101093126 Saskatchewan Ltd. (The Whitewood Inn) - v. -, 2011 SKPC 89

IN THE PROVINCIAL COURT OF SASKATCHEWAN CIVIL DIVISION Citation: 2011 SKPC 089 Date: June 1, 2011 File: 9/10 Location: Yorkton _____________________________________________________________________________ Between: 101093126 Saskatchewan Ltd. (The Whitewood Inn) - and - BMR Business Systems Ltd. Jeffrey Deagle For the Plaintiff Ms.

An For the Defendant _____________________________________________________________________________ JUDGMENT BRENT KLAUSE , J _____________________________________________________________________________ The Issue [ 1 ] The Defendant sold business equipment to the Plaintiff in September of 2007. The Defendant alleges that the equipment sold never worked properly and seeks damages for breach of contract and in the alternative, damages for fraudulent misrepresentation, damages for negligent misrepresentation, damages for unjust enrichment, all in the amount of $20,000.00.

The Facts [ 2 ] The majority of the facts are not in serious dispute. The Plaintiff operates the Whitewood Inn in Whitewood, Saskatchewan and in September of 2007, entered into an agreement with the Defendant to supply and install business equipment at the Inn. [ 3 ] The equipment consisted of two groups of computerized business equipment which can be loosely categorized as the “Cash Equipment” and the “Camera Equipment”. The Cash Equipment as its name implies is designed to enter and receive payments for purchases at the Inn, mostly restaurant purchases.

The Camera Equipment is designed to provide security and to monitor the actions of the employees of the business. [ 4 ] Rod Kletcho was at all times the operating mind of the Defendant and he entered into an agreement with the Plaintiff to supply and install a number of pieces of equipment which were to be compatible with each other. The cost of the Cash Equipment was invoiced July 10, 2007, in the amount of $10,939.05 and the cost of the Camera Equipment was invoiced on July 27, 2007, in the amount of $10,983.45.

No service contract was ever signed between the Plaintiff and the Defendant. [ 5 ] Contemporaneously with this agreement, the Plaintiff entered into a financing agreement with Irwin Financial Canada Corporation dated October 31, 2007. Irwin owned all the equipment and amortized the cost back to the Plaintiff over a time frame of 66 months at an agreed rate of interest with the monthly payment being $445.11. [ 6 ] The equipment was subsequently installed by employees of the Defendant in September and October of 2007.

On October 31, 2007, the Plaintiff signed the Equipment Rental Agreement between The Whitewood Inn and Irwin Financial: Exhibit P1 and D1. [ 7 ] The last paragraph of that agreement which contains the date of the agreement and the signature of the officers for the Plaintiff states as follows: You have read, understand, and accept this Agreement, including the attached Terms and Conditions, and hereby affirm that you are authorized to execute this Agreement. You agree that a facsimile copy of this Agreement with your facsimile signature(

s) and Irwin’s original signature shall constitute the original of this Agreement. You further confirm and acknowledge: (1) that the Equipment described in the Equipment Rental Details has been inspected and received in satisfactory condition not more than ten (10) days prior to the date you execute this Certificate; (2) that there are no maintenance, service, or other agreements which attach to this Agreement; (3) that Irwin is not an agent of the Vendor(

s) nor a manufacturer or distributor, and that the essential element of this Agreement is equipment rental only; and (4) that Irwin is authorized to pay the Vendor(

s) for the Equipment and to commence the Agreement on the date to be established by Irwin. [ 8 ] In the pleadings of the Plaintiff, he alleges that the Cash Equipment is not working and has never worked properly. This was supported by his testimony in-chief.

He testified that the technicians sent by BMR did not know how to successfully install the equipment and that despite repeated efforts by their technicians and repeated calls to BMR, that the equipment was never installed properly and is unusable. [ 9 ] The Plaintiff has always made his payments to Irwin Financial and is not in breach of any of his financial obligations to Irwin.

When questioned as to why he would sign P1 and D1, and thereby affirm that the equipment was working, he stated that Irwin forced him to sign as he believed that BMR would not come back to finish the installation unless he signed the document and further avers that the document was not true when he signed it. [ 10 ] He further testified that he made repeated efforts to have BMR’s technician “Jerry” return to finish the installation and to ensure that all the equipment was working but that at no time did the Cash Equipment work and that to this day, it sits idle.

The last contact he had with BMR was early in 2009 and at that time, the Defendant wanted more money to come out and correct the problem.

[ 11 ] Essentially the Plaintiff feels he has been deceived by the Defendant and that he has not received the product he contracted and has paid for. The lawsuit was commenced January 27, 2010 and the trial heard January 5, 2011. [ 12 ] The Defendant agrees that he had a business arrangement to supply and install the equipment as described in his invoice of July 2007, but differs with the Plaintiff in many respects. He indicates that as far as he was aware his technicians had installed the equipment and that the Plaintiff was satisfied with the installation as evidenced by his agreement with Irwin.

He further indicated that he tried to respond to the Plaintiff’s complaints but that some of the things that the Plaintiff wanted done were not part of any agreement that he had with the Plaintiff (ie. the installation of cable) and that after a point in time, the Plaintiff no longer seemed to be interested in following through on his suggestions; essentially the arrangement had fallen apart. [ 13 ] He further testified that his technicians were familiar with this equipment and its installation and that it had been done successfully over 150 times and that in this case, as far as he was aware the installation had been successful, and that as part of his arrangements with Irwin, he has to certify to Irwin that it had been installed, the leasing company then confirms the install as was evidenced by the agreement dated October 31, 2007 and then Irwin pays him out his costs.

His position is that any further difficulty with the equipment was because of improper use or programming by the Plaintiff and that he cannot be held responsible for that. [ 14 ] He further testified that his technician “Jerry” died in January of 2009 of cancer and this makes it nearly impossible to discover what was done or what was said by one of his most competent technicians. It is also his position that a former employee of his is now one of his competitors in the business and that he has ‘tinkered” with the equipment he originally installed.

It is his position that he tried at all times to make things right with the Plaintiff but that the Plaintiff was difficult to deal with and that he would not try to reach a mutually acceptable compromise with the Defendant or his agents.

Position of the Plaintiff [ 15 ] The Plaintiff’s position is that the Defendant is in breach of the agreement to successfully supply and install the business equipment; that they had a continuing agreement until at least the summer of 2009, due to the continuing representations of the Defendant; that P2 is a valid written contract between the two parties; and that the Defendant is in fundamental breach of their contract.

Position of the Defendant [ 16 ] The Defendant’s position is that the claim of the Plaintiff is statute barred as any agreement they had was entered into prior to October of 2007; that there was never any written agreement between the two parties; that they have performed their part of the agreement and are therefore not in breach and that no service agreement was ever entered into between the two parties. Analysis [ 17 ] There are two questions which are required to be answered:

(1) Is this action barred by The Limitations Act ?

(2) If not, is the Defendant liable for breach of contract or for fraudulent and or negligent misrepresentation or unjust enrichment? [ 18 ] In my view there was never a valid written contract entered into between the Plaintiff and the Defendant. There was certainly an oral agreement to provide and install certain equipment and the parties had agreed upon a price for those services. This was reduced to an invoice which later became the subject of a financing agreement and contract between the Plaintiff and Irwin Financial. [ 19 ] I find that when the Plaintiff entered into that agreement with Irwin in October of 2007, he acknowledged that the equipment

was in proper working order and that he was essentially happy with the work that had been done. Why else would a responsible adult businessman sign such an agreement? If he was in fact unhappy with the work and the installation which he now says he was, why would he sign this agreement and why would he continue to make payment after payment for equipment that was at best, in his opinion, only working part-time.

It makes no sense for a business person who can be assumed to routinely enter into complicated business transactions on a regular basis to make that sort of error. [ 20 ] In my opinion, The Limitations Act , s. 5 and 6 does apply in this situation.

Those sections read as follows: 5 Unless otherwise provided in this Act , no proceedings shall be commenced with respect to a claim after two years from the day on which the claim is discovered. 6 Unless otherwise provided in this Act and subject to subsection (2), a claim is discovered on the day on which the claimant first knew or in the circumstances ought to have known; (

a) that the injury, loss or damage has occurred; (

b) that the injury, loss or damage appeared to have been caused by or contributed to by

an act or omission that is the subject of the claim; (

c) that the act or omission that is the subject of the claim appeared to be that of the person against whom the claim is made; and (

d) that, having regard to the nature of the injury, loss or damage , a proceeding would be an appropriate means to seek or remedy it. (2) a claimant is presumed to have known of the matters mentioned in clauses 1(

a) to (

d) on the day on which the act or omission on which the claim is based took place, unless the contrary is proved. [ 21 ]

Section 18 of the same Act states: 18 If in a proceeding, a limitation period is raised against a claimant, the claimant has the burden of proving that: (

a) the limitation period has not expired; or (

b) there is no limitation period that applies to the claim. 19 If, after the commencement of a proceeding, it is established that a limitation period applicable to the claim had expired before the commencement of the proceeding, the claim is barred and the proceeding shall not be maintained. [ 22 ] As far as the Defendant knew in October of 2007, the Plaintiff was content with the installation and that the equipment had been properly supplied and tested to his satisfaction.

The Plaintiff now claims that he signed that agreement under duress and that to his knowledge, the equipment was not working prior to October 31, 2007. [ 23 ] The Limitations Act allows an action to be commenced within two years of the claim being discovered. This claim here was discovered prior to October 31 of 2007, and therefore the Plaintiff had at the latest, until October 31, 2009, to commence his action. His action was not commenced until January of 2010. [ 24 ] The Limitations Act sets forth a finite period so that the party being sued can properly defend an action.

It is precisely the sort of situation that occurred in this case that The Limitations Act is designed to prevent. [ 25 ] The Saskatchewan Court of Appeal in Josvanger v. Fold , 2005 SKCA 138 , 275 Sask. R.101 at paragraph 20 stated as follows: [20] One of the purposes is that of “Peace and Repose”, which has been described this way: 3.1 “Peace and Repose” It is said that statutes of limitation are acts of “peace” and “repose”. The theory is that, at some point after the occurrence of conduct that might be actionable, a defendant is entitled to peace of mind.

When a period of limitation has expired, a potential defendant should be able to assume that he is no longer at risk from a stale claim. He should be able to part with his papers if they exist and discard any proofs of witnesses which has been taken; discharge his solicitor ifhe has been retained; and order his affairs on the basis that his potential liability has gone. That is the whole purpose of the limitationdefence. [21] This need to give a defendant peace of mind is based on concerns that over time the quality and availability of evidence willdiminish and memories will fade.

There are also economic and public interest considerations, and there may be judgmental reasonsarising from changes in values and standards. [26] Our Supreme Court considered a similar issue in Stoddard and Watson, (SCC), [1993] 2 S.C.R. 1069 atparagraph 11: 11 This Court recently described the purpose of limitations legislation in M. (K.) v. M. (H.), (SCC), [1992] 3 S.C.R. 6. M. (K.) v. M. (H.) was a claim for damages for incest brought well after the expiration of the limitation period, even allowing for theplaintiff to reach majority.

La Forest J. stated at pp. 29-30: In order to determine the time of accrual of the cause of action in a manner consistent with the purposes of The Limitations Act, I believeit is helpful to first examine its underlying rationales. There are three, and they may be described as the certainty, evidentiary, anddiligence rationales: see Rosenfeld, "The Statute of Limitations [page 1080] Barrier in Childhood Sexual Abuse Cases: The EquitableEstoppel Remedy" (1989), 12 Harv. Women's L.J. 206, at p. 211. Statutes of limitations have long been said to be statutes of repose; see Doe on the demise of Count Duroure v.

Jones (1791), 4 T.R. 301,100 E.R. 1031, and A'Court v. Cross (1825), 3 Bing. 329, 130 E.R. 540. The reasoning is straightforward enough. There comes a time,it is said, when a potential defendant should be secure in his reasonable expectation that he will not be held to account for ancientobligations ... The second rationale is evidentiary and concerns the desire to foreclose claims based on stale evidence. Once the limitation period haslapsed, the potential defendant should no longer be concerned about the preservation of evidence relevant to the claim ...

Finally, plaintiffs are expected to act diligently and not "sleep on their rights"; statutes of limitation are an incentive for plaintiffs to bringsuit in a timely fashion. While these rationales benefit the potential defendant, the Court also recognised that there must be fairness to the plaintiff as well. Hence, the reasonable discovery rule which prevents the injustice of a claim's being statute barred before the plaintiff becomes aware ofits existence: Kamloops (City of) v. Nielsen, (SCC), [1984] 2 S.C.R. 2; Central Trust Co. v. Rafuse, (SCC), [1986] 2 S.C.R. 147; M. (K.) v. M. (H.), supra.

A limitations scheme must attempt to balance the interests of both sides. [27] In my opinion, both of these Superior Court cases have an instant application to this case and I adopt and follow theirrationales explicitly. [28] Here the technician who installed the equipment and who had the most direct contact with the Plaintiff is now deceased andcannot offer his opinion or evidence on what occurred past October of 2007. That evidence in my opinion would be critical to the properdefence of this case and that is one reason why this statute was enacted.

The mere fact that there was some communication between theparties after that time does not in my opinion help the Plaintiff as there was never a service contract entered into between these twoparties. The only agreement that they had was to supply and install the equipment - not to maintain, service or reprogram it.

Theircontract, if it can indeed be termed that was complete by October 31, 2007, when on that date the Plaintiff entered the formal financingagreement with Irwin Financial. [29] If however, I am incorrect in my application of the law in regard to The Limitations Act, I would further find that there was anagreement to supply and install the business equipment but that in my view of the evidence, the Defendant completed his part of thetransaction. He supplied and installed the equipment and as far as he was aware, the Plaintiff was satisfied with the work done.

He triedto address subsequent complaints but in my opinion, these were outside the parameters of the original agreement as no service contractbetween the parties existed. [30] I further find there was no material representation and no fraud. The Defendant supplied the equipment that they agreed toprovide and in their view, and which I accept, installed it correctly. The Plaintiff signed the agreement with Irwin indicating that theywere satisfied with that equipment and have had two and a half years with the equipment to inspect it or have someone else look at it to

establish if anything was wrong with it. Apparently they have not done this and despite continuing to make all the regular payments on that equipment, have done nothing further to ensure that it is working for the purposes for which it was designed. One would assume that if a business owner continues to make payments on equipment, that he is content with that equipment. [ 31 ] I must conclude from the evidence I have heard that there is no evidence of fraud or any concealment of facts that would allow the Plaintiff’s claim to succeed. There is further no evidence of unjust enrichment.

The Defendant supplied the equipment that they agreed to supply and it has been in the exclusive possession of the Plaintiff at all material times. [ 32 ] In my opinion, the Plaintiff has not established any element of its case on a balance of probabilities and I therefore must dismiss this action. B.M. Klause, J