1189677 Alberta Ltd operating as Hillstone Aggregates Plaintiff - v. -, 2019 ABQB 914

Court of Queen’s Bench of Alberta Citation: 1189677 Alberta Ltd v Professional Excavators & Construction Inc, 2019 ABQB 914 Date: 20191129 Docket: 1701 16593 Registry: Calgary Between: 1189677 Alberta Ltd operating as Hillstone Aggregates Plaintiff - and - Professional Excavators & Construction Inc., Professional Excavators Ltd. and The Town of Cochrane Defendants _______________________________________________________ Reasons for Decision of J.T. Prowse , Master in Chambers _______________________________________________________

[ 1 ] The plaintiff 1189677 Alberta Ltd operating as Hillstone Aggregates (“Hillstone”) says that it delivered $1,791,810.18 worth of clean fill to the defendant Professional Excavators & Construction Inc. (“Professional”) but has only been paid $1,163,964.72. [ 2 ] Hillstone seeks

summary judgment for the difference of $627,845.46. [ 3 ] Professional disputes the

summary judgment application and itself applies to amend its statement of defence to include defences of mistake and unconscionability. [ 4 ] For the reasons which follow I grant Hillstone’s

summary judgment application, and dismiss Professional’s application to amend its statement of defence. Background – a tale of two quotes [ 5 ] The dispute centers around which, of two quotes, was the quote under which Hillstone supplied fill. [ 6 ] Professional says that Hillstone was supplying fill pursuant to a Hillstone quote dated June 9, 2017, under which Hillstone was to charge $7 per cubic meter (“m3”) delivered. Hillstone says that this written quote is a ‘fake’ – a document concocted by someone at Professional’s office.

I will refer to it as the ‘Cheaper Quote’. [ 7 ] Hillstone says it was supplying clean fill pursuant to a Hillstone quote dated July 17, 2017, under which the price was $7.50 per tonne. This was made up of $3.50 per tonne for the clean fill and $4.00 per tonne for trucking the fill from Hillstone’s pit to the job site. I will refer to is as the ‘Expensive Quote’. [ 8 ] Hillstone’s quote of July 17, 2017 is more expensive.

The weight of a cubic meter of clean fill varies due to its density (whether it contains more of lighter sand or more of heavier clay), but if you use an assumed “conversion” rate of 1.6, then a cubic meter of clean fill might weigh 1.6 tonnes. In other words, Hillstone’s quote of July 17, 2017 (using this conversion rate as an example) might be the equivalent of $11.20 per m3. [ 9 ] So Hillstone says it was supplying clean fill at the equivalent of perhaps $11.20 per m3 (the Expensive Quote), while Professional says it was buying clean fill at $7 per m3 (the Cheaper Quote).

This is why Hillstone’s claim is $627,845.46 more than Professional is willing to pay. [ 10 ] In my opinion, for the reasons set out below, it is clear that the Cheaper Quote is, in fact, a fake quote, and that Hillstone was supplying clean fill pursuant to the Expensive Quote. [ 11 ] The subjective view of Professional’s project manager, Shane Gilmour, is not determinative.

It may well be that, if he had focussed on what he was doing, he might have rejected the Expensive Quote (after all, he had other quotes available to him which were less expensive), but that is not what he communicated to Hillstone. [ 12 ] Nor did Hillstone have any reason to suspect that Gilmour was getting confused between a price per m3 and a price per tonne. [ 13 ] Two email exchanges make this clear. The first email exchange [ 14 ] The first email exchange occurred on the day that the Expensive Quote was submitted by Mr.

Gino Matteo of Hillside, July 17, 2017. [ 15 ] Put yourself in the shoes of Professional’s project manager, Mr. Gilmour. He says he already had received the Cheaper Quote from Hillside over 5 weeks earlier. [ 16 ] You would expect Mr. Gilmour to respond “what are you talking about, you gave me a much cheaper quote 5 weeks ago --- are you trying to renege from your earlier cheaper quote?” [ 17 ] Instead, here is the exchange: Mr. Gilmour (Professional) – Thanks Gino. Do you think we could get the clay for 3.00 per m3.

Let me know if this is possible. [note: the Expensive Quote just received was for $3.50 per tonne for fill, plus $4 per tonne shipping – Mr.Gilmour is trying to get a reduction in price. What better time to raise the Cheaper Quote, but there is no mention of the Cheaper Quote] Gino Matteo (Hillside) – Do you mean per metric tonne? I am as low as they would let me go. Right now you are at $1.60 per conversion. [nobody understands what Mr. Matteo meant by “$1.60 per conversion” – presumably this is some reference to the conversion rate between tonnes and m3 – In any event, one part of the message from Mr.

Matteo is clear – he’s not agreeable to reducing the Expensive Quote that they are discussing] Mr. Gilmour (Professional) – We are good I added the number up wrong. The second email exchange

[ 18 ] The second critical email exchange occurred about 10 days later, on July 27, 2017. [ 19 ] Recall that Gino Matteo of Hillside’s position is that he had sent in the Expensive Quote, and only the Expensive Quote. [ 20 ] It is hard to figure out what Mr. Gilmour’s position was on July 27, 2017. On that day his position is that he had received both the Cheaper Quote and the Expensive Quote. Again, this is an opportunity for him to say that he is agreeable to the Cheaper Quote and not the Expensive Quote.

Instead, this is the email exchange: [Gilmour to Gino Matteo of Hillside]: Hi Gino, The invoice that was set has $3.75 per ton and the levy [presumably the shipping charge of $4 per ton] is also added at the bottom. We should be at $3.50 per ton as per the quote. Also can you tell me what you are using for the conversion, I just need to make sure on my side. [Matteo of Hillside responding to Gilmour]: Hi Shane, I submitted your revision request this morning along with the original quote. Sorry for the confusion.

As for the conversion I just used a conversion of 2.0 which was the average of both the proctor numbers we discussed - 1.85 and 2.15. [ 21 ] This exchange of emails is absolutely devastating to Professional’s argument. [ 22 ] Firstly, Mr. Gilmour does not even mention the Cheaper Quote he says he has in his possession. [ 23 ] Mr. Gilmour instead refers only to the Expensive Quote. He notes that the Expensive Quote as being ‘per ton’ and, just in case one suspects that this was just a slip of the keyboard, Mr.

Gilmour goes on to discuss the ‘conversion’, which is only a topic required when converting tonnes to cubic meters. Clearly Mr. Gilmour was referring to the Expensive Quote and not to any alleged earlier Cheaper Quote. [ 24 ] Prior to this exchange of emails, Hillside had issued invoices at $7.75/tonne of clean fill ($3.75 per metric tonne of clean fill plus $4.00 in cartage charges). Following this exchange of emails Hillside changed its invoices to charge $7.50/tonne of clean fill, consistent with the Expensive Quote.

Hillside sends invoices and is paid based on the Expensive Quote [ 25 ] Following this exchange of emails, Hillside submitted invoices based on the Expensive Quote and was paid according to the Expensive Quote. [ 26 ] Professional actually audited the billings. During the audit Professional challenged the amount of clean fill provided but Professional never raised any question about the price contained in the Expensive Quote.

The Cheaper Quote appears on the scene [ 27 ] Months later the Cheaper Quote appeared on the scene. [ 28 ] Hillside received an email dated November 22, 2017, from Joanne Herman at Professional, attaching the Cheaper Quote and stating: It has been brought to my attention that the unit of measure used on the quote and within the billings is not correct. Please see the attached quote [Cheaper Quote] from Gino that was offered in June of 2017 for the Griffin project. The $7.50 rate is per m3 not tonne. I was not using the correct quote provided in the bid either.

Our Vice President brought this to my attention late this afternoon. Pricing needs to be converted". [ 29 ] On November 23, 2017, Ms. Herman sent a further email to Hillside stating: The copy I sent you [Cheaper Quote] was in our projects folder (just not in the right place). How our administrator got a different version [Expensive Quote] is still a mystery. [ 30 ] In fact we know where Professional received the Expensive Quote from. It was sent by Hillside to Mr. Gilmour, and Mr. Matteo and Mr.

Gilmour specifically discussed it in the email exchange of July 27, 2017. [ 31 ] Hillstone subsequently had metadata extracted from two of the quotes which it did author, one of which was a quote dealing with other products, not clean fill, the other being the Expensive Quote. [ 32 ] Hillstone hired someone to extract the metadata from the two genuine Hillside quotes and from the Cheaper Quote. [ 33 ] With respect to the two genuine quotes, the metadata showed: • each had been created using a Mac OS X application • each had a blank next to the heading ‘author’

• each had a file name (for example Hillstone HS-70611.pdf) which matched the ‘quote #’ on the quote itself. [ 34 ] With respect to the Cheaper Quote, the metadata showed: • it had been created using a Microsoft Word 2010 application • the ‘author’ was indicated as Shane Gilmour • the file name (PEC000334.pdf) did not match the ‘quote #’ on the quote itself. [ 35 ] Is there a possible innocent explanation for the metadata extracted from the Cheaper Quote to refute the obvious inference, which is that the Cheaper Quote is a fake? [ 36 ] It is Professional’s responsibility to put their best foot forward by having an expert describe possible scenarios where the metadata could show Mr.

Gilmour as the author of the Cheap Quote when he was not in fact the author. No such evidence was forthcoming. [ 37 ] The only expert evidence Professional submitted was an opinion saying that someone with enough skill can alter metadata, but there is no evidence to show the metadata was in fact altered. [ 38 ] Is Professional suggesting that Hillside hacked into Professional’s computer system in order to alter their Cheaper Quote and show Mr. Gilmour as the author in order to discredit the Cheaper Quote? Where is the evidence as to how that might have occurred?

Why wouldn’t Hillside hire an expert to testify that their system had been hacked? Or that the xerox machine in Professional’s office was somehow set so as to show Mr. Gilmour as author of documents converted into pdf format when run through that xerox machine? [ 39 ] Professional has submitted no expert evidence to support the supposition that somehow there is an innocent explanation for the metadata showing Mr.

Gilmour to be the author of the Cheaper Quote. [ 40 ] When I questioned Professional’s counsel as to why his client had not sought this type of expert evidence, he indicated, in essence, that the cost of obtaining of obtaining such expert evidence would be too great “because we’re dealing with $600,000”. Completely non-credible evidence [ 41 ] Typically the Court does not make findings of credibility on

summary judgment applications. [ 42 ] However, common sense dictates that a respondent to a

summary judgment application cannot obtain a delay for years (waiting for a trial) based on completely non-credible evidence. [ 43 ] As stated in Janvier v 834474 Alberta Ltd , 2010 ABQB 800 , 2010 CarswellAlta 2483, at para, 15: If there remains a dispute on material facts at the time of the application, there must be a trial. However, if one party's evidence on material facts is either destroyed by cross-examination on affidavit or the introduction of other evidence rendering that party's evidence completely non-credible, then the Master may accept certain facts or may draw inferences of fact. [ 44 ] Mr.

Gilmour’s sworn assertion that he received the Cheaper Quote from Hillside is completely non-credible. I find as a fact that Hillside did not author the Cheaper Quote, and that the only quote submitted by Hillside was the Expensive Quote. Amendment to plead mistake [ 45 ] Professional applies to amend its statement of defence to plead mistake. [ 46 ] There is some evidence to support the assertion that Mr. Gilmour was confused and believed that he was dealing in prices per m3, whereas the Expensive Quote was per tonne. After all, Mr.

Gilmour had received (unknown to Hillside) some other quotes from other bidders which were for a lower price than the price in the Expensive Quote. [ 47 ] Professional asserts that the parties were not on the same page: Gilmour (from Professional) thought the price was per m3, whereas Matteo (from Hillside) thought the price was per tonne. [ 48 ] The assertion that the parties were not ad item is an assertion of mutual mistake.

See Ron Ghitter Property Consultants Ltd v Beaver Lumber Co , 2003 ABCA 221 , 2003 CarswellAlta 1049, at paragraph 12 . [ 49 ] The problem with the proposed amendment to assert mistake is that Mr. Gilmour’s confusion was only in his own mind. [ 50 ] Objectively, the Expensive Quote was per tonne. That is expressly what it stated. [ 51 ] There is no evidence that Hillstone did anything to cause Mr. Gilmour’s confusion, or that Hillside had any reason to believe that Mr.

Gilmour was confused. [ 52 ] Any objective observer privy to the communication between the parties would conclude that the price negotiated was per tonne. [ 53 ] Guidance can be found in the Ghitter decision. [ 54 ] Ghitter was purchasing a leasehold interest from Beaver. Ghitter thought this would entitle him to all lease payments from sub-tenants. Beaver was aware that there was a rent sharing agreement ("RSA") with the head landlord under which the head landlord

was entitled to a 45% cut of net profit under subleases. [ 55 ] The Court concluded that there was a mutual mistake and found that there was no binding agreement. The parties were not ad item. [ 56 ] In arriving at this conclusion in Ghitter , the Court observed at paragraph 8: In determining whether the parties have reached agreement for legal purposes, the starting point must be the alleged contract itself: Associated Japanese Bank (International) Ltd. v. Crédit du Nord SA (1988), [1989] 1 W.L.R. 255 (Eng. Q.B.) at 268 .

If the wording of the contract is plain and unambiguous, that will ordinarily be an end of the matter. [ 57 ] In Ghitter the wording of the contract was ambiguous as to whether the purchaser was to assume the leasehold subject to the RSA or not. In our case, the Expensive Quote is clear that the price was per tonne. [ 58 ] Objectively there is no doubt as to the price being per tonne.

Again, as stated in Ghitter , at paragraph 9: The common thread running through the cases is that the parties will be found to have reached a meeting of the minds, in other words be ad idem, where it is clear to the objective reasonable bystander, in light of all the material facts, that the parties intended to contract and the essential terms of that contract can be determined with a reasonable degree of certainty ... [ 59 ] On this analysis it is clear that the proposed plea of mistake is hopeless, and I decline to allow the amendment.

Amendment to plead unconscionability [ 60 ] Professional seeks to amend its statement of defence to allege that the price under the Expensive Quote is unconscionable. [ 61 ] The components of unconscionability are set out in Burby v Ball , 2018 ABCA 22 , 2018 CarswellAlta 63, at paragraph 5 : The trial judge also applied the proper legal test for proving unconscionability, as set out in Cain v.

Clarica Life Insurance Co.2 The plaintiff must prove (1) a grossly unfair or improvident transaction; (2) a lack of independent legal advice; (3) an overwhelming imbalance in bargaining power caused by the plaintiff's vulnerability; and (4) the defendant knowingly took advantage of this vulnerability. [ 62 ] Ingredients (2)(3) and (4) are inconsistent with the evidence before the Court, and so the proposed amendment is hopeless.

Professional’s claim for quantum meruit [ 63 ] Both parties acknowledge that Professional sent staff and equipment to Hillside’s pit and that they assisted in preparing clean fill for the contract, as well as providing dust suppression services. [ 64 ] Professional says it was implicit from the circumstances that they would receive payment for this. [ 65 ] Hillside says that Professional was simply doing this to make sure that Professional would be able to complete its job with the Town of Cochrane (for which the clean fill was needed) on a timely basis. [ 66 ] Both sides agree that there was no discussion as to whether Professional would be paid or how much they would be paid. [ 67 ] Professional’s claim for quantum meruit should be allowed to proceed.

Only a trial judge would be able to sort out this issue. [ 68 ] However, I will not stay enforcement of Hillside’s judgment for product delivered pending determination of Professional’s quantum meruit claim. Interest [ 69 ] Hillstone’s statement of claim asserts (paragraphs 5 and 6) that Professional signed a credit application dated January 1, 2017 pursuant to which interest would accrue at the rate of 2% per month on overdue accounts. Accordingly Hillstone seeks judgment at this rate on its claim of $627,845.46. [ 70 ] Professional responds that the credit application is not properly before the Court.

It is found in Hillstone’s affidavit of records but is not attached as an exhibit to an affidavit made in support of Hillstone’s

summary judgment application. [ 71 ] Further, Professional submits case law in support of its assertion that, if the credit agreement is properly in evidence, the interest rate offends

section 4 of the Interest Act , R.S.C. 1985, c. I-15 . Counsel for Hillstone has not had the opportunity to respond to this case law, nor was this case law dealt with in the hearing of this application. [ 72 ] The best way to deal with this issue is to have either party submit evidence regarding the interest claim on or before January 15, 2020. Once that evidence is received (along with any rebuttal and/or cross examination) a hearing will be arranged to receive further submissions. [ 73 ] In the meantime, judgment can be entered for the principle balance, reserving the interest claim for future determination.

Quantum of Hillstone’s claim [ 74 ] Professional disputes the volume of fill that Hillstone says it supplied.

[ 75 ] Hillstone’s claim is based on truck weigh scale tickets which establish the number of tonnes supplied. [ 76 ] Professional’s dispute is based on volume of fill supplied, which can only be tentatively converted to weight by using volume (m3) multiplied by an assumed conversion rate. Conversion rates can vary and are based on assumptions. [ 77 ] Hillstone’s weigh scale tickets are by far the most reliable method of establishing the weight of materials supplied. Accordingly I am satisfied that Hillstone has been unpaid, as alleged, by $627,845.46.

Summary of rulings • Hillstone is awarded

summary judgment in the amount of $627,845.46. • Hillstone’s judgment shall not be stayed pending the outcome of Professional’s counterclaim. • Hillstone’s claim for interest will be considered following further evidence and submissions. Costs [ 78 ] If the parties cannot agree on costs they shall

schedule a hearing before me to make submissions in that regard. Heard on the 01 st day of November, 2019. Dated at the City of Calgary, Alberta this 29 th day of November, 2019. J.T. Prowse M.C.C.Q.B.A. Appearances: Blair C. Yorke-Slader, Q.C. Bennett Jones LLP for the plaintiff Jonathan J. Bourchier/Nakul Bhatia MLT Aikins LLP for the defendant Professional Excavators