Robbie Dale Wotherspoon - v. -, 2013 SKPC 100

IN THE PROVINCIAL COURT OF SASKATCHEWAN CIVIL DIVISION Citation: 2013 SKPC 100 Date: July 23 , 2013 Small Claim #: 17/2012 Location: Swift Current, SK _____________________________________________________________________________ Between: Robbie Dale Wotherspoon - and - Growers International Organic Sales Inc. and N.M. Paterson & Sons Limited Mr. Robbie Dale Wotherspoon For the Plaintiff Ms. Madeline Low For the Defendants DECISION L.A. MATSALLA , J [ 1 ] The defendant, Growers International Organic Sales Inc. (“GIOSI”), is a wholly owned subsidiary of N.M.

Paterson & Sons Limited (“Paterson”) and conducts business in Western Canada as a buyer and marketer of organic grains. GIOSI enters into contracts with producers to purchase grain on terms that have been agreed upon between the parties. The plaintiff is a producer of certified organic Amber Durum. The dispute in this case involves payment for a sale of a lesser quantity of such grain by the producer to GIOSI that was of a lesser quality than that specified in the contract and the counterclaim made by GIOSI, is for an amount equal to the market value of the grain that was undelivered.

The Plaintiff [ 2 ] Mr. Wotherspoon farms in the Success District, Saskatchewan. In April of 2011, he was, by telephone, approached by a representative of GIOSI who expressed an interest in purchasing organic Durum. He had not done any business with the defendant prior to this occasion. In early June further discussions took place. The plaintiff testified that during these discussions he advised the caller that, since he did not have a line of credit, payment upon delivery was crucial to him. The parties discussed the terms of a contract. On June 8, a number of documents were faxed to the plaintiff including the following:

a) a covering letter from GIOSI that referred to a Deferred Delivery Purchase Contract (“DDPC”) and to a CWB Fixed Spread Contract application (“FSC”) and,

b) an unsigned copy of page 1 of the DDPC dated June 10. While the letter stated that the FSC was attached, the plaintiff said that he did not receive it. He then testified that he called the representative for GIOSI about the application and the person told him that he, the representative, would look after it and all that he needed was the plaintiff’s Canadian Wheat Board permit number. Apparently the defendant was of the view that the completion of the application was not necessary. [ 3 ] The plaintiff signed and returned the DDPC to GIOSI by fax.

A copy of page one of the contract signed on behalf of GIOSI was then faxed back to him. No other documents or copies of documents were ever sent to him by mail or delivered to him in person until the dispute in this case arose. [ 4 ] On page one of the contract, the basic terms of the contract are set out as follows:

a) the product to be delivered - Certified Organic Amber Durum at a grade of No. 3 or better,

b) the amount to be delivered - 4,500 net bushels,

c) the amount to be paid per bushel - $11.10 with the producer to net $10.00 per bushel after trucking and after CWB OFSC fees deducted,

d) delivery dates - “Crop to be delivered between June 13 - June 24, 2011 (buyer’s call)”, and

e) the producer to pay trucking and CWB OFSC fees. While the provision is not specified, it appears to be common ground that the defendant was to arrange to pick up the grain with the cost to be borne by the producer. The net price was the price after trucking fees were deducted. A term of the DDPC provided that the grain was to be “in dry condition and free of infestation or contamination...at the Crop Delivery Location during the Delivery Period.” Payment was to be made if the crop, at the agreed upon grade, was delivered during the delivery period. In a

section entitled “Liquidated Damages”, the contract specified that in the event that the producer failed to deliver the crop: before the end of the Delivery Period in accordance with the requirements of this contract then the Producer shall pay to GIOSI, as liquidated damages and not as a penalty, the sum determined by multiplying the quantity of the Crop not delivered by the first transaction following the last day of the Delivery Period in which GIOSI purchases, for immediate delivery. Product of the specified Quality to replace the contracted production not delivered.

In addition, the producer was required to pay all legal fees and expenses on a solicitor and client basis. The agreement provided that the producer, Mr. Wotherspoon, agreed that he understood the Terms and Conditions on the reverse side of the DDPC and that those terms were incorporated as part of the contract.

[ 5 ] The defendant, GIOSI, did not pick up the grain during the delivery period. On June 29, Mr. Wotherspoon spoke to the same person that he had previously spoken to when he had negotiated the contract and the individual assured him that he, that is Mr. Wotherspoon, was next in line to have his grain picked up but no specific dates were mentioned. The plaintiff testified that on the same day, he was contacted by representatives of a trucking firm owned by the defendant GIOSI (or its parent company) who advised that a truck would be available to pick up the grain during the first week of July. Mr.

Wotherspoon decided not to deliver his grain to the defendant because the defendant was outside the delivery period and the FSC had not been signed - a requirement that he thought was mandatory. [ 6 ] On July 10, the plaintiff received another copy of page one of the contract from the defendant by fax dated the same date that set out the same terms as the original contract except that it provided for a delivery date that was to be between “June 13 - July 31, 2011 (buyer’s call)”.

The contract was signed on behalf of GIOSI and the words “extension due to weather problems” were handwritten in the lower right-hand corner of the agreement - words that Mr. Wotherspoon did not write. According to the plaintiff, he did not receive any further pages to the contract. He did not sign the contract. Mr. Wotherspoon told the Court that he had spoken to the same representative of GIOSI to tell him that he felt that an application for the FSC should be signed for the sale to be lawful. He told the representative that GIOSI was required to complete the contract.

Thereafter, truck drivers for the defendant GIOSI frequently called the plaintiff in an effort to arrange to pick up the grain from the plaintiff. [ 7 ] In early August, the plaintiff took samples of the grain to the elevator and a representative of the defendant GIOSI graded the grain as No. 4 - a grade lower than that specified in the initial agreement. [ 8 ] Finally, on November 4, truckers in the employ of the defendant GIOSI picked up 29.880 metric tonnes of organic Amber Durum and took the grain to the defendant’s Wolsely facility.

No further amounts of grain were picked up from the plaintiff even though the initial contract required the delivery of a further 97.218 metric tonnes. For some unexplained reason, a cash purchase ticket was issued by Paterson Grain that showed that the grain was delivered on November 15. The ticket indicates that the value of the grain was $9,277.49, that a deduction in the amount of $347.05 was forwarded to the Canadian Wheat Board and that the remaining amount of $8,930.44 was retained by the defendant GIOSI with no amount payable to the plaintiff.

The amount of grain delivered and the value of the grain is not disputed. The ticket shows the grain as being subject to a “non-board Deferred Delivery Contract”. Mr. Wotherspoon believed that he was selling the grain under the auspices of the Canadian Wheat Board and, he said that in discussions he had with the Board, it was clear that an FSC had not been signed in respect of the grain. [ 9 ] On December 6, he received a letter dated the same date from GIOSI in which the defendant claimed the sum of $8,930.44 from him based upon clause 6 on page 2 of the Terms and Conditions of the contract.

A copy of the Terms and Conditions were included with the letter. Mr. Wotherspoon asserts that the first time he saw page 2 of the contract is when he received the letter from GIOSI. [ 10 ] Mr. Wotherspoon is of the view that the grain was not picked up within the time specified in the initial contract and so he is not bound by that agreement. It is his view that he did not have a written contract with GIOSI to buy his grain. The Defendant [ 11 ] The defendant takes the position that when it typically sends a DDPC by fax, it also sends the back side of the contract that sets out twelve Terms and Conditions.

There was no evidence that the process was followed in this case. The contract permits the defendant to extend the time of delivery for a further period and the phrase “buyer’s call” means that such an extension was within the discretion of GIOSI.

Clause five of the Terms and Conditions clearly sets out that the producer was to deliver the crop “at a time designated by GIOSI” and if the producer cannot deliver then GIOSI “may, at its option...designate an alternative delivery location, or, extend, without notice, the Delivery Period by a period not to exceed 60 days.” [ 12 ] Furthermore, the defendant is of the view that clause 6 of the Terms and Conditions permitted it to “set off against any amounts payable to the producer, all amounts owing by the producer to GIOSI” and so, since the plaintiffs did not deliver all of the grain under the terms of the contract, GIOSI was permitted to set off the value of the remaining amount to be delivered (97.218 tonnes) at a price that it would have had to pay in the market ($459.30 per metric tonne) for a total that would have exceeded the amount payable.

Therefore the

defendant’s liquidated damages under the contract amounted to at least the amount that would have been otherwise payable to the plaintiff - that is $8,930.44. ISSUES

a) whether the parties are bound by a written contract and, if not, was there a verbal contract between the parties,

b) whether the plaintiff has proven his claim, and

c) whether the defendant has proven its counterclaim. ANALYSIS [ 13 ] At the outset, it is clear that the plaintiff had an arrangement with GIOSI. Despite the fact that the cash purchase ticket was issued by Paterson Grain, I am satisfied that the plaintiff’s claim is as against the defendant GIOSI. There is no evidence before me that the defendant, N.M.

Paterson & Sons Limited, had any agreement with the plaintiff and so the plaintiff’s action against the company is dismissed. [ 14 ] The DDPC dated June 10, is a standard form contract that was prepared by the buyer and imposes obligations on the producer to deliver grain of a set quality and quantity at a specific price under specific conditions on a particular delivery date and provides the buyer (in the case of a failure to deliver the grain “for any reason whatsoever”) with significant financial compensation as “liquidated damages”.

Even the costs of enforcement are to be borne by the seller including solicitor and client costs. According to the standard form, the producer, Mr. Wotherspoon, agrees that he has read the contract and the contract includes the Terms and Conditions on the reverse side “which are incorporated herein by this reference”. The Terms and Conditions that are relied upon by the buyer set out strict terms that benefit the buyer including:

a) GIOSI is to determine the quality of the grain,

b) the producer shall pay the costs of delivering the grain,

c) the producer shall deliver the crop at a time that suits GIOSI and it may specify an alternative location or it may extend the delivery period “at its option” and “without notice”,

d) GIOSI has the right of set-off referred to above that can have significant financial consequences for the producer,

e) GIOSI can accept crop of lower quality but it can, if it wishes, refuse to accept the product and, if so, the producer continues to be obligated to deliver the crop under the agreement, and

f) if any provisions of the agreement is held by a Court to be unenforceable, invalid or void, such provisions shall be severable from the agreement. The signatures of the parties were appended to the bottom of the first page of the contract. However, the evidence satisfies me that the plaintiff did not at any time receive a copy of page two until he received a copy from counsel acting on behalf of the defendant under cover of a letter dated December 10, 2011. It can be noted that the buyer had picked up Mr. Wotherspoon’s grain on November 4.

a) Whether the parties are bound by a written contract and, if not, was there a verbal contract between the parties [ 15 ] The plaintiff argues that he did indeed have a written agreement with the defendant to sell his grain and the defendant acknowledges that there was an understanding to purchase the plaintiff’s grain. The defendant submits that the document dated June 10, 2011 constituted the agreement. The plaintiff, however, asserts that the defendant did not pick up the grain during the period of time specified in the agreement and so it breached the agreement.

The defendant argues that the plaintiff refused to permit the defendant to pick up all of the grain covered by the agreement and, as a result, he breached the contract and the provisions in the agreement for the calculation of liquidated damages applies to entitle it to the amount claimed.

[ 16 ] In this case the contract dated June 10, specified a period for the delivery of grain that extended from June 13 to June 21 - a period of 11 days. It is clear that the grain was not picked up by the buyer during that period. The document dated July 10, was identical in form to the June 10 th contract with the exception that the delivery period was extended from June 13 (the first day of the period that was specified in the first agreement), to July 31 - a period of 48 day of which 27 days had already expired. In effect the July 10 th document appeared to have been a replacement for the earlier DDPC.

Once again, the standard form terms were the same as the earlier agreement and the same terms were set out in the event of a failure to deliver the grain. The plaintiff did not sign the document. He did not think that he had a written contract with the defendant. [ 17 ] The doctrine of fundamental breach has been “laid to rest” by the Supreme Court of Canada in respect of exclusion clauses in a contract [1] . Some cases in this province that have dealt with breaches of contract are helpful. In the case of Palliser Grain Co. Ltd. v.

Chamberlain [2] , the grain company alleged a breach of a grain purchase contract as a result of the failure on the part of the farmer to deliver canola under the contract. The defendant denied that he breached the contract arguing that the company failed to supply a grain car into which the canola was to be deposited as provided for in the agreement. Delivery was to be made in January of 1994, however a railcar was not made available until February 26. It was held that there was a breach of the contract on the part of the plaintiff.

At paragraph 51, the Court said: 51 Not every breach of a contract will entitle the party alleging that breach to treat the contract as at an end. It is only those instances where the breach could be said to go to the root of the contract which would be considered to be fundamental as contrasted with a breach of contract which would not bring the contract to an end and would entitle a party to claim only for damages. The Court relied upon the Saskatchewan Court of Appeal case of Murray v. Saskatchewan [3] , that in turn referred to the seminal case of Suisse Atlantique Societe D ’ Arment Maritime S.A. v. N.V.

Rotterdamsche Kolan Centrale [4] in which it was said, respecting fundamental breach: This expression is no more than a convenient shorthand expression for saying that a particular breach or breaches of contract by one party is or are such as to go to the root of the contract which entitles the other party to treat such breach or breaches as a repudiation of the whole contract. Whether such breach or breaches do constitute a fundamental breach depends on the construction of the contract and on all the facts. In Humboldt Flour Mills Co. Ltd. v.

Hume and Scotian Developments Ltd. (No. 42) [5] , Dielschneider J. examined a contract for the sale and delivery of mustard seed before June 15. The buyer of the seed asked that delivery be made on June 17. The seller considered the contract as discharged and proposed to keep a $20,000.00 advance payment. Given that the buyer was prepared to rectify the breach promptly, the Court concluded that “the breach was not such that the defendant could, in law, refuse to allow delivery of the seed”. The breach did not go to the root of the contract and the plaintiff was entitled to the return of the payment.

More recently in Simpson Seeds Inc. v. Gerry Farms Ltd. [6] , the defendant agreed to sell canary seed to the plaintiff and the plaintiff was to make trucking arrangements to take delivery of the seed at the defendant’s farm. The contract stated that the delivery was to be “FOB Farm at Creelman - June 2003 - July 2003 at buyer’s call” - the latter expression being the same as that used in the case before me. A particular trucking firm was to pick up the seed but, due to some unfortunate circumstances, the trucker did not pick up the seed until August 5, 2003.

The defendant, however, considered the contract as a nullity and sold the seed. The Court, relying on Palliser, supra concluded that the defendant advised the plaintiff that it was expecting delivery before the end of July and that the company was entitled to consider the contract as rescinded. In this case, I am satisfied that at the time that the terms were negotiated the plaintiff advised the defendant that, for financial reasons, payment upon delivery was very important to him and the agreement provided for a short period of delivery.

No reason was provided for the failure to pick up the grain within that period. The buyer was obligated to pick up the grain as specified and not whenever it wished to do so. The plaintiff advised the defendant that it must comply with the terms of the contract. While the trucker advised the plaintiff on June 29, that pick up could occur during the first week of July, no specific date was discussed. I must conclude that GIOSI’s failure to pick up the grain amounted to a breach that went to the root of the contract and Mr.

Wotherspoon was entitled to either consider the contract as either one that continued or to sue for damages for breach of contract. As it turned out, Mr. Wotherspoon did neither - likely because he thought that he had otherwise sold his grain to the defendant. [ 18 ] The July document was never signed by the plaintiff. It appears to have been an attempt by the defendant to replace the first contract with the second. Although it was not a valid contract, it is evident that the buyer did not consider itself bound by it. An

agreement between the parties requires that there be a meeting of the minds. Without such a consensus there cannot be a contract [7] . [ 19 ] Even after July 10, and without a written contract Mr. Wotherspoon was prepared to sell grain to the defendant and the defendant was prepared to take delivery of grain. I must determine if there was an agreement and, if so, the terms of that agreement.

On the question of whether parties have reached a consensus sufficient to constitute a binding contract Fridman , supra , said this at page 15: Constantly reiterated in the judgments is the idea that the test of agreement for legal purposes is whether parties have indicated to the outside world, in the form of the objective reasonable bystander, their intention to contract and the terms of such contract. The law is concerned not with the parties’ intentions but with their manifested intentions.

It is not what an individual party believed or understood was the meaning of what the other party said or did that is the criterion of agreement; it is whether a reasonable man in the situation of that party would have believed and understood that the other party was consenting to the identical terms. The terms of an agreement between the parties may not be clear and in fact important terms may be omitted.

However, courts often enforce such agreements as binding contracts and fill gaps in an agreement with “reasonable terms” based upon the extent of the reliance on the alleged agreement by the person seeking to enforce it. The Court in Farm Woodlot Assn. of Saskatchewan Inc. v. Bell [8] , considered the obligation of the Court in such circumstances. At paragraphs 34 and 35, Mr. Justice Baynton said this about a verbal agreement in this case: 34 Obviously some of the terms of the “understanding” reached on February 5 th were left open and were not capable of definite determination.

But courts often enforce agreements as binding contracts even where those agreements are incomplete and indefinite. This is so especially if the parties have substantially relied on the agreement. 35 S.M. Waddams, The Law of Contracts 1984 , in commenting on open terms and incomplete agreements, states at p. 29: When a dispute arises the court has to solve the difficult question of whether or not there is an enforceable contract. Again there can be no rule of thumb. Every agreement contains elements of implication, and the courts have frequently supplied important terms that the parties have omitted.

He goes on to state at pp. 36-7: A factor that would appear to be influential in such cases, is the extent of the reliance on the alleged agreement by the person seeking to enforce it....the court will go some way in order to protect reasonable reliance.... Similarly, in other cases where the court readily fills up gaps in an agreement with “reasonable” terms, it appears, on examination, that substantial reliance on the alleged agreement has occurred.

He distinguishes indefiniteness from incompleteness, and states at p. 45: It may be suggested, therefore, that indefiniteness standing alone will very rarely be a ground for refusing enforcement, particularly where the party seeking enforcement has relied on the promise. In this case the defendant wished to purchase Mr. Wotherspoon’s grain at a grade that it had determined after the time that it was to take delivery. It then arranged for delivery and took possession of the grain. The parties had determined in June that the grain was to be valued at the price of $11.10 per bushel.

It is reasonable to conclude that as of November, the grade was of at least a similar value. I conclude that there was no written agreement between the parties but that they had an understanding between them that required the defendant to pay the plaintiff for his grain in the amount of $8,930.44. [ 20 ] The sale of goods in Saskatchewan is governed by The Sale of Goods Act [9] .

Section 6 of that Act reads as follows:

6(1) A contract for the sale of goods of the value of $50 or upwards shall not be enforceable by action unless the buyer shall acceptpart of the goods so sold and actually receive the same or give something in earnest to bind the contract or in part payment or unlesssome note or memorandum in writing of the contract is made and signed by the party to be charged or his agent in that behalf.

(2) This

section applies to every such contract notwithstanding that the goods may be intended to be delivered at some future time ormay not at the time of the contract be actually made, procured or provided or fit or ready for delivery or that some act may be requisitefor the making or completing thereof or rendering the same fit for delivery.

(3) There is an acceptance of goods within the meaning of this

section when the buyer does any act in relation to the goods whichrecognizes a pre-existing contract of sale whether there be an acceptance in performance of the contract or not. I am satisfied that the buyer did accept all of the goods sold and that the agreement is enforceable.

b) Whether the plaintiff has proven his claim [21] I am satisfied that the plaintiff has established his claim in the amount set out above.

c) Whether the defendant has proven its counterclaim [22] In light of the findings that I have made, the claim of the defendant, based as it is upon the written agreements, shall bedismissed. CONCLUSION [23] The plaintiff shall have judgment against the defendant in the amount as follows:

a) Claim $ 8,930.44

b) Interest under The Pre-Judgment Interest Act $ 139.45 (calculated from November 4, 2011)

c) Costs $ 89.00 TOTAL $ 9,158.89 ____________________________ L.A. Matsalla, J [1] 2010 SCC 4 , [2010] S.C.J. No. 4

[2] [1996] S.J. No. 249, Allbright J. [3] (1987), (SK CA), 55 Sask. R. 193 at 196, Gerwing J.A. [4] [1966] 2 All E.R. 61 at 86 [5] (1983), (SK KB), 28 Sask. R. 249 at 252 [6] [2007] S.J. No. 22 [7] Fridman, The Law of Contract, 6th ed, Carswell, p. 13-14. [8] [1994] S.J. No. 18 [9] R.S.S. 1978, c-S-1.