Western Sleep Products Ltd. Plaintiff v. Lelannd Haver, International Lease/Max Systems Ltd., 2003 BCSC 433

IN THE SUPREME COURT OF BRITISH COLUMBIA Citation: Western Sleep Products Ltd. v. Lelannd Haver et al, 2003 BCSC 433 Date: 20030320 Docket: C996029 Registry: Vancouver Between: Western Sleep Products Ltd. Plaintiff And Lelannd Haver, International Lease/Max Systems Ltd. and Eagle Court Pinnacle Lodges Ltd. Defendants Before: The Honourable Madam Justice Sinclair Prowse Reasons for Judgment Counsel For Plaintiff F.M. Baily Appearing On Behalf Of International Lease/Max Systems Ltd. R. Reece Date and Place of Trial: September 10 - 12, 2002 Vancouver, B.C. (

I) NATURE OF PROCEEDINGS AND RELEIF SOUGHT [ 1 ] This trial pertains to a claim for breach of contract.

Specifically, the Plaintiff claims that it had a contract with the Defendant International Lease/Max Systems Ltd. (“Lease/Max”) wherein Lease/Max would pay it $31,950.30 upon the delivery of various items; that it (the Plaintiff) delivered the items as agreed; and that Lease/Max failed to pay the monies owing, although the Plaintiff has requested that payment. [ 2 ] Although the Plaintiff also claimed that Lease/Max was obligated to pay it interest at a rate of 24% on the outstanding balance of the monies owing, the Plaintiff acknowledged that there was no contractual foundation for this claim and abandoned it during final submissions. (II) ISSUE [ 3 ] The issues raised in this case are whether the Plaintiff and Lease/Max had a contract and, if so, whether Lease/Max breached its obligations under that contract. (III) CIRCUMSTANCES [ 4 ] To put this matter in context, in the fall of 1998 the Defendant Eagle Court Pinnacle Lodges Ltd. (“Eagle Court”) was in the midst of developing a resort outside of Kamloops, B.C.

On November 12, 1998, Eagle Court ordered bedding and seating for this resort

from the Plaintiff, the cost of these items as set out on the Purchase Order being $31,858.18. (The Plaintiff is a business that manufactures bedding and upholstery products.) [ 5 ] At the time that this order was placed, Eagle Court was undergoing some financial difficulties. They contacted Lease/Max to arrange a leaseback arrangement with them. (That is, an arrangement whereby Lease/Max would assume ownership of the goods and Eagle Court would lease them back.) Evidence was led by the Plaintiff that such a financing arrangement is not uncommon.

This was not disputed by Lease/Max. [ 6 ] On or about November 30, 1998, the Plaintiff received a document (on Lease/Max letterhead) entitled “ LEASE APPLICATION STATUS ”. (This title is bolded in capital letters and is in larger print than most of the document.) Above this title and to the right of this document is the phrase “ Providing Your Financial Solution ”.

In this document, the Plaintiff was requested to send its bill to Lease/Max and to ship the goods to “Eagle Court Pinnacle Lodges – dba – The Pinnacle.” [ 7 ] Two thirds of the way down this one-page document is the declaration (set out in bolded letters) that This Lease Application is: Approved . (The size of the print of this declaration is larger than most of the print on the document.

The letters are about the same size as the title LEASE APPLICATION STATUS. ) [ 8 ] Immediately above this declaration is the amount to be paid – namely, $31,858.18, which was the value of the goods ordered by Eagle Court from the Plaintiff. Further, the approved date is November 13, 1998, the day after Eagle Court placed this order with the Plaintiff. [ 9 ] Just below this declaration (that is, the declaration stating This Lease Application is: Approved ) is a paragraph entitled “Terms and Conditions:”. This paragraph provides that: The above total reflects your quote to LELANND HAVER & ASSOC. per PO# 224510.

Please follow above PO# shipping directions, however your invoice MUST state SOLD TO: and SHIP TO as above. Your invoice is one of many for this customer and prompt response is appreciated. FAX copy of invoice showing equipment description, serial numbers (if available), cost breakdown. NO PST, only gst (provide gst #). Your payment will follow satisfactory delivery & installation. Mail original invoice to above address. [ 10 ] LeLannd Haver & Assoc. placed the order on behalf of Eagle Court with the Plaintiff.

PO# 224510 is the number of the Purchase Order placed by Eagle Court (through LeLannd Haver & Associates) with the Plaintiff on November 12, 1998. [ 11 ] At the very bottom of the LEASE APPLICATION STATUS document (that is, under the Terms and Conditions paragraph and in smaller print) is a box containing the following provisions: UPON APPROVAL: INVOICE TO READ AS ABOVE ADDRESSES.

ENSURE INVOICES SHOW EQUIPMENT MAKE, MODEL, SERIAL#, GST (NO PST – USE EXEMPT NUMBER), FAX US A COPY AND MAIL ORIGINAL ASAP ** PRE-AUTHORIZED PAYMENTS MANDATORY UNLESS PREVIOUSLY AGREED ** ALL CREDIT APPROVALS EXPIRE THIRTY DAYS FROM ISSUE DATE ** CREDIT IS APPROVED ON TERMS AND EXACT EQUIPMENT SUBMITTED ** ALL CREDIT APPROVALS ARE SUBJECT TO THE PROPER PUBLISHED RATES AT THE TIME OF DRAW DOWN AND SATISFACTORY DOCUMENTATION BEING COMPLETED ** INTERNATIONAL LEASE/MAX SYSTEMS ASSUMES NO LIABILITY FOR EQUIPMENT RELEASED WITHOUT COMPLETED LEASE [ 12 ] On or about December 21, 1998, pursuant to the LEASE APPLICATION STATUS the Plaintiff shipped the goods to the address set out in that document.

The Plaintiff then billed Lease/Max. As was set out earlier, Lease/Max has failed to pay the money. (IV) ANALYSIS AND DECISION

[ 13 ] In these proceedings, Lease/Max contends that it was not able to finalize its arrangement with Eagle Court as financing could not be secured.

Lease/Max submits that any obligations that it was prepared to assume for Eagle Court regarding the Plaintiff were conditional upon the securing of that financing. [ 14 ] Although any agreement between Eagle Court and Lease/Max may have been conditional on securing suitable financing, the evidence does not prove that the offer made, and subsequently accepted by the Plaintiff in the LEASE APPLICATION STATUS document was subject to any such condition. [ 15 ] The conditions at the bottom of the page do not set out such a condition.

To the contrary, the document read as a whole indicates that the lease has been approved which in turn indicates that the financing has been approved. [ 16 ] In any event, the evidence shows that there is a binding contract between Lease/Max and the Plaintiff.

That is, there is an offer, and acceptance, and consideration. [ 17 ] Specifically, in the LEASE APPLICATION STATUS document Lease/Max makes an offer to the Plaintiff that it (Lease/Max) will pay the Plaintiff $31,858.18, provided that the Plaintiff ships the goods ordered in PO# 224510 to “Eagle Court Pinnacle Lodges – dba – The Pinnacle”. [ 18 ] Upon shipping these goods to that location, the Plaintiff accepted the offer of Lease/Max. [ 19 ] As far as consideration is concerned, the benefit to Lease/Max was that the goods were delivered to them – that is, to the place and at the time as it directed.

The benefit to the Plaintiff was that it was to be paid for these goods. [ 20 ] Pursuant to their contract, Lease/Max was obligated to pay the Plaintiff $31,858.18 if the Plaintiff delivered the ordered goods to the specified location. The Plaintiff did comply with those conditions. Therefore, Lease/Max is obligated to pay it the aforementioned amount. The Plaintiff is granted judgment in that amount, plus interest. (

V) COSTS [ 21 ] As was mentioned during these proceedings, the Plaintiff abandoned one of the two claims that it was pursuing at the conclusion of this trial – namely, its claim that Lease/Max pay interest on the outstanding balance owing at the rate of 24%. That claim for interest was equal to, if not more than, the claim for the balance owing. [ 22 ] Given the fact that these claims were of about equal value, in the end both parties enjoyed equal success. The Plaintiff did not abandon the 24% rate interest claim until final submissions.

At the beginning of the trial, Lease/Max set out that it was as concerned about this interest claim as it was about the breach of contract claim. [ 23 ] Given these circumstances, each party will bear its own costs. “J. Sinclair Prowse, J.” The Honourable Madam Justice J. Sinclair Prowse