Northwest Waste Solutions Inc. v. Bimmer Haus Date:, 2011 BCPC 276

Citation: Northwest Waste Solutions Inc. v. Bimmer Haus Date: 20111014 2011 BCPC 0276 File No: 1134624 Registry: Vancouver IN THE PROVINCIAL COURT OF BRITISH COLUMBIA BETWEEN: NORTHWEST WASTE SOLUTIONS INC. CLAIMANT AND: BIMMER HAUS ENTERPRISES INC. DEFENDANT REASONS FOR JUDGMENT OF HER WORSHIP KAREN NORDLINGER Counsel for the Claimant: Joseph W. Jachimowicz Counsel for the Defendant: No one appeared Place of Hearing: Vancouver, B.C.

Date of Hearing: August 17, 2011 Date of Judgment: October 14, 2011 A corrigendum was released by the Court on October 18, 2011; the corrections have been made to the text and the Corrigendum is appended to this document. [ 1 ] The claim in this matter is for an amount of $925.29 for waste disposal services from June, 2010 to January, 2011, for liquidated damages in the amount of $1,140 per month and for costs. The Claimant provided the waste disposal services to the Defendant pursuant to an agreement entered into on June 18, 2007. The term of the agreement was 60 months or until June 17, 2012.

On or about June, 2010, the Defendant ceased paying for the services and gave notice of his wish to terminate the agreement. The monthly payment required of the Defendant was $59.00 per month.

However, in the agreement, the Claimant had the right to “adjust rates hereunder based upon increases in fuel costs, insurance rates, disposal facility costs and transportation costs due to a change in the location or disposal facilities, decreases in the local market prices for recyclable material, changes in the composition, weight or volume of material disposed of by customer, or contamination of recyclable material.” [ 2 ] The Defendant filed a Reply to the Notice of Claim as follows: “They start taking more money than our agreement from our account without any notice or letter.

I ask them to correct the problem and they didn’t. They said I have to pay whatever they want for 60 months.” [ 3 ] I became concerned during the hearing that I did not have copies of the actual invoices indicating the amounts that were being charged to the Defendant, and I asked the Claimant to provide me with the invoices and with written submissions on this matter. I have now received those invoices and the submissions. [ 4 ] It is clear from the invoices that the rate adjustments were spelled out on the invoice. On September 1, 2008, the monthly charge was raised from $59.00 per month to $68.00 per month.

On January 1, 2009, the monthly charge was raised to $72.00 per month. On

January 1, 2010, it was raised to $83.00 per month and on January 1, 2011, it was raised to $95.00 per month. In addition to those charges were fuel and environmental surcharges and GST. Most of the invoices, if not all, also contained a late payment service charge. Mr. John Snider, the customer service representative of the Claimant, testified that the original service amount of $59.00 per month was based on current costs and expenses, including landfill fees and fuel. The increases passed on to the customer are based on historical amounts; i.e., in hindsight.

The customer is advised by letter of the rate hikes. [ 5 ] It is not clear from the material filed when, and to what extent, the Defendant in this matter was advised of these increases to his monthly charges, except for the amount billed to him on the various invoices.

No copies of letters informing him of the increases were before me. [ 6 ] The Defendant counterclaims for an amount of $600 representing compensation for the increases in the various invoices, and $720 for the cost of a parking spot on which the disposal bin was located. [ 7 ] The agreement provided that the Defendant could terminate the agreement by written notice not more than 120 days and not less than 90 days prior to the renewal date, in this case June 17, 2012. If the agreement was not terminated in this fashion, it would automatically renew.

If the Defendant terminated the agreement outside of that window of time, the Defendant would become subject to the Failure to Perform provision, which provides that the Claimant could accept the termination, in which case the Defendant agreed to pay the Claimant as liquidated damages “an amount equal to the greater of the sum of the customer’s monthly billing for the most recent 12 months or, if the customer has not been serviced for 12 months, the customer’s average monthly billings for the months serviced or, if none, the billing projected by Northwest for the first month, in each case multiplied by 12, or the sum of amounts due to Northwest for the balance of the term remaining on this agreement.” A further provision reads: “The customer acknowledges that the foregoing liquidated damages are reasonable in light of the anticipated loss to Northwest caused by the termination and are not imposed as a penalty.” [ 8 ] The Defendant did not terminate the agreement within the parameters of the agreement. [ 9 ] As the result of its failure to pay for services for several months, the Claimant gave written notice to the Defendant that it assumed that the Defendant wished to terminate the agreement, and requested payment of the liquidated damages and the outstanding balance owing for services rendered. [ 10 ] No payment was made, and this claim resulted. [ 11 ] It is clear that a claim for liquidated damages has been differentiated from a penalty in many cases and that the Courts have upheld the parties’ right to predetermine an amount of damages for a failure to perform.

The Claimant submits that the Court must determine if the clause is a liquidated damages clause or a penalty as of the date of making the agreement. If it is a true liquidated damages clause that ends the inquiry. If not, then the question of should relief be granted arises. The Court is then to answer that question by determining if enforcing the penalty is or would be unconscionable at the date of the invocation of the clause. [ 12 ] The Defendant did not give specific notice of termination, but rather simply stopped paying the monthly invoices.

The Claimant determined on January 21, 2011 that the Defendant had effectively terminated the agreement and sought payment of liquidated damages. [ 13 ] Although filing a Reply and a Counterclaim, the Defendant did not appear at the hearing of this matter and therefore I have no submissions from the Defendant on the liquidated damages claim or on the rate increases issue. I am troubled by the rate increases and what I perceive to be a lack of explanation provided to the Defendant.

However, the Defendant was not here to provide evidence with regard to that issue and, on a plain reading of the agreement, the Claimant was entitled to make such rate adjustments. The liquidated damages have been based on 12 months at the highest rate of $95.00 per month. [ 14 ] In Reasons for Judgment of the Honourable Judge Hicks in Super Save Disposal Inc. v. Rat Rod Kustoms Ltd. et al , March 30, 2010, wherein the same issue arose in four cases with the same Claimant and based on a similar agreement.

Those matters also came on as default hearings and, at paragraphs 7 and 8 of that decision, the Court stated: “It is clear to me, based on the evidence that has been provided, that these clauses are an effort to identify what would otherwise be damages which would be difficult to define if called upon to establish them in each individual case.

I am satisfied that they are an attempt within reason, and certainly within reason in terms of the positions being taken by the claimant in each of these cases, to provide a reasonable pre-estimate of the damages, including specifically the loss of stream of income should an agreement be terminated. There is some distinction to be drawn between the provision of a service for the providing of a bin and the removal of debris, garbage and a situation in which a unique sign is provided and for which there is no other use.

But in these circumstances, in the absence of a defendant before the court to provide evidence as to why I should treat the situation differently, and bearing in mind what I have stated previously, that the obligation rests on the defendant to demonstrate that a provision is a penalty, I am satisfied in each of these cases that the claimant has established that these acceleration clauses attempt reasonably to pre-estimate these damages. They are not penalties, they are not so gross as to be beyond what would be a reasonable attempt to establish what would otherwise be difficult damages to calculate.

These are business contracts, all of the contracts are signed, there is nothing on the face of the contract that would lead me to conclude that the parties did not wish to enter into agreements which included these clauses. In all the circumstances, I have concluded that they are enforceable.” [ 15 ] Cases, of course, must be determined on their own facts. In this case, a liquidated damages amount based on 12 months in a 60 month contract does not strike me as so unreasonable that it amounts to a penalty.

However, I am sympathetic to the Defendant’s position as articulated in his Reply with regard to the rate hikes. It may be to base the liquidated damages amount on the most recent rate hike, not specifically agreed to by the Defendant, may rise to a level of unconscionability that would create an unenforceable penalty, but as I have not heard submissions on this from the Defendant, I do not decide this issue. [ 16 ] I therefore award to the Claimant the following:

(

a) for services: $ 915.29 (

b) liquidated damages: 1,140.00 (

c) costs : 140.00 [ 17 ] There will be court ordered interest on the amount ordered, which will run from June 1, 2010 to the date of these Reasons. [ 18 ] The Counterclaim is dismissed. KAREN F. NORDLINGER, Q.C . Adjudicator CORRIGENDUM – Released October 18, 2011 [1] The Reasons for Judgment filed in the Provincial Court Registry in this matter should reflect, in paragraph 17, that the Court ordered interest shall run from June 1, 2010 to the date of these Reasons.