Joshua Dampare v. Damion Williams, 2016 SKPC 52

IN THE PROVINCIAL COURT OF SASKATCHEWAN CIVIL DIVISION Citation: 2016 SKPC 052 Date: April 11, 2016 Location: Kindersley _____________________________________________________________________________ SC#286 of 2015 Between: Joshua Dampare and Damion Williams - and - Arif Hussain Selves For the Plaintiff Self For the Defendant - and - SC#285 of 2015 Between: Joshua Dampare and Damion Williams and 101256920 Saskatchewan Ltd. - and - 1642470 Alberta Ltd.

Selves For the Plaintiff Self For the Defendant _____________________________________________________________________________ JUDGMENT S.L. METIVIER , J _____________________________________________________________________________ Introduction [ 1 ] There are two actions before the Court. [ 2 ] In Claim # 286(2015) the Plaintiffs, Joshua Dampare and Damion Williams, claim damages against the Defendant, Arif Hussain, in the amount of $6,600.00 under a written “Loan Agreement” signed by the Parties on February 23, 2014.

The Plaintiffs further claim $2,000.00 for repayment of a personal loan advanced to the Defendant on March 1 st and 2 nd , 2014. [ 3 ] Claim # 285(2015) involves the same people, but in their corporate capacities.

The Plaintiff, 101256920 Saskatchewan Ltd., alleges that the Defendant, 1642470 Alberta Ltd., owes $18,591.00 for unpaid wages, vehicle maintenance, WCB payments and fuel costs arising out of a verbal agreement to operate the Defendant’s semi truck and share the net profits. [ 4 ] The Defendant argues that the Plaintiffs are not entitled to recovery of $6,600.00 under the Loan Agreement because they breached their contract by failing to take over the lease of his semi truck.

He does not dispute the Personal Loan of $2,000.00, but argues that it has been paid in full by money paid to the Plaintiffs under their business dealings. [ 5 ] The Defendant (Plaintiff by Counterclaim) claims damages for breach of contract arising from the Plaintiffs refusal to take over the Defendant’s lease on the semi truck. Factual Background [ 6 ] In February, 2014, the Defendant, Arif Hussain, found himself in financial distress and unable to keep up with the lease payments and maintenance costs on two semi trucks used in his trucking business.

He placed an advertisement on Kijiji looking for someone to take over the lease on a 2009 Kenworth truck (the “ Truck ” ) for a cash payment of $6,000.00. [ 7 ] The Plaintiffs, Joshua Dampare and Damion Williams, replied to the Kijiji advertisement as they were hoping to purchase a truck and start their own trucking business.

The Defendant, sensing that the Plaintiffs were only mildly interested, sweetened the offer to include a hauling contract that he had with Gibson Energy Sask Ltd. ( “ Gibsons ” ) if the Plaintiffs would take over the lease of the Truck. [ 8 ] The Plaintiffs were very interested in the business opportunity, but had credit issues that prevented them from immediately taking over the lease. The parties negotiated in good faith to come to an agreement that would result in the Plaintiffs taking over the Truck lease and the Defendant ’ s hauling contract with Gibsons.

In return, the Defendant would be relieved of some of his financial responsibilities. [ 9 ] The Plaintiffs assured the Defendant that Mr. Williams was working to clear his credit history and would be in a position to take over the lease within the next two to three months. The Plaintiffs offered to “loan” the Defendant $6,000.00 on the understanding that the payment would satisfy the cash component of the agreement provided that their credit was approved and other stipulated conditions were met. In the interim, the parties agreed to the following: 1) the Plaintiffs would assume financial responsibility

for the Truck; 2) the Plaintiffs would operate the Truck under one of the two hauling contracts that the Defendant had with Gibsons, with a view to taking over that contract; 3) until such time as the lease transferred to the Plaintiffs, the net profits generated from operation of the Truck were to be split 50/50 between the Plaintiffs and the Defendant (the “ Business Arrangement ” ). [ 10 ] On February 23, 2014, the parties signed a document entitled “ Loan Agreement ” that provided as follows: Loan Agreement Damion Williams and Josh Dampare agree to Loan ARIF Hussain The sum of $6,000.00 to be used for the purposes of bringing the lease payment of Kenworth T800 with vin# up to date and pay for maintenance for aforementioned truck.

This loan amount can be used as part of the option to purchase said Truck from Arif Hussain to Damion Willliams and/or Josh Dampare. If a mutual agreement is made between Arif Hussain, Josh Dampare and Damion Williams pertaining to the terms and conditions of the lease, The contract Arif Hussain and Gibsons, The due diligence on the above mentioned truck and upon approval from both parties legal counsel. Terms of Loan There is a 10% Interest charge. After 6 months if Josh Dampare and Damion could not get approval to takeover the lease and do not want to continue then Mr.

Arif will return $6,600.00 in two monthly payments. If Joshua Dampare and Damion Williams could get approval of the lease on their own names, then they don ’ t have to pay anything else than what they had paid $6,000.00 at the start. If Joshua Dampare and Damion Williams get approval of the lease while Mr. Arif is also on the lease, then Mr. Arif will take some mutually decided compensation at that time.

If Joshua Dampare and Damion Williams could not get approval of the lease within 3 to 6 months and still want to continues they way, it is then new agreement will be written with the mutual consultation at that time. Starting from March 1 st , 2014, Joshua Dampare and Damian Williams will be responsible for the lease payments and maintenance. Mr.

Arif will manage the business until Joshua Dampare and Damion Williams join him. [ 11 ] On March 1 and 2, 2014, the Plaintiffs advanced a personal loan to the Defendant in the amount of $2,000.00 (the “ Personal Loan ” ). [ 12 ] Around April 16, 2014, the Plaintiffs moved to Coleville and started operating the Truck under the Defendant ’ s contract with Gibsons. Gibsons paid the Defendant pursuant to their contract, and the Defendant distributed money to the Plaintiffs. The Business Arrangement ended in August, 2014.

It ended because the Plaintiffs failed to take over the Truck lease within the time frame stipulated in the Loan Agreement even though the Defendant had turned over his hauling contract with Gibsons. By that time, the relationship between the parties was in a downward spiral caused by disputes over calculation of labor costs, expenses, and repayment of the Personal Loan. Issues [ 13 ] The issues in this case are: 1. Is the Defendant liable to repay $6,600.00 under the Loan Agreement? 2. Has the Defendant repaid the Personal Loan? 3.

What amount, if any, does the Defendant owe the Plaintiffs under the Business Arrangement? Analysis 1. Is the Defendant liable to repay $6,600.00 under the Loan Agreement? [ 14 ] The Defendant asserts that the Loan Agreement was part and parcel of the Business Arrangement and that his obligation to repay was contingent on the Plaintiffs ’ inability to obtain credit to take over the lease. He argues that the Plaintiffs are not legally entitled a return of the $6,600.00 as they did not keep their side of the bargain to take over the Truck lease even though he turned over his hauling contract with Gibsons.

The Plaintiffs take the position that the Loan Agreement was separate and distinct from the Business Arrangement and argue that they were under no legal obligation to take over the Truck lease.

[15] The fundamental principles in relation to matters of contractual

interpretation were recently reviewed by Wilkinson J. in Dyckv JCL Property Management Ltd, 2014 SKQB 274 where she stated as follows: [38] The role of the Court is to determine, objectively, the parties’ intention at the time the contract was made. The Court must construethe plain and ordinary meaning of the words used in the contract as a whole, aided by reference to the surrounding circumstances (orfactual matrix) that existed at the time the contract was made. [39] In Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53 , [2014] S.C.J. No. 53 (QL), at paragraphs 47 and 48 theSupreme Court of Canada stated that the

interpretation of contracts has evolved towards a practical, common-sense approach notdominated by technical rules of construction. The overriding concern is to determine “the intent of the parties and the scope of theirunderstanding”. To do so, a decision-maker must read the contract as a whole, giving the words used their ordinary and grammaticalmeaning, consistent with the surrounding circumstances known to the parties at the time of formation of the contract.

Consideration ofthe surrounding circumstances recognizes that ascertaining contractual intention can be difficult when looking at words on their own,because words alone do not have an immutable or absolute meaning. Contracts are not made in a vacuum. In a commercial contract theCourt should know the commercial purpose, the genesis of the transaction, the background, the context, the market in which the partiesare operating, and the nature of the relationship created by the agreement. [40] The nature and scope of “factual context evidence” is addressed at paras. 56-61 of the Sattva decision.

To summarize, while suchevidence is an aid to understanding the mutual and objective intent expressed in the words of the contract, it cannot overwhelm thewords. The

interpretation of a written contractual provision must always be grounded in the text and read in light of the entire contract.The nature of such evidence varies from case to case. It should consist only of objective evidence of the background facts at the time ofthe execution of the contract -- that is, the facts that reasonably ought to have been within the knowledge of both parties at or before thedate of contracting.

Subject to these requirements and the parol evidence rule, this includes absolutely anything which would haveaffected a reasonable person’s understanding of the language employed. [41] Where a document is clear and unambiguous there is no need to resort to extrinsic evidence because it is presumed the partiesintended the legal consequences of their words: Eli Lilly & Co. v. Novopharm Ltd.; Eli Lilly Co. v. Apotex Inc., (SCC), [1998] 2 S.C.R. 129, 161 D.L.R. (4th) 1 at para. 55. [42] Only if the words viewed objectively are capable of giving rise to two or more reasonable

interpretations may the Court considerextrinsic evidence. [16] The Loan Agreement was drafted without the assistance of legal counsel. It includes some provisions that indicate the $6000.00 was a loan and other provisions that suggest it was intended as a deposit. In Howe v Smith, 27 Ch D 89, Fry J. describedthe purpose of a deposit at p. 101 as follows: Money paid as a deposit must, I conceive, be paid on some terms implied or expressed. In this case no terms are expressed, and we musttherefore inquire what terms are to be implied.

The terms most naturally to be implied appear to me in the case of money paid on thesigning of a contract to be that in the event of the contract being performed it shall be brought into account, but if the contract is notperformed by the payer it shall remain the property of the payee. It is not merely a part payment but is then also an earnest to bind thebargain so entered into, and creates by the fear of its forfeiture a motive in the payer to perform the rest of the contract. [17] While it is a matter of contractual

interpretation whether a deposit made to a seller in advance of the completion of apurchase is forfeited to the seller, a deposit is generally forfeited by a buyer who repudiates a contract. See: Tang v Zhang, 2013 BCCA52. [18] I find from the wording of the Loan Agreement and the surrounding circumstances that the $6,000.00 was intendedas a deposit, provided by the Plaintiffs as an “earnest” to complete the contract and refundable in the event the Plaintiffs were unable toobtain credit approval.

This intention is demonstrated in the third paragraph of the Loan Agreement, which states that the Defendantsliability to repay the $6,000.00 is contingent on the Plaintiffs’ inability to get approval to take over the lease. In addition, the Plaintiffs’evidence at trial did not support their position that the Loan Agreement was separate and distinct from the Business Arrangement. Mr.Dampare testified that the Plaintiffs loaned money to the Defendant as the parties were all working together to get the Truck out of theKenworth shop and into operation. Mr.

Williams stated that they loaned the money to the Defendant as part of a mutually beneficialagreement. Payment of a deposit is consistent with the commercial purpose of the agreement, which was to provide the Plaintiffs with aTruck and a contract to start their new business while, at the same time, relieving the Defendant of his financial obligations associatedwith the Truck. [19] The Plaintiffs did not state that they were unable to take over the lease because they were refused credit; rather, theysaid they didn’t trust the Defendant.

The Plaintiffs argue that the words “and do not want to continue” contained in the third paragraphof the Loan Agreement mean that the choice to take over the lease was in their sole discretion.

In my view, those words, read in thecontext of the whole agreement, merely convey an option that if the Plaintiffs could not get credit approval within the six month timeperiod, the parties could agree to postpone repayment of the $6,000.00 and continue with the Business Arrangement. [20] The second paragraph of the Loan Agreement contains some further conditions that must be met before the $6,000.00 couldbe applied to the purchase price. It is implicit in the agreement that the parties would comply with the conditions in good faith.

Theevidence establishes that the Defendants completed their due diligence by having the Tuck inspected and repaired. Gibsons agreed totransfer the hauling contract to the Plaintiffs. Mr. Hussain testified that he provided the Plaintiffs with a copy of the lease agreementafter their very first meeting. The Plaintiffs had ample opportunity to review the lease and to consult with legal counsel if they wished to

do so. Accordingly, the only outstanding condition was the Plaintiffs’ credit approval. [ 21 ] The Plaintiffs repudiated the contract by failing to take over the lease, and, as such, the Defendant is entitled to retain the deposit. The Plaintiffs claim for repayment of $6,600.00 is dismissed. 2. Has the Defendant repaid the Personal Loan? [ 22 ] As stated above, the Defendant does not dispute the Personal Loan, but argues that it has been repaid out of his share of the net profits.

In support of his argument, the Defendant created and filed Exhibits D-2 and D-3. [ 23 ] Exhibit D-3 shows that the Truck generated a total revenue of $105,492.81.

Exhibit D-2 indicates that the Plaintiffs incurred expenses of $41,987.62 (including labor) and that the Defendant directly deposited $40,781.00 into the Plaintiffs ’ bank account. [ 24 ] According to the Defendant ’ s calculations, it appears that the Plaintiffs were not fully reimbursed for their expenses, let alone provided with any repayment of the Personal Loan paid out of the Defendant ’ s share of net profits. [ 25 ] The Plaintiffs are entitled to repayment of the Personal Loan in the amount of $2,000.00. 3.

What amounts, if any, are owed to the Plaintiffs under the Business Agreement? [ 26 ] The Plaintiffs prepared and filed Exhibit P-13 showing that their labor and expenses to operate the Truck ($51,510.75) exceeded the total amount they were paid ($40.781.00) by $10,729.75. [ 27 ] The Defendant prepared and filed Exhibits D-2 and D-3 suggesting that the $40,781.00 paid to the Plaintiffs covered all of their labor and expenses ($40,392.44), plus the Personal Loan, after setting off $5500.00 for fuel abuse and $830.62 paid to WCB on their behalf. [ 28 ] It is worthwhile noting that the accounting documents filed by both parties were prepared after the Business Arrangement had ended. [ 29 ] The accounting issues between the parties might have been settled by accounting for gross revenue, expenses and net profits in accordance with their agreement.

The Plaintiffs did not advance a claim for net profits and neither party provided a complete accounting to the court. In the absence of such, I will address each of the specific claims raised by Plaintiffs. Lost Wages [ 30 ] The Plaintiffs claim that they are entitled to be compensated for their labour at a rate of $30.00 per hour plus overtime, as set out in invoices marked as Exhibit P-12.

The Defendant, on the other hand, has calculated the Plaintiffs ’ labour based on 30% of the gross revenue. [ 31 ] Both the Plaintiffs’ and the Defendant’s labor calculations are set out below: Defendant Plantiffs April $2,539.40 $4,067.25 May $9038.71 $12,622.25 June $9,446.72 $10,179.00 July $10,623.02 $10,679.25 $31,647.85 $37,547.75 [ 32 ] The difference between the two is $5,897.90. The Defendant testified that it is common practice is to pay subcontractors a fixed amount to control expenses. He argues that the Plaintiffs were not his employees and should not be entitled to overtime.

Each of the parties has chosen the method that is financially advantageous to them, but neither was agreed to. In the absence of an agreement one way of the other, the Court will reluctantly split the difference an award damages to the Plaintiffs in the amount of $2,948.95. Expenses and Vehicle Maintenance Costs [ 33 ] The Defendant acknowledged at trial that he did not have complete information to calculate the Plaintiff ’ s expenses. The Defendant calculated the Plaintiffs expenses (excluding labor) at $10,339.77.

He reduced that amount by $1595.18, which he paid for insurance and plates, resulting in expenses and vehicle maintenance costs in the amount of $8,744.59. [ 34 ] The Plaintiff ’ s calculation of expenses and vehicle maintenance costs, as set out in Exhibit P-13 is $13,963.00. The Plaintiffs are entitled to recovery of $3,623.23, which is the difference between their calculation and what they received less $1,595.18 for costs incurred by the Defendant. Fuel Holdback Charge

[ 35 ] The Defendant paid the fuel costs associated with the operation of the Truck. He testified that in his view, the Plaintiffs were inefficient with their fuel usage, resulting in an unnecessary expense in the amount of $5,500.00, which he held back from the Plaintiffs. [ 36 ] There is no express agreement in respect of fuel usage, nor is this a situation where one ought to be implied. The Plaintiffs are entitled to payment of $5500.00 held back by the Defendant for excess fuel consumption. WCB Payment [ 37 ] The Defendant testified that he paid $860.00 to the WCB on behalf of the Plaintiffs.

WCB payments are a statutory obligation. The Plaintiffs ’ claim for this amount is dismissed. Gibsons Holdback Fee [ 38 ] Gibsons imposed a holdback fee of $3,000.00, which was returned to the Defendant at the end of the contract. According to the revenue sharing agreement, the Plaintiffs are entitled to 50% or $1,500.00. Counterclaim [ 39 ] The purpose of a deposit is to serve as liquidated damages in the event that the payor fails to complete the contract. Accordingly, the Defendant is not entitled to any further damages for the Plaintiffs breach of contract. The Defendant’s countercaim is dismissed.

Summary [ 40 ] In claim #286(2015) the Plaintiffs, Joshua Dampare and Damion Williams shall have judgment against the Defendant, Arif Hussain , in the amount of $2,000.00 plus pre-judgment interest from March 2, 2014 to the date of judgment. [ 41 ] In claim #285(2015) the Plaintiff, 101256920 Sask. Ltd. shall have judgment against the Defendant 1642470 Alberta Ltd. in the amount of $13,572.18 together with pre-judgment interest from August 31, 2014 to the date of judgment. _________________________ S.L. Metivier, J