ALGO ENTERPRISES LTD. v. NBP ENTERPRISES INC., 2014 NBQB 265

Cause No. N/C/19/07 IN THE COURT OF QUEEN’S BENCH OF NEW BRUNSWICK TRIAL DIVISION JUDICIAL DISTRICT OF MIRAMICHI ALGO ENTERPRISES LTD. AND NBP ENTERPRISES INC. -AND- UPM KYMMENE MIRAMICHI INC. 2014 NBQB 265 BETWEEN: ALGO ENTERPRISES LTD. and NBP ENTERPRISES INC. Plaintiffs -and- UPM-KYMMENE MIRAMICHI INC. (SUCCESSOR BY AMALGAMATION TO REPAP NEW BRUNSWICK INC.) Defendant DECISION BEFORE: The Honourable Mr. Justice John J. Walsh AT: Miramichi, N.B. ON: January 7, 2013; November 17, 2014 DECISION: December 15, 2014 COUNSEL: Rodney J. Gillis, Q.C. for the Plaintiffs Debora M.

Lamont (on January 7, 2013) and Melissa M. Everett-Withers (on November 17, 2014) for the Defendant Walsh J.: I. Introduction and Issues [ 1 ] This case is about a commercial contract, referred to as a “Logging Agreement”. The damages claimed for the alleged breach of that contract are approximately $1.5 million, plus pre-judgment interest dating back to 2001. Sadly, in some respects this case can be viewed as illustrative of the dire consequences that can befall from ‘owing your soul to the company store’, so to speak.

Except, in this community there is no longer even a ‘company store’. [ 2 ] The Plaintiff companies were ‘woods contractors’ that provided services over a number of years to the Defendant (and its predecessors), the owner in the pulp and paper industry of several types of mills in the Miramichi region. This relationship ended in March 2001. The Plaintiffs claim that the Defendant breached its contract with them, resulting in their going out of business. Unrelated, approximately 6 years later the Defendant closed down all of its mills in the area.

Indeed, those mills do not even physically exist today. [ 3 ] The gravamen of the Amended Statement of Claim is that: “ In terminating the contract for the 2001-2002 season without written notice and without reason, the Plaintiffs allege that the Defendant failed to meet the requirements of good faith performance of the contractual provisions ” and that “… the Defendant failed to meet the good faith requirements under the contract and therefore claim damages for loss of capital, loss of profit and loss of business reputation ”.

[ 4 ] The Defendant denies that the contract was terminated. Rather, it argues that the contract was simply not renewed and, regardless, that this is not a “situation” or “relationship” where the principle of good faith can be given effect so as to have required the Defendant to give the Plaintiff notice or so as to have required that the defendant have cause in ending the relationship.

The Defendant also disputes the damage claim. [ 5 ] In addition to interpreting the nature of the contract, the case requires the Court to address the relevance of the “general organizing principle of good faith” (i.e. “that parties generally must perform their contractual duties honestly and reasonably and not capriciously or arbitrarily”), as very recently identified and espoused by the Supreme Court of Canada in their seminal decision in Bhasin v. Hrynew 2014 SCC 71 . There the Supreme Court determined that:

(1) There is a general organizing principle of good faith that underlies many facets of contract law.

(2) In general, the particular implications of the broad principle for particular cases are determined by resorting to the body of doctrine that has developed which gives effect to aspects of that principle in particular types of situations and relationships.

(3) It is appropriate to recognize a new common law duty that applies to all contracts as a manifestation of the general organizing principle of good faith: a duty of honest performance, which requires the parties to be honest with each other in relation to the performance of their contractual obligations. (Emphasis added) (at para. 93) II. Limitations of Actions Act [ 6 ] Initially though, the Defendant pleads the Limitations of Actions Act , R.S.N.B. 1973, c.

L-8 , arguing that any cause of action is statute barred, having been brought more than six (6) years after any cause of action arose ( s. 9 ). [ 7 ] Clearly, if NBP Enterprises Inc. did have a cause of action based on wrongful termination of contract, it arose well before the 6 year limitation for bringing the action. The last (and only) “Logging Agreement” NBP Enterprises Inc. had with the Defendant was dated June 10, 1999, was effective June 14, 1999, and ended March 31, 2000. The Notice of Action was filed March 26, 2007, almost seven (7) years later.

Furthermore, to argue, as the Plaintiffs’ have, that “NBP” was the “alter ego” of Algo Enterprises Ltd. (or vice versa) is to fly in face of the common law and the N.B. Business Corporations Act , s. 13 (1) that recognize a corporation as a separate legal entity (person). The claim by the Plaintiff NBP Enterprises Inc. is therefore dismissed with costs to be assessed later in this judgment. [ 8 ] Whether the Plaintiff Algo Enterprises Ltd. has brought its cause of action within the prescribed limit is a somewhat more difficult question.

The last of a number of “Logging Agreements” executed between “Algo” and the Defendant over a number of years is dated September 15, 2000 and ended March 31, 2001, the so-called “contract season”.

The central issue of this case is whether there is also contained in that Agreement a clause that provides for automatic renewal subject to termination (Plaintiff’s position) or whether the clause evidences but an agreement to agree (Defendant’s position). [ 9 ] As will be seen, the evidence is that sometime in March 2001, before the end of the contract season covered by the “Logging Agreement”, the President of Algo Enterprises Ltd. was notified over the phone by the Defendant’s Woodlands Operation Superintendent that “we no longer need you as a contractor”.

The evidence is also that the work required for the contract season (ending March 31, 2001) was completed by the Plaintiff and paid for by the Defendant. It is accepted that the notification given was not directed at the then existing contract season, but, rather the next and ensuing seasons. [ 10 ] The Defendant argues that if the Plaintiff has a cause of action for wrongful termination, it began to run from the date of that verbal notification.

And, since the Plaintiff is not certain of the actual date in March, 2001 when he received that call (the Defendant has not offered any evidence itself) then the Plaintiff has failed to establish that its cause of action falls inside the limitation period. The evidence of the Plaintiff is that the telephone call was made “sometime in late March” in 2001. In cross-examination, it was suggested to the President of the Plaintiff that the call was on March 13 th , (which would be outside the 6 year limitation period). His response was: “it could be”.

[11] The Plaintiff’s counter argument is that since the notification given by the Defendant (which the Plaintiff says was wrongfultermination) relates to what the Plaintiff in effect alleges is an automatic renewal clause, then the cause of action did not commence torun until, at least, the expiry of the then existing contract season. The Court agrees, perhaps for a different reason. [12] It has been guided by the following: Whenever a limitation provision is open to multiple reasonable

interpretations, the one least inimical to the plaintiff must be favoured:para. 173 Kermont Management Inc. v. Saint John Port Authority et. al. (2002) 2002 NBCA 11 , 248 N.B.R. (2d) 1 (C.A.) … (Dupuis v. Moncton (City)

(2005) NBCA 47 at para. 20; See also: Godin v. Star-Key Enterprises Ltd. 2006 NBCA 91 at para. 21) [13] Regardless of whether what occurred in the context of the provisions of the “Logging Agreement” was the attempted terminationof an automatic renewal or a simple refusal to renew for the next season, the Plaintiff by its subsequent conduct did not accept theDefendant’s repudiation. It is seen in the evidence that the President of the Plaintiff was still making inquiries of the Defendant in June2001 in an effort to find out why the Defendant did what it did, i.e. why the Defendant was not going to give the Plaintiff work for thenext “contract season”. [14] The

interpretation I find the “least inimical” to the Plaintiff is that the notification given by the Defendant by that phone call ismore properly understood to be “an anticipatory breach”, if the Court were to find a breach: Anticipatory breach of contract occurs where a party expresses its intention to break a contract before the time at which it is bound toperform its obligations under the agreement or where it acts in such a way as to lead a reasonable person to the conclusion that it does notintend to fulfil its obligations.

Anticipatory breach entitles the other party either to “accept” the renunciation and sue for damages at onceor to wait for the time of performance to arrive and then sue. … Depending on which of the two courses of action outlined above theparty affected by the repudiation decides to take, the limitation period will commence from the date of the acceptance of the repudiationor from the date of performance of the obligation called for in the contract. (Graeme Mew, The Law of Limitations, 1991, Butterworths at p. 131) [15] In this case the Plaintiff did not accept the renunciation by the Defendant in March 2001, making the “time of performance” thebetter yardstick.

The result is that the claim was brought within the limitation period. III. Factual Overview [16] During the course of trial the Court was required to rule on a Motion brought by the Plaintiffs to amend its Statement of Claim(Algo Enterprises Ltd. and NBP Enterprises Inc. v. Repap New Brunswick Inc. 2013 NBQB 176). In doing so, the Court provided anoverview of the evidence to that point. It remains relevant since it now forms part of the factual matrix for this judgment. Indeed, theDefendant called no evidence in this trial.

Those facts are as follows: The Plaintiffs are related companies that at one time were involved in the forestry industry in New Brunswick. The Defendant Company[Repap New Brunswick Inc.] and its successor through amalgamation, UPM-Kymmene Miramichi, Inc., were at one time owners of,inter alia, a ground wood mill, pulp and paper mill and saw mill in the Miramichi region of New Brunswick. As such, the Defendant wasthe holder of major licences for timber cutting on 'Crown lands', some 2.5 million acres of woodland. The President and controlling principal of both Plaintiff companies is Brian Donovan. Mr.

Donovan, in his personal capacity, began alogging operation business in the early 1980's. More particularly, he became one of a number of contractors who harvested andtransported wood from the Defendant's Crown licences (or their freehold land) for the Defendant's predecessors. This work was doneunder written contracts ("Logging Agreements") made each year for a specified period in that year ("Contract Season"). Around 1990 Mr. Donovan "rolled over" this business into the Plaintiff Algo Enterprises Ltd. (hereinafter referred to as "Algo"). Algocontinued as a contractor for the Defendant, except for one year.

The exception was 1999, when the "Logging Agreement" for that"contract season" was entered into with NBP Enterprises Ltd. (hereinafter referred to as "NBP"), a company also owned and controlledby Mr. Donovan. The evidence from Mr. Donovan … is that this change was made at the request of the Defendant because of"unionization" issues which had arisen. Those issues abated and the next year Algo resumed as contractor. The evidence … is also that in March 2001 Mr. Donovan was cryptically advised over the telephone by the Defendant's WoodlandsOperations Superintendent that "we no longer need you as a contractor". Mr.

Donovan testified that he made unsuccessful attempts tofind out why the Defendant took this position. Mr. Donovan confirmed that the work for the 2000-2001 "contract season" (ending March31, 2001) was completed by Algo and paid for by the Defendant. But, Algo (or NBP) never after acted as a woods contractor for theDefendant. Mr. Donovan testified that the Plaintiff companies tried to mitigate their losses.

However, because of their then size and because of thedebt load on equipment and the years of virtually exclusive reliance on the woods contracting work provided by the Defendant and itspredecessors, they could not continue to operate. A chartered accountant, using a five year bench mark, has put the damages to the

Plaintiff companies as "a going concern" (assuming the damages are connected to any breach alleged) at $1,136,385.00 for Algo and $403,461.00 for NBP. … … As mentioned, these contracts for the cutting and transportation of wood are entitled "Logging Agreements" and cover a particular "contract season" that have both a start and end date. The last Logging Agreement between the Plaintiff Algo and the Defendant was for the "2000-2001 Contract Season". It was executed on behalf of Algo on July 5, 2000 and on behalf of the Defendant on July 6, 2000.

At the outset it states: "THIS AGREEMENT made in quadruplet this 15th day of September, 2000". It also states, inter alia , that: The Contractor agrees to cut, process, and deliver during the period between September 15, 2000 and March 31, 2001 all merchandise products of such quantity as the Company may designate from assigned operating areas on crown licences 3 & 4 and on company freehold.

The Agreement goes on to address the type, amount and size of wood to be harvested; the quality of the wood required; the specific areas ("blocks") of land from which the wood was to be cut; the time and place of delivery of the wood; the contract price and payments; along with a myriad of terms and conditions, many related to the manner in which the work was to be performed. Of particular relevance to this Motion (and to the Action) is the following clause: Duration (

a) This Agreement shall become effective on September 15, 2000 and shall remain in full force and effect until March 31, 2001 and shall continue from year to year by mutual agreement of both parties. (

b) The Company retains the right to terminate the agreement for any cause upon a written three (3) day notice to ALGO ENTERPRISES LIMITED. Except for the first agreement made with Mr. Donovan in his personal capacity in the early 1980s, this duration clause is found in all the Logging Agreements since that have been entered before the Court. It appears that the only difference in that clause from Agreement to Agreement is the start and end dates in sub-paragraph (a). ( Ibid at paras. 2-9) IV.

Additional Facts and Legal Analysis [ 17 ] The original statement of claim had not alleged that the contract had been terminated , but, rather, that the defendant refused to renew the contract “without written notice and without reason” and thereby “failed to meet the requirements of good faith performance of the contractual provisions”. As mentioned before, during the trial the Court ruled on a requested amendment. The Court permitted the Plaintiffs to amend their Statement of Claim to allege instead that the defendant wrongfully terminated the contract, relying on those same grounds.

The Court explained the Plaintiff’s motivation for seeking the amendment: … the distinction at issue in this Motion to amend is between the relevance of the concept of good faith in renewing (or negotiating) a contract (which the Plaintiffs say they are not pursuing) and the relevance of the concept of good faith in the performance and enforcement of an existing contract (which the Plaintiffs say they are pursuing). (Ibid. at para. 16) [ 18 ] This distinction is actually critical to the plaintiff’s case: The amendment sought is in effect an effort by the Plaintiffs to distance them from any claim that the Defendant was under a good faith obligation to renew a contract for the next season and ensuing seasons.

Counsel for the Plaintiffs admitted as much during argument. Their motivation for doing so is readily found in the common law: It has long been held that agreements to agree or negotiate are not enforceable: Walford v. Miles, [1992] 2 A.C. No. 128 (HL); Cedar Group Inc. v. Stelco Inc. (1995), 59 A.C.W.S. (3d) 1096 , aff’d (1996), 66 A.C.W.S. (3d) 867 (C.A.) . As Lord Ackner stated in Walford at p. 138: “The reason why an agreement to negotiate, like an agreement to agree, is unenforceable, is simply because it lacks necessary certainty.” ( Georgian Windpower Corp. v.

Stelco Inc. , 2012 ONSC 3759 at para. 121 ; See also: Martel Building Ltd. v. R. 2000 SCC 60 ; Girouard v. Druet , 2012 NBCA 40 at para. 43 ; S.M. Waddams, The Law of Contracts , 5 th Ed., Canada Law Book at pp. 45-46)

As mentioned, during argument Counsel made clear that the Plaintiffs do not intend to advance any contrary plea given the weight of thelaw. Actually, our Court of Appeal has recently removed any doubts that may have existed about the viability of such claims. RobertsonJ.A., on behalf of the Court in Doucet v.

Spielo Manufacturing Inc., canvassed the jurisprudence, concluding that “the law does notrecognize a pre-contractual duty to bargain in good faith”: In the end, there is simply no support for the proposition that Canadian law has recognized a generalized duty to bargain in good faith … (2011 NBCA 44 at para. 34) (Algo Enterprises Ltd. v. Repap New Brunswick Inc., ibid, at paras. 13-14) [19] The Supreme Court’s very recent decision in Bhasin v.

Hrynew, supra, although it did recognize and advance the concept of‘good faith’ as an organizing principle in contract law and did under that principle create and impose a new common law duty of “honestperformance” for all contracts (not relevant here), the Court did not, in my respectful view, go so far as to recognize a good faith duty tobargain.

In any event, as seen, the Plaintiff is not now pleading their case on an alleged good faith requirement to renew the contract. [20] Rather, if the Plaintiff can prove that the nature of the contract properly interpreted is such that what is involved here is thetermination of an existing contract, then it would seek to rely on certain pre-existing doctrines, endorsed in Bhasisn v. Hyrnew, supra,where in particular contractual situations and relationships the principle of good faith has found direct application. The distinction wasperhaps best drawn by the Ontario Court of Appeal in Oz Optics Ltd. v.

Timbercon Inc.: …, the law has not recognized a general duty to bargain in good faith in contract. However, in specific circumstances, a duty to enforce orperform a contract in good faith has been recognized. (2011 ONCA 714 , [2011] O.J. No. 5029 at para. 63) [21] The foremost question, then, is whether the defendant terminated an existing contract or simply refused to enter upon anothercontract for the next logging season? I have concluded that as a matter of contractual

interpretation it is the latter. These are my reasons. [22] The place to start is to have regard to the legal rules of

interpretation. I am aided by our Court of Appeal’s direction inRobichaud et. al. v. Pharmacie Acadienne de Beresford Ltée: The objective of contractual

interpretation is the identification of the true intent of the parties at the time they entered into the contract.That intention must be ascertained by reference to the meaning of the words as used by the contracting parties … More often than not,the context plays an influential role in shaping that meaning … (2008 NBCA 12, at para. 18) [23] The Court of Appeal also explained that the law has evolved so that the principles of statutory

interpretation are now applied tothat for construing contracts (ibid at para. 19). This means that the words in issue in the contract are to be read in their entire context andin their grammatical and ordinary sense harmoniously with the scheme of the contract, the object of the contract and the intention of theparties (See: Rizzo & Rizzo Shoes Ltd. (Re) (SCC), [1998] 1 S.C.R. 27 at para. 21). [24] More recently, in Sattva Capital Corp. V. Creston Moly Corp. 2014 SCC 53, the Supreme Court stated that “in contractualinterpretation the goal of the exercise is to ascertain the objective intent of the parties – a fact-specific goal – through the application oflegal principles of

interpretation” (emphasis added; at para. 49) and that “contractual

interpretation involves issues of mixed fact and lawas it is an exercise in which the principles of contractual

interpretation are applied to the words of the written contract, considered in lightof the factual matrix” (at para. 50). [25] The words in issue in this case are those found in

Section 16 of the last “Logging Agreement” between the parties, headed“Duration”; in particular, subparagraph (a): This Agreement shall become effective on September 15, 2000 and shall remain in full force and effect until March 31, 2001 and shallcontinue from year to year by mutual agreement of both parties. (All emphasis added)

[26] The Plaintiff first emphasizes the underscored words - “and shall” - to argue that that mandatory language means the contract wasa multi-year one, i.e. was to run from year to year unless otherwise properly terminated by one of the parties. Except, as a matter of plainlanguage the duration of the contract simply cannot bear the meaning put on it by the Plaintiff; for it would in effect result in eliminatingfrom the subparagraph the additional words - “by mutual agreement” - found there.

This the Court cannot do: The proper mode of construing any written instrument is to give effect to every part of it, if this is possible, and not to strike out ornullify one clause in a deed, unless it be impossible to reconcile it with another in a more express clause in the same deed. (As per Lord Romilly M.R. in Re Strand Music Hall Co. Ltd. (1865) 55 E.R. 853 at 856, as cited in McCamus, The Law of Contract,Irwin Law (2005) at p. 719) [27] Second, the Plaintiff points to subparagraph (

b) of

Section 16 of the contract as evidence of a termination requirement - “TheCompany retains the right to terminate the agreement for any cause upon a written three (3) day notice …” However, that clause onlymakes sense if read in the context of the entire scheme of the contract. [28] The “Logging Agreement” was for a specified period or season, i.e. September 15, 2000 to March 31, 2001. And, the contractread in its entirety reveals that there are actually two so-called termination clauses, the one set out above and one found in

Section 14 ofthe contract. This clause reads: 14. Default: In the event either party hereunder shall default in the performance of any of the obligations or agreements hereof, or in any other mannercontravene any provisions of this Agreement and shall fail, within 30 days of the receipt of written notice from the other party, specifyingsuch default or contravention, to remedy or make good the default or cease the contravention, the party giving such notice may upon theexpiration of the said 30 day period, forthwith terminate this Agreement. [29] As can be seen, the termination clause in

Section 14 is a right given to both parties, triggered by a default by the opposite party inperformance or by some other contravention of the contract. On the other hand, the termination clause in

Section 16 (

b) is a right givento the Defendant only and can be triggered for any cause unrelated to a contract breach. Read together,

Section 16 (

b) is a further anddifferent right of termination given to the Defendant that could be exercised for any cause outside default in performance orcontravention by the Plaintiff. Nor is this broader and exclusive right surprising. The evidence is that the Defendant drafted the contractand did so in the previous years without input from the Plaintiff.

And, given the nature of the contract this termination clause isfunctionally and pragmatically explicable as added protection for the Defendant should circumstances arise during the contract season,unrelated to the Plaintiff’s performance, which would necessitate ending the work to be done by the Plaintiff or ending the work period.That its slanted effect might make it an unfair clause is a given. But that is not what is germane here.

What is germane is its relevance toconstruing the phrase found in Clause 16 (a): “and shall continue from year to year by mutual agreement of both parties”. [30] Read as a whole, and not in “an isolated and disjunctive way”, the termination clauses in the contract are reconcilable byreference to the period or season covered by the contract, i.e. September 15, 2000 to March 31, 2001. Put differently, taking “a practicaland common-sense approach” (See: Sattva Capital Corp. v.

Creston Moly Corp., supra at para. 47), both termination clauses areintended to protect against different circumstances that might impact the existing contract or work, i.e. during the “contract season”. Thesecond of those termination clauses, found in

Section 16 (a), as the Court interprets, extended the protection for the Defendant to anyevents during the contract season not connected to default in performance or other contravention. It is simply not a clause addressingwhether there would be more work the next season. Any other

interpretation would re-write the second part of subparagraph (

a) despiteits clarity of meaning: It is a cardinal rule of the construction of contracts that the various parts of the contract are to be interpreted in the context of theintentions of the parties as evident from the contract as a whole. (BG Checo International Ltd. v. British Columbia Hydro & Power Authority (SCC), [1993] 1 S.C.R. 12 at 23-24) [31] Since the evidence is that the Defendant drafted the contract without input from the Plaintiff, the Plaintiff had urged the Court toapply the contra proferentem rule of construction in construing the language of the contract.

This rule “applies to contracts and otherdocuments on the simple theory that any ambiguity in a term of a contract must be resolved against the author if the choice is betweenhim and the other party to the contract who did not participate in its drafting” (McClelland and Stewart Ltd. v. Mutual Life AssuranceCo. of Canada (SCC), [1981] 2 S.C.R. 6 at p. 15). However, contra proferentem is a last resort rule, only to be invokedif there is first found to be an ambiguity in the words of the contract, some doubt as to meaning (See: G.L. Fridman, The Law of Contract in Canada, 6th ed., Carswell, at p. 458).

And, as explained, in my view there is no evident ambiguity. [32] Third, the Plaintiff refers to the “surrounding circumstances”. For example, it led evidence as to the understanding of Mr.Donovan, the principal of “Algo”, as to the nature of the contract. During Mr. Donovan’s testimony on behalf of “Algo” the followingexchange occurred between him and his counsel:

Q. Okay, Let’s continue on at paragraph 16. It reads:

a) Duration: This agreement shall be effective on September 15, 2000 and shall remain in full force and effect until March 31, 2001 and shall continue from year to year by mutual agreement of both parties. Do you see that? A. Yes. Q. And what can you say whether or not that’s the same words used in the contracts and all the previous years let’s say going back to the 1990, and we have them all here in this binder? A. That is the same statement that is in each of my contracts that I have signed with Repap even in the late 80’s. Q. I am focused on “and shall continue from year to year”.

What was the significance of that statement in that contract to you as a contractor? A. First of all from year to year meant that you had a job with the company as long as they had wood to cut provided that you met their standards and kept your staff educated which was designated also by Repap if you had a job there to go to year after year after year . ( Transcript , pp. 37-38) (Emphasis added) [ 33 ] This evidence, in effect, amounts to the opinion of the operating mind of the Plaintiff that the last part of clause 16 (

a) of the contract is an automatic renewal provision. The plaintiff argues that this testimony is relevant to interpreting the meaning of the contract. Counsel refers the Court to Sattva Capital Corp. v. Creston Moly Corp , supra. That case does, indeed, recognize a role for the “surrounding circumstances” in contractual

interpretation, a role that does not offend the ‘parol evidence rule’ - “because it is used as an interpretative aid for determining the meaning of the written words chosen by the parties, not to change or overrule the meaning of those words” (at para. 60). The rationale for admission of evidence as to the “surrounding circumstances” was explained: ...

Consideration of the surrounding circumstances recognizes that ascertaining contractual intention can be difficult when looking at words on their own, because words alone do not have an immutable or absolute meaning: No contracts are made in a vacuum: there is always a setting in which they have to be placed … In a commercial contract it is certainly right that the court should know the commercial purpose of the contract and this in turn presupposes knowledge of the genesis of the transaction, the background, the context, the market in which the parties are operating. ( Reardon Smith Line , at p. 574, per Lord Wilberforce) ( Ibid , at para. 47) [ 34 ] However, inquiries into and reliance on the circumstances surrounding the making of a contract does have its limits, as made clear in that same case: While the surrounding circumstances will be considered in interpreting the terms of a contract, they must never be allowed to overwhelm the words of the agreement … The goal of examining such evidence is to deepen a decision-maker’s understanding of the mutual and objective intentions of the parties as expressed in the words of the contract.

The

interpretation of a written contractual provision must always be grounded in the text and read in light of the entire contract … While the surrounding circumstances are relied upon in the interpretative process, courts cannot use them to deviate from the text such that the court effectively creates a new agreement … (Emphasis added) ( Ibid , at para 57) [ 35 ] The above referenced testimony of Mr. Donovan does not fall within the rubric of “surrounding circumstances” within the meaning of the common law.

It is simply evidence of his subjective belief or understanding of what the contract duration clause meant and flies in face of the words of the contract as written . To rely on that evidence would be “to deviate from the text such that the court effectively creates a new agreement”. According to the Supreme Court, that kind of evidence is outside the umbrella of “surrounding circumstances” and in contravention of the ‘parol evidence rule’, which “precludes, among other things, evidence of the subjective intentions of the parties” ( See: Sattva Capital Corp. v.

Creston Moly Corp. , ibid at para.59). [ 36 ] Under the rubric of “surrounding circumstances” the Plaintiff also relies on evidence given by Mr. Donovan as to the relevance of the language of the contract in organizing the financial affairs of the Plaintiff Company with its financial lenders: Q. Mr. Donovan when we broke I was asking about how you go about financing pieces of equipment that cost $600,000, what the financing company requires? A.

Financing especially for the forest sector was always quite difficult but with this agreement that they had in where our contract stated year to year the finance companies viewed that as you are their contractor and this is not a one year contract but multiple years of contract.

MS. LAMONT: I am going to object here Mr. Justice. I don’t know if this witness is intending to give us evidence about what was said to him his various financing companies but that’s hearsay. THE COURT: You are objecting on the basis that it’s hearsay from someone at a bank? MS. LAMONT: Yes. Q. You can’t relate what they told you. I’ll come at it this way Mr. Donovan, what’s been your experience if you went in with a contract that had only a one year term? A.

Well, if you are looking even a smaller amount of money all of these financial contracts that you’ll be signing to buy a piece of equipment usually lasts from three to six years.

Normally four to five years is what we took them out on and what a finance institute looked for – they just simply would not talk to you if you only had a one year contract. (Emphasis added) (Transcript at pp. 49-50) [ 37 ] There are two legal barriers to the use of this testimony. [ 38 ] Firstly, even the underscored re-worded testimony remains hearsay, to the extent that the purpose is to relate the truth of how the Plaintiff’s financial institution or any other financial institution, to which the Defendant was clearly not privy, interpreted or would interpret the duration of the contract.

Essentially, it takes the cloaked form of an implied assertion ( See: R v. Baldree 2013 SCC 35 ). Assuming for the sake of argument that the thrust of the evidence is relevant; the foremost hearsay dangers here are perception and reliability. [ 39 ] To illustrate, the obvious implication from Mr. Donovan’s testimony is that financial institutions would not lend money or lend the Plaintiff Company money if the contract was only for a year, as opposed to a multi-year one. This is offered as true, to be implied from the fact that the Plaintiff was able to finance equipment purchases.

However, it is unknown what the financial institution(

s) actually understood or would understand or relied upon. One inference very well may be that money was lent or would only be lent under the belief of a multi-year contract. Or, it may be that the financial institution(

s) did or would lend money under a one year contract given the history of renewal of the logging agreements year after year, and the nature of the work involved and the type of parties to the contract. Or, it may be that the duration clause was not closely read by them. Yet, there is no opportunity to probe the financial institution’s understanding in court and under cross-examination. The above underscored testimony therefore remains hearsay.

Although admitted into evidence without objection, it cannot carry any weight. [ 40 ] Secondly, even if that testimony did not run afoul of the prohibition against hearsay, it is not relevant. It is not the kind of evidence contemplated by the Supreme Court as properly considered under the “surrounding circumstances”: The nature of the evidence that can be relied upon under the rubric of “surrounding circumstances” will necessarily vary from case to case. It does, however, have its limits.

It should consist only of objective evidence of the background facts at the time of the execution of the contract, that is , knowledge that was or reasonably ought to have been within the knowledge of both parties at or before the date of contracting … (Emphasis added) ( Sattva Capital Corp. v.

Creston Molly Corp , supra, at para. 58) [ 41 ] As to the admissible “surrounding circumstances”, the evidence reveals that these Logging Agreements were entered into with a number of contractors, not just the Plaintiff, and their purpose was to meet the “annual allowable cut permitted” on the Crown licenses assigned to the Defendant under the “Forest Management Plan” between the Defendant and the Province, which plan was revised or adjusted every five years to meet the vagaries of the forest and the industry.

The evidence also reveals that the Defendant was aware or ought reasonably to have been aware that the Plaintiff was heavily invested in the equipment necessary to carry out the requirements of the Defendant under that contract and the previous contracts; that the Plaintiff was dependant on that work year after year; that it had been made known to the Plaintiff that the Defendant expected their needs under the contract to be the Plaintiff’s priority; and that the Plaintiff Company and Defendant, through its predecessors, had entered upon Logging Agreements every year since the 1990-1991 contract season. [ 42 ] Unfortunately for the Plaintiff, there is nothing in any of those “surrounding circumstances” that the law would accept as a basis for reading into, what the Court has found to be an unambiguous contract, an obligation on the Defendant to give the Plaintiff notice or to have cause to end the relationship: … There are circumstances in which a court is entitled to conclude that everything agreed by the parties is not contained in the written

document or documents …that appear to make up the contract. Some additional term or terms must be implied. The acceptance of whatDuff J. once called “an unexpressed incident” requires more than that a court might think it reasonable to make such an implication. It isfirmly based on the idea that courts are seeking to discover what the parties intended, not what a court thinks reasonable. As Ayles J.A.said in Mr. Convenience Ltd. v. 040502 N.B.

Ltd. [(1993), (NB CA), 137 N.B.R. (2d) 305 (N.B.C.A.) at p. 313], theimplication of a term “is a matter of law, arising where parties would have intended the stipulation in question”. Such an implication canbe made only if the parties intended to imply the term in question, e.g. for the purpose of business efficacy.

A term cannot be impliedsimply on the ground of “fairness”. (Emphasis added) (Fridman, Law of Contract in Canada, supra at pp. 463-464) [43] On this point, the Court is cognizant that the manner in which the Defendant ended its relationship with the Plaintiff was, as Iventured during counsels’ closing arguments, ‘high-handed’. At least it appears ostensibly to have been so, because for whatever reasonno explanation was given by the Defendant at trial for its actions.

It was, after all, a relatively long relationship; the Plaintiff Companywas local; the Defendant would know or ought reasonably to have known that the Plaintiff was dependant; subsequent agreements wereentered into by the Defendant with other contractors and, of course, the consequences to the Plaintiff were harsh. Yet, in striving to dojustice the Court cannot “veer into a form of ad hoc judicial moralism or “palm tree” justice”, to again quote the Supreme Court inBhasin v.

Hrynew, supra at para. 70; no matter how much it might otherwise be tempted to on the evidence. (See also: the recentcomments, albeit in a different context, of Drapeau C.J. in The Estate of Caroline J. Higgins v. Arseneau 2014 NBCA 65 at para. 7). [44] In the end, guided by the law the Court is driven to only one conclusion and that is the words “and shall continue from year toyear by mutual agreement of both parties” reflect but an unenforceable agreement to agree.

In other words, the Defendant did notterminate an existing contract, but, rather, simply refused to enter upon a contract for the next cutting season, for which the Defendantcannot be held liable in law. In coming to this conclusion, the Court has also had regard to the underlying rationale for the law’s stancethat agreements to agree are not enforceable; as referenced before – “because it lacks necessary certainty”.

Although it appears that these“logging agreements” were not really negotiated each year in the truest sense of the word and that certain terms and conditions remainedthe same in each successive agreement, nonetheless, much detail did change – e.g. price, quantity, type, location, delivery, etc. And, thePlaintiff retained, if not the freedom, the right not to enter upon any such contract if any of the terms and conditions were not agreeable inany year. Put another way, the very fact that a new agreement was entered into each year for the duration of the contract season asdescribed in Clause 16 (

a) makes the point that what was also contained within each of those agreements as further expressed in Clause16 (

a) was an ‘agreement to agree’ for the next season. [45] In contrast are the facts in Bhasin v. Hrynew, supra, a most recent case from the Supreme Court mentioned earlier and addressedat some length in final argument by counsel in this case. The contract between the parties there was characterized as a “commercialdealership agreement”. It took effect in 1998. As described by the Supreme Court, the term of the contract was three (3) years, but couldbe terminated in that period “on short notice for misconduct or other cause”.

Another provision, at the centre of that case, “provided thatthe contract would automatically renew at the end of the three-year term unless one of the parties gave six months’ written notice to thecontrary” (emphasis added). In May 2001 the defendant gave the required proper notice that it was not going to renew the agreement.The result was that the Plaintiff “lost the value of his business”. As explained by the Supreme Court, a significant finding made at trialwas that: Mr. Hyrnew, one of the respondents and another enrollment director, was a competitor of Mr.

Bashin [the Plaintiff] and there wasconsiderable animosity between them. The trial judge found, in effect, that Mr. Hrynew pressured Can-Am [a Defendant] not to renew itsAgreement with Mr. Bhasisn and that Can-Am dealt dishonestly with Mr.

Bhasin and ultimately gave in to that pressure. (Ibid, at para. 7) [46] It is also instructive to have regard to the decisions made at trial and in the Court of Appeal of Alberta that were under review bythe Supreme Court. [47] At trial: First, the trial judge decided that the 1998 Agreement was a type of agreement which as a matter of law requires good faith performance.She recognized that the 1998 Agreement did not fall within any of the existing categories of contract, such as employment, insurance andfranchise agreements, which have been held to require good faith performance.

She concluded, however, that the Agreement wasanalogous to a franchise or employment contract, and so by analogy to these cases, she implied a term of good faith performance as amatter of law. The contract was not balanced from its inception and the relationship placed the enrollment director in a position ofinherent and predictable vulnerability: … Second and in the alternative, the trial judge held that a term of good faith performance should be implied based on the intentions of theparties in order to give business efficacy to the agreement.

She concluded that “[w]hen one considers the whole of the relationship . . . it

is clear that the parties had to operate in good faith and there was a requirement of fairness between them. In other words, good faith was necessary to give business efficacy to the whole 1998 Agreement”: ... The 1998 Agreement contained an “entire agreement clause” stating that there were no “agreements, express, implied or statutory, other than expressly set out” in it: … The trial judge held, however, that this clause did not preclude the implication of a duty of good faith.

The parties, she reasoned, cannot rely on exclusion clauses to avoid contractual obligations where there is an imbalance of power and that courts refuse to let parties shelter under entire agreement clauses where it would be unjust or inequitable to do so: … ( Ibid , at paras. 23-25) [ 48 ] On appeal: The Court of Appeal reversed and held that there had been no breach of contract. The duty of good faith in employment contracts could not be extended by analogy to other types of contract.

In any event, the duty of good faith in the employment context is limited to the manner of termination and does not include reasons for non-renewal: … Nor was this a circumstance in which a term could be implied because it was so obvious it was not thought necessary to mention or was necessary to make the contract work: … Even if there were an implied duty of good faith in this case, the impugned conduct concerned the non-renewal of a contract, which occurs on expiry, unlike a termination clause: Moreover, the Court of Appeal held that a term cannot be implied where it goes against an express term of the contract.

Here, the parties did not intend a perpetual contract, since they included a term allowing either party to unilaterally trigger its expiration prior to the end of each three-year term. The trial judge’s approach was inconsistent with the non-renewal provision of the contract. The motive for triggering expiration was not restricted under the Agreement. The implication of a term of good faith also violated the entire agreement clause.

The court held that the evidence of assurances given by Can-Am as to how the non-renewal power would be exercised fell afoul of the parol evidence rule and should not have been considered. Since the Court of Appeal held there was no breach of contract, the basis for the claims in unlawful means conspiracy and inducing breach of contract also disappeared. ( Ibid , at paras. 27-28) [ 49 ] As to those decisions, the Supreme Court found that: “the only relevant breach of contract in this case is the breach of the duty of honest performance” (at para. 106).

However, in order to even provide that relief the Supreme Court had to recognise as a general doctrine of contract law: “a new common law duty that applies to all contracts as a manifestation of the general organizing principle of good faith; a duty of honest performance, which requires the parties to be honest with each other in relation to the performance of their contractual obligations” (at para. 93).

I pause to observe that, whatever else, there is no evidence in this case of “dishonesty” that would trigger that new common law duty here, nor has this case been advanced as such. [ 50 ] Moreover, the Supreme Court critiqued the trial judge’s approach: It is not necessary in this case to define in general terms the limits of the implications of the organizing principle of good faith. This is because it is unclear to me how any broader duty would assist Mr. Bhasin here. After all, the contract was subject to non-renewal.

It is a considerable stretch, as I see it, to turn even a broadly conceived duty of good faith exercise of the non-renewal provision into what is, in effect, a contract of indefinite duration… ( Ibid , at para. 90) [ 51 ] Indeed, although recognizing “good faith” as an organizing principle and identifying the new duty of “honest performance” as an aspect of that principle, the Supreme Court sounded a loud note of caution: The principle of good faith must be applied in a manner that is consistent with the fundamental commitments of the common law of contract which generally places great weight on the freedom of contracting parties to pursue their individual self-interest. … The development of the principle of good faith must be clear not to veer into a form of ad hoc judicial moralism or “palm tree” justice.

In particular, the organizing principle of good faith should not be used as a pretext for scrutinizing the motives of contracting parties. Tying the organizing principle to the existing law mitigates the concern that any general notion of good faith in contract law will undermine certainty in commercial contracts .

In my view, this approach strikes the correct balance between predictability and flexibility. ( Ibid , at para. 71) [ 52 ] This Court has already addressed the existing law as it pertains to the nature of the contract in issue here and as to the claim that there was a good faith obligation imposed upon the Defendant to have cause or to provide notice before ending its relationship with the Plaintiff. In my view, Bhasin v. Hyrnew , supra does not impact on that state of the law.

[53] Actually, what that case has done for this Court is clarify the law in regard to the relevance of the concept of “good faith” incontract. This is because until Bhasin the Canadian common law was divided between those who “see a broad role for good faith as animplied term in all contracts that establishes minimum standards of acceptable commercial behaviour” (at para. 38) and those courts thatare of the view that good faith has a limited role, restricted to certain contexts (at para. 39).

This controversy has now been clarified bythe Supreme Court to the extent mentioned at the outset – i.e., that there is an organizing principle of good faith; in general, its particularimplications are tied to the existing common law that gives effect to aspects of that principle in certain types of situations andrelationships; and, as a manifestation of the organizing principle of good faith, that there is now a “duty of honest performance”applicable to all contracts (See: at para. 93).

None assists the Plaintiff here. [54] This is probably sufficient to dispose of this action. [55] However, counsel made a strenuous argument that the nature of the relationship between the Plaintiff and Defendant was suchthat a duty of good faith should be implied based on the existing law that recognizes that good faith does have implications for certaincontractual relationships, one being an employment relationship.

The argument made is that the contractual relationship here was “akin”to an employment relationship, despite the contract itself identifying “Algo” as a contractor, not as an employee. [56] The Court will address the argument, despite having found that there was no termination of an existing contract by theDefendant, but rather a refusal to enter upon another contract.

I do so for completeness, because of the emphasis placed on that argumentby counsel and because of the seriousness of the case and the ramifications for the Plaintiff of this Court’s decision. [57] Recall an aspect of the trial decision in Bhasin, First, the trial judge decided that the 1998 Agreement was a type of agreement which as a matter of law requires good faith performance.She recognized that the 1998 Agreement did not fall within any of the existing categories of contract, such as employment, insurance andfranchise agreements, which have been held to require good faith performance.

She concluded, however, that the Agreement wasanalogous to a franchise or employment contract, and so by analogy to these cases, she implied a term of good faith performance as amatter of law. The contract was not balanced from its inception and the relationship placed the enrollment director in a position ofinherent and predictable vulnerability: … (Emphasis added) (Ibid at para. 23) [58] Recall that the Supreme Court did not accept this analogy as a basis for liability in that case (See: Ibid, at para. 72).

Certainly thisCourt cannot do so here either, by way of some incremental extension of the common law under the guise of an “akin” approach,especially given the Supreme Court’s so recent review of the law. Even apart from being bound by Bhasin, the Court sees other seriousdeficiencies in the argument made. [59] The Supreme Court explained in that same case the relevance of “good faith” in an employer-employee relationship: …, common law Canadian courts have also recognized that there are classes of relationships that call for a duty of good faith to beimplied by law.

For example, this court confirmed that there is a duty of good faith in the employment context in Honda Canada Inc. v. Keays, 2008 SCC39 … The majority held that in all employment contracts there an implied term of good faith governing the manner of termination. Inparticular, the employer should not engage in conduct that is “unfair or is in bad faith by being, for example, untruthful, misleading orunduly insensitive” when dismissing an employee: para. 57, citing Wallace v. United Grain Growers Ltd., (SCC),[1997] 3 S.C.R. 701, at para. 98.

Good faith in this case did not extend to the employer’s reasons for terminating the contract ofemployment because this would undermine the right of an employee to determine the composition of its workforce: Wallace, at para. 76. (Ibid, at para. 54) [60] It is immediately apparent that reliance on an “akin” argument, so as to draw on the duty of good faith recognized in theemployment relationship and apply it to found a breach of a commercial contract and to support a claim for damages, is very problematic,to say the least. Just for example, as the Supreme Court made clearer in Honda Canada Inc. v.

Keays: Moreover, in cases where damages are awarded, no extension of the notice period is to be used to determine the proper amount to bepaid. The amount is to be fixed according to the same way as in all other cases dealing with moral damages. Thus, if the employee canprove that the manner of dismissal caused mental distress that was in contemplation of the parties, those damages will be awarded not

through arbitrary extension of the notice period, but through an award that reflects the actual damages … ( 2008 SCC 39 at para. 59 ) [ 61 ] In any event, the evidence here simply does not establish that the relationship between the Plaintiff “Algo” and the Defendant was an employer-employee one, nor even “akin” to one. The terms and conditions of the contract itself make this very clear. To illustrate,

Section 10 (General Conditions) states: It is agreed that neither the Contractor nor anyone employed by the Contractor in the production or delivery of such merchantable products is or shall be construed to be an employee or agent of the Company. The Contractor further agrees that it is a bona fide contractor pursuant to subsection 1 (4) of the Industrial Relations Act . The Company shall not have the right to direct or control any of the employees of the said Contractor.

The Contractor agrees to fully comply with all laws and regulations made thereunder of the Government of Canada, the Government of New Brunswick and of the Municipality or District and further agrees to indemnify and save harmless the company from all penalties, charges or other assessments of every nature and kind whatsoever which the company may suffer by reason of the Contractor’s violation thereof and without restricting the generality of the foregoing, the Contractor shall be solely responsible for: (

a) Employing competent and skillful employees to do the work herein and without limiting the generality of the foregoing, the Contractor shall be solely responsible for:

i) The direction, supervision and control of his employees and their work which at all times must conform with the terms and conditions of this Agreement. ii) Making deductions for Income Tax, Unemployment Insurance premiums, contributions to Canada Pension Plan or other pension plans designated by the Contractor, compulsory health insurance premiums and remitting such deductions as and when required by the Acts. iii) Payment of assessments to the Workplace, Health, Safety & Compensation Commission and for providing a letter of proof to Repap from Workplace Health, Safety & Compensation Commission prior to the start-up of operations that the Contractor has paid the required assessments for the up-coming season. iv) Payment for statutory holidays and vacations.

v) Making employer contributions as and when required by the provincial or federal legislation including, but not limited to Unemployment Insurance premiums, contributions to Canada Pension Plan or other pension plans designated by the Contractor. vi) Payment of all payroll taxes. (

b) Payment of all tax assessments and levies arising from the operation of his business pursuant to the Contractor’s obligations under this Agreement. (

c) Dealing directly with the Workplace Health, Safety & Compensation Commission of New Brunswick, the Income Tax Branch of the Department of National Revenue, the Unemployment Insurance Commission in all matters pertaining to the coverage of his employees by the relevant legislation. (

d) The living accommodation and meals for his employees including compliance with all pertinent legislation pertaining thereto. (

e) Making his own arrangements with a doctor regarding the medical supervision of his employees and sanitary inspection of his camps and abiding by the regulations administration by the provincial health authorities. [ 62 ] In argument, though, plaintiff’s counsel stressed the degree of control that the Defendant had over the Plaintiff. And it is true that there was a considerable degree of control exercised over the manner of work to be performed and as to the qualifications of those who were to perform it.

But, as a measure to define the line between an employee and an independent contractor, control is no longer the governing feature: This criterion has been criticized as wearing an air of deceptive simplicity” … The main problems are set out by MacGuigan J.A. in Wiebe Door , supra, at pp. 558-559: A principal inadequacy [with the control test] is its apparent dependence on the exact terms in which the task in question is contracted for: where the contract contains detailed specifications and conditions, which would be the normal expectation in a contract with an independent contractor, the control may even be greater than where it is to be exercised by direction on the job, as would be the normal

expectation in a contract with a servant, but a literal application of the test might find the control to be less. In addition, the test has broken down completely in relation to highly skilled and professional workers, who possess skills far beyond the abilities of their employers to direct. ( 671122 Ontario Ltd. v.

Sagaz Industries Canada Inc. 2011 SCC 59 at para. 38 ) [ 63 ] Instead, the Supreme Court favours the following: Although there is no universal test to determine whether a person is an employee or an independent contractor, I agree with MacGuigan J.A. that a persuasive approach to the issue is that taken by Cooke J. in Market Investigations, supra. The central question is whether the person who has been engaged to perform the services is performing them as a person in business on his own account.

In making this determination, the level of control the employer has over the worker’s activities will always be a factor. However, other factors to consider include whether the worker provides his or her own equipment, whether the worker hire his or own helpers, the degree of financial risk taken by the worker, the degree of responsibility for investment and management held by the worker, and the worker’s opportunity for profit in the performance of his or her tasks. It bears repeating that the above factors constitute a non-exhaustive list, and there is no set formula as to their application.

The relative weight of each will depend on the particular facts and circumstances of the case. (Emphasis added) ( Ibid , at para. 47) [ 64 ] To find that the parties’ relationship was that of an employee and employer or “akin” to one would not only be contrary to the objective intent and expectations of the parties as expressed in their contract, but also contrary to the evidence as a whole.

The Plaintiff Company was most certainly in business on its own account – the indicia is overwhelming, extending as it does to the fact the Plaintiff owned the equipment required, hired and paid its workers, took the financial risk and was obviously engaged in the work for profit. Quite frankly, the control exercised by the Defendant would be the normal expectation in a contract with an independent contractor engaged in the type of work the Plaintiff was engaged in, considering where it was to be performed and that it was a heavily regulated industry. [ 65 ] For all these reasons this argument must also fail. V.

Damages [ 66 ] In dismissing claims in contract or tort, courts are generally expected to provisionally assess damages in the event of a successful appeal so as to perhaps avoid sending the matter back. In my view the circumstances here make such an assessment near impossible, for it is so heavily dependent on what error(

s) the appellate court might find, including what kind of termination requirement would be applicable and the import, if any, of the obligations of “good faith” to this commercial setting? [ 67 ] That is, if a higher court did find a breach, how would it be characterized and how might it impact on the evidence as to damages proffered by the Plaintiff at trial? That evidence is in the form of an expert opinion given by a chartered accountant and advanced on the theory that the breach of contract caused the demise of the Plaintiff Company.

Aside from the Defendant’s arguments that certain information relied upon by the expert was not reliable (e.g. unaudited financial statements) and that certain information relied upon was not supported in the evidence (e.g. no equipment list), that calculation is made based on the business as a “going concern” method, over the ensuing five (5) years, i.e., as I understood, the projected normalized earnings of the Plaintiff Company from the end of the 2001 contract season through to the end of the 2006 season (as if those contracts would have been renewed each year) plus the value remaining in the Plaintiff’s equipment assets at the end of that five (5) year period. [ 68 ] As hopefully can be seen, a provisional assessment here is too dependent on the characterization of the nature of the contract and the consequential nature of the breach.

In my view, there are simply too many variables to permit a reasonably reliable determination of the foreseeability or remoteness of damages on a provisional basis and any attempt to do so on various alternative calculations basis smacks of artificiality. [ 69 ] This is all to say that any required assessment of damages in the particular circumstances of this case would benefit from further submissions against the backdrop of any determination of liability made by a higher court. VI. Costs

[ 70 ] Both sides claimed costs. The award of party and party costs is normally in a case like this determined by regard to Tariff “A” of Rule 59 . In my opinion, the amount involved for the purpose of assessing costs against NBP Enterprises Inc. approximates the amount claimed by it - $400,000 (without incorporating the additional claim of pre-judgment interest). Likewise, in my opinion, the amount involved for the purpose of assessing costs against Algo Enterprises Ltd. approximates the amount claimed by it - $1,300,000 (without incorporating the additional claim of pre-judgment interest).

Counsel for the Plaintiff suggested in argument that Scale 3 of the Tariff was the appropriate measure of complexity. The Defendant’s counsel did not appear to take issue. [ 71 ] Therefore, the Defendant is awarded costs against the Plaintiff NBP Enterprises Inc. of $10,375.00 (based on the tariff of $7,375.00 for the first $100,000 of the amount claimed plus 1% on the amount over) and allowable disbursements.

The Defendant is awarded costs against the Plaintiff Algo Enterprises Ltd. of $19,375.00 (based on the tariff of $7,375.00 for the first $100,000 of the amount claimed plus 1% on the amount over) and allowable disbursements. Having regard to Rule 59.02 in assessing those costs, the Court chose the lowest figure of 1% of the amounts claimed in excess of $100,000 to reflect the shortened length of the trial. [ 72 ] The Plaintiffs’ action is dismissed. DATED a the City of Miramichi, N.B. this 15 th day of December 2014 ____________________ Mr. Justice John J. Walsh