22G Transportation Inc. v. Guru Nanak Freightlines Ltd., 2010 ABQB 740

Court of Queen ’ s Bench of Alberta Citation: 22G Transportation Inc. v. Guru Nanak Freightlines Ltd., 2010 ABQB 740 Date: 20101125 Docket: 1001 04069 Registry: Calgary Between: 22G Transportation Inc. Appellant - and - Guru Nanak Freightlines Ltd. Respondent _______________________________________________________ Decision of the Honourable Madam Justice B.E.

Romaine _______________________________________________________ Appeal from the Oral Decision of The Honourable Judge Brian O’Ferrall Dated the 24 th day of February, 2010 Docket: P0890102093 [ 1 ] On October 2, 2007, 22G Transportation Inc., acting through its principal, Jaskaranjit Gill, purchased a truck from Guru Nanak Freightlines Ltd. The evidence is not clear with respect to who signed the bill of sale on behalf of Freightlines, but it was in any

event signed by an authorized representative of Freightlines. [ 2 ] The purchase price was stated to be $32,000 plus GST on the bill of sale, but in fact Mr. Gill initially only paid $10,000. There is conflicting evidence as to whether the balance of the purchase price was to be paid two or three days later or fifteen days later, but this is not relevant except that it is clear that the rest of the purchase price was to be paid later. [ 3 ] The bill of sale initially indicated that the truck was free of liens. [ 4 ] On about October 5, 2007, Mr. Gill took possession of the truck.

It appears that at that time, the following “special condition” was added to the bill of sale: free of liens and encumbrances if any seller is responsible for that and also any accident or tickets. [ 5 ] Gurpeet Mann, the principal of Freightlines, initialled the change to the bill of sale. Mr. Mann was aware that Mr. Gill was trying to get financing for the truck and needed a bill of sale for that purpose. [ 6 ] A few days later, Mr. Gill discovered that there was a lien on the truck for about $27,000. He returned to Mr. Mann and demanded that Mr. Mann remove the lien. Mr.

Mann initially denied there was a lien, but later said that if Mr. Gill paid the rest of the purchase price, he would pay out the lien. It is possible that Mr. Mann was mistaken about the lien, and thought that, although Freightlines owed the money, the truck was unencumbered. [ 7 ] Mr. Gill refused to pay the balance of the purchase price on this condition, testifying that at this point he did not trust Mr. Gill. He kept the truck, however, and used it for business purposes. [ 8 ] About four months later, the truck was seized.

Seizure of the truck reduced Freightlines indebtedness to the lien-holder by about $23,000, leaving a deficiency of $8,598.08. [ 9 ] 22G Transportation sued for the return of its $10,000 deposit and Freightlines’ counter-claimed for the $22,000 plus GST owing under the bill of sale. [ 10 ] The trial judge gave judgment to 22G Transportation in the amount of $10,000, commenting as follows: [22G Transportation] paid $10,000 for a truck which was taken away from [Mr. Gill] four months after he bought it. [Mr. Gill] agreed to pay $32,000 plus GST for a truck that he could finance and perhaps sell, but [Mr.

Gill] couldn’t finance this truck, nor could he sell it except subject to the lien. [Mr. Gill] never did get title to the truck, at least not the title to the truck that he paid for - namely, one free and clear of all encumbrances. For that reason, there will be judgment against [Freightlines] for [22G Transportation] in the amount of $10,000. With respect to the counterclaim, [Freightlines] claimed the $22,000 owing under the bill of sale. That claim cannot be maintained for a couple of reasons.

The first is because [Freightlines] never did convey to the purchaser the title for which the purchaser agree to pay $32,000. In other words, [Freightlines] was in breach of its contract and therefore not in a position to recover monies owing under the contract and it was a fundamental breach. But much more importantly, [Mr. Mann] who complained a number of times throughout the trial that he never got his truck back, did get his truck back. That is, [Freightlines’] debt to CIT Financial was reduced by $23,000 - the proceeds of sale of the truck by CIT which was put before me by [Freightlines].

To award [Freightlines] $22,000 would be to see [Freightlines] paid $10,000 by [Mr. Gill] $23,000 by [the lienholder] and a further $22,000 by the Court for a total of $55,000. I mean, it makes no sense at all.

So in the end, [22G Transportation’s] claim is allowed in the entire amount of $10,000. [Freightlines’] counterclaim is dismissed. [ 11 ] Both parties are in breach of the contract in this case: 22G Transportation for breach of its agreement to pay the full $32,000 and Freightlines for its breach of warranty that there were no liens on the trust.

Both parties were entitled, therefore, to exercise the normal remedies of damages or rescission, and it appears that there was in effect mutual rescission. [ 12 ] In the normal course of things, money paid by even a guilty party to an innocent party in a rescission case is recoverable in a restitutionary claim, so that the trial judge was correct in giving judgment against Freightlines in favour of 22G Transportation in the amount of $10,000. However, such a claim is subject to a counter-claim for losses by the innocent party. Even though Freightlines was not entirely innocent of a breach, Mr.

Gill kept the truck while in effect rescinding the contract, and I find that the trial judge erred in not recognizing the damages that arose from that wrongful retention. Those damages are the costs of the seizure that were charged by the lien-holder against Freightlines, in the amount of $6,239.16. [ 13 ] There was also interest on unpaid debt, but no evidence was adduced to show that this arose from Mr.

Gill retaining the truck, and Freightlines could have mitigated these damages in any event by paying the debt. [ 14 ] I therefore allow the appeal by finding for Freightlines on its counter-claim in the amount of $6, 239.16. Heard on the 29 th day of October, 2010. Dated at the City of Calgary, Alberta this 25 th day of November, 2010. B.E. Romaine J.C.Q.B.A. Appearances: Jeffrey B. Woodruff for the Appellant J. Gill for 22G Transportation Inc., on his own behalf