Super Save Disposal v. Dinoking Tech Date:, 2012 BCPC 245

Citation: Super Save Disposal v. Dinoking Tech Date: 20120717 2012 BCPC 0245 File No: 23413 Registry: Richmond IN THE PROVINCIAL COURT OF BRITISH COLUMBIA BETWEEN: SUPER SAVE DISPOSAL INC. CLAIMANT AND: DINOKING TECH INC. DEFENDANT REASONS FOR JUDGMENT OF THE HONOURABLE JUDGE E. D. SCHMIDT Appearing for the Claimant: J. Sampert Appearing for the Defendant: D. Bao Place of Hearing: Richmond , B.C. Date of Hearing: November 22, 2011 Date of Judgment: July 17, 2012

[ 1 ] The Claimant provides disposal services by placing disposal bins with their clients at the client’s place of business by contract with the client. [ 2 ] The Defendant is a corporation which had a place of business in the city of Richmond. [ 3 ] The Claimants placed a bin at the site of the Defendant’s business on instruction from a person who the Defendants say was their contracted production manager, Melvin Woo. [ 4 ] The agreement was signed by the production manager on July 23, 2008.

The contract was for a five-year term. [ 5 ] The Defendants say the contractor had no authority to sign the contract or the credit application on their behalf. [ 6 ] There is a letter dated March 14, 2008, prior to the signing of the contract with the Claimant, verifying that Melvin Woo had a one-year contract with them starting February 9, 2008. [ 7 ] The Defendants said they were aware of the bin, but thought it was a pay-as-you-go arrangement. [ 8 ] On August 17, 2009, the Defendant wrote to the Claimant purporting to cancel the service as of July 31, 2009, as they were changing location, and asking what the follow-up procedure would be.

That letter reads as follows: “I would like to cancel our service with Super Save Disposal effective on July 31 since we recently moved and no longer use this service, please let us know what would be the follow up procedure. Do not hesitate to contact me either at 604-277-0707 ext 557 or fiona@dinosaursunearthed.com should you have any question or concern. Thanks for your attention.” [ 9 ] On November 6, 2009, the Defendant wrote to the Claimant advising that the service has been suspended due to an overdue account in the amount of $874.77.

The letter stated as follows: “ Attention: Owner/President Regarding Account 512183 This letter is to advise you that your service has been suspended in excess of 30 days due to non-payment. As per

section 5 of the terms and conditions of your agreement with us, we have the right to recover our equipment. Should this action be necessary, there will be an early contract termination fee charged to your account, and the file will be forwarded to our legal department for possible legal action. Payment must be received in our office for the amount of $874.77, no later than November 16, 2009 to avoid such action.

Regards, Lisa” [ 10 ] The Defendant immediately requested a copy of the contract and was provided with it by fax. [ 11 ] The bin was removed by the Claimant on December 11, 2009. [ 12 ] On December 23, 2009, a letter was sent by the Claimant to the Defendant responding to the request of the Defendant to discontinue service. That letter reads as follows: “ Account # 51283

Without Prejudice Attention: Fiona He This letter will confirm that you have requested your disposal service to be discontinued. Our records indicate that you have a legal and binding contract in place until July 24, 2013. Below are the early termination fees that will apply. - Early termination fee Waste Bin: 9 months x $ 85.00 = $ 770.40 - Removal Charge $ 135.00 = $ 135.00 Subtotal = $ 905.40 GST = $ 45.27 Total $ 950.67 Once this early termination document has been signed and faxed to me, then I can start making arrangements to have your container removed.

Payment in full is required before the bins can be removed. An extra charge may apply if your bin needs to be emptied before being removed. You will be invoiced accordingly. This early termination fee does not include any outstanding amounts on your account.” [ 13 ] The response to the cancellation letter of the Defendant for “follow up procedure” seems to be that they would have to pay the amount of $874.77 in overdue payments and $950.67 in early termination fees and removal charges in order to cancel the contract. [ 14 ] The contract provides for early termination as follows: “ 11.

Failure to Perform If customer purports to terminate this Agreement prior to the expiration of its term, Contractor will have the option to either (

a) affirm this Agreement, whereby, Customer hereby irrevocably agrees and consents to any/all permanent, interlocutory and interim relief that Contractor may seek from the Courts to enforce its rights hereunder, or (

b) accept the purported termination by Customer and terminate this Agreement, in which instance. Customer agrees to pay Contractor, as liquidated damages, an amount equal to the greater of (1) sum of Customer’s monthly billing for the most recent nine months, or if none, the billing projected by Contractor for the first month, in each case multiplied by nine or (2) the sum of amounts due to Contractor for the balance of the term remaining on this Agreement.

Customer acknowledges that the foregoing liquidated damages are reasonable in light of the anticipated loss to Contractor caused by termination and are not imposed as a penalty. In the event Customer fails to pay Contractor all amounts which become due under this Agreement, or fails to perform its obligations hereunder, Customer agrees to pay any and all costs incurred by Contractor as a result of such action, including reasonable lawyer’s fees on a solicitor and own client basis.

If Customer is in default of any of the terms and conditions of this Agreement, or becomes insolvent or is placed in receivership or becomes bankrupt, Contractor may, at its option, terminate this Agreement without notice and take possession of the Equipment and may pursue all remedies as are available to Contractor .” [ 15 ] It appears that in this case, the Claimant chose to accept the termination and opted to enforce option (1). [ 16 ] However, in November 2010, they reversed their decision and opted to accelerate the term and demanded payment based on option (2) in the amount of $5766.11 based on the arrears, interest and accelerated payments to December 2013. [ 17 ] Also in November 2010, the Notice of Claim for that amount was filed.

The trial was held on November 22, 2011. The Defendants gave evidence at the trial, as did the Claimants. [ 18 ] The court reserved decision at the request of the Claimant who stated that a decision would soon be released by the Supreme Court of British Columbia that would clarify the issue of accelerated payments in the event of default or termination. [ 19 ] A number of decisions had been released finding that the accelerated payments contained in similar or identical clauses, were a penalty and not a measure of liquidated damages.

The first such case was BFI Canada Inc. v Persia Food Products Inc. , 2010 BCPC 308 . [ 20 ] At the end of February 2012, the court received the case referred to by the Claimant. The case handed up is Super Save Disposal Inc, v. Blazin Auto Ltd. 2011 BCSC 1784 .

That case was an appeal from two decisions by lower courts which had disallowed the accelerated payments claimed and limited the claim of the Claimants to a 90-day notice period based on the BFI decision in the Provincial Court. [ 21 ] In both cases under appeal, the Defendants had made no appearance at trial and the judgment was a default judgment with no argument advanced by the Defendants as to why the accelerated payments were a penalty in their case.

The Supreme Court found that the onus is on the Defendant to put before the court why the circumstances of the particular case make the acceleration of payments a penalty. There being no appearance at trial by the Defendants, they had not met the onus. [ 22 ] The lawsuit in this case was opposed with a responsive Reply filed within the time periods allowed and the Defendant called

evidence at trial. The evidence led is that the Claimant made no inquiry as to whether the contractor, Melvin Woo was a signing authority for the company, either legally of by virtue of his employment. In the alternative, the Defendant says the amount claimed by the Claimant is a penalty and not a genuine pre-estimate of the damages the Defendant would suffer in the event of early termination. [ 23 ] The court is not satisfied that the Claimant should have been aware that Melvin Woo did not have signing authority for the Defendant.

He represented himself as having authority and signed not only the contract but also a credit application containing details of trade references. The title he was given by the Defendants was sufficiently authoritative as to put the Claimants at ease in doing business with him. In addition, the Claimants made no objection to the bin being on their premises and was in fact used by them.

They had a duty to inquire as to how the bin was on their property and make immediate protest to the Claimant to have it removed and the contract terminated if their contractor did not have authority to sign. [ 24 ] On the alternative defence, the Defendant is successful in part. The Claimant made a decision on the extent of the damages that the early termination caused and cannot later, for the purposes of litigation, determine that another amount is more appropriate.

Even though the contract called for damages based on the greater of two calculations, the Claimant chose to base their liquidated damages demand on the lesser of the two. [ 25 ] The fact that they chose the lesser amount, at the time of the termination, as the damages accruing as a result of the termination, is evidence that the liquidated damages were thought by them to be in that range. The bin had been removed and the termination was accepted at the time of the December 23, 2009 letter.

The damages were determinable by the Claimant at that time as nothing more was to occur between the parties or as a result of the relationship of the parties. [ 26 ] While the court is drawn to the reasoning in line of cases beginning with BFI Canada Inc. v. Persia Foods Products Inc. , the facts in this case differ in an important aspect. In the BFI case, and others that followed it, the Claimants did not address their minds to the issue of what their liquidated damages in fact would be as a result of the termination.

They simply calculated the amount allowed for accelerated payments or automatic renewal in the contract. The only signpost for what true damages might be was the 90-day notice provided for in the small window for termination near the end of the contract term. [ 27 ] Finding that that calculated amount was a penalty, the court had nothing to rely on to indicate what might be true liquidated damages other than that provision.

The court reasoned that absent any other provision, the Claimant must have considered that in some circumstances at least, the Claimant thought the cost of termination would be loss of business for 90 days. [ 28 ] In this case, there is evidence that the Claimant addressed its mind to liquidated damages in the circumstances confronting it and chose, prior to litigation, an amount provided for in the contract. The court cannot say that the amount requested in the December 23, 2009 letter is a penalty.

It must be taken to reflect what the Claimant thought would be their loss as a result of the breach by the Defendant. [ 29 ] The court finds that the liquidated damages are limited to the amount stated in the letter of December 23, 2009 and provided for in the agreement. That amount is $950.67. Court ordered interest for that amount will run from November 6, 2009 to July 6, 2012. The Claimant is not entitled to the accelerated amount until the termination of the relationship in December 2013. [ 30 ] In addition, the Claimant is entitled to $874.77 for overdue payments.

Court ordered interest will run on that amount from December 23, 2009 to July 6, 2012. [ 31 ] Costs are awarded in the amount of $156.00. ________________________ E. D. Schmidt, P.C.J.