First Class Waste Services Inc. v. Hub Fire Engines & Equipment Ltd., 2014 BCPC 38

Citation: First Class Waste Services Inc. v. Hub Fire Engines & Equipment Ltd. 2014 BCPC 0038 Date: 20140318 File No: 21556 Registry: Abbotsford IN THE PROVINCIAL COURT OF BRITISH COLUMBIA BETWEEN: FIRST CLASS WASTE SERVICES INC. CLAIMANT AND: HUB FIRE ENGINES & EQUIPMENT LTD. DEFENDANT RULING ON APPLICATION OF THE HONOURABLE JUDGE K. D. SKILNICK Counsel for the Claimant: R. K. Benham-Parker Appearing for the Defendant: J. Rempel

Place of Hearing: Abbotsford , B.C. Date of Hearing: March 3, 2014 Date of Judgment: March 18, 2014 Introduction [ 1 ] The Claimant First Class Waste Services Inc. has commenced this action against the Defendant Hub Fire Engines & Equipment Ltd. for the sum of $17,665.56, which is the amount that the Claimant alleges is owing under a contract made between the parties. Under the terms of that contract, known as a “Container Services Agreement”, the Claimant agreed to provide the Defendant with waste removal services for a term of five years at the contract rate.

The contract provided that at the end of the initial sixty month term, the contract would automatically renew for a further sixty months, unless the Defendant gave proper notice of termination. The Defendant says that it did just that, but the Claimant disagrees and says that the Defendant is bound by the contract for another five years. [ 2 ] The parties appeared for a settlement conference on March 3, 2014, as required under Rule 7 of the Small Claims Rules. At the settlement conference it became clear that the outcome of this action turned on an

interpretation of the disputed clause in the contract. The parties were directed to the provisions of Rule 7(14) which gives a settlement conference judge the power to decide on any issues which do not require evidence, as well as the power to dismiss a claim or reply that is without reasonable grounds. The parties agreed that the validity of the claim and the defence raised turned on the

interpretation of the clause in the contract which set out how the contract could be terminated. The parties were afforded the opportunity to make submissions at the Settlement Conference, and were also given a further period of two weeks (i.e. by March 17, 2014) to file any written submissions. The Defendant was not represented by counsel, but its representative Mr. Rempel said that he had spoken to a lawyer and was confident of his position. [ 3 ] Following are written reasons for my ruling on the issue of the

interpretation of the contract clause in dispute pursuant to Rule 7(14)(

b) of the Small Claims Rules , which in turn decides the entire action. Agreed Facts [ 4 ] On September 27, 2012, the Defendant entered into a written contract with the Claimant for the collection and disposal of waste.

The signed contract was the Claimant’s printed standard form, a single page agreement, which contained this clause: “This agreement is for a term of sixty months and shall be continued for a consecutive sixty month terms (sic) without further action by the parties, but may be terminated at the end of any contract period by either of the parties hereto by not less than ninety days but no more than on (sic) hundred and eighty days written notice (Registered Mail).” (Emphasis added). [ 5 ] The initial sixty month term ended on September 26, 2012.

On March 4, 2013, the Defendant wrote to the Claimant by Registered Mail, as follows: “Re: Customer No. 1230 Container Service Agreement Please be advised effective immediately Hub Fire Engines & Equipment will be terminating the above contract.” Position of the Parties [ 6 ] The Defendant argues that it has terminated the contact as permitted under the agreement. It argues that according to the terms of the contract, it could not terminate the contract until “the end of the contact period”, which ended on September 26, 2012. On its

interpretation of the contract, it was then permitted to terminate the contract, but could only do so between ninety and one hundred and eighty days thereafter (i.e. sometime between December 25, 2012 and March 25, 2013). The Defendant says that it did terminate the contract within this time frame and therefore the contract is at an end. [ 7 ] The Claimant takes the position that it would be an absurdity to permit the Defendant to terminate the contract after it was at least three months into the new term.

By use of the word “notice”, it is understood that this is something which occurs before the term has ended, not after. Although the contract does not expressly say that “prior” notice of termination was required, such an

interpretation gives effect to the purpose of the agreement. Rule 7(14) of the Small Claims Rules [ 8 ] Under Rule 7 of the Small Claims Rules, the parties to a small claims action are required to attend to a settlement conference before a trial date is set. The judge at a settlement serves as a gatekeeper, and determines which actions justify the allocation of court time, and which can be determined in some fashion other than a trial. Rule 7(14) provides, in part, as follows:

(14) At a settlement conference, a judge may do one or more of the following: ...

(

b) decide on any issues that do not require evidence; … (

d) set a trial date, if a trial is necessary; … (

i) dismiss a claim, counterclaim, reply or third party notice if, after discussion with the parties and reviewing the filed documents, ajudge determines that it (

i) is without reasonable grounds, (ii) discloses no triable issue, or (iii) is frivolous or an abuse of the court's process;… (

l) make any other order for the just, speedy and inexpensive resolution of the claim. [9] The late Chief Judge Stansfield of this court referred to settlement conferences (in Barroetavena v. Schmidt [1994] B.C.J. No.1593) as “one-stop shopping” and said that the settlement conference should be used as the forum to address issues such as dismissal of aclaim or ruling on issues in cases where the parties are in agreement as to the facts on which those issues may be decided.

Interpretation of the Contract [10] The Claimant argues that its

interpretation of the contract is the correct one and states that this

interpretation has been upheld bya previous decision of this court in Alpine Valley Disposal Ltd. v. Harrison Bay Dairy Farm Ltd. [2012] B.C.J. No. 2832; 2012 BCPC489. In that case the claimant, also a waste disposal company, sued a customer on a similarly worded contract. That case turned on adifferent issue from the one now facing this court. There, the defendant argued that the container service agreement was not a contract, orif it was, that there was insufficient attention drawn to the fact that the contract contained a 60 month term. The Honourable JudgeMacKay of this court rejected both of those defences.

He found that there was a valid offer and acceptance and sufficient considerationand therefore a binding contract existed. He rejected the defendant’s arguments that it should be relieved from the terms of the contract,and gave judgement to the claimant. [11] Judge MacKay did not expressly consider the construction of the renewal clause. In the Alpine Valley Disposal case, there wasno renewal of the initial term. The defendant stopped paying a year into the initial term.

Judge MacKay did not have to consider whetheror not a termination notice was given within the time allowed. [12] Generally speaking, in interpreting a contract, a court is attempting to give meaning to the terms adopted by the parties to thecontract. The court is trying to ascertain the true intentions of the parties. The intention of the parties is generally found from what theyhave committed to writing. It is the written agreement which preserves the record of the intention of the parties. Sometimes however, itis unclear from the language used in the contract precisely what the parties were agreeing to.

This occurs, for example, when the partiesuse ambiguous language, in which case resort is had to a number of rules of construction of contracts. [13] One of the rules of construction of contracts is known as “contra proferentem”, a Latin phrase which means “against a partywho proffers or puts forward a thing.” If a term of a contract is ambiguous, the contra proferentem rule of construction requires that theambiguous provision it is to be construed against the interest of the party that drafted or proffered the ambiguous provision. InMcClelland & Stewart Ltd. v.

Mutual Life Assurance Co. of Canada Ltd. (SCC), [1981] 2 S.C.R. 6, Justice Estey of theSupreme Court of Canada wrote: “The appellant relies (as did the trial judge) on the doctrine of contra proferentem. That principle of

interpretation applies to contractsand other documents on the simple theory that any ambiguity in a term of a contract must be resolved against the author if the choice isbetween him and the other party to the contract who did not participate in its drafting.

The rule or principle, however, only comes intoplay if there is an ambiguity in the language of the contract.” [14] The Merriam-Webster Dictionary defines “ambiguous” as “able to be understood in more than one way; having more than onepossible meaning; not expressed or understood clearly.” It must be first decided if the disputed term in this case is ambiguous, that is,whether it is capable of having more than one possible meaning, and whether it is not clearly understandable. [15] The disputed provision of this contract sets the time when the contract can be terminated as being “at the end of the contractperiod”, which suggests that the customer must wait until then before the right to terminate arises.

The provision goes on to provide that,in order to terminate the contract, either party can provide written notice. Contrary to what one might expect, the contract does not requirethis to be prior notice. It goes on to provide that the party who wishes to terminate the contract must give “not less than ninety days, butno more than on (sic) hundred and eighty days written notice” by registered mail. [16] It is agreed that on March 4, 2013, the Defendant gave the Claimant written notice by registered mail of its intention toterminate this contract. On one possible literal

interpretation of the contract, the right to unilateral termination of the contract did not ariseuntil the end of the contract period, which in this case happened on September 26, 2012. The agreement did not expressly require priornotice of the intention to terminate and therefore, once the time for allowable unilateral termination arose, the party terminating hadbetween 90 and 180 days to give notice of the intention to terminate. This would suggest that the Defendant had between December 25,2012 and March 25, 2013 to give notice of the intention to terminate the contract. This is in fact what the Defendant did.

[ 17 ] One of the arguments raised at the settlement conference by the Claimant was that the use of the word “notice” implied that it would be prior notice and therefore the

interpretation of the contract that the Defendant is arguing for makes no sense. Requiring subsequent notice would really mean that the contract would be for a term of sixty-three to sixty-six months, rather that the stated term of sixty months. However on a consideration of the definition of the word “notice” as used in the context of contracts, this does not follow. One of the

definitions of the word notice in the Merriam-Webster Dictionary is “the announcement of a party's intention to quit an agreement or relation at a specified time.” The specified time does not necessarily have to be in future. It can be, as was specified in this case, “immediately.” [ 18 ] On a consideration of the disputed contract in this case, as well as the law applicable to the

interpretation of contracts, I find the disputed provision of the Container Service Agreement to be ambiguous, and capable of being interpreted both in the manner argued for by the Defendant and by the Claimant. As between those two possible

interpretations, the absence of the adjective “prior” in defining the type of notice required, and the express provision stating that the contract “may be terminated at the end of any contract period” makes the Defendant’s

interpretation the more reasonable one. In any event, the contra proferentem rule requires that the ambiguity which exists here should be resolved against the Claimant, who is the party who proffered the contract. This also leads to the conclusion that the Defendant’s

interpretation of the contract is the correct one. [ 19 ] Therefore, it follows that the Defendant has complied with the terms of the contract and that it did give the Claimant proper notice to terminate the contract in accordance with the terms of the contract. Accordingly the Claim is dismissed. Order [ 20 ] For the foregoing reasons, the Claim brought by First Class Waste Services Inc. against Hub Fire Engines and Equipment Ltd. in this matter is dismissed. Pursuant to Rule 20(2)(

a) of the Small Claims Rules, the Defendant is entitled to an order that the Claimant pay the Defendant its filing fee of $50. Dated at the City of Abbotsford, in the Province of British Columbia this 18 th day of March, 2014. ______________________________________________ (The Honourable Judge K. D. Skilnick)