Super Save v. All India Supermarket Date:, 2014 BCPC 168

Citation: Super Save v. All India Supermarket Date: 20140506 2014 BCPC 0168 File No: 73435 Registry: Surrey IN THE PROVINCIAL COURT OF BRITISH COLUMBIA BETWEEN: SUPER SAVE DISPOSAL INC. CLAIMANT AND: ALL INDIA SUPER MARKET

(2011) LTD. DEFENDANT REASONS FOR JUDGMENT OF THE HONOURABLE JUDGE M. B. HICKS Appearing for the Claimant: J. Jordison A company representative Appearing for the Defendant: Tony Mrock Manager (only appeared on one day of trial) Place of Hearing: Surrey , B.C. Dates of Hearing: Feb. 17, Apr. 23 , 2014 Date of Judgment: May 6, 2014

[ 1 ] THE COURT : On October 4, 2011, the claimant, Super Save Disposal Inc., entered into a contract with the defendant, All India Super Market

(2011) Ltd., to provide waste removal services to the defendant on an exclusive basis. The agreement is evidenced by a written contract on a pre-printed form. The parties signed the agreement on October 4, 2011, and it became effective on that date for an initial five-year term with renewal provisions. [ 2 ] The claimant says the defendant has failed to pay its account for service provided under the contract, and seeks payment of its outstanding account which it says is in the amount of $6,834.85, and that figure is stated in the Notice of Claim.

Further, the claimant says that if the defendant allowed a competitor company to provide waste removal services, it thereby breached the exclusive service provision of the contract. The claimant says the defendant effected a termination of the contract prior to its expiry and contrary to the termination provisions of the contract. The claimant seeks liquidated damages pursuant to the terms of the contract in the amount of $37,564.80.

The claimant waives its claim beyond the $25,000 jurisdiction of this court. [ 3 ] The defendant attended on the trial date when evidence was heard, but has not attended on two adjournment dates which were intended to address an expectation that the Supreme Court of British Columbia would issue a decision that might be relevant, and once that decision was provided on the last adjournment date, then for today's date for submissions to be made by both parties in respect to that decision.

As I said, the defendant has not attended on either of those dates. [ 4 ] I had indicated already this morning, after reviewing the court record and receiving confirmation from the claimant's representative here, that she provided information about today's date to the defendant by registered mail, and also having reviewed the court file, satisfied myself that the notice of today's date that I had directed the registry send was indeed sent to the address on the court file for the defendant. I therefore proceeded with this hearing to a conclusion today without the defendant's presence.

We have paged and no response has come to that page. [ 5 ] In its reply, the defendant stated that the claimant did not perform the services as promised and thereby breached the contract. The defendant further said that the claimant had suffered no damage or has failed to mitigate its damages. The provision for liquidated damage, the defendant says, amounts to a penalty and therefore the defendant asserted in its defence that that provision was unenforceable. [ 6 ] At trial, Janine Jordison, Sales and Retention Manager for the claimant, gave evidence.

She identified the service agreement, together with 41 pages of business records of the claimant which purport to set out the defendant's account history and status with the claimant. All the material was marked collectively as Exhibit 1. [ 7 ] Paragraph 1 of the service agreement provides, in part: The contractor (Super Save) shall have the exclusive right to provide all non-hazardous, solid waste disposal and recyclable collection service (the service) and/or containers (the equipment) to the customer, All India, during the term of this agreement, and the customer agrees to make payments provided for herein.

Portions of that paragraph I have excluded which are not relevant here. [ 8 ] Paragraph 3 of the agreement states the following.

It is headed "Term and Renewals": This agreement commences on the effective date hereof and continues for five years after the date service begins hereunder, and shall be renewed for successive five-year terms without further action by the parties, but may be terminated at the end of any five-year period by the customer providing not more than 120 days and not less than 90 days' written notice prior to the end of such five-year period (by registered mail), or may be terminated at any time by the contractor upon not less than 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. [ 9 ] The agreement provides for a monthly charge of $315 to remove four yards at 60 kilograms per yard of waste twice a week, and $90 per month to remove 64 yards at 25 kilograms per yard of cardboard three times per week. The agreement provides that extra lifts for waste will be charged at $75 each, and for cardboard, at $35 each. The fuel surcharge is set at 12.5 percent. The agreement provides the first five months will be free.

Those prices were firm, which I take to mean would not be adjusted, during the first year of the contract. [ 10 ] Paragraph 4 provides the contractor may adjust the rates based upon increases in various costs such as fuel, recycling fees, transportation or equipment costs, and may charge a reasonable fee to service its containers left on the defendant's premises. [ 11 ] Paragraph 5 provides the defendant must pay its account no later than 30 days from the date of the invoice.

The claimant may suspend services without prejudice to the exclusive nature of the agreement if payments are late and up to the point the account is brought fully current. If the account is over 30 days past due, the claimant may, in its discretion, terminate the contract, retrieve its containers, and enforce the liquidated damages provision of the contract which is set out at paragraph 11 as follows. That paragraph is headed "Failure to Perform": If customer purports to terminate this agreement prior to the expiration of its term or any renewal thereof, contractor will have the option to either: (

a) affirm this agreement whereby customer hereby irrevocably agrees and consents to any and all permanent interlocutory and interim relief the 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. The sum of customer's monthly billing for the most recent nine months, or if none, the billing projected by contractor for the first month, multiplied by 9; or 2. The sum of amounts due to the contractor for the balance of the entire term remaining on this agreement. Customer acknowledges that the foregoing liquidated damages are reasonable in light of the anticipated loss to the contractor caused by the termination, and are not imposed as a penalty.

In the event the customer fails to pay the contractor all amounts which become due under this agreement, or fails to perform its obligations hereunder, customer agrees to pay any and all costs incurred by contractor as a result of such action, including reasonable lawyer fees on a solicitor and own client basis.

If customer is in default of any of the terms and conditions of this agreement or becomes insolvent or is placed in receivership or becomes bankrupt, contractor may, at its option, terminate this agreement without notice and take possession of the equipment, and may pursue all remedies as are available to contractor. [ 12 ] The claimant says that with the exception of payments of $759.20 and $768.10 in April 2012, no payments were made by All India for the services provided. Those two payments are evidenced by copies of cheques included with the material filed at pages 40 and 41 of Exhibit 1.

The claimant says it exercised its right, under paragraph 5 of the contract, to treat non-payment as a termination of the contract by the defendant, and it removed its containers on August 16th of 2012. The claimant has calculated total unpaid services to August 16, 2012, when the bins were removed, to be $6,834.85. [ 13 ] The claimant says that shortly after the contract began, at the defendant's request, the claimant replaced the four-yard bin with an eight-yard bin. No specific documentation was provided.

The evidence discloses that the claimant provided extra lifts during both the free initial five-month period and thereafter to the termination of the contract. The two payments in April may relate to extra lifts but that is not clear, nor is the manner in which those figures were calculated. [ 14 ] The claimant says that pursuant to paragraph 11 of the contract, it is entitled to liquidated damages following termination of the contract by the defendant contrary to its provisions.

The claimant calculates that period from the conclusion of service in August 2012 over the remainder of the contract term to October 4, 2016, and relying on paragraph 11. The calculation is based on a rate of $545 per month, plus $100 per month for the second cardboard bin, plus taxes. At trial, the claimant says the total payable was $30,520. [ 15 ] Tony Mrock is the manager of All India. In evidence he said the defendant company operated a store selling Indian food products at unit 160 - 12899 - 80th Avenue in Surrey.

He said the store is no longer in business because the premises were damaged in a fire on October 31, 2012, and many documents were lost. The entire stock had to be thrown out. He said the store would not re-open. [ 16 ] He said the claimant moved in the larger bin on its own motion. The defendant, he said, did not request the larger bin. He asserted the claimant billed for services, including extra lifts, it did not provide. He said he was invoiced for services during the five- month free-service period.

He said the last service was provided in March of 2012 and thereafter his company had to bring in another service provider in April of 2012. [ 17 ] With the exception of the two cheques in April of 2012, the defendant has led no evidence that it has paid for any service provided by Super Save. Super Save, on the other hand, has provided extensive documentation setting out the history of its dealings with All India. [ 18 ] I conclude the parties entered into an enforceable contract and that Super Save provided bins as contemplated in that contract in order to commence the service.

They have provided detailed records supportive of their assertions that services were provided as contemplated under the agreement, and as set out in the billing records. The defendant asserts the service was not provided and that rates were increased inappropriately, and that larger bins were placed by the claimant arbitrarily, and the defendant was billed for extra lifts which did not occur. [ 19 ] I accept the claimant's evidence that service was provided as detailed in those business records.

I accept those records were kept in the ordinary course of the business of the claimant and are a reliable record of its performance under the contract. They are accepted over the unsupported assertions of the defendant. In reaching this conclusion, I appreciate the defendant's assertion that records were lost in the fire; however, the evidence before me is a record which I conclude is reliable.

From that I conclude the claimant provided the services as set out in those records. [ 20 ] In respect of the debt which it says is owing, the claimant seeks to be reimbursed for the services provided in the first five months of the contract which were initially treated as free. During that period, the claimant did pick-ups of waste, it provided a larger bin, or bins, and it attended on several occasions for extra lifts.

After setting out the bin sizes and rates and the charge for extra lifts, the fuel surcharge, and that the price is firm for one year, the agreement says in handwritten form "five months' free service". [ 21 ] In paragraph 1, the agreement defines "service" to mean "the contractor shall have the exclusive right to provide all non- hazardous solid waste disposal and recyclable collection service". The claimant chose to provide those five free months at the outset of the contract. Thus, the contract provided that the defendant was entitled not to be charged for the service during that time period.

Subsequently, it made two payments in April towards the service, but by that point the five months had expired. [ 22 ] Under the contract, the reasonable

interpretation of the definition of "service" covers all aspects of the claimant's responsibilities to remove waste. The providing of larger bins on the premises which might otherwise incur a greater rate, I conclude, fall within the comprehensive definition of "the service" as set out in the agreement, and so are captured within the free service provided during the first five months. Similarly, extra lifts are part of that service, and so I conclude were free during that five-month period. [ 23 ] This was a contract substantially in a pre-printed form, proffered by the claimant. If there is an ambiguity in that document, the

interpretation most favourable to the defendant should be adopted. I conclude the claimant agreed to provide a free service during those first five months and cannot now claim for that service which included the prospect of larger bins at greater rates, and extra lifts. I therefore deny any claim in debt during that initial five-month period.

[24] I will now address services provided by the claimant from March 4 of 2012 immediately following the five-month free-serviceperiod, and August 16, 2012 when the claimant treated the contract as terminated and removed the containers. I will refer to invoicescovering that period filed with Exhibit 1. [25] Invoice 1303867 dated March 31, 2012, in the total amount of $816.35 covers services from April 1, 2012 to April 30, 2012. Invoice 1312966 in the amount of $816.35 covers the period May 1 to May 31, 2012.

Invoice 1327903 in the amount of $936.53 coversservice from June 1 to June 30, 2012, and invoice 1338341 in the amount of $873.04 covers the period July 1 to July 31, 2012. Invoice1348419 in the amount of $816.35 covers service in August of 2012 which should be reduced by $322.99, and $62.03 being credits forservices not provided after August 16th. The balance for August service is $421.33.

The total for service over the period from thecompletion of the free service to August 16, 2012, based on these invoices, totals $3,863.60. [26] On March 20, 2012, and again on June 21 of 2012, the claimant billed $50.40 for service resumption fees totalling $100.80. There are also bills and credits in the same amount for bin removal fees. These latter invoices are not explained and are not obviouslyrecoverable under the contract. I deny those amounts. Further, pages 2 and 3 of Exhibit 1 is a Super Save document which purports tosummarize all the outstanding charges referenced to the applicable invoice.

I note in respect to each of the invoices that I have listedabove, the claimant has added service charges. The basis to claim a service fee and the calculation of the service fee which was appliedis not explained and is not evident on the face of the contract, and I decline to award those amounts. [27] Thus, in respect of service provided up to August 16, 2012, the claimant is entitled to judgment in the amount of $3,863.60, lessthe payments made by two cheques in April which, although unexplained, I choose to apply against this balance. The total of thosecheques was $1,527.30.

The judgment, therefore, in respect of item A for debt will be for the balance of $2,336.30. [28] I am going to turn now to the claim for liquidated damages pursuant to paragraph 11 of the agreement following termination ofthe agreement. I choose not to find a breach has been proven on the basis that a second service provider was brought in by the defendantand raising the exclusive-service term. The evidence, in my view, was uncertain and insubstantial in respect of this issue.

I will confirmhere, however, that pursuant to the terms of the agreement, the defendant did breach the contract by failing to pay the outstandingbalances as the contract provided. The claimant was entitled, pursuant to the terms of the agreement, to treat that as a termination of thecontract by the defendant. That termination was not in compliance with the notice provisions for termination set out in paragraph 3. That triggers consideration of paragraph 11 which is entitled "Failure to Perform".

The claimant says it is entitled to enforce thatparagraph because it is a genuine pre-estimate of the claimant's expected loss flowing from the breach. The defendant said that it is, asMadam Justice Fenlon stated in Tristar Cap & Garment Ltd. v. Super Save Disposal 2014 BCSC 690, "a penalty that is so oppressive orunreasonable that equitable intervention is justified to prevent an injustice." The onus is on All India to establish that the paragraphamounts to a penalty.

It is a case-specific consideration. (Tristar at para 30). [29] Madam Justice Fenlon in the Tristar decision referred to a case called Super Save v. Blazin Auto 2011 BCSC 1784 where thefollowing appears at paragraphs 31 and 32: [31] Judicial interference with a liquidated damages provision will be justified if enforcement of the term results in payment of a sumwhich is extravagant and unconscionable in comparison with the greatest loss that could conceivably be proved to have followed fromthe breach: 32262 B.C. v.

Rite Optical supra at para 13. [32] Conversely, a liquidated damages provision is more likely to be enforced where the claim approximates the amount to which theclaimant would otherwise have been entitled according to principles of general contract law: 32262 B.C. v. See-Rite Optical at para 16 to18. [30] The agreement that the provision for liquidated damages in the present case cannot be construed as other than a genuine pre-estimate of damages has been accepted in Tristar, in 32262 B.C. v. Cryer Holdings (BCSC), and in 32262 B.C. v. See-Rite 1998 ABCA.

And in that latter case, at paragraph 18, the Alberta Court of Appeal stated the following: Given that [the liquidated damages clause] permitted the Appellant to claim as damages an amount that was closely related to the amountto which it would have been entitled according to principles of general contract law, I am at a loss to know how one could conclude thatthe damages anticipated in [the clause] were oppressive, extravagant or so unreasonable as to justify the interference of a court in a matterof private ordering in a commercial context.

And, having found the provision at issue to be enforceable, it follows that it is that provisionand that provision alone that governs the calculation of damages in this case. [31] The terms of the contract which the claimant seeks to rely upon here, that is paragraph 11, is substantially the same as theprovision at issue in Tristar although the term of that agreement was much shorter. Similar to the circumstances in Tristar, Super Save,at common law in the present case, would be entitled to recover the loss of the income stream, although here under the five-yearcontract, less any servicing costs.

I note the argument made in Tristar that, for example, a reasonable amount would be the equivalent ofthe notice period, and that anything beyond that figure was unreasonable and oppressive was rejected. In Tristar, Madam Justice Fenlonstated at paragraphs 43 through 45 the following: [43] With respect, I do not agree that the notice period for terminating a contract and preventing automatic renewal can or should beused to measure the provider’s loss. The parties agree to that period, whether it is 30, 60, or 90 days.

It could reflect the time requiredfor the orderly removal of the bin, or the adjustment of accounting records, staffing levels, or driver routes. [44] It cannot be assumed that the notice period reflects the maximum time a waste disposal company needs to “replace” the customerwho resiled from the contract. The notion of “replacing” a customer in this situation is flawed. It is illogical to presume that anothercustomer can or will be found who could not, or would not, have been found in addition to the customer who resiled from the contract.

This, of course, presumes that the waste disposal company has the capacity to serve more customers. [45] In my respectful view, the adjudicators’ approach in Housewise, Northwest, and Persia Food is inconsistent with the principlesapplicable to assessing whether a liquidated damages clause is a genuine estimate of damages or a penalty. The proper approach is tocompare the estimate of damages “with the greatest loss that could conceivably be proved to have followed from the breach”: Blazin at

para. 31. That loss includes the income stream due under the contract. Damages are not to be assessed against the provider’s out-of- pocket expenses or the time needed to find another customer to “replace” one who resiles from the contract. [ 32 ] The income stream lost over the remaining term of the contract is a genuine pre-estimate of damages and I conclude it is not a penalty. The claimant will therefore have judgment on that basis, but I just want to confirm again, Ms.

Jordison, the $645, that is the charges for the two bins on a monthly basis, is that the original charge or is that an increased charge that was implemented at some point during the contract term? And the reason I ask that is because the contract says that prices will be firm through the first year. (DISCUSSION) [ 33 ] The judgment then, in respect to liquidated damages, will be in the amount of $32,250, which is the total of $645 per month multiplied over the 15 months remaining on the contract.

The judgment in total will be for $25,000, reflecting waiver by the claimant of the claim recoverable in excess of the court's jurisdiction. [ 34 ] The claimant is entitled to interest in the amount of 24 percent pursuant to the contract terms, but only on the amount of $2,336.30, being the unpaid debt portion of this judgment.

That 24 percent interest is not permitted on the liquidated damages portion of the judgment. [ 35 ] The claimant is entitled to pre-judgment interest under the Court Order Interest Act in respect to $22,663.70, which is the difference between the debt owing of $2,336.30, and the court's jurisdiction of $25,000.

That pre-judgment interest on that $22,663.70 figure is calculated from August 16, 2011, which is the date that the cause of action arose. [ 36 ] The claimant is entitled to post-judgment interest from today's date on $22,663.70, and the claimant is entitled to a filing fee of $156 and the service fee of $80 to be recovered as well. (REASONS FOR JUDGMENT CONCLUDED)