Super Save Disposal Inc. v. West Coast et al. Date:, 2011 BCPC 315

Citation: Super Save Disposal Inc. v. West Coast et al. Date: 20110729 2011 BCPC 0315 File Nos: 20398, 20399 20455 Registry: Abbotsford IN THE PROVINCIAL COURT OF BRITISH COLUMBIA BETWEEN: SUPER SAVE DISPOSAL INC. CLAIMANT AND: WEST COAST EMBROIDERY LTD.

(20398) ABBOTSFORD NURSERY AND FARM LTD.

(20399) WALNUT GROVE COLLISSION SERVICES LTD.

(20455) DEFENDANTS REASONS FOR JUDGMENT OF THE HONOURABLE JUDGE B.G. HOY Appearing for the Claimants: J. Sampert, a company representative No one appearing on behalf of Defendants Place of Hearing: Abbotsford , B.C. Date of Hearing: June 24 and July 29, 2011 Date of Judgment: July 29, 2011 INTRODUCTION: [ 1 ] THE COURT: At this default hearing, the application is for the determination of quantum with respect to claims of debt and liquidated damages. There are three files for review; in each instance they involve a written service contract relating to waste disposal bins. Each of the litigants is businesspersons.

None have filed a reply, nor have they appeared at this hearing. ISSUES: [ 2 ] At a default hearing, to what extent can one claim liquidated damages? THE CONTRACT: LIQUIDATED DAMAGES : [ 3 ] The liquidated damages provision on file number 20398, West Coast Embroidery, and file number 20399, Abbotsford Nursery, is the alternative of either a nine-month multiplier of the monthly charges or the balance of the term of the contract after purported termination, whichever is greater. It reads 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 purported termination by the 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 the contractor for the balance of the term remaining on this agreement based on the most recent monthly billing. Customer acknowledges that the foregoing liquidated damages are reasonable in light of the anticipated loss to contractor caused by the termination and are not imposed as a penalty.

[ 4 ] The liquidated damages provision on file number 20455, Walnut Grove Collision, only refers to a multiplier of nine months as the mechanism of calculating liquidated damages. It reads as follows: Failure to perform.

In the event customer terminates this agreement prior to the expiration of this term, the customer agrees to pay as liquidated damages an amount equal of the sum of customer's monthly billing for the most recent nine months, or, if customer has not received services hereunder, or has been serviced for less than nine months, the amount of the customer's bill or projected bill for the first month of service hereunder, multiplied by nine. The customer acknowledges that the foregoing liquidated damages are reasonable in light of the anticipated loss caused by the termination and are not imposed as a penalty.

DISCUSSION: [ 5 ] My initial concern on each of these files was whether the liquidated damages claims were more in the nature of a penalty than a true estimate of the loss of income due to a default. [ 6 ] I have now had the opportunity to review two decisions of our court on this point. The claimant had provided a transcript of the submissions and decision of Super Save Disposal Inc. v. Rat Rod Kustoms Ltd ., March 30th, 2010, Surrey Registry C64279, 66283, 63716 and 64443. The other decision is a very recent one called Super Save Disposal Inc. v.

Bamboo Asian Cuisine Inc ., April 29th, 2011, Vancouver Registry file number 11/341232 and 11/343158. [ 7 ] The first consideration is that as these are default hearings, the challenge to whether the amounts claimed are liquidated damages can only be accomplished by the defendant.

It is his onus to prove it is a penalty as opposed to a genuine pre-estimate of damages. (See the Rat Rod decision at page 3 where this principle was referred to in "McGregor on Damages") It is noted there may be circumstances where one might look further at this question. [ 8 ] In the case at bar, the claimant confirmed there are two methods of calculating liquidated damages. She elected to pursue a calculation that yielded the greatest amount of damages. In discussing why, she stated it is their standard practice to do so in order to use it as a tool towards settlement.

This hardly seems like a true evaluation of liquidated loss. One has to wonder whether this might be an in terrorem claim where there is a great disparity in the calculation of that loss between the two methods of its calculation. On the other hand, the absence of the defendant impedes a further evaluation of this issue. [ 9 ] A further consideration is whether the Business Practices and Consumer Protection Act S.B.C. 2004,

Chapter 2, has application to the circumstances. In Super Save Disposal Inc. v. Yung Sing Enterprises Ltd. , November 17th, 2010, Vancouver Registry file number 102997-1, the court suggests that the contract entered into offended the legislation as they were automatic renewable terms of greater than two years and thus rendered the contact unenforceable. Upon review of the legislation, with respect I disagree. The legislation deals with consumer rather than business transactions. [ 10 ] In conclusion, the claimant is entitled to a claim of liquidated damages.

QUANTUM AND INTEREST: As for quantum, I note that the claims made included a calculation of overview interest at the rate of 24 percent.

On file number 20399 and number 20398 respectively, Abbotsford Nursery and Farm Ltd. and West Coast Embroidery Ltd., each are governed by their agreement, and at paragraph 5 it imposes interest at the rate of 24 percent. [ 11 ] With respect to file number 20455, Walnut Grove Collision Ltd., interest of 24 percent was imposed by the claimant based on a term that reads, in the last sentence of paragraph 4 of their agreement, as follows: Greater Vancouver Recycling Disposal Ltd. may impose, and customer agrees to pay, a late fee for all past due payments, such late fee not to exceed the maximum rate for same allowed by applicable law. [ 12 ] There is an absence of what the rate of interest might be, other than that noted above.

In the absence of specificity, interest shall be calculated to that amount allowed by law which is pursuant to the Court Order Interest Act . [ 13 ] The awards given in this default hearing are as follows: File number 20399, Abbotsford Nursery and Farm Ltd., debt $1,534.51, damages $9,766.40, contractual interest is allowed at 24 percent calculated from, and I'll need your help here to tell me the commencement date of that calculation, and I'll return to you in a moment. Or, if you have that readily handy? [ 14 ] MS. SAMPERT: I do.

The date the statement -- or the statement date that we used to file the claim was May 3rd, 2011. The claim arose when we removed the bins from the premises on February -- sorry, December 31st, 2010. [ 15 ] THE COURT: I'll just make a note. December 30th, (sic) 2010? [ 16 ] MS. SAMPERT: Yes. [ 17 ] THE COURT: Okay. So, for that file, that is the commencement date of your contractual interest. [ 18 ] Turning next to file number 20398, West Coast Embroidery Ltd., debt amount of $615.73, damages $1,028.16, contractual interest calculated at 24 percent per annum, to be calculated from what date? [ 19 ] MS.

SAMPERT: We removed the bins from the premises on December 31st, 2010. [ 20 ] THE COURT: Calculated from that date. [ 21 ] And on the last file, number 20455, Walnut Grove Collision Ltd., debt $3,473.39, damages $4,284, interest shall be calculated pursuant to the Court Order Interest Act from the date of calculation from what date?

[ 22 ] MS. SAMPERT: The bins were removed on August 13th, 2010. [ 23 ] THE COURT: December 13th, 2010. [ 24 ] MS. SAMPERT: August. [ 25 ] THE COURT: Or, excuse me, thank you. August 13th, 2010. Those rates of interest are calculated from each of those respective dates to this date of judgment; thereafter, post-judgment interest rate shall be calculated at the rates allowed pursuant to the Court Order Interest Act . ______________________ B.G. Hoy Provincial Court Judge