AGROCORP PROCESSING LTD., AGROCORP INTERNATIONAL PTE LTD., v. AGROCORP HOLDINGS INTERNATIONAL, 2023 SKKB 219

KING’S BENCH FOR SASKATCHEWAN Citation: 2023 SKKB 219 Date: 20 23 10 20 Docket: QBG-SC-00049-2016 Judicial Centre: Swift Current BETWEEN: AGROCORP PROCESSING LTD., AGROCORP INTERNATIONAL PTE LTD., and AGROCORP HOLDINGS INTERNATIONAL INC. PLAINTIFFS - and - G.F. FARMS LTD. DEFENDANT Counsel: Virgil A. Thomson for the plaintiffs Kevin Hoy for G.F. Farms Ltd. JUDGMENT KEENE J. October 20, 202 3 I. INTRODUCTION [ 1 ] There are two applications for

summary judgment before the court. Counsel for the plaintiffs advised the court that Agrocorp Holdings International Inc. should be the sole plaintiff and the court need not concern itself with the other plaintiffs. Therefore from this point on I will refer to the plaintiff as Agrocorp which will stand for Agrocorp Holdings International Inc. Agrocorp applies under Rule 7-2 of The Queen’s Bench Rules for

summary judgment for damages against the defendant, G.F. Farms Ltd., and interest pursuant to the provisions of The Pre-judgment Interest Act , SS 1984-85-86, c P-22.2 arising out of the failure of the defendant to honour a contract to deliver small red lentils to Agrocorp. The defendant brings a counter application for

summary judgment asking the court to dismiss the plaintiff’s claim. [ 2 ] The parties are in agreement that the facts for the most part are not controversial and this case is more about legal issues. II.

SUMMARY OF FACTS [ 3 ] G.F. Farms Ltd. is a commercial grain farming company. Its principal and sole officer is Guy Fournier who was responsible for making the business decisions for G.F. Farms Ltd. at all material times. In March 2014, Mr. Fournier on behalf of his company, G.F. Farms Ltd., decided to grow lentils for the upcoming crop year and started negotiating with a potential buyer. A controversy has arisen because Mr. Fournier now claims he did not know who or what corporate entity he was going to sell his lentils to. This will be discussed below. For the purposes of this

summary, it can be said that Mr. Fournier on behalf of his company signed production contract 71278 that indicated the name of “Agrocorp International” as the purchaser on the document. The contract set out the terms of purchase of small red lentils. The defendant failed to deliver any red lentils to Agrocorp. This caused Agrocorp to go out into the market to purchase replacement lentils to fulfil contracts Agrocorp had with other parties. It turned out there was a bull market in red lentils that fall and into 2015 which caused Agrocorp to buy into an upward market resulting in alleged damages.

Agrocorp was unhappy with this and sued the defendant for damages. The defendant has put forth a full defence – raising a number of issues. It is to be noted that shortly before this application was to be heard – the plaintiff abandoned its claim under another production contract ( i.e. 71279) leaving only production contract 71278 in contest. III. ISSUES (

a) Is a

summary judgment application(

s) appropriate to determine the lawsuit regarding production contract 71278? (

b) What determinations should the court make regarding production contract 71278?

(

c) What are the plaintiff’s damages? IV. DISCUSSION OF ISSUES (

a) Is a

summary judgment application(

s) appropriate to determine the lawsuit regarding production contract 71278? [ 4 ] The parties are in agreement that this court should decide the lawsuit under the

summary judgment rules in

Part 7 of The Queen’s Bench Rules . I agree. The court believes that this case is largely a matter of contractual

interpretation that is well suited for

summary judgment. I also agree with the parties that there are no substantial conflicts in the evidence and where such conflicts exists, the court should be able to resolve these conflicts. Accordingly, there should be no genuine issue left for trial. (

b) What determinations should the court make regarding production contract 71278? [ 5 ] Agrocorp contends this is a straightforward matter. The defendant entered into a contract to sell red lentils to Agrocorp but failed to deliver the lentils and therefore damages arise accordingly.

The defendant however, sets out several defences. [ 6 ] I will now go through all of this – starting with a reproduction in part of contract 71278: AGROCORP INTERNATIONAL PRODUCTION CONTRACT 71278 GF Farms Inc Date: March 13, 2014 Box 71 Kincaid, SK S0H 2J0 Canada ATTN: Guy Fournier Tel: [Court redacted the telephone number] Fax: [Court redacted the fax number] Email: CLEANING PLANT: South West Terminal Ltd.

BROKER: COMMODITY: 2014 Crop Small Red Lentils QUANTITY: 1088 MTB (+/-) 5% (10 Bus/Acre) on 4000 Acres) LAND LOCATIONS: QUALITY: No2 QB Small Red Lentils EXEMPTIONS: Max Moisture 13% PRICE/BASIS: CAD 20.50/Cwt Clean Loaded Rail PACKING: Bulk In Hopper POSITION: 01/Sep/2014 – 31/Oct/2014 Buyer’s Call PAYMENT TERMS: 90% Upon Receipt Of Inland B/Ls, Balance on Unload At Port TERMS & CONDITIONS: • Dockage Fully Deductible; • Grade, Dockage And Moisture Based On A Per Truckload Basis If Product Grades Outside Of Contract Agrocorp Retains This Right But Not The Obligation To Accept Product At Contracted Price And Terms; • Moisture Test Required Upon Deliver To Plant Or Loading Site If Product Is Not Dry As Per Cgc Standards Agrocorp Will Determine If Seller Must Dry It Down Or Replace To Cargo All At Seller’s Expense • If Either Party Is Unable To Deliver Or Accept The Crop, As The Case May Be, Due To

An Act Of God Than This Agreement Shall Be At An End And Neither Party Shall Be Liable To The Other For Any Further Costs, Charges, Damages Or Expenses Of Any

Kind. For The Purpose Of This Agreement, “Act Of God” Shall Mean An Occurrence Entirely To Forces Of Nature Which Could NotHave Been Prevented Through Human Intervention. Grower Must Provide Verification Of Loss From Crop Insurance Or An AlternateSource Deemed Valid By Agrocorp International. If The Quality Of The Production Grain Is Lower Than Those Listed On TheContract, Agrocorp International Has The Sole Option To

A) Purchase Lower Grade Product At The Lower Of The Contract Or MarketPrice, Or

B) Release The Producer From The Terms, Conditions And Obligation Of This Contract. Agrocorp Retains Right Of FirstRefusal On Balance Of Production On Contracted Acres. Waived 1% Handling Fee Contact Us immediately if any error or omission appears to this contract; otherwise, retention is an acknowledgement and acceptance ofcontract [Emphasis added] [Affidavit of Vijay Iyengar sworn May 17, 2019 at para. 14, Exhibit 10] (

i) Is the contract void for uncertainty? [7] The defendant argues that the above contract is void for uncertainty because there is uncertainty of an essentialterm – who was the actual purchaser? The defendant quotes from several authorities (Sattva Capital Corp. v Creston Moly Corp., 2014SCC 53, [2014] 2 SCR 633; Harle v 101090442 Saskatchewan Ltd., 2014 SKCA 6, [2014] 4 WWR 783 [Harle]; Anderson v Anderson,2021 SKCA 117, 463 DLR (4th) 217 and Jans Estate v Jans, 2020 SKCA 61, 59 ETR (4th) 53) and an excerpt found in Harle where ourCourt of Appeal relied on a passage from John D.

McCamus, The Law of Contracts, 2nd ed. (Toronto: Irwin Law Inc., 2012) at 92 notingthe learned author opined “…Where the parties either fail to reach agreement on all essential terms of the agreement or expressthemselves in such a fashion that their intentions cannot be divined by the court, the agreement will fail for lack of certainty of terms.”The defendant then goes on to argue that “Agrocorp International” is nothing – it is not a company – it is not any sort of legal entity andtherefore when Mr.

Fournier signed the production contract he had no idea who his company was contracting with and the result is thatthe contract is void for uncertainty. In many respects this is the bell ringer of the defendant’s argument that the contract should not beenforced by the court because the identity of the buyer is unknown or inscrutable.

The defendant particularly points to the Nova Scotiacase of Cloake v Canada Permanent Trust Company (1982), (NS SC), 56 NSR (2d) 243 (NS SC) [Cloake] where thecourt held that the identity of a contracting party was essential in a chattel mortgage covering a 1980 Pontiac Acadian car. [8] In an attempt to strengthen the defendant’s argument that the lack of certainty voids this contract – thedefendant also looks to s. 267(1) of The Business Corporations Act, RSS 1978, c B-10 (since rep) [BCA] and The Business NamesRegistration Act, RSS 1978, c B-11 [BNRA].

The BCA stated: Publication of name 267(1) A corporation shall set out its name in legible characters in all contracts, invoices, negotiable instruments and orders for goods orservices issued or made by or on behalf of the corporation.

(2) Subject to subsection (1), a corporation may carry on business under or identify itself by a name other than its corporate name, wherethat other name has been registered under The Business Names Registration Act. [9] The BNRA states: Publication of name 9.1 Every person and firm that has registered a business name pursuant to this Act shall set out his or its business name in legiblecharacters in all contracts, invoices, negotiable instruments and orders for goods or services issued or made by or on behalf of the personor firm. [10] The defendant goes on to argue that s. 262(1) of the BCA required every corporation carrying on business inSaskatchewan to be registered in Saskatchewan.

The defendant points out none of the plaintiffs, including Agrocorp HoldingsInternational Inc. was in compliance with the BCA as of March 2014 when the production contract was signed. [11] In this sense, the defendant has pivoted from the factual issue of who did the defendant contract with (i.e. Mr.Fournier seems to imply he was at a loss as to whom his company was doing business with) to an argument centered on compliance withprovincial statutes. [12] The plaintiff argues that the defendant misconstrues the purpose of s. 267 of the BCA.

The plaintiff contendsthat the purpose of s. 267 of the BCA (or for that matter s. 9.1 of the BNRA) was to ensure that a party to the contract understood whetherthey are either dealing with a person or with a corporation for which there is no personal liability. I find myself in agreement with theplaintiff on this point.

Section 267 of the BCA has turned up in Saskatchewan cases (Desjardins v 627332 Saskatchewan Ltd. (McNabTownhouses Joint Venture), 2008 SKPC 176, 351 Sask R 131; Drury Farms Inc. v Stevenson, 2008 SKPC 68, 46 BLR (4th) 319;Westcor Builders

(2003) Inc. v Freshair Enterprises Ltd., 2017 SKPC 99; Vallis v Prairie Alternative Energy Solutions Ltd., 2013 SKPC124, 426 Sask R 61; Hill v Kronberg, 2016 SKPC 152 and Patrick v Toovey, 2006 SKQB 83) but only for the purpose of addressing asituation in which a defendant claimed they had no personal liability because the plaintiff contracted with a corporation. The defendanthas not cited any authority that supports its

interpretation of s. 267 of the BCA that the failure to disclose on the production contract thecomplete corporate name of Agrocorp Holdings International Inc. caused statutory induced uncertainty and therefore invalidated thecontract. [13] The Cloake case has been proffered by the defendant as an important authority for its lack of certainty defence.The facts are distinguishable in that Justice Rogers was deciding whether a bona fide purchaser in good faith and for value of a motor

vehicle had to yield to the mortgagee’s interest. The court, keeping within the four corners of the chattel mortgage, at paras. 15-24discusses the law (as then known to the court) and held that there was ambiguity as to which entity – Canada Permanent Trust or CanadaPermanent Mortgage was the identifiable party and then looked to s. 8 of the Nova Scotia Bills of Sale Act, RSNS 1967, c 23 as to theeffect of such ambiguity and decided the requirements of that

section had not been met. The Cloake case is distinguishable on its factsand not binding on this Court. Further, the Cloake case does not reflect the present judicial approach to determining certainty of essentialterms (see Sunrise Foods International Inc. v MGM Specialty Livestock Ltd., 2020 SKQB 312 [Sunrise Foods] discussed below) whichcan involve an analysis beyond a mere facial review of the contract. [14] I will return to the facts of our case. It is obvious that Mr. Fournier, on behalf of his company, was well awarethat he (i.e. his company) was dealing with a corporation. Mr.

Fournier deposed in his affidavit sworn September 20, 2022 that: 12. In or around the month of March 2014, I discussed the terms of an agreement for the sale of red lentils in a telephone conversationwith Colin Young (“Young”), whom I understood worked for a commercial grain purchaser. At the time of my March 2014 discussionswith Young, it was my understanding that Young worked for a company that I simply knew as “Agrocorp.” My understanding was basedon the fact that Young described the company for which he worked as “Agrocorp” and that G.F.

Farms had previously sold grain to anentity that I knew as “Agrocorp” under agreements that I had also negotiated with Young. 13. As of March of 2014, I did not have a precise understanding of the corporate identity of “Agrocorp,” nor did I have personalknowledge as to the name of the specific corporate entity for which Young worked. I have no recollection of Young informing me as tothe corporate identity of the party who would act as the purchaser in a potential 2014 agreement concerning G.F. Farms’ sale of redlentils to be produced that year. [Emphasis in original] [15] The above establishes that Mr.

Fournier knew his company was contracting with a corporation. The court willgo further and find that Mr. Fournier, despite his protests to the contrary, actually knew that his farming corporation was contractingwith the plaintiff, Agrocorp Holdings International Inc. because in the past G.F. Farms Ltd. had entered into similar contracts andreceived payments from Agrocorp Holdings International Inc. (Affidavit of Vijay Iyengar sworn July 6, 2022 at para. 12).

Further, Mr.Fournier during his cross examination at pages 47-49 admitted that in the summer of 2013 he would have likely seen grain receiptsshowing that the plaintiff, Agrocorp Holdings International Inc., was the buyer of commodities purchased from G.F. Farms Ltd. in thatyear. All of this leads to my conclusion that Mr. Fournier knew the purchaser was Agrocorp Holdings International Inc. despite the use ofthe heading “Agrocorp International” on production contract 71278. [16] Mr.

Fournier argues that Agrocorp Holdings International Inc. was not extra provincially registered inSaskatchewan at the time the production contract was entered into and raises this as a defence. I find this argument is without merit (see:408464 Ontario Limited v Gogals Furniture Ltd. (1986), (SK KB), 53 Sask R 147 (QB) at paras 1-3 [Gogals], wherethe court held “s. 275(1) [of the BCA] is regulatory in nature and does not have as its end the creation of a defence to an action founded incontract”).

Although Gogals dealt with s. 275(1) of the BCA – the reasoning applies to s. 262(1) of the BCA. [17] To round this out, I note Justice Currie’s comments in Sunrise Foods about what is required to determinecertainty of essential elements in a contract: [18] In Hailink Dent Removal Inc. v Kindersley Mainline Motor Products Ltd., 2018 SKQB 138 at paras 22-23, Justice Smith addressedwhat is required for the creation and enforcement of a contract: 22 Contracts, oral or written, are enforceable so long as the parties have an intention to contract, the essential terms are agreed upon, andthe terms are sufficiently certain.

The test for determining the same was recently reiterated by Pfuetzner J.A. of the Manitoba Court ofAppeal in Matic v Waldner, 2016 MBCA 60 at para 55, 330 Man R (2d) 107 (leave to appeal refused [2016] SCCA No 359 (QL)): [55] The standard for determining whether an agreement, written or oral, has been reached, is whether an “objective reasonablebystander”, looking at all the material facts, would say so.

GHL Fridman, The Law of Contracts in Canada, 6th ed (Toronto: Carswell,2011) describes the test as follows (at p 15): Constantly reiterated in the judgements is the idea that the test of agreement for legal purposes is whether parties have indicated to theoutside world, in the form of the objective reasonable bystander, their intention to contract and the terms of such contract. The law isconcerned not with the parties’ intentions but with their manifested intentions.

It is not what an individual party believed orunderstood was the meaning of what the other party said or did that is the criterion of agreement; it is whether a reasonable man inthe situation of that party would have believed and understood that the other party was consenting to the identical terms. As Fraser C.J.A.said in Rob Ghitter Property Consultants ltd. v.

Beaver Lumber Co. [2003 ABCA 221 at 9, 330 AR 353]: the parties will be found to have reached a meeting of the minds, in other words be ad idem, where it is clear to the objectivereasonable bystander, in light of all the material facts, that the parties intended to contract and the essential terms of that contractcan be determined with a reasonable degree of certainty. [emphasis added [by Justice Smith]] The classic origin of the rule dates back to the late 1800s when articulated by Blackburn J. in Smith v Hughes (1871), L.R. 6 Q.B. 597(Eng.

Q.B.). 23 Although a written contract or memorandum might assist the court in evaluating whether consensus ad idem was reached, the absenceof the same is far from fatal. G.H.L. Fridman, The Law of Contracts in Canada, 6th ed (Toronto: Carswell, 2011), explains the analysisrequired in regard to oral contracts, at page 16: If there is no single document to which reference can be made in order to decide if a contract exists between the parties, but a series of

negotiations, then everything that occurs between the parties relevant to the alleged contract must be considered by the court which isfaced with the problem of deciding the issue.

From what they have said, done, or written, in combination if necessary, there must beestablished a bargain or an agreement. [19] This approach was confirmed by the Court of Appeal in Jans Estate v Jans, 2020 SKCA 61, where Justice Tholl said at para 34: 34 In order for a contract to exist there must be a consensus ad idem, or a meeting of the minds, with regard to the essential terms: Tetherv Tether, 2008 SKCA 126 at para 62, [2009] 4 WWR 274.

This same proposition is set out in a slightly different manner in Matic vWaldner, 2016 MBCA 60 at para 57, [2017] 1 WWR 504 (leave to appeal to the SCC refused, ), where Pfuetzner J.A.stated that a contract is only formed when three criteria are met from the perspective of an objective bystander: (

a) the parties intended to contract; (

b) the parties reached agreement on all essential terms; and (

c) the essential terms are sufficiently certain. [20] The essential terms of a contract are the parties, the property and the price. This essence of a contract was referred to by JusticeTholl at para. 35 of Jans Estate, in the context of a contract involving land and other items. It applies equally to a contract involving onlyitems other than land. ... [30] It is not necessary for me to address whether the defendants did not deliver durum for the reason that Mr. Blazeiko provides or forthe reason that Sunrise suggests.

As described in Hailink the question is whether an objective reasonable bystander, who is aware of allof the circumstances surrounding the alleged contract, would conclude that the parties intended to contract and that the essential terms ofthe contract can be identified with a reasonable degree of certainty. The focus is not on the parties’ intentions but on their manifestedintentions. [18] Mr.

Fournier during cross examination on his affidavit at pages 23-25 of the transcript admitted to makingdelivery on six past contracts which referred to only the purchaser as being “Agrocorp International” and that nevertheless, the defendanthonoured these contracts and delivered the commodities. [19] Additionally, during this cross examination Mr. Fournier admitted to receiving wire transfers prior to March2014 and he had no reason to believe that the bank document did not identify the payor as being Agrocorp Holdings International Inc.

Ireproduce from this transcript the following: Pages33-35 Q Well, let me reframe it, I guess, Mr. Fournier. Now, prior to March of 2014, do you recall ever receiving any type of wires withregard to payments from an Agrocorp entity towards yourself? A I would say so, yes. They’re, like, you know, all together, yes, there -- there must have been some payments. I’ve dealt with themfor quite a few years. … Q Okay. But do you recall, as an example, when you would look over your bank statement, and -- A Yes. Q -- you received a wire transfer -- A Yeah. Q -- did it say who the wire transfer was from?

A It would usually say something, yeah. Q Do you recall if it would have said “Agrocorp International Holdings”? A They -- Agrocorp usually straight out, usually, it said “Agrocorp Processing,” “Agrocorp Holdings,” “Agrocorp Ltd.” I do believethey were using three different names. Q But, Mr. Fournier, I want to be clear in terms of this. I’m asking you, is that: D you, specifically, recall receiving any -- in yourbank statements, would it specifically say, Deposit, $114,611; would it say the entity from which you received the wire transfer? A It should, yes. Pages 41-43 Q So, Mr.

Fournier, let me ask you this, then: If you did not receive confirmation, how did you know that the funds, whichsuddenly appeared in your account, related to payment for a contract you had executed with Agrocorp? A How did I know?

Q Yes. A Yeah, it would have been a -- if only, if I would have looked and seen that there was a deposit and it came from Agrocorp, I would have had to have looked at my statement -- looked at my bank statement and seen that it was put in by Agrocorp; otherwise, it’s a complete trust thing on the -- with the entity to put the money in, complete trusting. … Q Sure. My question is, Mr. Fournier, is: Do you recall, when you received payment on any of those six contracts, would your bank have identified the payer party as being Agrocorp Holdings International? A I hope so. Q All right.

You don’t have any reason to believe that didn’t occur? A I don’t have any reason, no. [Plaintiff’s brief of law dated March 20, 2023 at para. 33] [ 20 ] I am satisfied that an objective reasonable bystander would be aware that G.F. Farms Ltd. and Agrocorp Holdings International Inc. had contracted on multiple occasions in similar contracts which referred to “Agrocorp International” as the purchaser and as a result G.F. Farms Ltd. received payment on these contracts from the plaintiff.

In the court’s opinion, these circumstances would cause an objective reasonable bystander to conclude that when the production contracts were entered into these contracts while referring to “Agrocorp International” – this was understood by the parties to be Agrocorp Holdings International Inc. [ 21 ] The cross examination further reveals that Mr. Fournier admitted that he would have received grain receipts from the trucking company which made delivery on past contracts from 2013 with “Agrocorp” and he would have seen on these receipts that the purchaser was Agrocorp Holdings International Inc. Q Okay.

So you would have seen, Guy Fournier, then, in the summer of 2013, that it was Agrocorp Holdings International Inc. doing business as Agrocorp International that was the purchaser, correct? A Oh, I -- that's a tough one. So what are you asking me? That I read that it said “Agrocorp Holdings International.” Q Inc., yes. A Oh, boy. You’re asking me if I read that particular line? Hmm. Wow. That’s a tough one. I -- I don’t recall. It was too long ago, but I would -- you know. I don’t – no, it’s a -- you can’t ask me if I read that particular line on a grain receipt that was 18 years ago.

Yeah, but I would -- I received it somehow along the lines, so -- yeah, I probably read -- read where it was from: Agrocorp. Q From Agrocorp Holdings International Inc.? A It could be, yeah. Now they -- now they put the full name in, but the -- on the other -- anyways, carry on. [Cross examination of Guy Fournier, pages 48-49] [ 22 ] In the end, I find it disingenuous for Mr. Fournier to now state that he was uncertain with whom his farming corporation contracted with.

There is ample evidence he knew exactly who it was – Agrocorp Holdings International Inc. even though the contract used the short form name “Agrocorp International” on the production contract. [ 23 ] Therefore, I find there is no genuine issue requiring a trial on the issue of uncertainty of identity. This defence fails for the above reasons and is easily decided in this

summary manner. (ii) Was the production contract uncertain as to other essential terms? [ 24 ] The defendant seems to also argue that the production contract was uncertain as to where the lentils were to be delivered following cleaning. In my opinion this does not have any merit. Mr. Fournier was questioned on this. The court will sacrifice brevity to reproduce his responses from the plaintiff’s read ins as follows: Page 41 of the Transcript Q Okay. What about this provision for them being to deliver it to South West Terminal as the cleaning plant and loading location? A What’s the question, please? Q Okay.

Did you discuss where delivery would take place? A Yes. Page 55-58 of the Transcript Q Before we took the break, I was trying to establish when you would have received this letter saying you owed money that you burnt. And I had asked you whether it was before the deliver date or after the delivery date called for under your contract. A I would say it’s after the delivery date.

Q Okay. Did you make any arrangements to deliver under contract 71278, which we’ve marked as D-1? A Yes, with South West Terminal. Q Okay. And what arrangements did you make with South West? A We were trying to get cars. Q Okay. When -- when did you make those inquires? A It would have been when I was harvesting. Q Okay. And I’m not sure when you would have started harvesting in 2014. Would you have been started in -- early in August? A Correct. Q Okay. What were the result of those inquiries? A They were having a hard time getting cars. And it didn’t look like they could get cars. Q Okay.

Did you discuss with anybody at Agrocorp possible alternate arrangements? A I do not recall. The – Q Okay. Just – no, you started saying something else. So – A I’m fine. I’m fine. Q Okay. So were there ever any cars spotted to fulfill this contract? A No. Q And you don’t recall whether you contacted anybody at Agrocorp to discuss alternate delivery provisions? A Can you repeat the question, please? Q Okay. You weren’t able to comply with the requirements to deliver clean loaded rail at South West Terminal. And if I understood you correctly, that they were unable to get cars spotted for that purpose.

Is that -- was that your answer? The gist of your answer? A I’m still not following. Sorry, I’m not getting the question. Q Okay. You attempted to fulfill this contract by getting cars spotted at South West Terminal; is that correct? A That’s correct. Q How many cars would you have needed to – A I’m not sure. Q -- to -- for the amount that was to be delivered? A We were still disputing the second contract, so I’m not sure. Q Okay, I’m just talking -- just for the first contract right now. So for the first contract you would have needed – A I’m not sure. Q Okay.

You were unable to get cars for the relevant time period, that’s September 1st to October 31st? A That’s correct. Q Okay. Did you contact anyone at Agrocorp to determine if some alternate delivery arrangement could be made? A No. Page 65/66 of the Transcript A Is that what is said? Hang on a minute because I don’t remember seeing that in the contract when I -- when he drew that up, I don’t remember telling him that’s what it was because you see they’ve got this written down as a cleaning plant. It’s not even a cleaning plant, South West Terminal. So I don’t even get where you could get that information form.

Q Okay. So where would the cleaning be done? Would you do that on the farm? A That or hire somebody. Q Okay. You’ve got your own equipment to clean?

A Yeah. Page 76 of the Transcript Q Okay. Let’s go to -- to document D-1. You understood where South West Terming Ltd. is? A Correct. Q That facility is at Hazenmore, Saskatchewan. A Yes, one of them. Q Okay. So it was not -- it wasn’t uncertain where you were gong to make delivery to? A What’s this – whatever the contract said [ 25 ] Mr. Fournier clearly understood that “Clean Loaded Rail” meant that G.F. Farms Ltd. was responsible for having the lentils cleaned and loaded onto a rail car so the commodity could be delivered directly to the buyer (cross examination transcript of Guy Fournier, pages 12-13).

Further the cross examination transcript of Mr. Fournier at pages 9-11 shows that he was aware of prior production contracts which referred to the “Cleaning Plant” as being the “South West Terminal Ltd.” and it is apparent he knew where he was to deliver and indeed had done exactly that in the past. It also appears that Mr. Fournier did not consider the place of delivery to be an essential term of the production contract in any event because past contracts did not even mention the place of delivery and G.F.

Farms Ltd. still made delivery on the contract with the actual location of delivery being assigned after the signing of the contract (cross examination transcript of Guy Fournier at pages 15-17). [ 26 ] I am satisfied that Mr. Fournier was not confused as to what the production contract meant. He knew the lentils were to be cleaned and then delivered to South West Terminal Ltd. at Hazenmore, Saskatchewan to be loaded on to train cars that G.F. Farms Ltd. was supposed to arrange.

The production contract stipulated that delivery was to occur between September 1, 2014 and October 31, 2014. [ 27 ] The defendant also appears to raise an issue as to the delivery point for lentils under the contract’s first right of refusal claiming this was not set out and therefore is uncertain and voids all or part of the contract. I will deal with the first right of refusal issue later on but for these purposes will consider this issue here. I find this argument has no merit.

This is an ancillary term of the production contract and did not cause any uncertainty. [ 28 ] I find there was no uncertainty in regards to any of the essential terms of production contract 71278 and dismiss the defendant’s arguments. There is no genuine issue on this point regarding a trial. (iii) Repudiation of production contract 71278 [ 29 ] The genesis of the defendant’s argument that the plaintiff repudiated production contract 71278 appears to be based on the fact that there were two contracts – the signed contract 71278 and the unsigned contract 71279. G.F. Farms Ltd. did not deliver on either contract.

The plaintiff demanded delivery on both contracts. It seems that the defendant believes this demand for delivery acted as some sort of repudiation by the purchaser. Quite frankly, that appears to be the exact opposite of repudiation in that the plaintiff demanded performance of the production contracts. This defence seems predicated on Mr.

Fournier’s assertions that if he complied with the production contract 71278 and made delivery but did not do so on the unsigned contract 71279 – the plaintiff would breach production contract 71278 by not paying his corporation to make up for the non-delivery under production contract 71279. There is no evidence that this was the intention of the plaintiff. Therefore I find that there is no merit to this defence and there is no genuine issue requiring a trial. (iv) Anticipatory breach [ 30 ] The defendant has plead that the plaintiff’s demand that G.F.

Farms Ltd. deliver on both production contracts constituted anticipatory breach of production contract 71278. The test is not whether Mr. Fournier subjectively believed that the demand for delivery amounted to anticipatory breach but rather what an objective person would reasonably believe. ( Spirent Communications of Ottawa Limited v Quake Technologies (Canada) Inc. , 2008 ONCA 92 at para 37 , 291 DLR (4th) 163). I find there is no evidence that the plaintiff was engaged in any form of anticipatory breach of contract conduct. Again, the facts point to the opposite.

The plaintiff actively pursued performance of production contract 71278 and there is no objective evidence that Agrocorp intended to breach that contract. Therefore this defence has no merit and must be dismissed resulting in no genuine issue needing a trial. (

v) Is the “Right of First Refusal” valid? [ 31 ] Production contract 71278 states: “Agrocorp Retains Right Of First Refusal On Balance Of Production On Contract Acres” [ROFR]. The defendant argues that the plaintiff’s claim for damages under the ROFR should not succeed for two reasons: (

a) The ROFR is too vague and uncertain to enforce and should be severed from production contract 71278; and (

b) Even if the ROFR is enforceable, the plaintiff did not suffer any damages under the ROFR because all of the sales concluded by G.F. Farms Ltd. for its 2014 red lentil production were concluded for market prices. [ 32 ] The defendant raises a compelling argument that I should consider before tackling the above issues. The defendant contends that Agrocorp seems to be conceptualizing the ROFR clause as granting the purchaser under production contract 71278 an option to purchase G.F. Farms Ltd.’s surplus production of red lentils on contracted acres at the fixed contract price of $20.50

per CWT (being the price for the primary delivery obligation of 1088 metric tonnes of lentils) as opposed to the price equal to oneoffered to G.F. Farms Ltd. by a third party purchaser. I agree with the defendant that the plaintiff’s suggested meaning of the ROFR isinconsistent with the generally accepted meaning of the phrase “first right of refusal” in commercial law. [33] Bryan A. Garner, Black’s Law Dictionary, 11th ed (Minnesota: Thomson Rueters, 2019) [Black’s] defines “Firstright of refusal”: right of first refusal. (1900) 1.

A potential buyer’s contractual right to meet the terms of a third party’s higher offer. • For example, ifBeth has a right of first refusal on the purchase of Sam’s house, and if Terry offers to buy the house for $300,000, then Beth can matchthis offer and prevent Terry from buying it. … [34] The above definition finds favour in the jurisprudence in this province where, for example, Justice MacLeanheld “…The lease contains what is referred to as a ‘Modified Right of First Refusal to Purchase’.

As this phrase implies, it grantsWascana [Wascana Energy Inc.] the right to match any offer received by Robert’s [Robert’s Victoria Centre Inc.] for the sale of thebuilding” (Wascana Energy Inc. v ADAG Corp.

Canada Ltd., [1997] SJ No 126 (QL) (Sask QB) at para 4). [35] Further, Justice Feldman writing for the Ontario Court of Appeal in Harris v McNeely (2000), (ON CA), 47 OR (3d) 161 (Ont CA) nicely summarizes the difference between an option to purchase and a ROFR as follows: [16] The difference between an option to purchase and a right of first refusal is that in the latter case, there is no specifically enforceableright at the time the agreement is executed.

Rather the right is contractual only and consists of the agreement of the grantor that if atsome time he becomes prepared to accept an offer to buy his property, then at such time the grantee has a time-limited option to purchaseon the same terms. [36] The plaintiff was unable to provide any authority that the phrase “first right of refusal” in any commercialagreement has been interpreted to mean an option for a buyer to purchase at a stipulated contract price upon notice of a third party’soffer. Agrocorp’s approach is to rely solely on Mr.

Iyengar’s affidavit evidence where he attempts to explain his subjectiveunderstanding of what the contractual phrase “Right of First Refusal” in the contract meant.

However, that approach is of little assistanceand contrary to the law (Vandal v Cousineau, 2015 ABCA 408 at para 9, 609 AR 380). [37] Finally, to round all of this out – the plaintiff drafted the production contract and the contra proferentem ruleapplies to any such clause and if considered ambiguous then the ambiguity should be interpreted against the interests of the party thatcreated the clause. [38] I will now, having concluded that the court is dealing with a ROFR and not some sort of option consider the twoabove issues. (

a) The ROFR is too vague and uncertain to enforce and should be severed from production contract 71278 [39] The defendant argues that the ROFR clause is brief – all it says is that “Agrocorp Retains Right Of First RefusalOn Balance Of Production On Contracted Acres” and since the part of the production contract designated to set out the “Land Locations”was left blank then it is “impossible to determine the specific seeded acres to which the ROFR pertains upon review of the text ofProduction Contract 71278” (defendant’s reply brief at para. 19).

The defendant acknowledges the contract refers to 4,000 acres butstates there is no mention of what specific land the ROFR pertains to. In short, there is no way to ascertain what extra production goeswith which land – just a vague reference to a ROFR and 4,000 acres. [40] In my opinion, the defendant raises a good point. It is evident G.F. Farms Ltd. seeded more than 4,000 acres ofred lentils in 2014. The actual seeded acreage (i.e. Land Location) was left blank at the time the production contract was signed.

Thisresults in uncertainty as to exactly which seeded acres the purchaser was claiming a production interest in. The court notes counsel forthe plaintiff has produced in his brief an elaborate mathematical wave of calculations and in that way the plaintiff hopes the riddle can besolved. In my view that is not good enough. The drafter of the contract should have anticipated the need for precision and the plaintiffshould not have left things to chance by leaving out the land descriptions.

I find that the ROFR is unenforceable for being uncertain inthat there is no way to satisfactorily remedy the lack of specifics as to what land the parties were contemplating. Therefore, the ROFRshould be severed from the production contract 71278 as being unenforceable. However, in the event I have misdirected myself on thelaw – I will consider the second issue. (

b) Even if the ROFR is enforceable, the plaintiff did not suffer any damages under the ROFR because all of the salesconcluded by G.F. Farms Ltd. for its 2014 red lentil production were concluded for market prices [41] The plaintiff contends that damages should be calculated on the basis of the differential between $20.50 perCWT contract price for 1,088 metric tonne delivery obligations and the average price paid by the plaintiff for red lentils betweenNovember 1, 2014 and July 7, 2015 (being $34.58 per CWT) on any red lentils it could have purchased from G.F.

Farms Ltd. beyond theminimum amount stipulated in the production contract. I have already found that this is not how the ROFR clause should operate – this isnot an option to buy red lentils at $20.50 per CWT. It is a ROFR on what G.F. Farms Ltd. was offered by a third party purchaser (i.e. themarket price).

Instead, in my opinion, any damages should be quantified as the difference between the price offered by a third party(being the price the plaintiff under production contraction 71278 would have been entitled to match) and the market price for red lentils.(See Peterson v Canadian Imperial Bank of Commerce (1992), (SK CA), 105 Sask R 113 (Sask CA) at paras 12-13and 15). I am satisfied that G.F. Farms Ltd. sold all of its red lentils produced during the 2014 growing season at the available marketprice at the time of sale (affidavit of Guy Fournier sworn September 20, 2022 at para. 47).

This resulted in no damages from any breachof the ROFR because there was no loss of bargain to the purchaser under the production contract 71278. Damages could have resulted ifG.F. Farms Ltd. had sold the balance of its red lentils to a third party at a price lower than the market price. There is no evidence that thishappened. Accordingly, even if I have reached the wrong conclusion on the first issue – I have decided the plaintiff did not suffer anydamages in any event under the ROFR and see no need for a trial of any issue under this heading.

(vi) Conclusion on production contract issues [ 42 ] In conclusion, the court finds that each of the defences raised to impeach the validity or enforceability of production contract 71278 have failed with the exception that the ROFR clause is not enforceable or if it is, there has been no resulting damages. The contract was validly executed and is enforceable (with the exception of the ROFR) and the defendant breached this contract by failing to deliver the lentils under the production contract. There is no genuine issue left to be decided at trial. (

c) What are the plaintiff’s damages? [ 43 ] The starting point is s. 50 of The Sale of Goods Act , RSS 1978, c S-1 [ SGA ] reproduced as follows: Damages for non-delivery 50(1) Where the seller wrongfully neglects or refuses to deliver the goods to the buyer the buyer may maintain an action against the seller for damages for non-delivery.

(2) The measure of damages is the estimated loss directly and naturally resulting in the ordinary course of events from the seller’s breach of contract.

(3) Where there is an available market for the goods in question the measure of damages is prima facie to be ascertained by the difference between the contract price and the market or current price of the goods at the time or times when they ought to have been delivered or if no time was fixed then at the time of the refusal to deliver. [ 44 ] The controversy here is: which subsection (50(2) or 50(3)) should apply?

The plaintiff contends it incurred costs to purchase replacement red lentils in an upward market over an extended period of time and therefore relies on ss. 50(2) and should be entitled to average its purchase costs resulting in $34.58 per CWT.

The damages then would be the tonnage times the difference between the stipulated cost of $20.50 CWT and $34.58 CWT. [ 45 ] The defendant argues that ss. 50(3) of the SGA should apply because there is reliable evidence that there was “an available market” around the end of October and early November 2014 based on data from the Province of Saskatchewan Ministry of Agriculture (see Input Capital Corp v Gustafson , 2021 SKQB 250 at para 33 where the court accepted market data published by Statistics Canada in a SGA non-delivery case) that 1,210,900 metric tonnes of red lentils were produced in Saskatchewan in 2014 and the price of red lentils at the end of October 2014 was $29.29 per CWT (Fournier affidavit sworn September 20, 2022 at paras 48-50, Exhibit “K”).

I acknowledge the plaintiff’s argument that despite this – it had to fill other contracts for red lentils and having to go into the market to replace the lentils contract put the plaintiff to a disadvantage. I am not persuaded this was the case because of the apparent volume of production in the province at the time. [ 46 ] I find myself in agreement with the defendant’s argument. I recognize that the plaintiff decided to work its way through the market from November 1, 2014 to July 7, 2015 – picking and choosing when to purchase small red lentils and in this way attempts to now rely on ss. 50(2) of the SGA .

However, I find ss. 50(3) of the SGA should govern the calculation of damages in these circumstances. Firstly, s. 50(3) of the SGA directs the court to that method of calculation. Secondly, there is evidence of availability of small red lentils for sale in the market in October and early November 2014. Agrocorp purchased 544 metric tonnes of small red lentils for $28 per CWT on November 4, 2014 (affidavit of Vijaykumar Iyengar sworn July 6, 2022, Exhibit “K”).

Further, the plaintiff’s evidence shows it successfully purchased a total of 1,082 metric tonnes ( i.e. approximately the tonnage under production contract 71278) of small red lentils in four transactions dating from between November 4, 2014 and December 8, 2014 with the majority of such tonnage being purchased in the first half of November (affidavit of Vijaykumar Iyengar sworn July 6, 2022, Exhibit “K”).

I agree with the defendant that the fact that the plaintiff was able buy over 1,000 metric tonnes of small red lentils in a matter of weeks following the expiry of the delivery period in the production contract shows the availability in the market of the commodity. [ 47 ] The court notes the plaintiff relies on Sunrise Foods particularly at paras. 55-62 .

However, that case can be distinguished on its facts because as Justice Currie pointed out in para. 62 “there was no ‘available market for the goods in question’” and therefore damages were calculated pursuant to ss. 50(2) of the SGA . [ 48 ] Accordingly, I am persuaded that the defendant’s approach for quantifying damages is appropriate.

I find that the difference between the production contract price of $20.50 CWT and the October 31, 2014 market price of $29.29 per CWT based on the stipulated contract obligation of 1,088 tonnes is $210,837.40 which represents the plaintiff’s damages under ss. 50(3) of the SGA . [ 49 ] However, matters do not end here. The plaintiff asserts that in addition to the damages for non-delivery – Agrocorp was required to pay for cleaning and loading of lentils to rail in the amount of $47,872 as set out in para. 54 of Mr. Iyengar’s affidavit sworn July 6, 2022.

The point being the production contract called for “Clean Loaded Rail” and because replacement lentils had to be cleaned and loaded this should be a cost or damages that the defendant is responsible for. Mr. Iyengar sets out in some detail (with exhibits) the basis for this claim in paras. 49-56 of his affidavit that for the sake of brevity I will not reproduce. [ 50 ] The defendant takes exception with this remonstrating that the “evidence does not establish that it actually incurred such costs” (defendant’s reply brief at para. 46). Respectfully, I disagree. The evidence of Mr.

Iyengar is detailed and on point and in my view establishes there was a need to clean and load replacement lentils caused by the breach of the production contract by the defendant. It is the best evidence in this regard and I accept his evidence. Accordingly, I find that the plaintiff has proven further damages in the amount of $47,872 and there is no genuine issue on this point requiring a trial. V.

SUMMARY AND JUDGMENT [ 51 ] The plaintiff, Agrocorp Holdings International Inc., has brought an application for

summary judgment that, in part, has been successful. However, I note the plaintiff originally sued under two different production contracts – contract 71278 (that has been the subject of this application) and the unsigned contract 71279. The plaintiff decided to withdraw any claim under contract 71279

shortly before the hearing date for these applications. The defendant was put to considerable work and expense to deal with that abandoned claim. For clarity the court orders that the plaintiff’s claim stands dismissed regarding production contract 71279. The plaintiff was unsuccessful in its attempt to receive damages under the ROFR in production contract 71278. However, the plaintiff was successful in receiving

summary judgment for damages on the primary production contract 71278 but was unsuccessful in its approach on quantification for damages. The plaintiff was successful in receiving cleaning and loading damages. The court finds it is appropriate that the plaintiff receive pre-judgment interest as per The Pre-judgment Interest Act , SS 1984-85-86, c P-22.2 from December 1, 2014 to the date of judgment. The defendant has had some success in defending the plaintiff’s application but failed to persuade the court the plaintiff’s claim should be dismissed summarily. [ 52 ] In conclusion, the court orders the following: (

a) The plaintiff, Agrocorp Holdings International Inc., shall receive judgment against the defendant, G.F. Farms Ltd., for damages in the amount of $210,837.40 for failing to deliver on production contract 71278; (

b) The plaintiff, Agrocorp Holdings International Inc., shall receive judgment against the defendant, G.F. Farms Ltd., for damages in the amount of $47,872 for cleaning and loading of small red lentils resulting from the failure to deliver on production contract 71278; (

c) The plaintiff, Agrocorp Holdings International Inc., shall receive judgment against the defendant, G.F. Farms Ltd., for pre- judgment interest per The Pre-judgment Interest Act on the total damages awarded of $258,709.40 from and including December 1, 2014 to the date of judgment in accordance with that Act . (

d) The plaintiff, Agrocorp Holdings International Inc.’s claim under production contract 71279 is dismissed; and (

e) The defendant, G.F. Farms Ltd.’s application for

summary judgment is dismissed. VI. COSTS [ 53 ] The parties have had mixed success. Additionally, the plaintiff belatedly abandoned its claim under contract 71279. In considering all of this, I have decided that neither party shall receive costs with the exception that if there has been any specific cost awards made during the course of these proceedings then those costs should be paid as ordered. J. T.J. KEENE