Corsair Field Services Ltd. v., 2016 BCPC 128

Citation: Corsair Field Services Ltd. v. 078530 B.C. Ltd. Date: 20160510 2016 BCPC 0128 File No: 40632 Registry: Kamloops IN THE PROVINCIAL COURT OF BRITISH COLUMBIA (Small Claims Court) BETWEEN: CORSAIR FIELD SERVICES LTD. CLAIMANT AND: 078530 B.C. LTD. DEFENDANT REASONS FOR JUDGMENT OF THE HONOURABLE JUDGE S.D. FRAME Appearing for the Claimant: Mr. Jason Lorraine Counsel for the Defendant: Mr. David Frappier Place of Hearing: Kamloops , B.C. Date of Hearing: February 16, 2016 Date of Judgment: May 10, 2016 [ 1 ] This is a claim by the Claimant against the Defendant for a cancelled tree planting contract. The claim is comprised of losses

[1] This is a claim by the Claimant against the Defendant for a cancelled tree planting contract. The claim is comprised of lossesincurred for holding a crew on standby, lease payments for trucks and a loss of profit margin of 15% of the total contract price. [2] The two companies have done business with each other frequently over the years. In 2014, the Claimant was contracted by theDefendant to do the same work.

The Defendant had a two year renewable contract with the Ministry of Forests and had subcontractedthe tree planting obligations to the Claimant. [3] On the assumption that the Claimant would do the work again, the Defendant offered the Claimant the contract in 2015. However, the Claimant had just acquired a significant contract with the federal government for the Chilcotin military training area. Itwould not be able to fulfil the contract for the Defendant. [4] As a consequence, the Defendant was able to line up two possible alternative companies to fulfil the contract if it could not doit itself.

It entered into a subcontract agreement with the Ministry of Forests to allow for this subcontract. It had not done this in 2014when the Claimant had been the subcontractor; nor had the Defendant arranged to have the Claimant identified as a subcontractor in2015 when the Defendant approached the Claimant. [5] Ultimately, the Chilcotin military training area contract fell through for the Claimant and it became available to do the workwith the Defendant. The principals of the two companies, Jason Lorraine and Davin Green, began text messaging and e-mailing eachother about this subcontract.

As a result of the text messages and e-mails, Mr. Lorraine came to the understanding on behalf of theClaimant that the Claimant had the subcontract. Mr. Green said he was saying and doing what he needed to do in order to ensure that theClaimant would pay the Defendant an amount outstanding on other unrelated contracts the Claimant had retained the Defendant toperform. This was entirely misleading to the prejudice of the Claimant. It was also unnecessary given the history of business dealingsbetween the parties. [6] Mr.

Lorraine argued that there was a contract between the parties which had been breached by the Defendant; the contract hada measurable value; the Claimant incurred costs to complete the contract; and the Defendant engaged in negligent misrepresentation. [7] Mr. Lorraine cited from the Law of Contracts in Canada, G.H.L.

Fridman, 5th Edition, 1994 at page 15 as follows: It is not what an individual party believed or understood was the meaning of what the other party said or did that is the criterion ofagreement; it is whether a reasonable man in the situation of that party would have believed and understood that the other party wasconsenting to the identical terms. [8] Therein lies Mr. Lorraine’s problem. For a contract to exist, there must be offer, acceptance, consideration and certainty ofterms. Mr. Lorraine knew what work had to be done but not how much the consideration would be.

He surmised it would be at least beas big as the one he had done in 2014 but expected that it would be larger. He does not know because the terms were never agreed. [9] He referred to an Ontario Supreme Court of Justice decision, Ravelston Corp (Re) 2006 O.J. No. 3764 from paragraph 44: Contracts are bundles of reasonable expectations, created by the exchange of promises. An objective test is applied to determine thecontent of those promises and resulting reasonable expectations. What would a reasonable person understand those promises andreasonable expectations to be?

The reasonable person is, of course, a necessary juristic construct. In reality, the reasonable person is thejudge hearing the dispute. [10] The Claimant argued that a reasonable person would conclude there was an agreement in place based on the longstandingcontracting relationship between the parties; the fact that the Claimant had performed the same contract the prior year; and the fact thatMr. Green had inquired on behalf of the Defendant who from the Claimant would be supervising that contract. Mr. Lorraine said thatthe contract had been made on the phone on the basis of “the same deal as last year”.

This was the same process these two parties hadused throughout their history to do hundreds of thousands of dollars of work between them. [11] Mr. Lorraine rightly argued that a verbal agreement is enforceable. Because the agreement is oral, the court must consider notonly what was said but how the parties conducted themselves. Mr. Lorraine argued that the words and actions of the parties in this casesupported the existence of a contract. [12] Mr. Lorraine also argued that the Claimant incurred costs in order to perform the contract. The Claimant had cleared space in itscrew

schedule and had rented trucks and equipment as well as hotel rooms. [13] Mr. Lorraine argued that the contract value ultimately closely matched the Claimant’s estimate of $90,000. This supports hisclaim that the terms of the contract were to be “the same deal as last year”. Based on the margins that the Claimant enjoyed from the2014 contract, the Claimant expected to make 15% or $13,500. [14] Mr. Green cited Queen v. Cognas Inc. (SCC), [1993] 1 S.C.R. 87 at 110 for the test to establish negligentmisrepresentation: 1.

A duty of care based on a “special relationship” between the person making the representation and the person to whom it wasmade; 2. That the representation in question is untrue, inaccurate or misleading; 3. That the person making the representation acted negligently in making it; 4. That the person to whom the representation was made relied on it in a reasonable manner; and 5. That the reliance was detrimental in the sense that damages resulted.

[15] The Claimant argued there was a special relationship developed through history with over a $1,000,000 and several years ofdoing business exchanged between the parties. This, however, is a purely business relationship and not a “special” one as contemplatedby the cases. [16] Mr. Green had testified that he had no intention of the Claimant doing the contract yet he made overtures to the Claimant. TheDefendant was making file requests and arrangements to pick up seedlings only days after asking Mr. Lorraine who was going to besupervising the job on behalf of the Claimant. It was only after this inquiry that Mr.

Green advised the Claimant that the Defendantwould do the contract itself. Mr. Green also testified that he did this deliberately to ensure that he would be paid on a separate contract. This is not negligent; it is deliberate. [17] Damages resulted which the Claimant has set out. These include not only the costs of the rentals, hotel rooms and other out-of-pocket expenses, but also the lost profits over the time that the Claimant should have been doing the contract. Mr. Lorraine cited severalcases for the proposition that these were liquidated damages. [18] Mr.

Frappier referred to Ron Ghitter Property Consultants v. Beaver Lumber Co. (2003), 17 Alta. L.R. (4th) and 642718 AlbertaLtd. v. Alberta (Ministry of Public Works, Supply and Services) (2004) 2004 ABQB 539 , 368 A.R. 53. [19] The Defendant acknowledged that verbal agreements are subject to the same principles as a written contract but argued theessential elements of a contract must also be present. Citing the same principles I set out above, Mr.

Frappier argued that the Claimanthas failed to prove those essential elements. [20] The Defendant argued that while the text messages certainly show an exchange of discussion regarding the subcontract inVernon for 2015, there is nothing that shows a definitive agreement. The Claimant agreed in cross examination that the agreement wasimplied. [21] Mr. Lorraine also agreed that the Claimant had not made most of the required preparations necessary to perform thissubcontract.

He did not submit a tree thaw request, or obtain maps from the Defendant necessary for performance of the contract,provide monetary security to the Ministry of Forests for the contract or submit the Notice of Project for WCB coverage. The Defendantargued that the Claimant expressed a blatant disregard for the importance of these requirements even though some are required by law. [22] The Claimant was also unable to recall what preparations he had done for the contract the year prior.

As such, the size andvalue of the contract may have been the same deal as the prior year, but other essential terms were neither considered nor settled. [23] The Defendant argued that the Claimant did not inquire whether the Defendant obtained permission from the Ministry ofForests to subcontract with the Defendant, which was necessary under the Vernon contract that the Defendant had with the Ministry ofForests. That argument has no strength in this case. The contract between the Defendant and the Ministry of Forests was for theDefendant to attend to.

The year prior, the Defendant did not have the Claimant added as a subcontractor. It was not reasonable for theDefendant to expect the Claimant to know this requirement or to attend to having it dealt with. It does confirm the Defendant’s less thanhonourable dealings with the Claimant. [24] The Claimant argued that it had arranged for the trucks and crew for the Vernon contract but, on cross examination,acknowledged it had already leased the trucks for the start of the planting season well before the Vernon contract was to start.

Mr.Lorraine had said that if he had known he would not be performing the Vernon contract, he would have returned those vehicles to thelease company. [25] The Defendant also argued that the Claimant had difficulty in naming the 18 crew members appointed for the contract. TheDefendant argued the Claimant was merely guessing the names of the crew. That is not particularly surprising given the transient natureof this work. Mr.

Lorraine testified the Claimant was only able to find work for six crew members but not for the balance of the crew. [26] The Defendant argued that the Claimant had already committed to the military contract in Chilcotin but it is clear on theevidence that the contract with the military had collapsed when Mr. Lorraine went back to the Defendant. The Defendant argued that theClaimant was unable to give any evidence of specific details of the conversation that ensued.

However, it is absolutely clear from thetext message from the Defendant to the Claimant that the Defendant knew the Claimant was available for that subcontract. TheDefendant deliberately misled the Claimant into believing it was going to perform the contract. [27] On May 5, Mr. Lorraine texted Mr. Green asking him “what’s the verdict. Id still like the trees. Just a scheduling issue”. Thisis evidence that the Claimant did not yet know with certainty that it had the contract. This is the strongest defence the Defendant has.

The text message shows that the Claimant was not certain it was going to be performing the Vernon subcontract and did not haveconfirmation there was a binding agreement between the Claimant and the Defendant for that work. [28] The Defendant had relied upon a March 9, 2015 text where the Claimant asked the Defendant if the Claimant was going to bedoing the Vernon work. The Defendant had replied the next day to say that it was given away. However, this text message precedes theDefendant’s query about who would be doing the Vernon contract from the Claimant.

Circumstances changed and the Defendant led theClaimant to believe it could now have the contract. [29] It was not until May 5 that the Defendant advised the Claimant that the Defendant was going to be doing the Vernon contractwith one of its own crews. This text was the same day that the Claimant asked the Defendant what the verdict was with respect to theVernon contract. [30] The Defendant argued there was no contract between the Claimant and the Defendant. The parties were never ad idem.

Also citing Fridman on the Law of Contracts in Canada, 6th Edition, the Defendant argued that the reasonable person test is qualified bywhether the parties are ad idem. Professor Fridman cites Ron Ghitter, supra: The parties will be found to have reached a meeting of the minds, in other words be ad idem, where it is clear to the objective reasonable

bystander, in light of all the material facts, that the parties intended to contract and the essential terms of that contract can be determined with a reasonable degree of certainty. [ 31 ] The Defendant argued that it never intended to have the Claimant perform the subcontract and therefore they were not ad idem . However, the Defendant deliberately misled the Claimant into believing it would be doing the subcontract and did so for the purposes of ensuring it would be paid on some other work. [ 32 ] It is true that without acceptance there can be no contract.

However, the Defendant’s actions in misleading the Claimant would have satisfied that component were it not for the clear uncertainty expressed by the Claimant on March 5. But for that expressed uncertainty from Mr. Lorraine, a reasonable person would have concluded that there was a binding contract between the parties. That Mr.

Lorraine was not certain whether the Claimant would receive the contract is supported by the fact that the Claimant had made no steps in preparation for performing that contract other than the hotel and vehicle rentals the Claimant had already engaged for other contracts. [ 33 ] The Defendant argued that the Claimant was not prepared to perform the contract because it had a scheduling issue. That is not what the text message says. The text message says the Claimant still intends to perform the contract but wants confirmation because it has a scheduling issue.

This belies the Claimant’s claim that it could not mitigate its losses. [ 34 ] Even if the Claimant had been successful in its claim, it could not have proved the damages it has incurred. The Claimant did not lead evidence of any efforts to mitigate losses or to properly establish whether the crew had any work during the time the Vernon contract was to be performed other than the six crew who were otherwise employed. In order for a claim to succeed, a Claimant must prove all the elements of it.

The burden always lies with the Claimant to lead the evidence necessary to prove the claim. [ 35 ] I am not satisfied that the Claimant has established that there was a firm and binding contract between it and the Defendant for the performance of this work. I am also not satisfied that the Claimant has proved on a balance of probabilities that it incurred the damages it claimed. However, it would be an entirely improper outcome if the Defendant were awarded costs given its improper conduct in its dealings with the Claimant.

This behaviour should not be condoned or rewarded by these courts. [ 36 ] The Claimant’s claim is dismissed without cost to either party. _______________________________ S.D. Frame Provincial Court Judge