Amik Oilfield Equipment & Rentals Inc. Plaintiff - v. -, 2016 ABQB 624

Court of Queen’s Bench of Alberta Citation: Amik Oilfield Equipment & Rentals Inc v Beaumont Energy Inc, 2016 ABQB 624 Date: 20161107 Docket: 1501 08382 Registry: Calgary Between: Amik Oilfield Equipment & Rentals Inc. Plaintiff - and - Beaumont Energy Inc., Beaumont Energy Inc. carrying on business as Whitecap Resources Inc. and Whitecap Resources Inc. Defendants _______________________________________________________ Memorandum of Decision of J.L.

Mason , Master in Chambers _______________________________________________________ [ 1 ] In reasons dated April 1, 2016, I found that Whitecap Resources Inc. breached the contract made between its predecessor Beaumont Energy Inc. and Amik Oilfield Equipment & Rentals Inc., when it refused to take delivery of six units of oil field equipment ordered by and built to Beaumont’s custom specifications. At paragraph 99 of those reasons, I directed a further hearing on the quantum of damages: The only remaining issue is what Whitecap should pay Amik as a result of its refusal to take delivery of and pay for the Units.

I direct that the parties contact the Masters’ office to set up an appointment to discuss the procedure for a hearing on this topic. More briefing and evidence is needed to properly determine the amount to be awarded.

I anticipate that this may be capable of being addressed through affidavits and cross-examination, such that oral evidence at trial may not be necessary. [ 2 ] Amik submits that it is entitled to damages equivalent to the contract price for the six units. [ 3 ] Whitecap resists the damages sought on several grounds: the plaintiff was named as “Amik Oilfield Equipment and Rentals Inc.” but the correct name is “Amik Oilfield Equipment and Rentals Ltd .”; all the units ordered were paid for; Amik’s employee

previously admitted that Amik’s “loss” was 40% of the purchase price; Amik has not proven its loss; and Amik failed to mitigate itsdamages. [4] For the reasons that follow, Amik’s damages are assessed at $486,165.12. Does the reference to the plaintiff as “Inc.” instead of “Ltd.” preclude the claim for damages? [5] The plaintiff’s corporate designation has been referred to as “Inc.” throughout these proceedings.

At questioning ondamages, Amik’s president and chief executive officer, Robert Heffner testified that his employer was Amik Oilfield & Rentals “Ltd.” [6] Corporate searches disclose that “Amik Oilfield & Rentals Inc.” does not exist. There is only “Amik Oilfield & Rentals Ltd.” [7] Whitecap asserts that as the named plaintiff is non-existent, it is incapable of suffering damages.

It says that the naming ofthe plaintiff is a fatal error that cannot now be remedied. [8] In response to Whitecap’s assertion, raised for the first time in Whitecap’s brief submitted for this hearing, Amik took out anapplication to amend its pleadings to correct the error in the plaintiff’s name, as well as an error in the body of the claim. [9] This latter error concerns the month in which Amik alleged Whitecap’s predecessor ordered the six units at issue.

Paragraph9 of the Amended Statement of Claim refers to the order taking place in September, when in fact the order occurred in December and theparties had dealt with the dispute on that basis. Whitecap objected to

summary judgment on the basis of this error. I stated at paragraph48 of my April 1, 2016 reasons: It is clear on all the material before the court that the September 2014 Order has never been in issue between the parties, and that theDecember 2014 Order has always been in issue. Notwithstanding the single incorrect reference in the statement of claim to “September”instead of December, Amik’s statement of claim does in fact address non-payment for the remaining six Units ordered by Beaumont inDecember of 2014, as does Amik’s application for

summary judgment. [10] I went on to find that Whitecap’s defence and brief in response to Amik’s

summary judgment application addressed theDecember Order. At paragraphs 53 and 54 of my reasons, I stated the following: Whitecap suggests that an amendment application should have been made prior to this

summary judgment application, and that only ifthe amendment were allowed and Whitecap given time to amend its defence, should the court entertain a

summary judgment applicationseeking judgment on the December 2014 Order. This approach is inconsistent with the obligation of litigants under Rule 1.2(3)(

a) to identify the real issues in dispute, and facilitate thequickest means of resolving the claim at least expense. To the extent necessary, I would be prepared to amend paragraph 9 of thepleadings from “September 2014” to “December 2014”, based on the evidence filed. [11] Whitecap argues that proceedings taken by a non-existent corporate entity are a nullity, citing Wolfe v Shawcor, 2016 ABQB261 at paragraph 56 and Lee v Segal’s (Michael) Inc., 1972 CarswellNat 475 (Fed. T.D.) at paragraph 4.

Those cases respectively holdthat a struck corporation and an entity that has lost status cannot commence or maintain an action. That is not the situation here. [12] Whitecap further submits that since judgment on liability has been entered, the court is functus and unable to order anyamendments. It refers to Fas Gas Oil Ltd. v J.H.

Automotive Ltd., 2004 ABCA 120 at paragraph 19 and Truehope v Stringham, 2014ABQB 772 at paragraph 5 and rules 9.12-9.14. [13] Those cases and rules refer to when the court may vary judgments and orders, both before and after entry. [14] This is not a matter of varying the judgment granted.

It is a matter of amendment to the pleadings to correct non-substantiveerrors in naming the plaintiff and in the month of the disputed order. [15] Whitecap also cites ATB v Naber (1994) (AB KB), 161 AR 393 and Canada West Tree Fruits Ltd v TGBright & Co, (BCCA) in support of its position. [16] ATB v Naber says that a defendant cannot deliver a statement of defence after the action has gone to judgment, since thejudgment closes out belated defences that were or could have been raised. [17] In Canada West Tree Fruits Ltd v TG Bright & Co, the trial judge permitted an amendment to add a further claim inmisrepresentation, following trial and entry of judgment for liability in contract.

The British Columbia Court of Appeal held the trialjudge was functus. The Court also held that the trial judge was functus when he made a further declaration following the entry of thejudgment. [18] These cases state that substantive amendments to the pleadings following the entry of judgment are not permitted.

This is notthe situation here. [19] Rule 6.3 contemplates that applications may be made during an action and post-judgment: Unless these rules or an enactment otherwise provides or the court otherwise permits, an application may only be filed during an actionor after judgment is entered. [Emphasis added.] [20] Sub-rules 3.74(2)(

b) and (3) provide: 3.74(2) On application, the Court may order that a person be added, removed or substituted as a party to an action if

... (

b) in the case of an application to add or substitute any other party, or to remove or to correct the name of a party, the application ismade by a party and the Court is satisfied the order should be made.(Emphasis added.) (3) the Court may not make an order under this rule if prejudice would result for a party that could not be remedied by a costs award, anadjournment or the imposition of terms. [21] Here, the amendment requested to the style of cause is to correct an error in the naming of the plaintiff. It is a classic situationof misnomer. There is no dispute that the limitation period has not yet run.

Amik is still within time if this claim is defective andincapable of amendment as Whitecap asserts. [22] Whitecap was under no illusions as to who the purported contracting party was and who was seeking damages from it in thisclaim. This is not a situation where some other legal entity, against whom Whitecap may have had some distinct defence, is beinginserted into the action.

As Whitecap itself points out, the currently named plaintiff does not exist. [23] As stated by Côté JA for the majority in Rocklake Enterprises Ltd v Timberjack Inc, 2001 ABCA 191 at paragraph 26,“[w]here there is a true misnomer, the party is the same all along, and need not be changed...Only a mistaken version of the party’s nameis corrected”, citing Leesona v Consol.

Textile Mills (SCC), [1978] 2 S.C.R. 2 at 8. [24] Regrettably, Whitecap has again taken an approach inconsistent with its obligations under rule 1.2(3)(a), this time in regard tothe obvious error that was made in referencing Amik’s corporate suffix in these proceedings. [25] The style of cause, the reference to the plaintiff in paragraph 1 and the reference to “September” in paragraph 9 of thestatement of claim shall be amended as requested. [26] These non-substantive amendments date back to the commencement of the action pursuant to Korte v Cormie (1996), 1996ABCA 15 , 36 Alta.

L.R. (3d) 431 (CA) and do not result in a non-permissible interference with the

summary judgmentpreviously granted on the issue of liability. Were all the units ordered paid for? [27] Whitecap emphasizes that Amik has maintained throughout these proceedings that 30 units were supplied following theSeptember quote, and that six of these have not been paid for. Whitecap argues that in fact, 33 units have been paid for following theSeptember quote.

It suggests that this means that there are no ordered units that have not been paid for, and thus no damages suffered. [28] It relies on the affidavit of Whitecap VP Productions & Operations Joel Armstrong, filed September 13, 2016 to advance thisargument. [29] Whitecap included an unsworn copy of Mr. Armstrong’s affidavit in the last tab of its responding brief for this hearing, filedSeptember 9, 2016. This escaped the notice of Amik’s counsel, perhaps because Whitecap had relied on affidavit evidence from Mr.Armstrong in the previous hearing.

The affidavit was filed one week before the hearing. [30] Whitecap asserts that the reason for the affidavit was to put a particular document into evidence in response to Amik’s claimfor damages. It is described as a “Whitecap accounting record” which shows payments made by Whitecap to Amik…in 2014 and 2015”.Whitecap submits that this document had only recently come to its attention. [31] Amik points out that Whitecap questioned Mr. Heffner on this very document in June of 2016. This questioning was ondamages only. Whitecap did not seek questioning by way of a court application prior to the

summary judgment application. [32] The obligations of applicants and respondents concerning affidavit evidence is addressed in rule 6.6(1): 6.6(1) If the respondent to an application intends to rely on an affidavit or other evidence when the application is heard or considered, therespondent must reply by serving on the applicant a copy of the affidavit or other evidence a reasonable time before the application is tobe heard or considered.

(2) The applicant may respond by affidavit or other evidence to the respondent’s affidavit or other evidence but must (

a) serve the affidavit or other evidence on the respondent a reasonable time before the application is to be heard, and (

b) limit the response to replying to the respondent’s affidavit or other evidence.

(3) If either the respondent or applicant does not give the other reasonable notice, the Court may impose costs on the party who did notgive reasonable notice, and the party who did not give reasonable notice is not entitled to rely on that party’s evidence unless the Courtotherwise permits. [33] Whitecap asserts that Civil Practice Note 2 permits new affidavits to accompany a respondent’s brief. [34] Paragraph 9(

a) of that practice note directs an applicant to file and serve its “Application, Affidavits, brief and authorities” the

third Friday before the week in which the special hearing is to be heard. The respondent’s “brief and authorities” must be filed and served the second Friday before. There is no mention of a respondent providing affidavits at that time. [ 35 ] In my view this is consistent with the concept that new evidence should not be submitted along with a responding brief in a special application. That is neither a fair or efficient way of litigating. There is a great demand for special applications and they are scheduled many months in advance. This one was set down on May 12, 2016. The questioning of Mr.

Heffner took place on June 7, 2016, and, as noted, included questions on this accounting record. Whitecap knew then that the court would be dealing with the question of damages on September 21, 2016. To purport to file a new affidavit with its responding brief is not reasonable in these circumstances. [ 36 ] I therefore decline to consider the additional affidavit pursuant to rule 6.6(3). [ 37 ] In any event, the argument to which this additional affidavit is addressed goes to liability, which has been determined. It does not go to the question of damages.

Did Amik admit that its loss was 40% of the purchase price? [ 38 ] As referenced at paragraphs 24-31 of my April 1, 2016 reasons, several emails were exchanged between the parties after it became apparent that Whitecap did not want to pay for the remaining six units. [ 39 ] Amik’s Sales Manager Lyle Duhaime was asked about this when Whitecap cross-examined him on his affidavit in support of the

summary judgment application: Mr. Popowich : Did you provide a restocking fee to Beaumont? Mr. Duhaime : We discussed it right here. Mr. Popowich : And what was it? Mr. Duhaime : He told me to get a restocking fee, and Whitecap will let you know how they would like to proceed. So then I got the restocking fee. Mr. Popowich : M-hm. Mr. Duhaime : And that’s where this – Mr. Popowich : How much was that? Mr. Duhaime : This email to Brad Jennings. Mr. Popowich : And that’s Document J in your affidavit? Mr. Duhaime : Yes. Mr. Popowich : And I gather, having reference to the April 21 email, you would restock at 40%?

Mr. Duhaime : That’s right. Mr. Popowich : Now, does that mean they pay 40 percent of the bill or pay 60 percent of the bill? Mr. Duhaime : They pay 40 percent. Mr. Popowich : And that was your estimated loss? Mr. Duhaime : Yes. [ 40 ] Whitecap asserts that Mr. Duhaime’s evidence constitutes an admission by Amik as to the measure of its loss, and that Amik has not offered any clarification or explanation for his evidence. [ 41 ] Amik President and CEO Robert Heffner does address this topic in his affidavit in support of the damages hearing. He refers to the April 21, 2015 email and confirms that Mr.

Duhaime offered Whitecap the restocking fee after it refused delivery of the units, in what turned out to be an unsuccessful attempt to resolve the impasse. He explains that since the six custom units were not saleable to any other company, Amik was prepared at that time to take 40% of the purchase price and walk away. [ 42 ] In the circumstances, Mr. Duhaime’s statements at questioning on his affidavit in support of

summary judgment do not constitute an admission by his employer, Amik as to the appropriate measure of damages in this lawsuit, nor are they determinative of that question. Has Amik proven its loss and made reasonable attempts to mitigate its damages? [ 43 ] Amik confirmed in its submissions that it is seeking damages for non-acceptance of the goods under

section 49 of the Sale of

Goods Act RSA 2000, c S- 2 , and not pursuing recovery of the purchase price based on the property in the goods passing to Whitecap under

section 48. It argues, however, that its damages are equivalent to the purchase price, and that it was not required to attempt to sell the units or their parts, given their unique nature and the poor market conditions. [ 44 ] Whitecap asserts that Amik has not provided sufficient evidence for the court to assess its damages, and that it has failed to mitigate. [ 45 ]

Section 49 of the Sale of Goods Act confirms that the measure of damages for wrongful non-acceptance by the buyer is the loss to the seller. It provides: 49(1) When the buyer wrongfully neglects or refuses to accept and pay for the goods, the seller may maintain an action against the buyer for damages for non-acceptance.

(2) The measure of damages shall be the estimated loss directly and naturally resulting in the ordinary course of events from the buyer’s breach of contract.

(3) When there is an available market for the goods in question, the measure of damages is, in the absence of evidence to the contrary, to be ascertained by the difference between the contract price and the market or current price of the goods at the time or times when they ought to have been accepted, or, if no time was fixed for acceptance, then at the time of the refusal to accept. [ 46 ] If there is an available market for the goods, the seller is entitled to the difference between the contract and market price. If not, as G.H.L.

Fridman states in Sale of Goods in Canada , 6 th ed. (Toronto: Thomson Reuters Canada Ltd., 2013) at pages 309-310, the court must assess the loss to the seller as best it can, on the basis of loss of profit. This may involve taking into account the cost of manufacturing or procuring the goods, or the cost of altering them to enable resale. [ 47 ] While the market for oilfield equipment is weak, I am not convinced that there is no value in the units. Mr. Heffner acknowledges in his affidavit that the six units could potentially be sold at auction for up to $52,156.

His evidence is based on hearsay statements from Mr. Duhaime, who reported a discussion he had with Ritchie Bros. [ 48 ] Mr. Heffner further states that another option would be to disassemble and sell the main components of each unit, for a potential net recovery of $127,419.24. He breaks down the parts comprising the main components, and what they could be sold for in a series of detailed spreadsheets. His evidence that only some parts are salvageable, and would be subject to a standard discount of 50% as they would be slow moving and considered by the market to be “used” is unchallenged.

I accept that there is no further value to be realized from these units. Whitecap did not lead any competing evidence of value. [ 49 ] It is clear that Amik has suffered a loss. It manufactured these custom units to Beaumont’s specifications, and Beaumont agreed to pay $613, 84.36 for them. Its successor Whitecap reneged on the deal. Amik is out the purchase price, but still has the units. Its own evidence suggests that there is some value in the units that could have been realized if specific attempts had been made, beyond Amik’s general sales efforts in the course of conducting its business.

In all the circumstances, it is reasonable to deduct $127,419.24 from the purchase price of $613, 584.36 and assess Amik’s losses in the amount of $486,165.12. [ 50 ] Assessing Amik’s damages in this fashion represents a fair and reasonable resolution of the matter, consistent with Hryniak v Mauldin , 2014 SCC 7 . Conclusion [ 51 ] Amik’s damages are assessed at $486,165.12. [ 52 ] If the parties cannot agree as to costs, they may make a written request to the Masters’ office within 30 days of these reasons to arrange an appearance before me.

Heard on the 21 st day of September, 2016; further submissions delivered on September 23rd and 28th, 2016. Dated at the City of Calgary, Alberta this 7 th day of November, 2016 . J.L. Mason M.C.C.Q.B.A.

Appearances: Johanna C. Price Peacock Linder Halt and Mack LLP for the Plaintiff Christian J. Popowich Code Hunter LLP for the Defendants