private Enterprise and the Law, the Faculty of Law, or the University of Manitoba. Academic Members of the University of Manitoba are entitled to academic freedom in the context of a respectful working and learning environment.