2014 BCPC 91, 2014 BCPC 91

Citation: Housewise Construction Ltd. v. Spring Auto Sales Ltd. Date: 20140404 2014 BCPC 0091 File No: 71644 Registry: Surrey IN THE PROVINCIAL COURT OF BRITISH COLUMBIA BETWEEN: HOUSEWISE CONSTRUCTION LTD. dba SEGAL DISPOSAL CLAIMANT AND: SPRING AUTO SALES LTD. dba SPRING AUTOBODY DEFENDANT REASONS FOR JUDGMENT OF THE HONOURABLE JUDGE K. ARTHUR-LEUNG

Appearing for the Claimants: S. Au (President of the Company) Place of Hearing: Surrey , B.C. Date of Hearing: March 11, 2014 Date of Judgment: April 4, 2014 [ 1 ] The Claimant, Housewise Construction Ltd. dba Segal Disposal, filed a Notice of Claim on March 26, 2012, against the Defendant, Spring Auto Sales Ltd. dba Spring Autobody, wherein the Claimant is seeking the sum of $4,400.71 inclusive of contract monies owing, liquidated damages and other fees. The Defendant filed a reply denying any contract had been signed. No one appeared for the Defendant. [ 2 ] The Court heard testimony from Mr.

Samuel Au, who is the owner and President of the Claimant company. Produced and filed in these proceedings and collectively marked as Exhibit 1 is a series of documents in support of the claim. Page 1 of Exhibit 1 is a copy of the Service Contract between the Claimant and the Defendant signed by the parties on September 3, 2010, with service to be effective September 5, 2010 (hereinafter referred to as “the Contract”).

Of particular note in the written and signed Contract is that the contract was effective September 5, 2010, noted under frequency it said “1/2 week”, the price for the “monthly charge” was $85.00 per month, it was for cardboard pick up, there was a notation that to “Call before truck go to dump, pick up money at the first pick up every month” and there were special instructions noted “No wheel, no lock. Customer had read and accepted all terms below.

If Customer breached this agreement, Customer agreed to pay the liquidation damage.” There was no evidence if the Defendant understood what it meant as “liquidation damage”. [ 3 ] The Contract is troubling and very much a one-sided contract significantly to the benefit of the Claimant. Under Clause 2 “Binding Effect”, the Defendant (or customer) is prohibited, during the term of the Contract, to enter into any other contract with a different third party for waste disposal or recyclable collection.

Under Clause 3 “Term and Renewals”, it states: “This Agreement is for a term commencing on the effective date hereof and continuing util [sic] five (5) years after the date service begins hereunder, and shall be renewed for [sic] successive five (5) years [sic] terms without further action by the parties, but may be terminated at the end of any five (5) year period by the Customer by not less than sixty (60) days written notice prior to the end of such five (5) year period (registered mail), or may be terminated at any time by the Contractor upon not less than thirty (30) days prior written notice by registered mail to the Customer.

This Agreement may not be terminated or otherwise cancelled by either party except as provided herein.” The Claimant can cancel the Contract at any time with thirty days written notice to the Defendant or customer, however, the Defendant or customer is bound to a five year term with only an option to terminate upon at least sixty days written notice to the Claimant before the expiration of the five year term. The Contract is very unbalanced.

Under Clause 4 “Rate Adjustments”, it states: “The Contractor reserves the right to adjust the rates hereunder upon increases in fuel costs, disposal facility costs, whether due to recycling programs or otherwise and transportation and equipment costs.

Contractor may also adjust rate to reflect weight and volume of the solid waste and recyclable materials disposed of… The Contractor may also adjust rates hereunder from time to time to reflect the percentage increase in the local Consumer Price Index for all items published by Statistics Canada.” Clause 6 “Liability for Equipment” states in part: “If the Equipment is inaccessible, any additional Service or attempt to provide such Service shall be charged as an ‘extra lift’”.

There is Clause 11 “Failure to Perform” which states: “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, [sic] Customer hereby irrevocably agrees and consents to any/all permanent, interlocutory and interim relief that [sic] Contractor may seek from the Courts to enforce its rights hereunder, or (

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

Customer acknowledges [sic] 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 ] Produced in Exhibit 1 are copies of invoices dated December 1, 2010, in the amount of $100.80; December 31, 2010, in the amount of $115.36; January 31, 2011, in the amount of $112.00; February 28, 2011, in the amount of $128.15; April 1, 2011, in the amount of $995.76; May 1, 2011, in the amount of $100.80; May 31, 2011, in the amount of $100.80; July 7, 2011, in the amount of $100.80; August 1, 2011, in the amount of $100.80; September 1, 2011, in the amount of $100.80; October 1, 2011, in the amount of $1,297.04; March 21, 2012, in the amount of $1,008.00; a “Finance Charge” invoice in the amount of $134.40 with no explanation or documentation to support the amount calculated and how, and a two page “Statement” in the amount of $4,194.71. [ 5 ] The Contract is fraught with errors and I am not convinced by the testimony of Mr.

Au that the amount that he is seeking is supported by his testimony or by the Contract. The Claimant did not produce any invoices for September, October and November 2010, therefore I do not know the amounts charged to the Defendant. However, the Claimant has produced some accounts for the period thereafter and each month has arbitrary amounts set out which are not supported by the Contract or by the testimony of Mr. Au.

The invoice dated December 1, 2010, is in the amount of $100.80 which reflects a charge of $90.00 for a 4 yd. cardboard bin (in accordance with the Contract that it is for cardboard), however, also notes “Warning: Customer dump [sic] a lot of garbage into the cardboard bin, clean [sic] up those bin [sic] will charge $120.00 [sic] month”. Nowhere on the written body of the Contract or in the tiny small print is there any notation to the Customer that there will be an additional charge for such or is there any indication of the amount.

This has been arbitrarily charged by the Claimant and cannot be supported by the Contract as to the additional $120.00 that may be charged. Clause 4 “Rate Adjustments” in its entirety does not allow for any additional charges for the mixing of cardboard and garbage. In addition,

nowhere on the Contract is there any notation that the Contract is subject to taxes. The body of the Contract clearly states under “Monthly Charge” the sum of “$85.00”. There is no notation that there is tax on either such amount or the amount of the tax.

This is an error by the Claimant and the Defendant should not bear that error. [ 6 ] The face of the Contract also has a provision for insertion for “Extra Lift Rate” for “waste” and “cardboard”, however, the Claimant has drawn a line through both provisions for additional fees, therefore the Claimant cannot unilaterally take the liberty of imposing such additional fees upon the Defendant when on the very Contract the Claimant had crossed out those clauses. That is not a binding term nor is it legally enforceable.

Again, a review of the invoice dated December 31, 2010, and the monthly amount charged to the Defendant, has arbitrarily been invoiced in the amount of $115.36, which includes a unilateral monthly increase of $103.00 plus taxes and has a notation “Attempt to pick [sic] twice. Charge 1 time truck time [sic]”.

There was no explanation as to why the rate increased from a contract price of $85.00 as of September 2010 to $90.00 in December 2010, and to $103.00 on December 31, 2010. [ 7 ] The invoice of January 31, 2011, charges $100.00, so a decrease from the month before, plus taxes and a notation “attempt to pick twice, car block. Charge 1 time truck time”. The amount charged in January 2011 is lower than the month before, however, still higher than the Contract price. In February 2011, the Defendant is charged $114.42 for the service and notes “attempt to pick triple, car block. Charge 2 time truck time” and taxes.

There is no explanation, again, for the deviation from the Contract and how an amount the month before was $100.00 and is arbitrarily for a supposed second attendance $14.42 more. The invoice dated April 1, 2011, has the Defendant charged $90.00, an arbitrary amount of $600.00 for “special handling”, a $70.00 fuel surcharge and a $44.56 late payment charge, in addition to taxes. The entire invoice is arbitrary as to the amount being charged which includes the monthly amount and there is no explanation why it decreased from the month before.

There is nowhere in the Contract specifying an amount or permitted fee for “special handling”, there is nowhere in the Contract setting out how a “fuel surcharge” is determined or calculated, nor is there any allowance in the Contract to show how $44.56 was arrived at as a late payment charge. [ 8 ] The invoice of May 1, 2011, invoice of May 31, 2011, invoice dated July 7, 2011, invoice dated August 1, 2011, and September 1, 2011, charged the Defendant a monthly amount of $90.00 plus taxes on each invoice. No June invoice was produced.

The invoice of October 1, 2011, showed a significant deviation in the billing to the Defendant which included the sum of $720.00 for “special handling waste mixed”, a fuel charge of $84.00, a late payment charge of $228.56, a removal bin fee of $150.00 plus taxes.

Again, all of the amounts are arbitrary with no specific amounts set out in the Contract nor is there any justification to an interest component, but only showing on this invoice, after not on a series of others, the amount of $228.56. [ 9 ] The final invoice produced is dated March 21, 2012, wherein the Defendant was charged the sum of $810.00, based on a liquidated damage amount of $90.00 per month, times 9 months, and an arbitrary late payment charge of $100.80, plus taxes. [ 10 ] In support of the amount the Claimant seeks against the Defendant, the Claimant is relying upon the Provincial Court of British Columbia decision of Housewise Construction Ltd. dba Segal Disposal v Sun Sushi Restaurant Ltd . (Vancouver Registry, File 1242020) of His Worship D.

Yule of April 17, 2013 (hereinafter referred to as “ Sun Sushi ”) . The facts are similar in that the Claimant was suing Sun Sushi for monies owing under a garbage disposal agreement with damages. In Sun Sushi, it was a three year contract with a five year renewal term with a monthly fee of $140.00 per month. A second contract with different fees was negotiated between the parties with an additional fee and now a longer term contract. Thereafter a dispute arose about payment of fees, mixed waste, liquidated damages and sundry fees.

In Sun Sushi (supra), the hearing commented, such as my own comments, that the Contract the Claimant is relying upon is in very small print. More so, in the matter before me, the Contract is different in that while the terms are on the front of the Contract, there are a number of areas where no specific fee is itemized nor any notice period to be provided to a Customer.

There are a number of concerns on the Contract before me that make it impossible to find certainty on a consistent basis. [ 11 ] I am mindful and have considered decisions regarding the law and entitlement on liquidated damages: Northwest Waste Solutions Inc. v 99 Nursery and Florist Inc . ( 2012 BCPC 79 ); Super Save Disposal Inc. v Northwest Solutions Inc . and Craftsman Millwork and Design Ltd. ( 2012 BCPC 42 ); BFI Canada Inc. v Persia Food Products Inc. 2010 BCPC 308 (Can LII); Super Save Disposal Inc. v Blazin Auto Ltd. and Daily Sun Investment Co.

Ltd. 2011 BCSC 1784 (Can LII); and Northwest Waste Solutions Inc. v Hui (cob Sushi Hut Japanese Restaurant), [2013] BCJ No. 2138 .

In considering all of the foregoing, I am guided that each case is fact driven, that the Court must consider whether the clause seeking liquidated damages is a realistic and genuine pre-estimate of damages or a clause inserted simply to compel performance, that the Court has the ability to strike down such clauses to prevent oppression to a party whom such damages are sought against, and that if a Court is to intervene and grant relief, the Court should do so lightly and only where it is unconscionable to uphold such a clause.

Any sum that is unconscionable, or cannot be supported, will be found to be a penalty and not liquidated damages. In Blazin (supra), at Paragraph 26 stated: The enforceability of a liquidated damages provision in an agreement engaged two competing objectives: freedom of contract versus the right of the courts to intervene in a given case to relieve against an oppressive or unconscionable result flowing from enforcement of the liquidated damages term.

It is well settled that the enforceability of such a term turns on whether it is a genuine pre-estimate of the expected loss that a party will sustain in the event of a breach of contract or a penalty clause so oppressive or unreasonable that equitable intervention is justified to prevent an injustice. [ 12 ] After reviewing the evidence before me and careful consideration of jurisprudence, I am not satisfied that the amount sought by the Claimant against the Defendant can be supported. The Contract is signed by both parties for cardboard pick up. The print on the front of the Contract is very minute and tiny.

There is a large amount of print on the front of the Contract, however, due to its tiny font, it takes a considerable amount of time to read it clause by clause. However, thereafter raises a number of uncertainties contained in the Contract that make it unreasonable and impossible for anyone to know what the charges, if any, above the monthly amount would ever be. The signed monthly amount to be invoiced on the front of the Contract says $85.00. There is no indication if that is inclusive or exclusive of taxes.

Specifically on the body of the Contract, the Claimant has crossed out any allowances for extra lift charges for “waste”, “cardboard”, “purchase order”, “locks” and “delivery charge”.

In the small print of “Terms and Conditions of Agreement”, it would be unconscionable to uphold what the Claimant is seeking because there is no certainty and in particular I am drawn to the paragraph of “Rate Adjustments” that there is no provision as to notice being given to a customer if and when such occurs, no provision to a customer as to how such increases are calculated and are very arbitrary stating that those increases are “…based upon increases in fuel costs, disposal facility costs, whether due to recycling programme or otherwise and transportation and equipment costs.” A

customer, and this file is an example of such, would have an invoice for a different amount every month. No one can have predictability and certainty, particularly for a lengthy contract such as this, based on such vague clauses. [ 13 ] The Claimant charged the Defendant for an additional lift, however, while Clause 6 has a provision that “if the Equipment is inaccessible, any additional Service or attempt to provide such Service shall be charged as an ‘extra lift’”, I am drawn to the body of the Contract in larger print that the Claimant has specifically crossed out any provision for charges for such.

The invoices are fraught with inconsistencies and there is no explanation as to how amounts were arrived at on those invoices by either looking at the Contract or from the testimony of Mr. Au. No invoice presented was ever for the contracted amount of $85.00 and there was no explanation as to why that occurred. Some invoices had unilateral sums imposed above the contract price and note that while an additional trip was allegedly made, there would be no additional charge.

Some invoices have unilateral imposed amounts such as $600.00 for waste, however, the Contract that the Claimant relies upon specifically crossed out additional amounts or lifts for waste. While interest is permitted and set out, the sums charged by the Claimant are arbitrary and include on a number of invoices “late payment” charges which have no basis to the Contract or any set amount of calculation, and are purely punitive in the amounts charged. One invoice has a bin removal fee, which nowhere in the Contract is there a specified amount.

The invoices presented by the Claimant are fraught with unilaterally imposed charges in the nature of the terms and amounts. No reasonable customer could ever reasonably follow such a Contract when the amounts unilaterally changed each and every month. [ 14 ] I am convinced that the Claimant is entitled to liquidated damages, however, the amount sought by the Claimant, again, is not justified when the body of the Contract is carefully analysed nor is it supported by the testimony of Mr. Au.

In accordance with the “Failure to Perform” provisions of the Contract, liquidated damages is a reasonable allowance in this particular matter, however, due to the unilateral charges to each invoice imposed by the Claimant, it would be unconscionable to permit the amount sought by the Claimant against the Defendant. [ 15 ] A contract requires certainty. The written terms of any contract must be clear. There are a number of clauses on the face of this particular Contract for the reasons that I have set out above are vague, have no notice provision, or provide any mathematical calculation to a customer.

When a party defaults in its payment obligations, the other party cannot impose unilateral charges where that party has specifically crossed out that provision in a contract nor can a party simply impose charges that have no basis or any consistency from month to month as to how those amounts were calculated. [ 16 ] Based on all of the foregoing, I am unable to award the amount that the Claimant seeks against the Defendant.

I am satisfied that for the invoices dated December 1, 2010; December 31, 2010; January 31, 2011; February 28, 2011; April 1, 2011; May 1, 2011; May 31, 2011; July 7, 2011; August 1, 2011; September 1, 2011; October 1, 2011; and March 21, 2012 are outstanding. These are the only invoices that the Claimant has presented as being due and owing. The Contract sets out a set price of $85.00 per month. There are before me 12 invoices outstanding and therefore the sum of $1,020.00 is due and owing by the Defendant to the Claimant.

In addition, the Claimant seeks liquidated damages of nine months of monies due and owing based on a unilateral sum of $90.00 per month. I will award liquidated damages in the amount of $765.00 based on a Contract price of $85.00 per month for a nine month period. [ 17 ] Therefore, there will be Judgment for the Claimant against the Defendant as follows:

a) Outstanding invoices based on the allowed sum of $1,020.00;

b) Liquidated damages in the amount of $765.00;

c) Interest on the sum of $1,020.00 shall accrue in accordance with the terms of the Contract at 2% per month or 26.8% per annum effective April 21, 2012;

d) Interest on the sum of $765.00 shall accrue in accordance with the Court Order Interest Act , RSBC 1996 and amendments thereto effective April 21, 2012;

e) Filing fees of $156.00; and

f) Service fees of $20.00. The Honourable Judge K. Arthur-Leung Provincial Court of British Columbia