Bond Reproductions Inc. v. Revolution Resource Recovery Inc., 2018 BCPC 241

Citation: Bond Reproductions Inc. v. Revolution Resource Recovery Inc. 2018 BCPC 241 Date: 20181009 File No: 1759861 Registry: Vancouver IN THE PROVINCIAL COURT OF BRITISH COLUMBIA (Small Claims) BETWEEN: BOND REPRODUCTIONS INC. CLAIMANT AND: REVOLUTION RESOURCE RECOVERY INC. DEFENDANT REASONS FOR JUDGMENT OF THE HONOURABLE JUDGE W. LEE Appearing for the Claimant: M. Lauga Counsel for the Defendant: J. Gehlen Place of Hearing: Vancouver , B.C. Date of Hearing: September 28, 2018

Date of Judgment: October 9, 2018 INTRODUCTION [ 1 ] On September 6, 2017, the claimant Bond Reproductions Inc. (“Bond Reproductions”) suffered a power outage following an accident when a truck owned by the defendant Revolution Resource Recovery Inc. (“Revolution Resource”) and driven by an employee of the defendant struck a nearby power pole. The claimant claims it has suffered losses as a result of this incident.

THE ISSUES [ 2 ] A Notice of Claim was filed November 8, 2017 seeking compensation for a “large economic loss” resulting from the power outage. [ 3 ] At a Settlement Conference held March 9, 2018, Her Honour Judge Adams described the sole issue as whether pure economic loss was recoverable from the defendant. [ 4 ] It was only a few days prior to trial that the claimant advised counsel for the defendant that the claimant was now alleging property damage.

It appears this new claim was now being advanced because the claimant reviewed the caselaw being relied upon by the defendant, which was sent to the claimant prior to the trial. [ 5 ] No request was made to amend the Notice of Claim. The claimant however sought at trial to advance a claim for property damage as well as financial losses.

The defendant was still prepared to proceed with the trial despite the late request to advance the new claim although the defendant did not agree that the new claim should be permitted. [ 6 ] I allowed the claimant to tender evidence regarding a property damage claim but I reserved my decision as to whether I would allow the claim to be made. [ 7 ] The issues before me then were whether the claimant suffered any property damage or economic loss for which the defendant was liable. DISCUSSION [ 8 ] Michael Lauga is the Chief Financial Officer for Bond Reproductions Inc.

He was the sole witness testifying on behalf of the claimant. [ 9 ] Bond Reproductions is located in Vancouver BC. [ 10 ] On September 6, 2017 at about 12:30PM, Mr. Lauga heard a noise from outside the premises of Bond Reproductions. He walked out the back of the premises and saw that a garbage truck had backed into a power pole. The power pole was leaning and a power line leading from the power pole to the Bond Reproductions building was sagging. The power to Bond Reproduction was off. [ 11 ] Information supplied by BC Hydro confirmed that a total of 442 BC Hydro clients had lost their power that day. [ 12 ] Mr.

Lauga did not see the accident occur but the fact of the accident was not disputed. [ 13 ] Mr. Lauga acknowledged that Bond Reproductions did not own the power pole. [ 14 ] Mr. Lauga also could not say if Bond Reproductions was responsible for the repair of the powerline. He was unable to testify whether the powerline was in fact damaged. He assumes there was damage to the powerline because there was no electricity. Mr.

Lauga was also not aware of their landlord billing Bond Reproductions for the repair of the powerline. [ 15 ] At the time, Bond Reproductions was extremely busy and working round the clock using three eight-hour shifts. Mr. Lauga did not state how long the power was off although part of the claim was for five hours of idle time when salaried employees could not work. I presume then that this reflects the amount of time the power was off. [ 16 ] Mr. Lauga summarized the claim of Bond Reproductions as follows: Sales Loss $9,438 [ 17 ] Mr.

Lauga testified that sales for Bond Reproductions in September 2017 totalled $906,000. This was an average of $26,964 a day. Bond Reproductions has a profit margin of between 30 to 40% and using an average of 35%, he estimates that for a day of lost sales opportunity, Bond Reproductions suffered a loss of $9,438 (35% x $26,964). [ 18 ] No financial records were provided to support this calculation. [ 19 ] I asked Mr. Lauga if he had records showing the average sales in the months before September 2017 to show if there was any drop in sales in September 2017. He did not have such records. Mr.

Lauga was unable to say if sales in September 2017 dropped when compared to previous months. Buyouts $2,480 [ 20 ] Mr. Lauga said that Bond Reproductions’ work is time sensitive. When the power went out, Bond Reproductions was forced to contract out four jobs to outside parties in order to meet certain job deadlines. Mr. Lauga tendered four invoices representing the work that was subcontracted out for completion. The total of those invoices came to $2,480.

Wages $3,658 [ 21 ] Mr. Lauga provided a

summary listing 20 unnamed employees who had to work overtime to make up for production lost during the power outage. These amounts totalled $3,658. Specific details of each employee were not provided. [ 22 ] In his testimony, Mr. Lauga said that certain employees work on an hourly basis and others on a salary. When the power outage occurred, the hourly employees were sent home and were not paid. I was not told if these 20 employees referred to by Mr. Lauga were hourly employees.

Given that there is a separate claim in relation to wages paid to salaried employees, I presume these 20 employees to be paid on an hourly basis. If that were the case, those hourly employees would have had to do the work and be paid regardless of any power outage, although the pay may not have been at the overtime rate. Idle Wages $3,378 [ 23 ] Mr. Lauga gave a list of 25 unnamed employees who were on salary. He calculated that salaries paid to these employees during the time they were not working due to the power outage totalled $3,378.

This was based on 62.5% of the day being lost due to the power outage, which is the percentage of five hours out of an eight hour day. Specific details of each employee were not provided. Physical Damage $1,600 [ 24 ] Due to the power outage, four presses used by Bond Reproductions stopped working. Between the four presses, there were 12 press plates being used at the time. A press plate is an aluminum plate holding a mould that is covered in ink which is then imprinted onto paper. Because the presses stopped running, the ink hardened. Mr. Lauga said that these plates had to be replaced. [ 25 ] Mr.

Lauga said that $1,000 of the $1,600 claim related to lost inventory costs. The $1,000 was comprised of the cost of ink, wages paid to press operators, loss of paper and time spent removing and replacing damaged inventory. [ 26 ] The cost of ink was said to be $393.48. An invoice showing this was not provided. [ 27 ] The press operators were paid $26.25 an hour and Mr. Lauga said there was 11 hours of lost time. I was not told how the 11 hours was calculated.

This part of the claim totalled $288.75. [ 28 ] The balance of the $1,000 claim, which would be $317.77, was attributed to an estimate of other losses such as paper and time spent removing damaged inventory. A calculation for this sum was not provided. [ 29 ] The remaining $600 of the $1,600 claim was based on lost press plates. Mr. Lauga said that the presses had a total of 12 press plates, which had to be replaced at a cost of $50 each. Mr. Lauga was asked whether the plates could not be cleaned and then re-used.

He said it was more cost effective to dispose of the plates. [ 30 ] The total claim by Bond Reproductions is $20,554. [ 31 ] The defendant chose not to call any evidence and simply cross-examined Mr. Lauga. ANALYSIS [ 32 ] The claimant has the onus of proving its claim on the balance of probabilities. If it fails to do so, the claim will be dismissed. [ 33 ] The claimant argues that the defendant caused the power outage and so should be liable for any resulting losses. [ 34 ] The defendant admits there was a power outage.

In written submissions provided to me, the defendant agreed that the power outage was caused when the defendant’s vehicle struck a utility pole owned by BC Hydro. Both parties also agreed to allow into evidence a copy of an email from a BC Hydro representative stating that the power outage affected some 442 BC Hydro customers. Pure Economic Loss [ 35 ] Revolution Resource takes the position that this is a claim for pure economic loss and in the circumstances is not recoverable. [ 36 ] There is a distinction in law between pure economic loss and consequential economic loss.

I refer to the textbook Canadian Tort Law , 7 th Edition by Allen M. Linden, published in 2001. At

Chapter 12, Professor Linden states: At the outset it is necessary to distinguish pure economic loss from consequential economic loss. Consequential economic loss is financial loss causally connected to physical damage to the plaintiff’s own person or property. An injured employee, for example, may suffer consequential economic loss in the form of medical expenses or loss of earnings. Consequential loss is usually governed by the same principles of recovery that apply to the physical damage itself.

On the other hand, a pure economic loss is a financial loss which is not causally connected to the physical injury to the plaintiff’s own person or property. [ 37 ] I must therefore first determine whether there was any damage to the property of Bond Reproductions before I can determine the legal approach I must take in assessing this case. [ 38 ] The defendant’s truck damaged a power pole. That power pole did not belong to the claimant.

The claimant instead alleges that the powerline leading from the pole to the premises of Bond Reproductions was damaged and that the claimant either owned the powerline or was responsible for its repair. However the claimant provided no evidence to show that it owned the powerline or that it

paid for any repair costs in relation to the powerline. The claimant also had no evidence to show that the powerline itself was evendamaged. This was simply presumed based on the power outage. [39] The claimant has not proven on the balance of probabilities that the defendant’s vehicle damaged any property owned by theclaimant or for which the claimant was responsible.

Given this finding, I need not decide if the claimant should even be allowed toadvance a property damage claim in this claim. [40] Bond Reproductions does claim property damage to its press plates but that damage was not caused by the defendant’s truck inthe sense that the truck did not impact or hit the press plates. The damage to the press plates was a result of the electrical outage. [41] No property of Bond Reproductions was directly damaged by Revolution Resource.

If Bond Reproductions did suffer anylosses, it was in the nature of a pure economic loss. [42] I will now consider whether there is a basis in law to claim compensation for pure economic loss. [43] In the decision Canadian National Railway Co. v. Norsk Pacific Steamship Co., (SCC), [1992] 1 S.C.R. 1021,two different approaches were taken to consider when pure economic loss could be recoverable. The Five Categories [44] The first approach was proposed by Mr. Justice Laforest of the Supreme Court of Canada. At page 1049 of the decision, Mr.

Justice Laforest referred to five categories of economic loss for which there may be compensation. Those categories were: 1. The Independent Liability of Statutory Public Authorities; 2. Negligent Misrepresentation; 3. Negligent Performance of a Service; 4. Negligent Supply of Shoddy Goods or Structures; and 5. Relational Economic Loss. [45] The Supreme Court of Canada reiterated this approach in the decision Winnipeg Condominium Corporation No. 36 v. BirdConstruction Co., (SCC), [1995] 1 SCR 85 at paragraph 12 and in the decision Design Services Ltd. v.

Canada, [2008]1 SCR 737, 2008 SCC 22 at paragraph 32. [46] These five exceptions were accepted by the BC Supreme Court in the decision James v. British Columbia, 2004 BCSC 608 atparagraph 14. [47] Only the last of these five categories, relational economic loss, could apply here. The defendant was not a public authority. Thedefendant made no misrepresentations to Bond Reproductions.

The defendant was not performing any service or supplying any goods tothe claimant. [48] Professor Linden explained in Canadian Tort Law, 7th Edition, at page 440 that “relational economic loss” occurs when a“defendant negligently causes personal injury or property damage to a third party. The plaintiff suffers pure economic loss by virtue ofsome relationship, usually contractual, it enjoys with the injured third party or the damaged property.” [49] In James v.

British Columbia, the court said at paragraph 47 that the category of “relational economic loss” only applied in thefollowing situations: 1. where the claimant has a possessory or proprietary interest in the damaged property; 2. the claimant's case is one of general average; or 3. the relationship between the claimant and the owner of the damaged property constitutes a joint venture. [50] I have already held that there was no evidence to support an argument that Bond Reproductions owned the powerline or had anyresponsibility to pay for damage to the powerline.

The first category of relational economic loss does not apply here because BondReproductions had no possessory or proprietary interest in the power pole. [51] The second category of relational economic loss refers to “general average”. This is a concept in maritime law and has noapplication here. [52] The last category is where the relationship between the claimant and the owner of the damaged property, BC Hydro, constituteda joint venture.

There is no evidence to support such a finding. [53] Given the above, I am unable to conclude that a relational economic loss exists on the evidence before me. [54] Utilizing the approach proposed by Mr. Justice Laforest, the claim for pure economic loss does not fit within any of the fiverecognized categories to permit a claim for pure economic loss and so must fail. Should There be a New Category? [55] It remains possible to create new categories that permit claims for pure economic loss. In the decision Design Services Ltd. v.

Canada, the Supreme Court of Canada stated: [45] Having found that the present situation does not fit within one of the five preexisting categories of pure economic loss, it isnecessary to assess whether a new category of pure economic loss should nonetheless be established, specifically a new duty of carebetween an owner and subcontractors. This requires the analysis mandated in Anns. [46] The Anns test was recently described by this Court in Childs, at para. 11: In Anns v.

Merton London Borough Council, [1978] A.C. 728 (H.L.), Lord Wilberforce proposed a two-part test for determining whethera duty of care arises. The first stage focuses on the relationship between the plaintiff and the defendant, and asks whether it is close or“proximate” enough to give rise to a duty of care (p. 742). The second stage asks whether there are countervailing policy considerationsthat negative the duty of care. The two-stage approach of Anns was adopted by this Court in Kamloops (City of) v.

Nielsen, (SCC), [1984] 2 S.C.R. 2, at pp. 10-11, and recast as follows: (1) is there “a sufficiently close relationship between the parties” or “proximity” to justify imposition of a duty and, if so, (2) are there policy considerations which ought to negative or limit the scope of the duty, the class of persons to whom it is owed or thedamages to which breach may give rise? [47] In essence, if a prima facie duty of care is found at the first stage of the Anns test and there are no residual policy concerns negatingthe creation of that duty at the second stage, then a new category of duty is recognized [56] I will focus on the second test in the Anns decision, whether there are policy considerations that will negative or limit the claim.Professor Linden stated at page 440 of Canadian Tort Law that the majority of claims for relational economic loss have failed in thecourts when such claims expose a defendant to a multitude of claims.

That is the very argument being advanced by the defendant here.The loss of electricity affected some 442 BC Hydro customers including Bond Reproductions. A successful claim by BondReproductions would open the door to the risk of a potentially staggering number of legal claims against the defendant. [57] Mr. Justice Laforest noted these same concerns at page 1132 of the Canadian National Railway Co. v.

Norsk Pacific SteamshipCo. decision. [58] The decision R171 Enterprises Ltd. et al. v Sunrise Construction Ltd. et al., 2005 BCSC 1081 at paragraph 122 accepts that “thepolicy against liability in indeterminate amounts for an indeterminate time of an indeterminate class should not be displaced.” [59] The BC Supreme Court also commented on pure economic loss in the decision Geremia v. Nielsen (Estate), 2006 BCSC 229. In this case, the husband of a woman injured in an accident sued the defendant for losses. The court referred to the CanadianNational Railway Co. v.

Norsk Pacific Steamship Co. decision which I discussed earlier and then said: [14] So, did Norsk fling open the door to all and sundry who suffer economic loss without accompanying physical damage? Apparentlynot, because four years later the Court decided D’Amato v. Badger, (SCC), [1996] 2 S.C.R. 1071. In D’Amato theplaintiff was a corporation who employed and relied upon a key fellow. That key employee was injured in a motor vehicle collision. The corporation presented a claim for the pure economic loss it suffered as a consequence of its key man being off work.

The SupremeCourt held that the claim did not meet the proximity test McLachlin J. articulated in Norsk. The court went further and said that even if itwas reasonably foreseeable that a person injured in an accident was employed in a critical position such that his employer relied on hisperformance, the claim would nonetheless be disallowed on policy grounds; vis: that to allow the claim would open tort feasors toliability to an indeterminate class of claimants. [15] Dr. Geremia argues that his claim should be allowed to proceed because it is sufficiently proximate to Mrs.

Geremia’s injury that atort feasor could reasonably foresee it. That is: any person driving down the highway could reasonably foresee that the victim of hisnegligence would have children and a working spouse who would be inconvenienced by injury to the victim, and further that the spousewould lose income as a consequence of picking up the victim’s duties around the house and while caring for her as she recovered. Onthe policy front, Dr. Geremia argues that to allow his claim would not open tort feasors to liability to an indeterminate class.

That isbecause his class is defined as spouses of injured persons who care enough about their injured husbands or wives and children (if any) todevote themselves to their collective care. [16] The flaw in Dr. Geremia’s argument is that he does not, and in my view cannot, distinguish his position from that of theunsuccessful employer in D’Amato.

On what basis can it be said that a reasonable member of society is able to foresee that the victim ofhis negligence would be married to a devoted spouse, when, as D’Amato decrees, that same reasonable person cannot reasonably foreseethat the same victim is an important employee? It seems to me that it is at least as likely that a victim will be important to his employeras to his spouse.

Indeed, I think I can take judicial notice of the rates of divorce in this country, and predict that it is perhaps more likelythat a victim of a traffic accident will be responsibly employed than married. [17] Further, about the indeterminacy problem that scotched D’Amato’s claim for policy reasons, Major J. said: 51 If a company is allowed to recover pure economic loss arising from the loss of a key shareholder and employee, the problem ofindeterminacy arises.

An injury to one person obviously has a ripple effect, causing economic loss in various forms to a large number ofpeople, both individuals and corporations. To allow recovery in these circumstances would invite similar claims by multi-memberedplaintiffs. It would remove the incentive for contracting parties to negotiate on who will bear risk of loss, and for corporations to planfor events such as this, through insurance or otherwise. [18] That same ripple effect can occur in a family situation as well.

If a husband or wife could recover income loss following injury to aspouse, then on what ground could a child’s income loss be excluded? Or a mother or father’s loss, or losses incurred by caring anddevoted aunts, uncles, cousins, grandparents, informal family members (e.g.: Uncle Bill, who while not actually related to anyone, is‘just like a member of the family’)? Or any cumulative combination of one or more of those folks? In fact, a family is, in my view, the

very arch-type of the multi-membered plaintiff that concerned Major J. enough deny it a right to recover its pure economic loss. [19] am persuaded that in Norsk the Supreme Court confirmed that sometimes plaintiffs can recover pure economic loss, but that inD’Amato the Court clearly denied that right to persons in Dr. Geremia’s shoes. His claims for income loss and special damages must,therefore, be dismissed. [60] Given the policy against indeterminate claimants, there is no basis on the facts before me to create a new category for a claimfor pure economic loss.

Proximity [61] The second approach to pure economic loss claims was taken by Madam Justice McLachlin in Canadian National Railway Co.v. Norsk Pacific Steamship Co. At page 1152 she stated that: …pure economic loss is prima facie recoverable where, in addition to negligence and foreseeable loss, there is sufficient proximitybetween the negligent act and the loss. [62] “Proximity” is a vague legal concept. At law, causation is not enough to make one liable for a loss. The conduct of thedefendant must be the proximate cause of the loss, or in other words, the loss must not be too remote.

Whether the action of a defendantis the proximate cause of a loss depends on the facts of each case. [63] I will state this in another way. Causation, which is sometimes referred to as “causation-in-fact”, can be determined by usingthe “but for” test. Applied to the facts of this case, would Bond Reproductions have lost electrical power but for the impact between thepower pole and the defendant’s truck? I am satisfied that the answer to this is “No”. However causation alone is not enough to makeone legally liable for damages. At law, a defendant must be the “proximate cause” of the loss.

Another legal term for this is “causationin law”. Proximate cause or causation in law deals with the limits of legal liability and that involves a more complicated analysis. I alsoadd that the proximate cause of a loss need not be the only cause of the loss: see Skinner v. Fu, 2010 BCCA 321 at paragraphs20 to 22. [64] For there to be a finding of proximate cause leading to legal liability, damage must not be too remote from the factual cause ofthe damage. [65] It is not enough that damage is foreseeable: see Seaboard Life Insurance Company v. Babich, (BC SC) atparagraph 21.

The damage suffered must be reasonably foreseeable: see Curtiss v The Corporation of the District of West Vancouver,2018 BCSC 509 at paragraph 57. [66] I note that the question of proximity is the first test set out in the Anns case for creating new categories for claims for pureeconomic loss. [67] In looking at whether the damage was reasonably foreseeable on the facts before me, the extent of Revolution Resource’sknowledge becomes relevant. There was no evidence that Revolution Resource was made aware of the risk faced by BondReproductions if the power pole were struck.

There is also no evidence to support a claim that Revolution Resource should have knownof the possible damage that the claimant would suffer if the power pole were struck. In my view the damage suffered by the claimantwas not reasonably foreseeable. As such, the proximate cause of the claimant’s loss was not the defendant’s truck hitting the powerpole. [68] This case differs from the facts in the decision in Seaway Hotels Ltd. v.

Consumer’s Gas Co., (ON SC),[1959] O.R. 177-182, appealed (ON CA), [1959] O.R. 581-585, where the defendant was digging a trench anddamaged an underground power cable, causing a loss of electricity to the plaintiff. In this case, the defendant Consumer’s Gas waswarned of the existence of the underground power line in the very location that it was digging. [69] Based on the approach proposed by Madam Justice McLachlin, the claim must be dismissed. The Claims [70] If I am wrong in my decision, I will still assess the economic loss claims. [71] The first claim is a sales loss of $9,438 occurring in September 2017.

No evidence was given showing the sales in the monthsprior to September 2017. I am therefore unable to determine if sales were even affected by the power outage. This claim has not beenproven on the balance of probabilities. [72] The second claim is for buyouts totalling $2,480. These are amounts paid to third parties to complete contracted work by somedeadline. No evidence was provided to show what projects the third party work related to or the deadlines.

At a minimum I would haveneeded details of the Bond Reproductions contract with its customers to confirm that the work contracted out to third parties related tothe claimant’s contracts. This claim was not proven on the balance of probabilities. [73] The third claim was for wages of $3,658. This related to 20 unnamed employees who had to work to make up for productionlost during the power outage. Mr. Lauga testified that some of the claimant’s employees worked on an hourly basis and were sent homedue to the power outage.

Since there is a separate claim for lost wages paid to salaried employees I presume that these 20 employeeswere all hourly wage employees. These employees would have still been paid to do their work if there had not been a power outage.There is no actual loss in such a case. It may be argued that these same employees could have done other work if they had not beenrequired to make up for lost time, but I was not given any work records, time sheets or any documents to confirm the availability of otherwork.

Furthermore, no evidence was given to show any lost opportunities suffered by Bond Reproductions because these 20 employeeswere delayed in doing their work. Lastly and most importantly, any loss suffered by Bond Reproductions would have been in relation to

its lost profits and not the wages paid to the employees. No evidence was given with respect to lost profits. This claim was not proven on the balance of probabilities. [ 74 ] The fourth claim is for idle wages of $3,378. This is a claim for wages paid to salaried employees who sat idle during the power outage. To support such a claim I would need payroll records to provide me with specific details of the claim. It is not enough to provide a

summary of the claim without supporting documentation. In any event, any loss suffered by Bond Reproductions would have been based on lost profits and not salaries paid. Once again, no evidence was given with respect to lost profits. This claim was not proven on the balance of probabilities. [ 75 ] The fifth and final claim is for property damage of $1,600. This was based on the following items: • Ink $393.48. No invoice supporting this claim was provided. • Lost press operators time $288.75. No time records were supplied to support this claim. • Other losses $317.77 (which was the balance of the $1,000 claim).

No details of this calculation or supporting documentation were provided. • Lost press plates $600. No invoices or records were provided to show the costs for the plates. [ 76 ] As should be evident, a claimant needs evidence to support its claim. When the claim relates to monetary losses or out of pocket expenses, the evidence would typically include supporting invoices or receipts. If there is a claim for wages paid, then time sheets could be provided to show the hours worked and the wages paid. It is not sufficient to come to court without any supporting documentation or evidence.

This claim was not proven on the balance of probabilities.

SUMMARY [ 77 ] The claim of Bond Reproductions Inc. is dismissed. [ 78 ] Bond Reproductions Inc. shall pay to Revolution Resource Recovery Inc. the sum of $25 representing the filing fee for its Reply. [ 79 ] Although the defendant was represented by legal counsel, no legal costs are payable pursuant to sec. 19(4) of the Small Claims Act . ________________________ The Honourable W. Lee Provincial Court Judge