Denise Korpan - v. -, 2012 SKPC 25

IN THE PROVINCIAL COURT OF SASKATCHEWAN CIVIL DIVISION Citation: 2012 SKPC 025 Date: February 8, 2012 File: SC# 187 of 2009 Location: Saskatoon _____________________________________________________________________________ Between: Denise Korpan - and - Parrish and Heimbecker Ltd. Anne Hardy For the Plaintiff Paul Clemens For the Defendant _____________________________________________________________________________ JUDGMENT D.E. LABACH , J _____________________________________________________________________________ INTRODUCTION: [ 1 ] On January 15, 2009, the Plaintiff, Denise Korpan, sold feed barley to the Defendant, Parrish and Heimbecker Ltd. Upon

settlement for the grain, the Defendant deducted an outstanding debt that the Plaintiff’s husband owed to the Defendant for some seed and chemical. The Plaintiff now sues the Defendant alleging that the Defendant had no authority to deduct her husband’s indebtedness from the proceeds of her grain sales nor did she authorize the Defendant to do so. [ 2 ] Besides disputing whether she was responsible to pay off her husband’s outstanding indebtedness to the Defendant, the Plaintiff also disputes the amount of her husband’s indebtedness.

In her view, they did not receive the four cases of chemical from the Defendant referenced in receipt #7241, dated May 20, 2008. She submits that if the Court does not accept her argument that the Defendant improperly deducted her husband’s indebtedness from her grain sales, then the sum of $1,100.00 should be subtracted from the $14,197.84 that the Defendant says her husband owed on January 15, 2009. In her view, her husband’s total indebtedness on that date was only $13,097.84. FACTS: [ 3 ] The Plaintiff and her husband, Ed Korpan, are farmers running a mixed farming operation.

They have been married for some 38 years and reside on a farm between Blaine Lake and Hafford. They have never incorporated their farming operation. Initially they carried on as a family run farm, however some 12 years ago, at their accountant’s suggestion, they divided the responsibilities in their farming operation. The Plaintiff now looks after the cattle portion of the farming operation while her husband is responsible for the grain portion of the operation.

Both have knowledge of what the other is doing and make decisions about the farming operation together, but both own farmland and farm assets in their own names. Even though certain machinery and/or vehicles are owned by one of them, the other can use the machinery or vehicles if necessary. [ 4 ] The Plaintiff has her own business number for GST purposes, has a separate account at the Co-op and her own permit book. Up until 2006, she had a separate bank account for the cattle farming operation. However, in 2006, she added her husband’s name to the account.

She uses this account for most of her farming transactions however her husband will use this account if he needs money. [ 5 ] While Ed Korpan grows a variety of crops, the Plaintiff grows feed barley for her cattle. When she is not growing feed barley she has grown other crops to sell so that she can buy feed barley to feed her cattle. Her husband looks after the purchases of seed and chemical. He has purchased seed and chemical from the Defendant, Parrish and Heimbecker Ltd. and other grain companies.

The Plaintiff has never purchased any seed or chemical from the Defendant, Parrish and Heimbecker Ltd. [ 6 ] In February, 2008, Norman Cobb, a sales representative for the Defendant, Parrish & Heimbecker Ltd., met with the Korpans at their farm. At this meeting, Ed Korpan filled out a credit application with the Defendant which was later approved. The Plaintiff did not sign the credit application, but was present when her husband signed it and took an active role in the discussions surrounding it. In the course of filling out the application, Mr. Cobb confirmed with them that they ran a family farm.

Nothing was said about them running separate farming operations. In the 2008 crop year, Ed Korpan purchased canola seed and chemical from the Defendant on credit. The Plaintiff was aware that he had done this although she did not recall seeing the actual contract. This was not out of the ordinary as Ed signed all of the grain related contracts on behalf of the family. [ 7 ] In September, 2008, Norman Cobb called Ed Korpan to encourage him to bring in some grain to pay off his outstanding account.

Ed did not bring in any grain because the prices were not that good at the time and he expected the prices to get better. As time went on, Mr. Cobb and Roy Hoffart, the Defendant’s elevator manager at their Hamelin terminal, became concerned with Ed’s unwillingness to pay his account. They began calling him more frequently about paying off his account, talked to him about locking in, selling other crops and the negative effect his non-payment would have on his credit with the Defendant, but to no avail. Eventually, in January, 2009, the Defendant had an opportunity to meet a big feed barley contract. Mr.

Cobb called Ed Korpan and told him about this opportunity. He told Ed that they would pay him $4.30/bushel for feed barley delivered, that they would deduct his outstanding account from the grain he brought in and pay him the difference. This was a good price for feed barley at the time. Ed agreed to bring in 4,000 bushels. [ 8 ] Ed discussed this deal with the Plaintiff. The Plaintiff had feed barley available to sell. Ed had malt barley available to sell but the evidence is not clear if he had feed barley. The deal called for feed barley.

It was a good price for feed barley and the Plaintiff needed money to cover a tractor payment, a mortgage payment and some other bills. So, the Plaintiff agreed to sell her feed barley and her husband confirmed the deal with the Defendant. Her husband asked her for some of the proceeds from the barley sale to cover his

bills. She told him that she would see what she had left after making her payments. [ 9 ] The Plaintiff hired a truck to take her feed barley to the Defendant’s elevator at Hamelin, Saskatchewan. On January 15, 2009 the truck hired by the Plaintiff made two trips to the elevator to deliver the Plaintiff’s grain. On the first trip the driver brought in 2,241 bushels of the Plaintiff’s feed barley and on the second trip, 1,847 bushels.

The total delivered was 4,088 bushels. [ 10 ] Every time a load of grain is brought to the elevator, a scale ticket is issued setting forth the date and time the grain is brought in, the producer’s name, the type of grain brought in, the grade, the gross weight, the tare and the net weight of the grain brought in. In this case, the Defendant prepared two scale tickets in the Plaintiff’s name for the two loads of feed barley delivered to them on January 15, 2009.

The Plaintiff filed her copy of these two scale tickets as an exhibit in this case and the Defendant filed their copies of these scale tickets as exhibits. Both copies are identical. [ 11 ] From the scale ticket, the elevator also creates a corresponding storage ticket for every load of grain brought in.

A storage ticket (or elevator receipt as it is also known) contains such information as the type of grain brought in, the provisional or agreed to grade, the date the grain was brought in, the gross weight, the vehicle weight, the unloaded weight, shrinkage allowance, dock percentage, dock weight, net weight and who the grain was received from. The storage tickets for the two loads of grain brought in by the Plaintiff were initially done up in Ed Korpan’s name. These two tickets were filed by the Defendant as an exhibit in this case.

However the following morning, these storage tickets were changed to reflect that the grain was brought in by the Plaintiff, Denise Korpan, not her husband Ed Korpan. The amended storage tickets were also filed by the Defendant as an exhibit in this case. [ 12 ] The Plaintiff and her husband were at the elevator on January 15 th at 6:25 p.m. when the second load of feed barley was delivered. The Plaintiff asked to go through each invoice on her husband’s outstanding account owing to the Defendant. Mr.

Cobb came into the elevator that evening and reviewed all the invoices with her. [ 13 ] All the invoices were satisfactory to the Plaintiff except for one. The Plaintiff took issue with invoice HA40691 in the amount of $1,100.00. As a result, Mr. Cobb located the corresponding receipt for this invoiced amount. Receipt #7241 indicated that on May 20, 2008, four cases of Clean Start had been sold by the Defendant to Ed Korpan. Clean Start was a chemical that was proficient at burning off crops and/or fallow before seeding canola. [ 14 ] The Plaintiff had no recollection of receiving this chemical.

She had earlier made it clear to Mr. Cobb that whenever product was delivered to them they had to sign for it otherwise they would not pay for it. By signing for it the Plaintiff and/or her husband could ensure that what they were being charged for was what they had received - nothing more, nothing less. Since no one had signed receipt #7241 confirming that it had been delivered, she denied receiving this Clean Start. A number of other invoices and corresponding receipts for product received by the Korpans from the Defendant in 2008 were filed in this matter.

All of these receipts were signed by Ed Korpan or their hired man. The Plaintiff did not dispute any of these. [ 15 ] Mr. Cobb told the Plaintiff that he had personally delivered the four cases of Clean Start referred to in receipt #7241 to their farm on May 20th. When he got there, nobody was there. He was aware that they wanted to sign for any product delivered however he had other deliveries to do that date and he did not want to have to return to their farm. So, he left the chemical in their chemical shed and stuck the receipt in one of the boxes of Clean Start. [ 16 ] According to Mr.

Cobb, after he delivered seed or chemical, he would go back to the office and do up an invoice on the computer for what he had delivered. He would then put the invoice on the particular farmer’s file to whom he had made the delivery. At month end, an employee of the Defendant would send the farmer a statement and attach all applicable invoices for product delivered. In this case, invoice HA40691 was attached to the Korpan’s May 2008 statement and sent out to them. Despite this, the Korpan’s never complained about the invoice at the time.

The first they complained about it was January 15, 2009. [ 17 ] After reviewing all the invoices on January 15 th and voicing her concerns about the Clean Start receipt, the Plaintiff asked Mr. Cobb if he could do anything about the interest that had accrued on the outstanding account. Mr. Cobb advised her that the best they could do was write off $400.00 of this interest. He explained that had her husband paid off the account earlier, they could have written

off all of the interest but were not inclined to do that at this late date. The Plaintiff then asked Mr. Cobb if she could get her settlement cheque that evening. He told her that that was not possible because of the lateness of the hour. Only the elevator manager could issue a cheque and unfortunately he had gone home for the evening. The earliest she could get her settlement cheque was the following morning. As a result the Plaintiff and her husband left empty handed. Before leaving, the Plaintiff told Mr.

Cobb that she would be back at 7:00 a.m. the following morning and to tell the elevator agent not to process anything until she got there. [ 18 ] Later that night, Mr. Cobb received a call from Ed Korpan saying that they were not prepared to pay for the four cases of Clean Start because the receipt was not signed. Mr. Cobb responded that they would discuss it in the morning. Before hanging up, Ed Korpan told Mr. Cobb that they would have to review his account again the following morning. [ 19 ] After finishing this call, Mr. Cobb contacted Roy Hoffart, the elevator agent, to discuss this issue.

It was Hoffart’s view that deducting $400.00 of interest was sufficient. He was satisfied that the four cases of Clean Start had been delivered to the Korpans even though they had not signed for it. He directed Mr. Cobb to prepare a cheque for his signature in the morning for the grain received from the Plaintiff less Ed Korpan’s outstanding indebtedness to the Defendant including the four cases of Clean Start. Mr. Cobb did this. [ 20 ] The Plaintiff and her husband arrived at the Defendant’s elevator at 7:15 a.m. on January 16 th and asked to go through the invoices again. Mr.

Cobb told them no and gave the Plaintiff her settlement cheque. When the Plaintiff reviewed her cheque, she noticed that they had deducted all of her husband’s indebtedness from the settlement of her grain. She also realized that the cheque would not be sufficient to cover her payments and bills. The Plaintiff told Mr. Cobb that she did not authorize the Defendant to take her husband’s indebtedness off her grain settlement to which Mr. Cobb replied, “It is a done deal”. The Plaintiff and her husband were upset and asked to speak to the elevator agent, Roy Hoffart. [ 21 ] Mr.

Hoffart met with the Plaintiff and her husband. After some discussion it quickly became apparent that Mr. Hoffart was not going to write off anymore monies nor was he going to reverse his decision to pay off Ed’s unpaid account from these monies. Mr. Hoffart told them that the matter was finished and that they should leave. [ 22 ] Upon hearing this, Ed Korpan got very upset. He got into Mr. Hoffart’s face and told him that the matter was not done. He insinuated that the Defendant had no right to deduct his indebtedness from a settlement of grain that the Plaintiff owned.

At this point, the discussion was spiralling out of control and Mr. Hoffart had his secretary call the RCMP. The RCMP attended and diffused the situation. The Korpans left and no charges were laid. [ 23 ] The total value of the barley that the Plaintiff delivered to the Defendant’s elevator on January 15, 2009 was $17,318.89. The total amount of Ed Korpan’s indebtedness to the Defendant deducted from this amount was $14,197.84. The settlement cheque the Plaintiff received on the morning of January 16 th from the Defendant was $3,121.05. ISSUES:

a) Was the Defendant, Parrish and Heimbecker Ltd., entitled to set off the indebtedness of Ed Korpan against the settlement of the Plaintiff’s grain delivered to them on January 15, 2009?

b) Were the four cases of Clean Start properly included in Ed Korpan’s indebtedness to the Plaintiff, Parrish and Heimbecker Ltd., on January 15, 2009? DISCUSSION:

a) Was the Defendant, Parrish and Heimbecker Ltd., entitled to set off the indebtedness of Ed Korpan against the settlement ofthe Plaintiff’s grain delivered to them on January 15, 2009? [24] In order to decide this issue, I must determine if the Plaintiff and her husband, Ed Korpan, were operating the farm as apartnership or if they were each running their own farming operation. The Defendant argues that it was former while the Plaintiff isadamant that her and her husband were each sole proprietors of separate farming operations. [25]

Section 3 of the Partnership Act, R.S.S. 1978, c. P-3, codifies the legal definition of “partnership”. It states as follows: 3(1) Partnership is the relation that subsists between persons carrying on a business in common with a view of profit. [26]

Section 4 of the Act contains rules for determining whether a partnership exists.

These rules are: 4 In determining whether a partnership does or does not exist, regard shall be had to the following rules: 1 Joint tenancy, tenancy in common, joint property, common property or part ownership does not of itself create a partnership as toanything so held or owned, whether the tenants or owners do or do not share any profits made by the use thereof; 2 The sharing of gross returns does not of itself create a partnership, whether the persons sharing the returns have or have not a joint orcommon right or interest in the property from which or from the use of which the returns are derived; 3 The receipt by a person of a share of the profits of a business is prima facie evidence that he is a partner in the business, but the receiptof such share, or of a payment contingent on or varying with the profits of a business, does not of itself make him a partner in thebusiness and in particular: (

a) the receipt by a person of a debt or other liquidated amount by instalments or otherwise out of the accruing profits of a business doesnot of itself make him a partner in the business or liable as such; (

b) a contract for the remuneration of a servant or agent of a person engaged in a business by a share of the profits of the business doesnot of itself make the servant or agent a partner in the business or liable as such; (

c) a person, being the surviving spouse or child of a deceased partner and receiving by way of annuity a portion of the profits made inthe business in which the deceased person was a partner, is not by reason only of such receipt a partner in the business or liable as such; (

d) the advance of money by way of loan to a person engaged or about to engage in any business on a contract with that person that thelender shall receive a rate of interest varying with the profits or shall receive a share of the profits arising from carrying on the business,does not of itself make the lender a partner with the person or persons carrying on the business or liable as such, provided that thecontract is in writing, and signed by or on behalf of all the parties thereto; (

e) a person receiving by way of annuity or otherwise a portion of the profits of a business in consideration of the sale by him of thegoodwill of the business is not by reason only of such receipt a partner in the business or liable as such. [27] These rules are not determinative but are simply a guide to determining whether a partnership exists. This was the view of theSaskatchewan Court of Appeal in Prince Albert Co-operative Association Ltd. v. Rybka 2010 SKCA 144 at paragraph 20. At paragraph25 of this case, the Court of Appeal reaffirmed the Supreme Court of Canada’s words in Backman v. R., 2001 SCC 10 , [2001] 1

S.C.R. 367: [25] In Backman, supra, the Supreme Court enunciated a long standing principle: [25] As adopted in Continental Bank, supra, at para. 23, and stated in Lindley & Banks on Partnership, supra, at p. 73: “In determiningthe existence of a partnership . . . regard must be paid to the true contract and intention of the parties as appearing from the whole facts ofthe case.” In other words, to ascertain the existence of a partnership the courts must inquire into whether the objective, documentaryevidence and the surrounding facts, including what the parties actually did, are consistent with a subjective intention to carrying onbusiness in common with a view to profit. [28] Smith, J. reached this same conclusion in Hansen v.

Hansen (2005) 2005 SKQB 436 , 271 Sask. R. 1 (Sask. Q.B.).

At paragraphs 47 and 48 he states: [47] At Title 107 - “Partnership” in The Canadian Encyclopedic Digest, 3rd ed., Vol. 26, at para. 57, it provides: The question of theexistence of a partnership must be determined by the real intention of the parties as evidenced by their conduct; in ascertaining their realrelationship, the court will not say that any one circumstance by itself raises a presumption for or against a partnership and then askwhether there is anything to rebut that presumption, but rather it will take into consideration everything that is available, includingformal contracts, admissions, documents, advertisements, correspondence and the evidence of witnesses, and ascertain therefrom, ifpossible, the true relationship between the parties. [48] As I construe the law, it is available to the Court to review the conduct of the parties and determine that a partnership existed evenif the parties have never spoken words to that effect or engaged a passing thought as to the legal status of their undertaking. [29] In the present case, the Plaintiff and Ed Korpan had been married for 38 years and over that time they lived and farmedtogether between Blaine Lake and Hafford.

Twelve years ago, on the advice of their accountant, they separated their responsibilities inthe farming operation. Nothing was written down on paper nor were separate farming companies incorporated, but from a day to dayperspective the Plaintiff looked after the cattle portion of their operation while her husband looked after the grain farming part of theiroperation. It appears that this was done solely for tax purposes. Other than this delineation of responsibilities, it was business as usualfor them on the family farm. [30] No income tax returns were filed as exhibits in this case.

The Plaintiff did not know if her and her husband were incomesplitting or listed as a farming partnership on their tax returns. She separated the expenses according to whether a bill was hers or herhusband’s and she passed them on to the accountant. What he did with the expenses or how he reported things on their tax returns wasup to the accountant. They relied on the accountant to do whatever was most tax advantageous for them.

But as to exactly what thatwas, the Plaintiff could not say. [31] The Plaintiff and her husband discussed the farm and farming decisions such as what crops to grow and what equipment tobuy. As an example, when Ed signed the credit application with the Defendant, the Plaintiff was present and took an active role indiscussing the application with Mr. Cobb. Ed had the primary involvement in dealings regarding the farm, he signed all grain relatedcontracts on behalf of their farm and bought all chemical. However, the Plaintiff also had the authority to make decisions regarding thefarming operation.

She contributed to the farming operation by doing such things as operating machinery and dealing with theaccountant among other things. [32] Both the Plaintiff and Ed Korpan owned land in their own names. The Plaintiff owned 2.6 acres of the NW 1/4-12- 44- 9-W3,SW 1/4-33- 44- 8-W3 and the NE 1/4-28-44-8-W3. Ed Korpan owned the other 157 acres of the NW 1/4-12-44-9-W3, the SW 1/4-13-44-9-W3 and the SW 1/4 -12-45-9-W3. While the Plaintiff ran cattle and grew some crops and Ed just grew crops, there was noevidence as to who did what on which quarter sections.

I do not know if the Plaintiff restricted her cattle/crop farming to the land sheowned and likewise Ed Korpan, to his land or whether the Plaintiff ran cattle on Ed’s land and he planted crop on her land. There wasalso no direct evidence as to the location of the yard site for their farm. However, it is reasonable to infer that the home and farmbuildings that they shared and both used were located on the 2.6 acres that the Plaintiff owned on the NW 1/4-12-44-9-W3.

[ 33 ] The Plaintiff and her husband also leased 1,400 acres of land. According to the Plaintiff, they grew hay and other crops on this rented land. The hay from this leased land would have been used by the Plaintiff in her cattle operation. [ 34 ] In addition to owning land, the Plaintiff owned some machinery. Specifically she provided evidence showing that she owned a 5088 IH tractor which was used for baling, a Ford New Holland 876 tractor used for cultivating and seeding, a front end loader, a baler, a 1979 Ford Detroit 9000 truck and a pick-up truck.

Her husband, Ed, owned a round baler, a swather, tractors and a combine. The Plaintiff testified that Ed used the pick-up truck registered in her name for farm business. There was no evidence as to whether they shared all of the other equipment that they each owned but that would be a reasonable inference based on the evidence I heard. The Plaintiff grew some crops but did not own a combine. I am sure that she used Ed’s combine when her crop was ready for harvest. [ 35 ] The Plaintiff and her husband had two bank accounts.

They had one chequing account together at the Bank of Montreal and Ed would usually pay for chemical out of this account. They had another account at the Innovation Credit Union. Up until 2006, this account was only in the Plaintiff’s name. Any payments that she had to make regarding her machinery or bills came out of this account. In 2006, Ed’s name was added to this Credit Union account. Ed used this account if he needed money in a hurry, but otherwise it appears he used the Bank of Montreal account. [ 36 ] Both the Plaintiff and her husband had permit books.

I was advised that this is a common practice among farming couples. In this case, it is not surprising since they were running a family farming operation. Both also had separate accounts at the Co-op. The Plaintiff’s account was at the North Battleford Co-op, while Ed’s account was with the Prince Albert Co-op, Marcelin branch.

By each maintaining a permit book and separate expense accounts at the Co-op, it would allow their accountant to accurately determine what grain revenues and corresponding expenses should be attributed to each of them for tax purposes and provide a paper trail for Canada Revenue Agency in case they were ever audited. [ 37 ] Taking all of these factors into account, the Plaintiff has not satisfied me on a balance of probabilities that she and her husband, Ed, ran separate farming operations.

The evidence establishes the contrary, that is, that they were engaged in a partnership, albeit a family partnership, to run their farm. They discussed important decisions regarding the farm, they both had the ability to make decisions about the farming operation and both contributed to their farming operation as a whole. Indeed, the Plaintiff admitted this during her testimony.

They may have split up the duties on their family farm at the suggestion of their accountant and they may have separated the expenses associated with the grain side of the operation as opposed to the cattle portion of the operation, but this was solely for tax purposes.

The Plaintiff and her husband shared the equipment that they each owned, they grew hay for the cattle operation on land they leased together, they both had equal use and access to the yard site and they had two joint accounts from which they paid the bills for the farming operation even though they tried to use one account for the grain side of things and the other for the cattle operation. Profitability of the farm was always on their minds. This was evident from Ed Korpan’s reluctance to sell grain unless the price was right.

It was also evident from the Plaintiff’s concern about the total amount of expenses her husband had incurred with the Defendant and her negotiation of a reduction in the amount of interest owing on this outstanding account. The success of their farming operation was in both their interests as this is how they derived their livelihood. [ 38 ] The Korpans had no written partnership agreement but for 38 years they both worked together on their farm trying to make a living. The comments of Smith, J. at paragraph 14 of the Hansen case are apropos to the present case. There, he said: [14] . . .

As is often the case with family, there was no discussion in a legal context. No one used the term “partnership” but everyone understood they would be working together to build a business and share in the benefits reaped therefrom. [ 39 ] If it looks like a partnership and acts like a partnership, then it is a partnership. I have no hesitation finding on the facts in this case that for 38 years, the Plaintiff and her husband, Ed Korpan, were working together as partners to build their family farm and share in the benefits reaped therefrom. [ 40 ] Having reached this conclusion,

section 11 of the Partnership Act speaks to the liabilities of partners. This

section states: 11 Every partner in a firm is liable jointly with the other partners for all debts and obligations of the firm incurred while he is a partner; and after his death his estate is also severally liable in due course of administration for those debts and obligations so far as they remain unsatisfied but subject to the prior payment of his separate debts.

[ 41 ] The Plaintiff and her husband were partners in their family farm. Ed Korpan had incurred a debt for the purchase of seed and chemical with the Defendant, Parrish and Heimbecker Ltd. This debt was incurred in the ordinary course of their farming operation so that they could plant and grow healthy, high yielding crops. Pursuant to

section 11 of the aforementioned Act , the Plaintiff was jointly liable for her husband’s debt with the Defendant. [ 42 ] It matters not that the Plaintiff did not recall seeing the credit application with the Defendant. The Plaintiff testified that her husband Ed bought all the seed and chemical for the farm and signed all the grain related contracts on behalf of the family. In addition, while she may not have signed the credit application, she was present when her husband signed it and she took

part in a discussion about the credit application. By her actions in this regard, she abdicated the decision making authority to her husband and agreed to his decisions regarding seed and chemical, one of which was to enter into the credit arrangement with the Defendant. Her husband signed the credit application and she is bound by the terms of it in her capacity as a partner in their farming operation. [ 43 ] Paragraph 2 of the Terms and Conditions of the Defendant’s credit policy which appears on the back of the credit application states as follows: 2.

Any amounts owing to P and H may be deducted and set off against any amounts now or in the future, owing by P and H to me (us). Therefore, the Defendant, by virtue of paragraph 2 of their credit policy was entitled to set off the indebtedness of Ed Korpan as against the settlement of the Plaintiff’s grain delivered to them on January 15, 2009. [ 44 ] Finally, I do not believe that the Plaintiff did not know that the Defendant would be deducting her husband’s outstanding indebtedness from her grain sales.

The fact that the Plaintiff reviewed all the invoices regarding product her husband had purchased from the Defendant, argued about one invoice and negotiated a reduction in interest owed on the outstanding balance confirms that she was aware that the Defendant would be deducting the outstanding indebtedness from the grain she brought in that day. There was no reason to go through the invoices and negotiate with Mr. Cobb the evening that she brought in the grain unless she was trying to minimize the amount deducted from her settlement cheque.

b) Were the four cases of Clean Start properly included in Ed Korpan’s indebtedness to the Plaintiff, Parrish and Heimbecker Ltd., on January 15, 2009? [ 45 ] The Plaintiff’s Statement of Claim contains no pleading as regards this issue. She does not raise it in her claim nor ask me as an alternative remedy to reduce the amount of Ed Korpan’s indebtedness to the Defendant as at January 15, 2009, by four cases of Clean Start. Not surprisingly, the Defendant’s Dispute Note contains no response to this issue.

It was only in closing argument that this issue first came to light. [ 46 ] Given that this issue was not pled by the Plaintiff and further that the Defendant did not deal with it in their Dispute Note, I would not normally rule on this point. However, in the course of the trial, the Defendant did call evidence to dispute the Plaintiff’s contention that the four cases of Clean Start were not delivered to their family farm. Moreover, both parties addressed this issue in closing argument.

It appears to me that Defendant’s counsel anticipated this issue and addressed it in evidence therefore, I do not see any prejudice to the Defendant in my dealing with it. [ 47 ] On the evidence before me, Mr. Cobb was very clear in his testimony that he attended the Plaintiff’s farm on May 20, 2008 to drop off the four cases of Clean Start that the Plaintiff’s husband had requested. It was the spring and farmers were busy with seeding. Nobody was at home at the Plaintiff’s farm when he got there. Mr. Cobb had a number of other deliveries that day and was too busy to come back.

As a result he left the four boxes of Clean Start with a copy of the receipt in the Korpan’s chemical shed. He was aware that

the Korpans wanted to sign for all product delivered and on other occasions that was done. But simply because that was not done on May 20 th does not exempt the Korpans from paying for the chemical if I conclude that Mr. Cobb delivered these four cases to them. [ 48 ] Mr. Cobb testified that at the end of the day he returned to his office and put all the receipts for chemical he had dropped off in each respective customer’s file. At the end of the month, a secretary sent out a monthly statement attaching copies of all the receipts for product delivered to or picked up by a customer in that particular month.

The Defendant tendered a copy of the May, 2008 statement and attached receipts for Ed Korpan with the Court. It is a stretch for me to accept that Mr. Cobb went to the trouble of fabricating a receipt for $1,100.00 of chemical that he did not deliver. Not only is there no reason given for him to have done so, the Plaintiff admitted that they received all other product that had been delivered to their farm in 2008.

Moreover, neither the Plaintiff nor her husband took issue with this receipt until eight months after it had been prepared and sent out to them. [ 49 ] Just because neither the Plaintiff nor her husband signed the receipt in question does not mean they did not receive the four cases of Clean Start on May 20, 2008. The Plaintiff testified that she did not believe that they received the four cases of the chemical in question because no one signed the receipt. However, she did not have any independent recollection of receiving the Clean Start one way or the other.

This is not surprising as by her own admission, she was not responsible for chemical purchases. Rather, her husband Ed was responsible for purchasing chemical. If anyone would know whether this Clean Start was received on May 20, 2008, Ed Korpan should know. However, he was not called as a witness in this case. Thus, while the Plaintiff may not recall receiving this Clean Start, I am not satisfied that Ed Korpan did not receive it. [ 50 ] The Plaintiff suggested that they had no use for Clean Start given the crops they were growing in 2008. However, I disagree.

Clean Start was used to ready the ground for canola seed, a crop that according to the evidence, the Korpans were growing that year. [ 51 ] On the facts before me, I am satisfied Mr. Cobb delivered four cases of Clean Start to the Plaintiff’s farm on May 20, 2008 and as such, it was properly included in the total indebtedness of Ed Korpan to the Defendant on January 15, 2009. In the future, in order to avoid allegations such as this, the Defendant would be well advised not to drop off chemical without getting a signature acknowledging that it had been received by the customer.

CONCLUSION: [ 52 ] Since I have found that the Defendant was entitled to set off Ed Korpan’s indebtedness against the Plaintiff’s grain settlement, the Plaintiff’s claim is dismissed. Each party will be responsible for their own costs. ___________________________________ D.E. Labach, J.