2012 NBQB 27, 2012 NBQB 27

M/C/0825/08 IN THE COURT OF QUEEN'S BENCH OF NEW BRUNSWICK TRIAL DIVISION JUDICIAL DISTRICT OF MONCTON 2012 NBQB 027 B E T W E E N: KENGARY ENTERPRISES LTD. and GARY WIGGINS and DEBORAH WIGGINS , Plaintiffs - and - RICHARD P. PHINNEY , Defendant BEFORE: Mr. Justice Paul S. Creaghan AT: Moncton, New Brunswick DATES OF HEARING: January 9, 10, 11, 12, 13, 16 and 17, 2012 DATE OF DECISION: January 25, 2012 APPEARANCES : Jeffrey R. F. Delaney for the Plaintiffs Gregory E. Murphy, Q.C., for the Defendant

CREAGHAN, J. [ 1 ] This case is about a scrap yard in Frosty Hollow, New Brunswick and about a family which has torn itself apart over who should get what share of what value it might have. [ 2 ] Before I state the issues that are before the Court alleged to be in dispute, perhaps it would be best if I introduced the characters in this saga, for without meeting them it is difficult to put the dispute in perspective. [ 3 ] The Defendant Richard Phinney, Jr., commonly referred to as Junior, is 77 years old and has a long standing heart condition.

Junior, whose parents had divorced when he was a boy, has a grade 3 education. One of seven children, he went to work in the woods when he was 13. At 16 he got a job in a foundry where he worked for about fifteen years as a spot welder. [ 4 ] In 1962 he married. He wanted to improve his prospects and in 1965 he left his job at the foundry and started in the scrap business. He and his wife Kathleen bought a property in Frosty Hollow where they built a house and Junior conducted the scrap business from the same property. [ 5 ] They raised a family of seven children. The evidence is that they had a good life.

He did well and looked after the needs of his family. [ 6 ] Around 1974 he went into another business with a Charlie Atkinson doing excavation work as A & P Construction Ltd. which apparently did quite well. It appears that Charlie’s wife Barbara Atkinson worked from her home as the bookkeeper for A & P Construction. [ 7 ] Unfortunately, in 1978, Charlie and Kathleen had an affair and they went off to Ontario. When the dust settled, Junior held 60% of A & P Construction and Barbara had the remaining 40%.

Barb, as she is known, continued on as the bookkeeper of the company. [ 8 ] After a short time, Barb and her mother sold her home and moved into Junior’s house.

It may be taken that Barb was soon recognized as Junior’s common law spouse. [ 9 ] The evidence also suggests that she played a significant role in the conduct of the financial aspects of both A & P Construction Ltd. and Phinney’s Salvage Ltd., which was the corporate name of Junior’s scrap business and the scrap yard which was on the house property where their home was located. [ 10 ] Barb died in 2007. [ 11 ] Junior’s eldest child and daughter is the Plaintiff Deborah Wiggins. [ 12 ] Debbie, as she is known, had dated the Plaintiff, Gary Wiggins for almost ten years and were married in 1975.

Gary operated a paint and body shop and the evidence is that he worked hard to support his family. [ 13 ] Debbie had three children with Gary. Sadly, the youngest child, a boy, is severely autistic and has been placed in a special care home. The evidence is that Debbie and her family got along well with Barbara and her father and indeed that she had a close relationship with her dad.

[ 14 ] Debbie also worked to support her family. She is a trained barber-hairstylist and works at Dorchester penitentiary; she has run a bed and breakfast; and even by times drove a garbage truck for a garbage collection business run by her husband. [ 15 ] Unfortunately, her relations with Gary began to deteriorate and by early 2008 Debbie decided to leave her husband and in that summer did so. They remain on reasonably good terms with joint responsibility for the children. [ 16 ] It was in July, 2008 that the principal events that spawned this action arose.

Debbie felt her father acted unreasonably and was motivated “by greed”. [ 17 ] Debbie and her father Junior have not spoken since that time. [ 18 ] The last major character to be introduced is the Plaintiff Gary Wiggins, Debbie’s estranged husband and Junior’s son-in- law. [ 19 ] As has been mentioned Gary and Debbie were married some 33 years before they split in 2008.

Gary supported his family by operating a paint and body shop, but by 1980 his health began to fail which he claims was due to paint fume poisoning from working at the shop. [ 20 ] Gary too had a close relationship with his father-in-law Junior and was familiar with his business and the operation of the scrap yard. [ 21 ] In the 1980’s Gary still drew a salary from the body shop but also worked on an irregular basis helping with Junior’s scrap business. He was paid from time to time. The evidence indicates Gary was of valuable service to Junior.

He trucked scrap and more and more was involved in “bidding on” and doing demolition work which could be a valuable source of scrap inventory. By 1992 Gary was working for Junior in the business full time and paid $2,000.00 “tax free” money a month. [ 22 ] In 1994 Junior’s health problems appeared more pronounced and Junior and Gary began discussions whereby Gary would buy Junior’s businesses specifically Phinney Salvage Ltd. and A. & P. Construction Ltd. [ 23 ] After the negotiations were completed and the deal was done, Gary was diagnosed with multiple sclerosis in about 2001.

I take judicial notice of this as a disease that affects the nervous system and has negative effect on a person’s physical capacities. [ 24 ] It is the consummation of these negotiations and the events that followed, that gave rise to this litigation. [ 25 ] But before we go there, I should finish the introductory character sketches. [ 26 ] In addition, two other more minor characters appear in this case. [ 27 ] The first is Ms. Dale Springer, who is a single lady whose main occupation is a job with Corrections Canada. Ms. Springer also does bookkeeping work on the side.

She had done some work in this area assisting Barb when Junior was running his companies and after Gary took over she seems to have played a major role in accounting for the financial affairs of the companies. [ 28 ] I have no idea what her training or qualifications are in this area but she seems to have had a great deal to do with reconstructing the companies’ financial affairs, particularly as they might pertain to this lawsuit. [ 29 ] Apparently all her effort was done in her spare time as were her bookkeeping duties performed for Gary’s companies in

the normal course through the years. [30] It appears she worked without pay. Dale is Gary’s half-sister and it is clear she is devoted to him. As she says, “sheowes him a great deal”. [31] The last character I should mention is Ken Crocket. Ken was Gary’s equal partner when they incorporated the PlaintiffKengary Enterprises Limited to purchase Junior’s business. Ken stayed with Kengary for a period of about two years and then he soldhis interest in Kengary to a Cecil Weldon in the spring of 1996.

Cecil’s interest was subsequently bought out by Gary and Debbie andthus the shareholders of Kengary material to this litigation were the Plaintiffs Gary and Deborah Wiggins. [32] With this background I think it we can move to a consideration of the dispute in the case before me. [33] In doing so, I am aware of the instructions I have already received from our Court of Appeal that reasonable inferencesdrawn on sound factual foundation are permissible to a trial judge, but that conjecture arising from the evidence must be avoided. Riverview Truck Repair Ltd. v.

Phillips, 2007 NBCA 60 , 2007 N.B.C.A. 60 [34] On the evidence before me, heard over 7 days, I will try my best, but after some 27 years of trial work I must say in acase such as this the distinction is perhaps easier to state than to apply. [35] The Plaintiffs claim an Order providing: (

a) That all consideration due to the Defendant pursuant to the terms of the Agreement of Purchase and Sale dated September 16, 1994has been paid in full; (

b) That the Defendant provide a Discharge and Release of a Collateral Mortgage issued as security for payment of consideration dueunder the Agreement of Purchase and Sale; (

c) That a Lease from the Defendant to Kengary Enterprises to the scrap yard dated September 16, 1994 continues in full force andeffect according to its terms; (

d) That the Defendant provide an accounting of all equipment and inventory located in the scrap yard from July 23, 2008 to the datepossession of the scrap yard was returned to the Plaintiff in July, 2009; and (

e) Damages for any equipment or inventory found missing and adjudged wrongfully converted by the Defendant to his benefit; and (

f) Damages for loss of business opportunities, income and devaluation of inventory caused by being restricted from the scrap yardfrom July 23, 2008 to the date of judgment; and (

g) An Order for specific performance of the lease referred to or in the alternative damages. [36] As was stated by Plaintiffs’ counsel on argument at the conclusion of the trial, all the claims set out in the Statement ofClaim turn on three issues. [37] First, has the Defendant been paid the money and other consideration due him under the Agreement of Purchase andSale;

[ 38 ] Second, did the Defendant unlawfully prevent the Plaintiffs from accessing, use and occupation of the scrap yard property, and [ 39 ] If he did so, what remedy is available to the Plaintiffs? [ 40 ] The Defendant claims that the Plaintiff Kengary is in default under the Agreement of Purchase and Sale and a balance of $90,000.00 remains outstanding and payable both by Kengary and Wiggins as guarantor of a promissory note given as concurrent security for payment; and (

a) That an Order issue declaring the Lease and its terms to be terminated; and (

b) That he be authorized to re-enter and take possession of the scrap yard to the exclusion of the Plaintiffs; and (

c) Alternatively, to termination of the Lease, that Kengary be ordered to “comply with all terms of the lease including reimbursement of real property taxes; maintenance of public liability insurance, proper corporate status of Kengary, licensing pursuant to laws of New Brunswick; removal of wood rubble, [and] satisfactory evidence Kengary has the equipment necessary to prepare and remove the scrap on the property”. [ 41 ] Again the resolution of these issues will turn on whether the terms of payment under the Agreement of Purchase and Sale have been met and whether the Lease remains valid and should be enforced according to its terms. [ 42 ] As stated previously, in 1994 Junior and Gary entered negotiations with a common intention that Gary would purchase the shares of Junior’s two operating companies Phinney’s Salvage Ltd. and A. & P.

Construction Ltd. [ 43 ] To facilitate the purchase Gary sought out a partner to provide both financial assistance and business experience. He contacted Ken Crocket, who had twenty years experience as manager of an Aerospace business in Amherst, Nova Scotia and was looking for new business opportunities. Ken agreed to join with Gary to purchase the scrap business and the associated excavation company. They incorporated a new company called Kengary Enterprises Limited and raised financing for the purchase through the Bank of Nova Scotia.

They came to an agreement with Junior that he would sell the shares in his operating companies and provide access to the scrap yard and its service building on his home property for $200,000.00 plus the cost of the buyout of the lease on the company truck that Junior used and an ATV so that they would be transferred to him personally. This amounted to additional consideration on the purchase of approximately $28,000.00. [ 44 ] Both Junior as Vendor and Kengary Enterprises as Purchaser retained legal counsel to advise them on the transaction and to assist in reducing their agreement to writing.

At trial Junior, who says he can’t read, offered some comment that his lawyer was “no good”, but the fact remains that both parties took legal counsel of their choice and I have no evidence that they were incompetent, failed to fully inform their clients, or acted in any manner that would put either party at an unfair advantage. [ 45 ] The Agreement is in evidence and speaks for itself. [ 46 ] It was for a purchase of the shares in the companies. [ 47 ] The purchase price was $200,000.00 plus the transfer of the Ford truck as well as a Honda ATV to the vendor. [ 48 ] The assets held by the companies were set out as

Schedule ‘A’ to the Agreement. [ 49 ] Included in the assets, in addition to vehicles and equipment, were certain parcels of real estate owned by the companies including: Steeves Property & Building (Lakeville Road [Painsec Property]; Dorchester Property & Building [Body Shop]; Dorchester Rock Pit [Robinson Property]; Dorchester Marshland [Mitton Property].

[ 50 ] As Ken Crocket stated at trial, the main component of the purchase was to acquire and operate Junior’s scrap business including the scrap inventory. The matter that obviously was lacking in the acquisition of the shares of the companies, was that the companies did not own, or have any legal access to, either the scrap yard property, its service building or any scrap inventory on the property.

That property was simply a yard adjacent to Junior’s residence and owned by him personally. [ 51 ] Accordingly, as a condition precedent to closing, it was provided in paragraph 4.01(7) of the Agreement of Purchase and Sale: “That the Purchaser concludes a lease on terms satisfactory to the Purchaser for the lease of the salvage yard at Frosty Hollow from Richard Phinney.” [ 52 ] The Lease, also dated September 16, 1994, is also in evidence and speaks for itself. [ 53 ] It provides a lease of what appears to be that portion of Junior’s property on which the scrap yard and service building is located, reserving to him what appears to be a portion of his property on which his home is situated. [ 54 ] I will deal with the terms of the Lease specifically later in this judgment after the issues concerning the Agreement of Purchase and Sale have been disposed of. [ 55 ] The Agreement of Purchase and Sale provided that Kengary purchased the shares for $200,000.00 by way of two promissory notes, one for $100,000.00 payable 10 days after closing and a second promissory note for $100,000.00 to be joint and several with Gary and Ken Crocket personally.

This note was to be payable by five installments of $20,000.00 each on each anniversary of the promissory note; the last payment to be due five years after September 16, 1994. This note was to be secured by a collateral mortgage against the lands acquired as assets of the companies. [ 56 ] It is common ground that the first $100,000.00 was paid by Kengary to Junior as required. [ 57 ] The second promissory note dated September 16, 1994 was executed by Kengary, Gary and Ken Crocket and delivered to Junior.

A collateral mortgage securing the second promissory note, and in effect the balance of the money owed under the Agreement of Purchase and Sale dated September 19, 1994, is in evidence. [ 58 ] From this point the evidence bearing on the issues in dispute is not so clear, in fact it is not clear at all. [ 59 ] I take it as common ground that ownership in the Ford truck and the Honda ATV were transferred to Junior.

Although there was some disagreement as to whether Kengary had fully honoured its obligation to pay out the outstanding lease on the truck, I am satisfied that there is no outstanding claim by Junior against the Plaintiffs in that regard. [ 60 ] It is the evidence of Gary and Debbie that once the deal was done and the parties had left the lawyers’ office and the initial $100,000.00 had been paid, the formal requirements of compliance with payment of the second $100,000.00 were disregarded by mutual consent and agreement of the parties. [ 61 ] They say that Junior told them not to worry about specific payments on specific dates with respect to the balance of $100,000.00 outstanding on the purchase.

They say that Junior told them he preferred to get paid by way of ad hoc payments from Kengary to his benefit and that he preferred to receive the balance owing to him on that basis. He would take money and benefits as needed. The payments would be in cash or services and would not be of record.

[ 62 ] Junior tells the Court that that is nonsense. He maintains that Kengary and Wiggins simply defaulted on their obligation to pay him $20,000.00 annually as agreed in five annual payments until the debt was paid. He says he did not press the issue because Debbie and Gary needed the money and that they could not pay anyway. [ 63 ] One thing seems clear. Kengary Enterprises and for that matter the same may be said of Phinney’s Salvage Ltd. and A. & P. Construction Ltd., certainly did not seem to keep many records.

For the important period in question in this case, from 1994 to 2008, there are no financial records of any reliable source or any professional financial forensic review that would stand as reliable basis for the findings I am asked to make. What I have are partial records of what seem to be Kengary expenditures and assertions that financial receipts or information was destroyed in an office flood or burned by Junior as trash. [ 64 ] Further, this case presents serious issues of credibility. I have Gary, Debbie and Dale making assertions which clearly are self serving.

Equally, I have Junior countering with assertions that paints the picture to support his position. [ 65 ] There is however evidence that I feel can support reasonable assumption as opposed to mere speculation. [ 66 ] The evidence does support that Junior was paid some money on the balance owing. He agrees that on April 4, 1996 Kengary sold the Painsec property on which he held a mortgage collateral to securing payment of the balance of the purchase price. He agreed to grant a partial release and was paid $5,000.00 against the balance owing.

Junior also recalls being paid another $5,000.00 by cheque signed by Ken Crocket which would have to have been sometime prior to spring of 1996. [ 67 ] A cheque to Phinney in this amount signed by Ken Crocket is not in evidence. [ 68 ] However, there is a great deal of evidence by way of receipts and invoices from Visa, N.B.

Power, fuel and gas suppliers, telephones, insurance agents and miscellaneous suppliers that did satisfies me that in the period 1994 to 1997 Junior and Barb did receive personal benefits paid for by Kengary. [ 69 ] In addition, there appear to be various cheques written by Junior or Barb on the Phinney Salvage bank account that do seem to be drawn for their personal benefit.

Again, they are written in the period of 1994 to 1997. [ 70 ] The amount advanced by the Plaintiffs as personal payments to Junior are totalled to be in excess of $100,000.00 and it is suggested that that total is not more because many of the receipts and invoices are no longer available. [ 71 ] I understand the weight this evidence may be given is lessened by the fact that this documentation was prepared by Dale Springer, who did so in a very hurried manner and cannot be seen as an independent witness. [ 72 ] It is also true that Dale compiled these documents by accepting any document with a reference to Junior as an ad hoc payment to him. [ 73 ] Further, Junior denies that he or Barb received any personal benefit from Kengary and claims that $90,000.00 is still due and owing.

He also denies that any of the signatures on the documents are his, which frankly, even in the absence of any expert opinion, I do not accept. [ 74 ] But there is more. First, I find that in the initial years after the sale, Junior had signing authority on Kengary’s bank account. Further there is the evidence of Ken Crocket that one of the principal reasons he sold his shares to Cecil Weldon in 1996 was that he was concerned that there were inadequate controls in place with respect to Kengary expenditures. He stated he was uncomfortable.

Junior still had signing authority and he did not know what was going on in a family operation in which he was not a family member. [ 75 ] It must be noted that when Weldon became a shareholder of Kengary for a short period before Gary bought him out, the control over the company expenses seemed to improve.

[ 76 ] There is also evidence that a further property subject to the collateral security(the Dorchester Rock Pit) was also sold by Kengary in 2001.

The evidence is that Junior did ask for money from the sale, but that he decided that his daughter needed the proceeds so he granted a partial release as required in any event. [ 77 ] To me the most telling evidence on the issue of whether a balance is still owing by Kengary and Gary on the balance of $100,000.00 is that up to July, 2008 almost 14 years after the sale had been closed and almost 9 years after the final $20,000.00 was to be made under the Agreement of Purchase and Sale and the Promissory Note, Junior had taken no action to either demand payment or collect any payment due on the promissory note. [ 78 ] Junior was a businessman.

What he was owed he expected to be paid, even in a business transaction with family.

It just does not make sense that he would forego payment of the amount he was owed under the agreement to recover the fruit of his life’s work over a period of some 14 years. [ 79 ] I find that an agreement collateral to the original Agreement of Purchase and Sale was made between the parties whereby Junior was to receive ad hoc payments and benefits from Kengary Enterprises from time to time and that these payments and benefits were in lieu of the five $20,000.00 payments due under the agreement from 1995 to 1999 and that the payments in lieu have been made. [ 80 ] I am satisfied that on a balance of probability Kengary Enterprises and/or Gary Wiggins has paid the obligation to pay the balance owing on the purchase of the shares of Phinney’s Salvage Ltd. and A. & P.

Construction Ltd. [ 81 ] Upon this finding the Defendant’s counterclaim for damages in the amount of $90,000.00 is dismissed; and [ 82 ] It Is Declared That all consideration due to the Defendant pursuant to the terms of the Agreement of Purchase and Sale dated September 16, 1994 has been paid in full; and [ 83 ] That the Defendant provide a discharge and a release of a Collateral Mortgage issued as security for payment of consideration due under the Agreement of Purchase and Sale; and [ 84 ] That any Certificate of Pending Litigation against PID #50072032 and #50237924 be discharged. [ 85 ] Now turning to the dispute as to the Lease. [ 86 ] The evidence before me is that up to July, 2008 the course of Kengary Enterprises and the Phinney and Wiggins family went on in a difficult but normal manner. [ 87 ] The Wiggins understood that they would see that Junior and Barb were looked after.

They assumed that benefits had been advanced from Kengary sufficient to repay the balance of the purchase price and they understood that he was “alright” in the way it had been done. [ 88 ] The scrap business was not doing all that well. Around the late 90’s scrap prices were low and the steel mill in Sydney, Nova Scotia, which had provided a good market closed down. Prices remained poor for several years. [ 89 ] Kengary sold off a good deal of its equipment to cover the bank loans that had financed them. Gary supplemented his income by obtaining a garbage collection contract with the Village of Dorchester.

They ran a bed and breakfast and Debbie continued her job as a barber-hairdresser.

[ 90 ] The evidence indicates that the scrap yard was still operating. Kengary was taking in some scrap, but at reduced levels because it could not buy and sell at the lower prices.

Gary brought some material from his Dorchester garbage collection business on the site. [ 91 ] There is evidence that there was a sale of scrap from the yard to America Iron Metals in an amount of $47,000.00 in 2006. [ 92 ] It appears however from the evidence that the scrap yard was not operating at any great capacity and that no great amount of inventory was accumulating and on hand. [ 93 ] It must be remembered that there are no records or independent evaluations of what inventory was in the yard at any point of time. [ 94 ] The family was experiencing personal problems and stresses during this period.

Gary’s multiple sclerosis was increasingly causing him health problems. In 2001, Gary and Debbie had their third child, a son, who was severely autistic. In 2007, Barb, who had been Junior’s common law partner for 33 years, died. By 2005, Gary and Debbie’s marriage was in trouble and early in 2008 she informed him of her intention to leave him. [ 95 ] In 2006 through 2008 the price of scrap began to recover.

As noted a substantial sale of inventory was made to AMI in 2006. [ 96 ] Gary’s evidence is that he started to accumulate, cut and prepare the inventory for sale. [ 97 ] It must be remembered that the evidence is that equipment required for this work had been sold, that workers at the scrap yard had been laid off and that there are no reliable records of what the company’s inventory was.

The evidence does indicate that Gary was going to borrow money from his sister Dale to obtain equipment necessary to prepare what scrap there was, but that such a loan was never made. [ 98 ] In early July, 2008 Junior took steps to block the yard from entry by Kengary and Gary.

He posted “No Trespassing” signs and through his son Alan he informed Gary, through his wife, Debbie, that no one was allowed into or out of the property. [ 99 ] The reason for Junior’s action in this regard, given the lease he had signed with Kengary as partial consideration of the sale of the shares in his companies back in 1994, is difficult to fathom. [ 100 ] Junior states that he did it because Kengary had no public liability insurance, and because he was the owner of the property and he did not want to be at risk.

He states that if Gary had obtained such insurance he would have been given access to the property. Why this concern suddenly arose in July, 2008 is difficult to understand. [ 101 ] Gary and Debbie state that they were told that Junior had learned of their marital difficulties and imminent separation, and that Junior did not trust Gary to fairly provide for his daughter Debbie in any property settlement. Again it is difficult to see this as a reason to unilaterally interfere with Kengary’s leasehold right. [ 102 ] In any event, Junior took the action he did.

Debbie went to talk to him to no avail and the two have not spoken since. Gary’s testimony is that he saw no purpose in talking with his father-in-law. And so the matter rested until the parties turned to the law and legal advice. [ 103 ] Junior took action to foreclose on the collateral security to sell what security remained relating to the payment of the balance of the purchase price.

[ 104 ] On motion this Court stayed the sale. [ 105 ] On March 3, 2009, Kengary took action to gain access to the scrap yard by enforcing its rights under the Lease. Why it took so long to move in this regard is not clear. But in any event, by Order of this Court dated March 17, 2010, after finding at the hearing, dated March 11, 2010 that Kengary “had a valid leasehold interest”, it was ordered:

a) until further Order of the Court, Kengary Enterprises Limited shall have interim possession of the leased premises, pursuant to the terms of Lease between the parties dated September 16, 1994 and upon the following conditions : (

i) it shall obtain Scrap Dealer License from the Province of New Brunswick and maintain same; (ii) it shall obtain public liability insurance in the name of Kengary and Gary Wiggins with respect to the premises and maintain same;” [ 106 ] On motion by the Plaintiffs heard at the beginning of the trial, I dismissed a request that this finding estopps this issue by way of res judicata on grounds that as an interim order it lacked judicial finality. [ 107 ] Having heard the evidence at trial, I too am satisfied that Kengary had a valid leasehold interest in the scrap yard. [ 108 ] The Lease of September 16, 1994 was given for good consideration and after obtaining independent legal advice.

It is enforceable according to its terms and I find no collateral agreement that might go to vary them. [ 109 ] The lease was for an initial term of 5 years with an option to review for 5 years with a termination date of September 16, 1999. This term was subject to covenants set out in

Schedule “C” of the lease which provides a further renewal of the term proving that “the lessor shall renew the lease for further terms of 5 years until the death of the lessor on the same terms and at the same rent provided the lessee obtains the necessary subdivision approval for such renewals, at the expense of the lessee, in excess of ten years”. [ 110 ] In August, 2008 Junior was alive. [ 111 ] There is no evidence that any necessary subdivision approval for the renewed terms was required. [ 112 ] By necessary implication and the conduct of the parties, the parties considered the lease as having been renewed, at least to August 2008, and no requirement appears that would warrant forfeiture. [ 113 ] I find no basis to argue termination by virtue of any sublease to Gary personally in the circumstances of this case. [ 114 ] It is correct that

Schedule “B” of the Lease provides that the lessee shall provide public liability insurance. I find that the lessor took no steps to enforce the provision before August, 2008 and that to consider the Lease as terminated without notice is unreasonable. By his own admission, the lessor testified that his action was not intended to terminate the lease, but simply to limit the lessee’s right of entry to the property until the required insurance was provided. [ 115 ] That insurance and also a required scrap yard license was finally obtained by Kengary in July, 2009 and is in effect today.

[ 116 ] It goes without saying that both parties shall comply with all the terms in effect under the lease and shall make due compliance as maybe necessary upon reasonable notice at the request of the other party. [ 117 ] I declare that the Lease from Junior to Kengary to the scrap yard, dated September 16, 1994 continues in full force and effect. [ 118 ] Kengary has an option to purchase that portion of the property described with the intention of exempting the residence property, for the sum of $50,000.00 again according to the terms set out. [ 119 ] Upon these findings, it is unnecessary for me to make any order for specific performance. [ 120 ] The only issues that remain go to the Plaintiffs’ claim for damages arising from Junior’s unwarranted action to exclude them from access and use of the scrap yard. [ 121 ] Two heads of damage are advanced. [ 122 ] First, Kengary and/or Wiggins claim an order for an accounting of all equipment and inventory located in the scrap yard from July 23, 2008 to July 2009.

Then Kengary and/or Wiggins claims damages for any equipment or inventory found to have gone missing in this period. [ 123 ] First of all, Gary is the only party who can provide that information. No reliable evidence has been provided to me that shows what inventory and equipment was on the property in July, 2008 or what was there in July 2009 when Kengary regained possession. [ 124 ] Gary offers a list of equipment used when Kengary approached the bank for a loan to purchase equipment in the 90’s.

By the fact that his own testimony is that the value of this equipment was overvalued at that time on his instructions, I have no confidence that all or any of it was on the scrap yard on July 23, 2008. A lot of equipment had been sold. Some may well have depreciated. To suggest that I take this list as a starting point on a claim of damages for wrongful conversion is unacceptable. [ 125 ] Further, Gary’s estimate as to the loss rests entirely on his testimony that when he regained entry to the property there was “a lot of stuff missing”. That just is not good enough to support a claim for damages.

There is some evidence that is advanced on the claim for lost business income of a volume of scrap of various categories that was available on the premises in April 2008 as compared to estimates of inventory made in August 2009. The fact remains that the estimates of volume of scrap in the yard in April 2008 arise solely from Gary’s estimates which he provided to obtain a pricing from AIM.

They are not based on any independent assessment and frankly I have little confidence in their accuracy. [ 126 ] The Plaintiffs’ claim for an accounting of equipment and inventory on the property from July 23, 2008 to July, 2009 and for damages for wrongful conversion of any such equipment is dismissed. [ 127 ] That leaves the matter of any claim due the Plaintiffs for damages for loss of business opportunity, income and devaluation of inventory caused by the Defendant’s breach of the Lease by denying the Plaintiffs access to the leased premises from July, 2008 to July 2009. [ 128 ] This claim is predicated on the assertion that this loss can be drawn from evidence given by an expert in the field of the buying and selling of scrap metal. [ 129 ] In April, 2009, Gary phoned Jacques Thibeault, who is the manager and buyer for American Iron and Metals, a large and established business in scrap metals worldwide.

He asked Thibeault for the price as of May 31, 2008 on the following grade material: #1HMS $390.00 NT-150 TONS and P&S $400.00 NT-250 TONS and White Goods $220.00 NT-400 TONS.

[ 130 ] Thibeault provided the information requested for May 31, the previous year and noted that as of April, 2009 the prices were significantly lower. [ 131 ] The evidence is not clear where the volumes of various grade materials came from. Even accepting that they came from Gary’s assessment of the inventory then in the scrap yard, I cannot accept them as a basis for advancing a serious damage claim. [ 132 ] There was no independent or reliable evaluation of the volume then in the yard. Certainly Mr. Thibeault never was on the property to support such volumes.

We know that the scrap business had been slow for many years and that Kengary lacked funds to purchase sizable inventory.

There is also evidence that Kengary had laid off manpower in the yard and had deficiencies in equipment required to cut and size the scrap. [ 133 ] At the same time, it may be taken that because of the significant increase in the market for scrap in 2007-2008, in the spring of 2008 Gary was looking for ways to increase his inventory and improve his capacity to process it. [ 134 ] In August, 2009 when Kengary had obtained access to the scrap yard by Court Order and obtained the necessary liability insurance and scrap dealer’s license, Gary called Thibeault and had him come to the yard to perform an evaluation of the scrap. [ 135 ] He did so and by letter dated October 9, 2009 he estimated that the yard contained F1-80NT; P&S – 150NT and shreddable (White Goods) 350NT. [ 136 ] He quoted a price at that time of F1-$180NT; P&S – $190NT and Shreddable (White Goods) $90.NT. [ 137 ] Mr.

Thibeault testified at trial and was qualified as an expert.

He makes several important observations. [ 138 ] There is no doubt that the price of scrap metal reached its highest point in years in early September, 2008 and that then the bottom fell out of it and the price crashed, not to recover to a reasonable level for two years. [ 139 ] If Kengary was to make a big profit on what scrap it had during the period it was excluded from the property it would have had to do so in a matter of two months. [ 140 ] Thibeault’s testimony is that the inventory was scattered over a large area in the yard. [ 141 ] He said his volumes were a guesstimate only. [ 142 ] He said generally the material was oversized and required cutting.

It was not prepared. [ 143 ] He said that Gary thought he had more than he had. [ 144 ] The prices provided were FOB Saint John, New Brunswick. [ 145 ] In addition to this testimony, the evidence is that in July, August 2009 Kengary was not prepared to size, cut and ship any large quantity of material even if it had it.

[ 146 ] Most importantly, I am not satisfied with the reliability of quantities that were available by way of inventory prior to Junior’s taking action to close off the yard. [ 147 ] In argument, the Plaintiffs advanced a calculation of damages under this head as they see them.

Based on the inventory as suggested by Gary in May, 2008 and the then current market value opposed to the inventory as guesstimated by Thibeault and the market value then, they claim a net loss of $136,000.00. [ 148 ] For the reasons stated I am not satisfied that the evidence adequately supports the amount claimed and the claim under this head is dismissed. [ 149 ] It must be noted that it is Dale’s evidence that Kengary did sell $11,000.00 of scrap White Goods to AIM in 2009 and there is evidence that it also sold metal scrap to Arcelor Metal through JLPR Truck Lines in the amount of $67,030.00 in 2010. [ 150 ] However, on balance I am satisfied that, although the evidence does not support a specific amount and I am not satisfied that the amount claimed can be justified, the balance of probability is that Kengary Enterprises Ltd. did suffer some economic loss by being unlawfully excluded from the occupation and use of the scrap yard it had leased for some period of time when it could have taken advantage of high scrap prices which did not continue to be available.

Specifically July, August and September of 2008, a period when damages could not have been mitigated by any reasonably expeditious legal action. [ 151 ] Accordingly, by way of other relief which this Court may deem just and expedient as plead by the Plaintiffs, I award the Plaintiff Kengary Enterprises Limited the sum of $10,000.00 against the Defendant by way of general damages. [ 152 ] Since both parties have had some measure of success on the relief given and denied, each of the parties shall bear their own costs. [ 153 ] Accordingly, and in

summary on the findings made and for the reasons given It Is Declared and Ordered: 1. All consideration due to the Defendant pursuant to the terms of the Agreement of Purchase and Sale dated September 16, 1994 has been paid in full; 2. The Defendant shall provide a discharge and release of a Collateral Mortgage dated September 19, 1994; 3. That any Certificate of Pending Litigation against any properties remaining as security under the Collateral Mortgage, specifically against PID #50072032 and #50237924 be discharged; 4. The Defendant’s Counterclaim is dismissed; 5.

The Lease to Kengary Enterprises to the scrap yard dated September 16, 1994 continues in full force and effect; 6. Both parties shall comply with all the terms in effect under the Lease and shall make due compliance as may be necessary upon reasonable notice at the request of the other party; 7. Kengary Enterprises, as a condition of the Lease, has an option to purchase that portion of the property described with the intention of exempting the residence from the lease of the scrap yard for the sum of $50,000.00 according to the terms set out in the Lease.

8. The Plaintiffs’ claim for an accounting of equipment and inventory on the property from July 23, 2008 to July, 2009 and for damages for wrongful conversion by the Defendant is dismissed. 9. The Plaintiffs’ claim for special damages for loss of business opportunity, income and devaluation of inventory caused by the Defendant’s breach of the Lease by denying the Plaintiffs access to the leased premises from July, 2008 to July, 2009 is dismissed. 10.

The Plaintiff Kengary Enterprises Ltd. shall have other relief deemed just by way of general damages for breach of the Lease by the Defendant which I assess in the sum of $10,000.00 to include interest. 11. Each party shall bear its own costs in the cause. [ 154 ] Judgment will be entered accordingly. DATED at Moncton, New Brunswick this 25 th day of January, 2012. _______________________________ Paul S. Creaghan Judge of the Court of Queen's Bench of New Brunswick