Super Save v. Lee Date:, 2015 BCPC 157

Citation: Super Save v. Lee Date: 20150423 2015 BCPC 0157 File No: 13-45905 Registry: Vancouver IN THE PROVINCIAL COURT OF BRITISH COLUMBIA (Small Claims) BETWEEN: SUPER SAVE DISPOSAL INC. CLAIMANT AND: CHI HUNG LEE doing business as PROMPT ENGINEERING SERVICES DEFENDANTS REASONS FOR JUDGMENT OF HIS WORSHIP BRYAN G. BAYNHAM Appearing for the Claimant: J.N. Jordison Appearing for the Defendants: C.H. Lee

Place of Hearing: Vancouver , B.C. Date of Hearing: October 22, 2014 Date of Judgment: April 23, 2015 [ 1 ] The defendant, Chi Hung Lee (“Mr. Lee”) is the owner of a commercial premises located at 1745 and 1747 Nanaimo Street, Vancouver, BC. Garbage bins were provided as a service to the defendant. In 2009 those bins were provided by Smithrite Disposal Ltd. (“Smithrite”). That contract appears to have come to an end in September 2009 and as the tenants did not want to be tied to a fixed term contract with a garbage disposal company Mr.

Lee endeavoured to locate a garbage disposal company that did not require a fixed contract as a condition of providing garbage removal services. [ 2 ] In response to an enquiry made by Mr. Lee, Super Save Disposal Inc. (“Super Save”) assigned one of their sales representatives, Wayne Chan, to meet with Mr. Lee. The first item of business when Mr. Chan met Mr. Lee was to provide a draft letter to terminate the contract with Smithrite. On October 6, 2009 Mr. Chan provided a typed letter for Mr. Lee’s signature dated October 6, 2009.

The letter was sent out and resulted in the termination of the Smithrite contract. [ 3 ] Mr. Chan also presented a contract to Mr. Lee dated September 30, 2009. The contracting party was said to be Canway Management Systems Inc. (“Canway”). The service agreement was in Super Save’s standard form and provided for one waste bin to be provided and dumped every week.

The effective date of the contract was October 9, 2009 and pursuant to the standard terms of the contract was for a period of five years with an automatic renewal “for successive five (5) year terms without further action by the parties”. [ 4 ] The contract was signed by Mr. Lee on behalf of Canway. The evidence of Mr. Lee, as provided for in his trial statement, is that the contract could be terminated by writing a letter to terminate similar to the one provided by Super Save to send to Smithrite.

Super Save, for its part, denies that there was any oral agreement and relies on the written terms of the contract. [ 5 ] It is also alleged by Mr. Lee in his trial statement that Mr. Chan told him that “the terms and conditions of the contract were not important”. This was said in the context that the agreement could be terminated at any time by simply writing a letter to terminate and sending it to Super Save. As set out in the trial statement it is Mr. Lee’s position that “the terms and conditions were never explained to the defendant because it was not necessary to explain the terms and conditions”.

As matters would have it the tenants moved out in late 2009 in

part citing the excessive costs of garbage removal as one of the reasons to leave the business. Mr. Lee made arrangements to have “City Hall” pick up the garbage and purported to terminate the agreement as he believed he was entitled to do by letter dated December 10, 2012. [ 6 ] Super Save responded by letter dated December 21, 2012 and asserted that the service agreement did not expire until October 9, 2014. In that letter Super Save demanded that payment of an “early termination fee” of $1,965.81. This represented the monthly charges of $93.61 for the remaining 21 months of service.

The monthly claim of $93.61 is to be compared with the monthly charge shown on the service agreement of $60.00. There was no evidence provided to support the increase from $60.00 per month to $93.61. In addition, Super Save unilaterally charged a fuel charge of $17.51 a month and a carbon tax recovery. There is no provision in the contract to allow for these additional charges. [ 7 ] The invoices as provided for in the contract were addressed to Canway. The reality is that Canway was dissolved for failure to file an annual return on August 31, 1990. Super Save’s position is that Mr.

Lee agreed to be personally bound when this was brought to his attention after the contract was signed. [ 8 ] As is the case with many of the bin disposal contracts the agreement is lacking in clarity. It is also the case that the contracts are exceedingly complicated and contain very fine print. Few if any of the customers appear to read the contracts, or if they read them, understand them.

Finally, in many cases there is a language barrier since many small businesses that require bin disposal services are operated by individuals where English is the second language and their ability to read is limited at best. [ 9 ] In this case the contract on its face is between Chi Hung Lee carrying on business as Canway Management Systems Inc. and Super Save. It is unclear as to whether or not it was the intention of the parties that Mr. Lee be personally bound or whether or not he intended Canway to be bound.

As a matter of law this is irrelevant because Canway was no longer a legal entity when the contract was signed and as such only Mr. Lee can be held personally liable. [ 10 ] For the reasons set out below I dismiss the case on the basis that Mr.

Lee was entitled to terminate the contract on one month’s notice as stated in his trial statement and the documents attached to the trial statement. [ 11 ] The facts arising from this case are yet another example of why, in my view, the provincial legislature should enact consumer protection legislation to protect consumers from the onerous terms of the contracts that are in wide use in the waste disposal business.

Similar onerous provisions are contained in other contracts providing services such as bottled water, linen supplies and rental washing machines. [ 12 ] The most pressing reason for the legislature to pass consumer protection legislation is the liquidated damages clause or as Super Save calls it the “early termination fee” but there are also other onerous provisions in the standard form waste management contracts used by the major suppliers of waste management services in Vancouver. Services Rendered [ 13 ] The contracts are generally silent as to what services are provided and what charges are payable.

In the present case the contract calls for a weekly fee of $60.00 yet the charge by Super Save was $93.61 per month. A plain reading of some of the contracts

seems to indicate that the weekly charge is payable irrespective of whether services are provided each and every week. Binding Effect [ 14 ] The parties agree to bind respective party’s heirs, successors and permitted assigns. While this may not be a huge concern where corporations are involved the clause appears to bind natural persons who acquire the property serviced pursuant to a waste disposal contract. Term [ 15 ] The contracts generally provide for automatic renewal for a period of five years without any action on behalf of the parties. The termination provisions are particularly onerous.

The waste disposal firm can typically terminate the contract on 30 days’ written notice whereas the customer can only do so by providing notice within a 30 day window beginning some four months prior to the renewal date. Once this window closes the customer has no further contractual rights to terminate the contract or prevent its renewal. This term also requires disclosure of the existing contract by the customer to the new service provider and obligates the customer to terminate the contract “at the customer’s earliest convenience”.

This could and often does result in the existing contract remaining in force (because notice was not given within the 30 day window) and the new contract being in force for a minimum of five years since the customer has no right to terminate the contract. Not infrequently this results in two service providers each providing bins to one location and each charging for waste removal services pursuant to their separate contracts. Right to Re-Negotiate [ 16 ] The contracts typically provide a right of “first refusal” based on the terms of any bona fide offer received by the customer with a third party.

Essentially, this provision makes it difficult if not impossible for any customer to provide a valid termination notice and subsequently enter into a new contract without an interruption of services. In practical terms it operates to essentially lock the customer into a perpetually renewing contract with the existing service provider. Payments [ 17 ] Typically the rate of interest is 24 percent. While this is nowhere near a criminal rate of interest it is certainly high given the prevailing interest rates over the last five to ten years.

Rate Adjustments [ 18 ] This provision allows service providers to alter the fees it charges based on a number of factors outside of the control of the parties. By way of example, some contracts provide for an increase in rates to reflect the percentage increase in the Customer Price Index “for all items published by Statistics Canada”. Failure to Perform [ 19 ] In addition to the liquidated damages component of the contract this clause provides that following a breach, the customer “irrevocably agrees and consents to” any injunctive relief the service provider might seek from the courts.

The clause also provides that the customer agrees to pay any costs incurred by the service provider in referring the matter to a lawyer on a “solicitor and own client basis”. Assignment [ 20 ] While the contracts typically permit the service provider to assign the agreement at any time to a third party without the consent of the customer, the customer may only assign the contract with the service provider’s consent (which must not be unreasonably withheld).

Burden on the Court [ 21 ] The other issue of concern to this Court is the burden placed on the Court as a result of the magnitude of cases that have been filed over the last few years by the service providers. Given the recent judgment of the Supreme Court in Tristar Cap & Garment Ltd. v.

Super Save Disposal Inc. , 2014 BCSC 690 the number of actions brought by the service providers will in all likelihood increase. [ 22 ] A review of the public available information on the internet reveals that Super Save has filed over 300 Small Claims files since Februrary 2001 of which 159 claims were filed at the Robson Square Registry. The actual number of claims filed by Super Save is unknown since the maximum number of hits for any one party is arbitrarily set at 300. [ 23 ] Another significant player in the waste disposal business is Segal Disposal which is owned by Housewise Construction Ltd.

Segal has commenced 135 actions since April 30, 2010 of which 79 actions have been filed in the Robson Square Registry. [ 24 ] The most active litigant in the waste disposal business would appear to be Northwest Waste Solutions Inc. (“Northwest”) which operates under various corporate entities. Northwest has commenced over 300 claims since March 8, 2010 of which 129 were filed in the Robson Square Registry. [ 25 ] The court records do not disclose how many of these hundreds of cases involve a claim for liquidated damages but it is safe to say that the majority of the cases include a claim for liquidated damages.

It is easy to see why. In the case before me Super Save was claiming just under $2,000 in liquidated damages when the bin was only on site for three months. Had I found the contract enforceable I

would have had to follow the reasoning in Tristar and award liquidated damages in this amount to the plaintiff. The fact that Super Save had the use of and no doubt did earn income from the bin in question during the ensuing 21 months is irrelevant based on the reasoning in Tristar since the obligation to lead evidence concerning mitigation of damages falls to the defendant. In the context of the simplified trial process this is a virtual impossibility. [ 26 ] On the same day that this judgment was handed down I delivered judgment in two other Super Save cases.

In action number 12-39245 Super Save was seeking liquidated damages of $3,340.39 based on a contract dated July 26, 2004 which was assigned to Super Save. In the third case, action number 13-43254 Super Save was seeking liquidated damages of $2,425.65 based on a disposal bin that was only on site for two days.

Both actions were dismissed on other grounds but had the contracts been found to be enforceable Tristar would have required that this Court award liquidated damages in the amount claimed. [ 27 ] As noted in the judgment in action number 13-43254 Super Save obtained an award for liquidated damages in the amount of $32,250 in a May 6, 2014 judgment.

This was reduced to $25,000 being the maximum amount that can be recovered in Small Claims Court. [ 28 ] Given the potential for very large awards for liquidated damages it only makes sense for bin disposal companies like Super Save to aggressively pursue customers for any potential breach of the service agreement no matter how weak the evidence. [ 29 ] Turning back to the case at hand there is conflicting evidence before me concerning the terms of the contract. It is not clear on the evidence before me that there was agreement at the time the contract was entered into that Mr.

Lee would be personally bound by the contract. There was no reason to name the company in the contract if Mr. Lee was the contracting customer. There is also conflicting evidence as to whether there was an oral agreement that the contract could be terminated upon written notice by Mr. Lee. [ 30 ] Normally, the written terms of the contract would prevail, but in this case there is evidence that the parties negotiated an amendment to those terms which would allow the customer, Mr. Lee, to terminate on one month’s written notice.

In this case there is also the evidence that the Super Save sales representative assisted Mr. Lee in terminating the contract with the existing service provider. This leads credence to Mr. Lee’s evidence that the Super Save representative agreed from the outset that the contract could be terminated at any time on written notice. [ 31 ] Taking all of this evidence into account I find that Super Save has not established on the balance of probabilities that Mr.

Lee is personally bound by the contract or that the term of the contract was three years as set out in the written agreement. [ 32 ] Accordingly, the action is dismissed. I decline to make any award as to costs. ________________________ B. Baynham Q.C. Adjudicator