Super Save v. Angel Glass Date:, 2015 BCPC 158

Citation: Super Save v. Angel Glass Date: 20150423 2015 BCPC 0158 File No: 13-43254 Registry: Vancouver IN THE PROVINCIAL COURT OF BRITISH COLUMBIA (Small Claims) BETWEEN: SUPER SAVE DISPOSAL INC. CLAIMANT AND: ANGEL GLASS CORPORATION DEFENDANT REASONS FOR JUDGMENT OF HIS WORSHIP BRYAN G. BAYNHAM Appearing for the Claimant: J.N. Jordison Appearing for the Defendant: No one appearing Place of Hearing: Vancouver , B.C.

Date of Hearing: September 10, 2014 Date of Judgment: April 23, 2015 FACTS [ 1 ] The facts of this case are not in dispute. Super Save Disposal Inc. (“Super Save”) provides garbage bins and a garbage removal service. In August of 2012 Super Save’s business development manager met with Victor Bui, an employee at Angel Glass Corporation (“Angel Glass”), who signed a credit agreement and a one year contract with Super Save.

This contract provides that Super Save would provide a waste disposal bin as well as removal services commencing September 1, 2012. [ 2 ] On August 20, 2012, the Director of Angel Glass called Super Save to advise that Victor Bui did not have the authority to sign on behalf of the company and that Victor Bui was not “part owner” as indicated on the service agreement. Angel Glass also informed Super Save over the telephone and via a second letter that they had an existing contract with a third party for waste disposal services, and as such, Super Save should not deliver the waste bins.

Super Save requested that this agreement be forwarded to them immediately. Angel Glass responded that they could not forward the existing third party agreement because that agreement provided that it was confidential. [ 3 ] On August 27, 2012 Super Save sent a letter to Angel Glass noting that they received Angel Glass’s request to discontinue the service and that the service contract was not validly executed. Super Save asserted that the agreement was valid and that this letter was notice of “Early Termination”.

The letter also provided that in order to cancel the service agreement they would need to pay the “early termination fees” that amounted to the full value of the contract. Super Save informed Angel Glass that they would drop off the garbage bins on September 1, 2012 unless they paid the early termination fees. Angel Glass did not pay these fees and the bin was delivered on September 4, 2012. The bin was then removed by Super Save on September 6, 2012. Angel Glass was then sent an invoice for $2,425.65. This amount included the fees for delivering and removing the bin in question.

Angel Glass refused to pay the termination fees, but paid the delivery and removal fees. [ 4 ] At the hearing, Super Save took the position that the early termination fees were in fact liquidated damages as provided in the contract. Angel Glass was not present at the hearing, nor were they represented by counsel. ANALYSIS [ 5 ] The garbage removal industry is a highly competitive one. To lock in their customers, the standard form contracts used by service providers make it difficult and sometimes impossible for customers to discontinue their services.

Super Save and its competitors pursue claims for breach of contract and liquidated damages aggressively. Sometimes the rewards for pursuing a liquidated damages claim can be surprisingly large. By way of example in a judgment dated May 6, 2014, Super Save advanced a claim for liquidated damages of $37,564.80. While the facts of that case were unusual, the judge awarded liquidated damages in the amount of $32,250, amounting to the income stream lost over the remaining term of the contract.

The judgment was reduced to $25,000, reflecting a waiver by the claimant of the damages awarded in excess of the court’s jurisdiction. [ 6 ] I have carefully read the contractual terms and considered them in light of the facts as they were explained to me in the written materials and Super Save’s testimony. While I commend Super Save’s representative, for skillfully arguing her employer’s case the facts were not in her favour. For example, when she was taking the business development manager through the contract, he had difficulty reading the fine print in the company’s contract.

The witness volunteered that this was in fact ironic. [ 7 ] I find that the contract is unenforceable on a number of grounds. First, the term in the contract requiring Angel Glass to provide Super Save with a written copy of their contract with their existing supplier is unenforceable. Even if this was an enforceable term, the failure to do this did not amount to an unlawful termination of the contract. Finally, Super Save refused to accept Angel Glass’s purported repudiation of the contract and delivered the garbage bin, but after the date set out in the contract.

Therefore, Super Save not Angel Glass breached the contract. [ 8 ] Even if Angel Glass was in breach of the contract, I am not prepared to enforce Super Save’s liquidated damages clause. In both of the cases before me on September 10, 2014, Super Save drew my attention to the case of Tristar Cap & Garment Ltd. v. Super Save Disposal Inc. 2014 BSSC 690. In that case, Madam Justice Fenlon upheld the respondent’s liquidated damages clause and found that it was not a penalty. In my opinion, the facts before Madam Justice Fenlon are distinguishable from the facts in this case.

THE CONTRACT [ 9 ] The Super Save standard contractual wording provides that the agreement will take effect on either the date that the garbage bin is delivered, or, if the customer is already bound by an agreement with a third party, the day on which that current service contract expires. In the latter case, the contract obliges the customer to forward a copy of the third party agreement to Super Save. Angel Glass informed Super Save that they could not forward a copy of their third party contract because the contract with the other service provider stated that it was confidential.

Super Save advised Angel Glass that this amounted to a breach of the contract and that they were subject to the early termination fees. [ 10 ] The fine print on the reverse of the contract stipulates that liquidated damages are applicable only when the “customer unlawfully terminates this agreement prior to the expiration of its term.” I find that the failure to forward a written copy of this third party contract was not an unlawful termination of the agreement.

Super Save cannot stipulate in their offer of services that a condition must first be satisfied before the contract comes into existence, and then seek to rely on a failure to perform this pre-condition, or condition precedent, as an unlawful termination. [ 11 ] In any event, Super Save demonstrated through their conduct that they did not accept the repudiation of the contract. They

informed Angel Glass that they would deliver the garbage bin on September 1, 2012, despite the fact that they were specifically told not to. Super Save did not deliver the bin until September 4, 2012, which put Super Save in breach of the terms of its own contract. [ 12 ] Even if the failure to forward a copy of the existing third party agreement is in breach of the terms of the contract, I find that the liquidated damages clause is unenforceable.

Although the freedom of two parties to enter into a contract is a fundamental legal concept that the courts should not lightly interfere with, courts will also decline to enforce contracts with unconscionable terms. I find the comments of Justice Fitch in Super Save Disposal Inc. v.

Blazin Auto Ltd., 2011 SCSC 1784 at paragraph 26 persuasive in the circumstances: “The enforceability of a liquidated damages provision in an agreement engages two competing objectives: freedom of contract versus the right of the courts to intervene in a given case to relieve against an oppressive or unconscionable result flowing from enforcement of the liquidated damages term.

It is well settled that the enforceability of such a term turns on whether it is a genuine pre-estimate of the expected loss that a party will sustain in the event of a breach of contract or a penalty clause so oppressive or unreasonable that equitable intervention is justified to prevent an injustice.” [ 13 ] In the case before me Super Save’s liquidated damages claim is particularly oppressive. According to the terms, Angel Glass is liable for the entire value of the contract despite the fact that no service was provided. [ 14 ] Super Save suffered no damages.

The witness called at trial testified that the bin was positioned at Angel Glass for only two days, and that Angel Glass subsequently paid for the delivery and removal of the bin. Aside from these two days in question the bin was available to Super Save to earn income by using this very bin to provide disposal services to other customers. [ 15 ] In my view the early termination fee is analogous to a penalty clause used to enforce compliance rather than a genuine pre- estimate of damages and lost profits. [ 16 ] As such, the claim is dismissed. ______________________ B. Baynham, Q.C. Adjudicator