Forest Drugs Ltd. (o/a Pharmasave No. 423) - v. -, 2011 SKPC 26

IN THE PROVINCIAL COURT OF SASKATCHEWAN CIVIL DIVISION Citation: 2011 SKPC 026 Date: January 31, 2011 File: SC# 09 of 2010 Location: Melfort _____________________________________________________________________________ Between: Forest Drugs Ltd. (o/a Pharmasave No. 423) - and - Express Scripts Canada Co. (formerly known as ESI Canada Inc.) Mr. G.A. Stefanson For the Plaintiff Mr. G. A. Green and Mr. T.W. Oleniuk For the Defendant _____________________________________________________________________________ JUDGMENT Q.D.

AGNEW , J _____________________________________________________________________________ [ 1 ] The Plaintiff owns and operates a pharmacy in Hudson Bay, Saskatchewan. The Defendant acts as a payor on behalf of a number of insurers who provide drug-plan coverage through benefits plans for employees of various organizations.

When a person who is a beneficiary under a benefits plan seeks to have a prescription filled by the Plaintiff, the Plaintiff contacts the Defendant electronically and, if the person is insured by one of the insurers for whom the Defendant acts, the Defendant agrees to pay to the Plaintiff the covered portion of the cost of the prescription. There is a written agreement between the Plaintiff and the Defendant governing how this relationship is to be conducted.

[ 2 ] In 2008, the Defendant performed an audit of the previous two years’ transactions with the Plaintiff.

As a result of that audit, the Defendant concluded that it had overpaid the Plaintiff in the amount of $21,101.04 by virtue of the Plaintiff claiming a “professional fee”, or dispensing fee, in excess of the amount agreed to between the parties. [ 3 ] The Defendant then immediately moved to recover this amount from the Plaintiff, by withholding that amount from ongoing payments to the Plaintiff. [ 4 ] The Plaintiff has now brought action to recover the amounts withheld, but in order to bring itself within the jurisdiction of this Court has limited its claim to $20,000.00, exclusive of interest and costs.

Facts [ 5 ] On July 22, 1998, the parties entered into a “Pharmacy Provider Agreement Open Network” (the “Agreement”). At that time, the Defendant was known as “ESI Canada Inc.”. However, there is no dispute but that the Defendant and ESI Canada Inc. are one and the same. [ 6 ] The Agreement is a standard form agreement produced by the Defendant with the intention that it would not be amended, but rather would be the same agreement governing the relationship between the Defendant and virtually all pharmacies with whom it contracted.

The exception to this standardization is on the first page of the Agreement, which has areas to be completed with information specific to the Plaintiff. This includes certain identifying and contact information, information with respect to insurance coverage, and a blank marked “Usual & Customary Professional Fee”. Next to the latter entry is a blank, in which the Plaintiff handwrote “6.93”.

The parties agree that this referred to $6.93, being the amount which the Plaintiff charged as its dispensing fee, that is, the amount that the Plaintiff was paid at that time for filling a prescription. [ 7 ] Paragraph 3A of the Agreement specifies how the Plaintiff is to be paid, which is “in accordance with the amount set forth on Exhibit A hereto”.

In turn, the crucial part of Exhibit A states that “Professional Fees” shall be (other than situations which do not apply here) “the Pharmacy’s usual and customary professional fee”. [ 8 ] I note that there is a discrepancy within the Agreement, in that the reference on page 1, in “Required Pharmacy Information”, is to “Usual & Customary Professional Fee”, all words being capitalized, whereas the reference in Appendix A is to “usual and customary professional fee”, with no words capitalized. I do not regard this difference as crucial, notwithstanding the contra preferendum rule.

There was no suggestion that the Plaintiff was misled by this difference. Furthermore, although “Usual & Customary Professional Fee” is capitalized, it is not a defined term. It is often the case that capitalized terms in a contract are defined, and if they are then used in their uncapitalized form, they may not have their defined meaning.

Here, however, as it is not a defined term, I am not willing to conclude that the lack of capitalization in Appendix A means that the phrase has a different meaning there than it has under “Required Pharmacy Information”. [ 9 ] Separate and apart from payments made through a third party payor such as the Defendant, pharmacies in Saskatchewan also deal with the Provincial Government as a payor.

The amount that can be charged by pharmacies to the Provincial Government as the dispensing fee is negotiated by a voluntary association of pharmacists, the Pharmacists’ Association of Saskatchewan (“PAS”) or its predecessor, the Representative Board of Saskatchewan Pharmacists. PAS is, as was its predecessor, a voluntary association. Currently approximately 85% of pharmacists in Saskatchewan are members of PAS.

When it negotiates with the Provincial Government for the maximum allowable dispensing fee for prescriptions being charged to the Provincial Government, it communicates with its members regarding those negotiations. The individual pharmacies are then each responsible for accepting or rejecting that new fee with the Provincial Government. That is done directly between the government and each pharmacy, and does not involve PAS. PAS does, however, communicate with various third party payors who occupy the same position in the marketplace as the Defendant, to advise them of the new maximum fee.

This point is of particular significance because, although the maximum fee is negotiated with the Provincial Government and not the third party payors, at least some pharmacies (including the Plaintiff) use it as the amount which they charge as their dispensing fees to all customers. The evidence shows that throughout the course of dealings between the Plaintiff and Defendant, the Plaintiff charged all customers, whether or not their transaction involved the Defendant, a dispensing fee equal to the

maximum government rate then in effect. [ 10 ] There is no evidence that the Defendant actually received any notifications from PAS regarding increases to the maximum government fee. Issues [ 11 ] There are, in essence, two issues in this matter. The first is whether or not the Plaintiff “overcharged” the Defendant by charging dispensing fees in excess of their contractual agreement.

The second issue is whether or not, if there was in fact any overcharging, the Defendant was entitled to recover the same from the Plaintiff by withholding other amounts legitimately due from the Defendant to the Plaintiff. [ 12 ] I do not consider the second point to be of fundamental importance. The major issue is whether the Plaintiff was entitled to charge dispensing fees in the amounts that were charged, or not. If the Plaintiff overcharged, then the Defendant would be entitled to recover that money. If not, then the money belongs to the Plaintiff.

Due to the withholding of funds by the Defendant, the legal process by which this issue has come before this Court has been by way of the Plaintiff suing the Defendant. Had the Defendant not withheld funds, the same issue would have been before the Court only with the Defendant and the Plaintiff reversing roles.

I therefore do not see that the question of whether the Defendant was entitled to withhold funds as it did is of any particular significance, other than the trivial fact that it has defined which of the parties was to be the Plaintiff and which the Defendant. [ 13 ] If the answer to the question is of some significance which I have overlooked, I consider that paragraph 3C is sufficient to provide a legal basis for the Defendant to have withheld these funds from the Plaintiff. It refers to taking such action in the event that the Defendant “was sent inaccurate information” by the Plaintiff.

The allegation in the case before me is that the Plaintiff charged the Defendant, and the Defendant paid, a dispensing fee in excess of the contract amount. I think the term of the contract which I have quoted above would encompass this situation, in the sense that the Plaintiff (allegedly) specified a certain amount as being payable to it pursuant to the contract when the amount actually payable (again, allegedly) was less. Obviously, clearer language would be preferable, but I do not believe it does violence to the language to give it the

interpretation I have given it, and this situation seems to fit squarely within the intention of this particular provision. [ 14 ] The only issue for decision, therefore, is whether or not the Plaintiff “overcharged” the Defendant for dispensing fees. [ 15 ] That question in turn can be further simplified. The Defendant acknowledged that if it had been provided with proper notice of the dispensing fee increases, as required by the contract, it would have paid the same without objection. The Plaintiff alleges that notice was in fact given.

The issue before me, therefore, reduces to whether or not the Plaintiff provided notice to the Defendant of the dispensing fee increases applicable to the two years in question, namely July 3, 2006 to July 2, 2008. [ 16 ] The Plaintiff argues that notice was given in two ways. Firstly, it says, notice was provided through PAS notifying third party payors of increases in the maximum payable by the Government of Saskatchewan from time to time. In essence, the Plaintiff argues that PSA provided notice to the Defendant as agent of the Plaintiff.

Secondly, the Plaintiff argues that the Defendant received notice of the Plaintiff’s charges each time the Plaintiff submitted a claim or certain other documentation, as the dispensing fee was clearly indicated as a separate entry. [ 17 ] As a separate matter, the Plaintiff alleges that if any “overcharging” occurred, the Defendant should not be entitled to recover the money (which it did by way of withholding of funds) due to promissory estoppel, or alternatively because the Defendant waived compliance with the notice requirements of the Agreement. [ 18 ] I will discuss each of these propositions in turn.

Agency [ 19 ] The Plaintiff argues that the Defendant was advised of the increases to its dispensing fee via PAS, or its predecessor organization. PAS negotiates with the Provincial Government to arrive at a maximum dispensing fee with respect to prescriptions for which the Provincial Government is going to pay, where it is the payor. The Plaintiff, through the entire time the Agreement has been in effect, has used that figure as it was set from time to time as its dispensing fee for all purposes.

In other words, the maximum allowable government dispensing fee from time to time was, and is, the dispensing fee which the Plaintiff charges to all customers, whether the payor is the Provincial Government or not. The Plaintiff therefore puts forth the position that the Defendant should have known what the Plaintiff was charging for its dispensing fee at any time, by reference to the maximum allowable government rate at that time.

Furthermore, it says, the Defendant should have been aware of what that amount was because PAS takes it upon itself to notify third party payors such as the Defendant of the new rate negotiated with the Provincial Government. [ 20 ] There are several difficulties with this contention. Firstly, there is very little evidence from which I can conclude that the Defendant actually received notice of all of the fee increases from PAS. To the extent that there is any evidence on this point at all, I do not find it convincing.

The Plaintiff has failed to prove on a balance of probabilities that the Defendant received notice of the applicable fee increases. [ 21 ] Secondly, even if the Defendant received notification of the increases, there is no evidence that the Plaintiff ever made it aware that when PAS provided such information, it was doing so on behalf of the Plaintiff. That is, even if PAS was providing such notification as an agent of the Plaintiff, there is no evidence to show that the Defendant was ever advised of that fact, or should have been able to deduce it for itself.

PAS is a voluntary organization, whose membership is less than 100% of the pharmacists in Saskatchewan.

As a result, without actual notification that PAS was acting as the Plaintiff’s agent, there is no reason for the Plaintiff to assume that it was so doing. [ 22 ] The third difficulty with the Plaintiff’s position is that even if I were to find that the Defendant had received notification of the government rate increases from PAS and was aware that PAS was providing such information on behalf of the Plaintiff, there is no evidence that the Defendant was ever advised that the Plaintiff’s dispensing fee would be the maximum allowable government rate in effect from time to time.

Without such a connection, any information provided to the Defendant with respect to the maximum allowable government rate cannot be construed as notice of a change in the dispensing fee which the Plaintiff intended to charge the Defendant. Actual notice [ 23 ] Page 1 of the Agreement contains on it spaces to be completed by the pharmacy with whom the Defendant is thereby contracting. In the case before me, other than the area for the date of the Agreement and the identity of the Plaintiff, all of the rest of the area to be completed is contained within a boxed area.

That box is itself fully occupied by three smaller boxes. The first box is a single line in grey, clearly intended as a heading and states in full “required pharmacy information”. The second box, immediately below that, contains information with respect to the pharmacy, including its operating name, its address, contact information, etc. Immediately below this second box is a third box. That box asks, in bold italicized letters, for the name of the Plaintiff’s insurance carrier.

It then asks, in the same unbolded typeface as most of the rest of the entries in the boxes, for the Plaintiff to attach a copy of its Certificate of Insurance. In the same typeface it also asks for the hours of service and “Usual & Customary Professional Fee”. Below this last entry is a further line in the same type face but bolded, asking for the Plaintiff to specify what special professional services are provided. [ 24 ] Also within this third box, to the right of these blanks to be completed, are two paragraphs in italics. The first paragraph states requirements regarding insurance.

The second paragraph reads in full: “Note: It is the responsibility of the provider to notify ESI Canada in writing of any changes to their required pharmacy information.” [ 25 ] It is the position of the Defendant that this “Note”, placed in proximity to “Usual & Customary Professional Fee”, requires that the Plaintiff provide written notice to the Defendant before it increases its “Usual & Customary Professional Fee” from the amount specified in handwriting in the Agreement, namely $6.93.

It is common ground between the Plaintiff and the Defendant that there is no other place in the contract where such a requirement is referred to and the Agreement does not specify the form or manner of such notice, or any length of time which such notice needs to be given prior to the implementation of a fee increase.

[ 26 ] Glenn Zapski, the principal of the Plaintiff at all relevant times, testified that he understood that “Usual & Customary Professional Fee” was part of the “required pharmacy information” and that notice of any change in the dispensing fee had to be provided in writing to the Defendant. He stated that he did not do so specifically because he believed that PAS was doing so for him. [ 27 ] This would seem to be the end of the matter, as I have held elsewhere in this decision that the actions of PAS did not constitute notice to the Defendant of changes by the Plaintiff in its dispensing fee.

However, the situation is somewhat more complex. [ 28 ] It is common ground that from the inception of the contract in 1998 through to the end of the audit period which is the subject of this action, namely July 2, 2008, the Plaintiff at no point provided a written statement to the Defendant of a change in the Plaintiff’s dispensing fee with intent that any such writing be taken as notice of a change to the “Usual & Customary Professional Fee”. The evidence shows, however, that the Defendant paid dispensing fees in excess of $6.93 (the amount specified on page 1 of the Agreement) in that period.

The evidence discloses that at some point prior to February 28, 2001, the Defendant began paying the Plaintiff’s dispensing fee of $7.15. This was an increased fee which the Plaintiff began charging when it became effective as the maximum government rate. The evidence is that there was nothing in writing from the Plaintiff to the Defendant to constitute notice of that change for the purposes of the Agreement. [ 29 ] Effective February 28, 2001, the maximum government rate for the dispensing fee increased from $7.15 to $7.22, which the Plaintiff immediately began charging.

The Plaintiff noted that the Defendant’s computer system was not allowing the increased dispensing fee, and sent a fax to them stating “we had an [increase] in fee from 7.15 to 7.22 effective Feb. 28/01 it has not been updated in your system yet, why??” [ 30 ] The Plaintiff never received a response to this fax, but thereafter the Defendant paid the Plaintiff’s dispensing fee at the rate of $7.22, and indeed the Defendant acknowledged in this trial that this fax constituted proper written notice. [ 31 ] There is also evidence, from an amending agreement between the Plaintiff and Saskatchewan Health, that the maximum government rate increased to $7.97 as of September 1, 2003 and to $8.21 as of December 1, 2005.

The uncontradicted evidence is that the Plaintiff always charged the maximum government fee as its dispensing fee in its dealings with the Defendant, and that it did so immediately upon such rate changes coming into effect with the Government of Saskatchewan. The facts to which I have referred above confirms that practice, and indeed this was not challenged by the Defendant. Accordingly, I am prepared to assume that the government fee increases specified above were charged to the Defendant effective those dates.

The evidence is that until this audit occurred, involving the period from July 3, 2006 to July 2, 2008, the Defendant paid the Plaintiff’s dispensing fee from time to time with no complaint or protest: including, therefore, those increases, even though again no notice was provided to the Defendant. [ 32 ] I therefore conclude that, at least to the last date on this list, the following is an accurate statement of the dispensing fee changes implemented by the Plaintiff and accepted by the Defendant: Contract Rate (July 22, 1998) $6.93 Pre-February 28, 2001 $7.15 February 28, 2001 (notice given) $7.22 September 1, 2003 $7.97 December 1, 2005 $8.21 [ 33 ] The contract rate of course is specified in the Agreement.

The facts to which I have referred above, the Defendant concedes, constituted sufficient notice of the increase of February 28, 2001. That leaves three increases implemented by the Plaintiff and accepted by the Defendant with no written notice. [ 34 ] In fact, the Plaintiff takes issue with the characterization of these changes as taking place “with no written notice”. It is the Plaintiff’s contention that in fact notice was given of all of these changes, specifically by it charging the increased fees.

It states that the Defendant was given full notice and disclosure of the amount being charged for the dispensing fee each and every time the Plaintiff

submitted a claim to the Defendant, which it did thousands of times per year. To understand this contention, it is necessary to examine the claim process in more detail. [ 35 ] The evidence shows that when a patient approaches the Plaintiff to have a prescription filled, there is a procedure which in appropriate cases determines that the patient is entitled to benefits from an insurer whose plan is administered by the Defendant. The Plaintiff, by online form, submits a claim to the Defendant for the amount that it intends to charge for that prescription.

The information submitted by the Plaintiff to the Defendant online includes, as a separate and distinct entry, the amount which the Plaintiff is seeking to charge as its dispensing fee. [ 36 ] The Defendant responds, also online, by showing the amount of the cost it is willing to pay, and the amount of the dispensing fee it is willing to pay. The amount of the dispensing fee being claimed by the Plaintiff is therefore, according to the evidence, specifically set out as a separate entry in the submission to the Defendant, and is specifically set out in the acceptance or otherwise by the Defendant of that claim.

As this all occurs electronically online, it is a very quick procedure and is done, as I understand it, while the patient is present and waiting for their prescription to be filled. [ 37 ] The Plaintiff therefore takes the position that each and every time it submitted a claim to the Defendant through the course of their dealings, it was providing to the Defendant an explicit statement of the amount it was charging for the dispensing fee.

The fact that the Defendant paid that dispensing fee constitutes an acknowledgment by the Defendant, in the Plaintiff’s submission, that it was accepting that dispensing fee, even though it might be in excess of the amount specified in the Agreement (prior to February 28, 2001) or in excess of $7.22 (as of February 28, 2001). [ 38 ] The Defendant, unsurprisingly, does not accept this characterization. The Defendant led evidence indicating that it deals with over 70 million claims per year of this type. It processes these electronically and automatically, in order to deal with the scale of its business.

It then relies on audits to ensure that the amounts it has paid are correct and, where they are not, it takes steps to correct the situation. This is what occurred with respect to the Plaintiff, according to the Defendant. The Defendant therefore submits that, because the process is entirely automated, any submission by the Plaintiff cannot constitute notice to the Defendant as it is not reviewed and approved by an individual. [ 39 ] There are two problems with this proposition.

First, the fact that the Defendant has chosen to organize its business in such a way that it pays claims without reviewing them cannot, in and of itself, change the legal effects of the Plaintiff’s actions. Analogously, if the Plaintiff had sent formal and proper written notice, it would not avail the Defendant to claim that because of the volume of mail it had received, it had not paid any attention to the Plaintiff’s notice. [ 40 ] The second problem is that from the evidence, it is clear that the Defendant did not in fact blindly pay whatever dispensing fee was claimed by the Plaintiff.

This is made clear by the events which led to the fax of February 28, 2001, quoted above, referring to the fee increase from $7.15 to $7.22.

That fax was occasioned by the Plaintiff, as of that date, submitting claims online showing a dispensing fee of $7.22, but receiving the automated response from the Defendant that it was only willing to pay a dispensing fee of $7.15; yet the evidence is clear that there had been no notice as defined by the Defendant which would have increased the dispensing fee from the contractual amount of $6.93 to $7.15. [ 41 ] This indicates to me that at some time, the Defendant’s computer system had been programmed to show that the Defendant would accept a dispensing fee from the Plaintiff of up to $7.15 but not more.

This is consistent with other evidence received during the trial, which leads me to the conclusion that the Defendant’s computer system was programmed with a figure instructing the computer as to the maximum amount which the Defendant would allow the Plaintiff to charge for its dispensing fee. That amount was changed from time to time. There is no suggestion that such change occurred as a result of a computer “glitch” or in any other way than by deliberate human intervention.

In other words, rather than the system being autonomous, simply paying whatever was claimed and the Defendant then relying on ex post facto audits to correct any errors, the Defendant quite understandably set up its system to automatically check the amount of the dispensing fee being charged, and to only allow dispensing fees to pre-authorized maximums. The necessary implication of this is that the Defendant authorized those maximums and thus, necessarily, authorized the increases from time to time in the dispensing fees it was willing to pay to the Plaintiff.

The evidence is that those increases were all paid as of the date the Plaintiff began charging them, namely the dates on which the increases in the maximum government rate became effective (with the exception of February 28, 2001, when the Plaintiff had to send a fax to the Defendant with respect to the fee increase). [ 42 ] From the evidence cited above regarding dates of fee changes, it is clear that the Defendant made a deliberate decision on at

least three occasions to increase the dispensing fee it was willing to pay to the Plaintiff without any written notification from the Plaintiff other than the claims themselves. [ 43 ] Mary Bozoian testified on behalf of the Defendant, and gave evidence with respect to various of the Defendant’s practices. She agreed that the Defendant would not typically allow changes to its standard form agreement when entering contracting with a party such as the Plaintiff.

She also testified that the Defendant had no record of receiving notice of the maximum government rate for the Province of Saskatchewan, although she testified that the Defendant was aware of that rate, likely through the entire course of the Agreement and certainly for the period in question in this lawsuit. She gave evidence that neither PAS nor the Plaintiff advised the Defendant that the Plaintiff was a member of PAS prior to September 1, 2008, that is during the relevant period, nor did it receive any notification that PAS was going to be giving notice of the Plaintiff’s fee changes.

On the other hand, she also indicated that there were a number of departments within the Defendant, as might be expected from an organization of its size. From her comments, it was not obvious to me that a notification which might be given to one department would be communicated to the proper department within the Defendant. She testified that it would be “Provider Relations” where a notice of fee increase should be sent. However, there is nothing in the evidence to indicate that any such knowledge was ever passed on to the Plaintiff.

That is, the Plaintiff was never advised that notices of increase in fees should be sent to “Provider Relations” and indeed most of the dealings which the Plaintiff had (other than standard submission of claims) were with the audit department. In the absence of some specific direction from the Defendant in the Agreement, I would not be prepared to find that notices that might be given to the “wrong” department were not binding on the Defendant.

This is not directly relevant, however, as the only “notices” that were given which are at issue are the submission of professional fee claims daily in the prescription claims processed automatically.

If I find that those submissions constitute notice, the fact that they may not have gone to the “proper” department within the Defendant is, in my view, a problem for the Defendant and not for the Plaintiff. [ 44 ] The evidence indicates that, following the audit and the withholding of funds by the Defendant which is the subject of this action, the Plaintiff began providing written notices which the Defendant acknowledged constituted proper notice under the Agreement. I do not consider that fact to be relevant.

At that point, the Defendant was (and is) taking the position that lack of such notice cost the Plaintiff over $20,000.00. While the Plaintiff did not (and does not) agree, it would merely be prudent for it to begin giving the notice which the Defendant was then specifying as required, in order to avoid further problems. I see this, therefore, more as a pragmatic response to an unpleasant situation than an admission that the Plaintiff’s previous process was not legally valid. [ 45 ] Ms. Bozoian was asked to refer to the second document in Exhibit P-3.

Page 2 of that document shows a submission to the Defendant for, inter alia, a dispensing fee of $13.76, of which ESI accepted and agreed to pay $9.15. The evidence from both Ms. Bozoian and Mr. Zapski was that this page showed the Plaintiff’s request for payment to the Defendant for a particular prescription for a particular customer. That request for payment included a dispensing fee of $13.76. The Defendant, through its automated system, indicated that it was willing to pay only $9.15 of that dispensing fee. [ 46 ] Ms.

Bozoian testified that the amount of $9.15 was allowable because it was the maximum Saskatchewan Government rate in effect at that time. She testified that, at that time, the last notice provided to the Defendant by the Plaintiff for its dispensing fee (in the Defendant’s view) was $7.22.

Her evidence was, as I understood it, that any amount claimed for a dispensing fee at or below $9.15 would have been accepted by the Defendant and paid without complaint or difficulty, even though it was above the amount specified in the last notification which ESI agrees it received pursuant to the Agreement. [ 47 ] In other words, and to use the example used by Ms. Bozoian in her evidence, had the Plaintiff claimed a dispensing fee of $8.00, the Defendant would have been willing to pay it, even though the last notice of fee increase (in the Defendant’s submission) was to a fee maximum of $7.22.

Furthermore, the reason that the Defendant would have been willing to pay $8.00 would have been because the maximum Saskatchewan Government fee was $9.15. [ 48 ] I found this somewhat confusing, as the evidence from Mr. Zapski was that P-3 reflected a transaction which took place on May 21, 2010. Ms.

Bozoian acknowledged that the Defendant had received proper notification in 2009 of an increase in the dispensing fee to $9.15 from the Plaintiff. [ 49 ] It is therefore not clear to me that the Defendant would have been willing to pay up to $9.15 as a dispensing fee on May 21, 2010 because that was the maximum allowable government rate in effect at that time, or because there was in its view a proper notice that had been given by the Plaintiff for dispensing of that amount prior to that date. In light of the confusion in Ms. Bozoian’s testimony, I am not attaching any weight to this evidence.

[ 50 ] In addition to the audit which resulted in the present claim, which apparently involved examination of every claim submitted by the Plaintiff to the Defendant over the two year period, the Defendant also conducted other types of audits through the course of dealings between the parties.

One of those types of audits was referred to by the Defendant as an “Extemporaneous Mixture Audit”, in which the Defendant faxed a request to the Plaintiff to complete a form regarding a specific drug claim, indicating what ingredients were mixed, the quantities and costs of each, the time involved and the professional fee which the Plaintiff charged the Defendant. [ 51 ] The Extemporaneous Mixture Audit appears from the evidence to be a document completed by the Plaintiff by hand and returned by fax to the Defendant.

In other words, it is not something which is simply electronically processed, unlike the claims submissions made several times per day. Although Ms. Bozoian was not specifically asked, I think a necessary inference from the form and content of the document is that it would have been examined by an individual at some stage after receipt by the Defendant. Given the purpose of the audit, that individual might well not have focused on the amount of the professional or dispensing fee. This is speculation on my part, as there was no evidence on the point one way or the other.

Given the lack of requirements by the Defendant of precisely how notice of dispensing fee increases were to be given to it, and in particular the lack of direction as to the department to which such notice was to be directed, I do not know that such a conclusion avails the Defendant anything in any event. [ 52 ] The evidence is that “audits” of this type, where the Defendant simply requested additional information from the Plaintiff, would occur roughly ten times per year over the course of the dealings between the Plaintiff and Defendant. It is not clear that the dispensing fee was noted in each case.

However, from Mr. Zapski’s evidence I conclude that there were a number of documents of this type every year which disclosed the professional fee being charged from time to time. [ 53 ] If the evidence was that the only “notice” the Defendant received of the Plaintiff’s dispensing fee from time to time was through its automated system, and that it always paid such amounts without question, relying on its audit process to correct any overcharging, my decision might be more difficult.

However, the evidence persuades me that human intervention occurred on the Defendant’s end, in the form of programming the computer system from time to time to accept claims from the Plaintiff in increased amounts notwithstanding the Defendant’s allegation of lack of notice.

Since the reason for requiring notice would presumably be so that the Defendant could decide whether or not to pay such increased amounts, and this programming change shows that the Defendant had in fact made such a decision, I find that the purpose of the notice requirement was fulfilled by the daily submission of claims with the amount of the dispensing fee claimed clearly specified therein.

I therefore conclude that the Plaintiff gave notice to the Defendant to the extent required by the terms of the Agreement. [ 54 ] Similar reasoning applies to the “Extemporaneous Mixture Audit” forms, which several times each year provided the Defendant with knowledge of the dispensing fee claimed by the Plaintiff. As I have found elsewhere in this judgment, those forms were intended to be reviewed by an individual.

That person would in my view have to be either an employee of the Defendant or, for the purposes of receiving the information on the forms, an agent of the Defendant. [ 55 ] As there is no contractual obligation to provide a specific form of notice or to send it to a particular location or department, notice to any department, employee or agent of the Defendant would comply with the requirements of the Agreement.

Both the daily claims (complying with the fee level pre-authorized by the Defendant) and the audit forms completed by the Plaintiff and forwarded to the Defendant at the Defendant’s request several times each year therefore comply with the term of the Agreement to give the Defendant notice in writing of changes to the Plaintiff’s “Usual & Customary Professional Fee”. Waiver [ 56 ] The Plaintiff alleges that the Defendant has, by paying the Plaintiff’s professional fee as charged from time to time without formal notice of changes, waived its right to enforce such notice. I do not accept this contention.

If the submissions made by the Plaintiff to the Defendant in the ordinary course of their dealings constituted notice, as I have held above, then the issue of waiver does not arise. If not, then the Plaintiff would have to show that the Defendant intended to alter the legal requirements of the contract. [ 57 ] In this regard, I refer to the Supreme Court of Canada in John Burrows Ltd. v. Subsurface Surveys Ltd. [1] at paras. 16 - 18.

At best, if the submissions by the Plaintiff to the Defendant do not constitute notice, then the Defendant’s choice not to rely on the contract is an “indulgence” as referred to in that case. To quote from John Burrows Ltd. :

It is not enough to show that one party has taken advantage of indulgences granted to him by the other for if this were so in relation to commercial transactions, such as Promissory Notes, it would mean that the holders of such notes would be required to insist on the very letter being enforced in all cases for fear that any indulgences granted and acted upon could be translated into a waiver of their rights to enforce the contract according to its terms. [2] [ 58 ] There is no evidence from which I can conclude that the Plaintiff intended to permanently waive the requirement of notice.

Accordingly, I do not accept the Plaintiff’s argument. Promissory estoppel [ 59 ] The Plaintiff argues that if notice was not provided as required, the Defendant is still barred from asserting its contractual rights by the doctrine of promissory estoppel. [ 60 ] One of the essential components of promissory estoppel is that the party alleged to be estopped must have made a clear promise or representation, with the intent that such party be bound by that representation: that is, that it have actual legal consequences. [3] In this respect, promissory estoppel is similar to waiver, discussed above.

Just as I was unable to find on the evidence that the Defendant intended to waive the requirement of notice, I cannot find a representation or promise by the Defendant to waive such requirement, let alone that such representation or promise have legal consequences. Accordingly, this argument too fails. Unjust enrichment [ 61 ] The Plaintiff alleges, as an alternative, that the Defendant has been unjustly enriched by withholding funds from the Plaintiff in order to recoup the “overpayment” (as the Defendant alleges). I find that I do not need to deal with this argument.

If the Plaintiff has provided proper notice, then the Defendant was not entitled to withhold the funds and the Plaintiff succeeds on that basis. If on the other hand the Plaintiff has not given proper notice and thus overcharged the Defendant, then as I have held elsewhere the Defendant was entitled to withhold these funds to recoup that amount. Either way the issue of unjust enrichment is not determinative of the case.

Other forms of notice [ 62 ] The Plaintiff provided me with a form of agreement similar to the Agreement, supplied to it by a different payor other than the Defendant, but one engaged in the same business. That document is the page of that payor’s agreement which is similar to the Defendant’s “Required Pharmacy Information” page in the Agreement. In the document from the other payor, it has the same notice about the responsibility of the pharmacy to notify the payor of changes in the information, “including any updates to the Usual and Customary Fee”.

As I understand the Plaintiff’s position, this document is much clearer and the fact that such a phrase does not appear in the Agreement should tell against the Defendant. [ 63 ] I disagree. Some other party handling the same issue differently, and arguably better, does not change the Defendant’s legal position. The fact that someone else does something differently does not make the Defendant wrong. Conclusion [ 64 ] As I have held that the Plaintiff gave the Defendant notice as required by the Agreement, it follows that the Defendant was not entitled to withhold the funds in issue from the Plaintiff.

I therefore find in favour of the Plaintiff, and award judgment to the Plaintiff in the sum of $20,000.00. [ 65 ] I also award the Plaintiff interest thereon pursuant to The Pre-judgment Interest Act , S.S. c. P-22.2. Although the evidence as

to when the funds were withheld by the Defendant is extremely thin, the Plaintiff’s pleadings allege that it occurred in February andMarch of 2009. This contention was not disputed by the Defendant. The timing and amount of each withheld payment is not inevidence. I therefore direct that interest shall be calculated from March 31, 2009 to the date of this judgment. [66] Finally, I award the Plaintiff the costs of issuing the summons, namely $100.00.

The Plaintiff had requested costs on a solicitor-client basis, but this Court has no jurisdiction to award “lawyer-related costs”.[4] [67] I would like to thank the parties’ respective counsel for their able presentation of their respective cases. Both counselfocused carefully on the issues between the parties and did not become distracted by minor or technical points. Documents wereadmitted by consent, and evidence was cogent and succinct. I appreciate the care that counsel put into their respective cases, and Icommend them both for it.

A trial which could easily have taken much longer and been more difficult was reduced to its essence, to thebenefit of the clients, who have not had to pay for excessive trial and preparation time, and myself, who has not had to deal with matterswhich ultimately do not assist in determining the real issues between the parties. ____________________________ Q.D. Agnew, J [1] (SCC), [1968] S.C.R. 607 [2]paragraph 18. [3]Maracle v. Travellers Indemnity Co. of Canada, [1991] 2 S.C.R. 50, , 3 O.R. (3d) 510, 80 D.L.R. (4th) 652, 47 O.A.C.333; Roberts v.

Browning Ferris Industries Ltd. (1998), (NL CA), 170 Nfld. & P.E.I.R. 228, 40 C.C.E.L. (2d) 29(C.A.). [4]See The Small Claims Act, 1997, S.S. c. S-50.11, s. 31.