Schnare Fisheries Ltd. Claimant v. B. Cameron Fisheries Ltd. Defendant Adjudicator : Eric K. Slone Heard : July 7, 2023 via zoom in Halifax, Nova Scotia, written submissions received on various dates Appearances : For the Claimant, Brent H. Silver For the Defendant, Jordan M. Upton By the Court: [ 1 ] This case concerns the aborted sale by the Defendant to the Claimant of a 45-foot fishing boat, the “Maggie Chantal.” [ 2 ] The trial, 2023 NSSM 81

Small Claims Court OF NOVA SCOTIA Schnare Fisheries Ltd. v. Cameron Fisheries Ltd ., 2023 NSSM 81 Date: 20231017 Docket: SCBW 517981 Registry: Bridgewater Between: Schnare Fisheries Ltd. Claimant v. B. Cameron Fisheries Ltd. Defendant Adjudicator : Eric K. Slone Heard : July 7, 2023 via zoom in Halifax, Nova Scotia, written submissions received on various dates Appearances : For the Claimant, Brent H. Silver For the Defendant, Jordan M.

Upton By the Court: [ 1 ] This case concerns the aborted sale by the Defendant to the Claimant of a 45-foot fishing boat, the “Maggie Chantal.” [ 2 ] The trial was held via zoom on July 7, 2023, with written submissions submitted thereafter. An Agreed Statement of Facts assisted in shortening the trial. Counsel also made written submissions at my invitation in response to a legal issue that I detected in the course of my deliberations.

I am grateful for counsel’s expert assistance. [ 3 ] The claim is for the return of a $20,000.00 deposit and $2,886.60 for some work done on the boat, on the theory that the Defendant would be unjustly enriched if not held to account for it. [ 4 ] The two companies are the vehicles through which their principals, Scott Schnare and Barry Cameron, carry on business in the fishing industry. For the sake of the narrative, I will at times refer to Mr. Schnare as if he were the Claimant, and similarly with Mr. Cameron.

I remain mindful that both parties are limited companies. [ 5 ] Both individuals are experienced lobster fishers. [ 6 ] In July 2020, Mr. Schnare was in the market for a new lobster boat and learned of the availability of the Maggie Chantal, which was listed for $320,000.00. Mr. Schnare looked at it, did some due diligence, and decided to make an offer of $305,000.00. [ 7 ] On September 1, 2020, a written agreement was arrived at and signed by the parties, at a price of $305,000.00. [ 8 ] The agreement was drafted by Mr. Cameron's wife, who is not legally trained.

That is not to say that there is anything obviously wrong with the agreement, but it bears mentioning. So does the fact that Mr. Schnare negotiated on his own behalf. Had there been lawyers involved throughout, the transaction may have unfolded differently, though that is pure speculation.

[9] Here are some of the important provisions of the agreement: 1. The Purchaser shall pay a deposit of $20,000.00 (Twenty Thousand Dollars) (the “Deposit”) … which shall form part of thePurchase Price. The Deposit will be credited to the Purchase Price on the closing date as hereinafter defined. If the deposit is not paid asaforesaid, the Vendor has the right to immediately terminate this Agreement. 2. The Vendor warrants that the vessel shall be sold free and clear of all liens, charges and encumbrances. 4. The closing date shall be on or before September 30, 2020 (the “Closing Date”). 8.

Time is of the essence in completing this sale and if the balance of the Purchase Price is not paid on or before the closingdate for any reason within the control of the Purchaser but beyond the control of the Vendor, the Vendor may, at the Vendor's option,cancel this agreement. 9.

The Vendor hereby agrees to release the deposit and all other amounts paid by the Purchaser towards the purchase priceshould the Vendor be unable to complete this transaction because of their inability to satisfy a condition of this agreement, but otherwisethe Purchaser is to forfeit the deposit unless the Purchaser completes the transaction as agreed herein. Forfeiture of the deposit under thisclause releases the Purchaser from all other claims, including specific performance of the agreement. 16.

This agreement is subject to the Purchaser obtaining acceptable financing from a qualified lending institution within (sic) or beforeSeptember 30, 2020, or the deposit is to be refunded to the Purchaser and all obligations of the parties hereto shall thereupon terminate. [10] Throughout September there was considerable activity. Various inspections had to be done in order for the boat to betransferable. Mr. Schnare wanted to paint the boat and apply a coat of antifouling to the hull while the boat was out of the water. Thisprocess took a few day and involved some expense. Mr.

Schnare understood that he did not yet own the boat, but it is some goodmeasure of his good faith desire to proceed with the purchase, if not also of his naivete. [11] In the meantime, Mr. Schnare initiated the process for arranging financing through the Royal Bank. Various minormodifications to the boat were also performed to enable it to pass inspections. [12] By September 30, the financing had not yet been approved. Mr.

Schnare was at all times confident that approval was likely,and it remains something of a mystery as to why it was not approved in a timely way. [13] It later was discovered that there was a cloud on the title to the boat, in the nature of a lien which had not yet been cleared,though it is conceded that this was somewhat of a technicality as the loan had been paid. Nevertheless, had the parties both “shown their hands” on the 30th of September, no closing could have taken place.

It is likely that the bank would have refused to fund the transactionwithout a completely clear title. [14] I believe it is fair to conclude that time ceased to be of the essence once the September 30 date passed without a formal tenderby either party. The Defendant argues that time never ceased to be of the essence, but I disagree.

Absent a certain closing date, timecannot be of the essence. [15] The consequence of time ceasing to be of the essence is that neither party is in an immediate position to enforce or end theagreement. [16] There is abundant jurisprudence on the subject of time being of the essence, though it mostly derives from real property law. Ibelieve the same principles would apply to the sale of a chattel, particularly one of such value. [17] If a vendor wishes to reinstate time being of the essence, he must set a new, reasonable closing date. In Domicile DevelopmentsInc. v.

MacTavish, (ON CA), the law was stated: Therefore, on the closing date neither Domicile nor MacTavish was entitled to enforce or end the agreement. A similar situation arose inKing v. Urban & Country Transport Ltd. (1974), (ON CA), 1 O.R. (2d) 449, (ON CA), 40 D.L.R. (3d) 641, a decision of this court relied on by Binks J. In King v. Urban, the purchaser wasnot in a position to close on the closing date; but the vendor was also in default and not entitled to rely on the time of the essenceprovision in the contract. Arnup J.A. resolved the stalemate by applying two propositions (at pp. 454-56): 1.

When time is of the essence and neither party is ready to close on the agreed date the agreement remains in effect. 2. Either party may reinstate time of the essence by setting a new date for closing and providing reasonable notice to the other

party. An important corollary of Arnup J.A.'s second proposition is that a party who is not ready to close on the agreed date and who subsequently terminates the transaction without having set a new closing date and without having reinstated time of the essence will itself breach or repudiate the agreement. [ 18 ] Both parties have conceded in their Agreed Statement of Facts that the transaction was still alive, as late as October 15, 2020. What that means is that neither party had (yet) repudiated the agreement. [ 19 ] After September 30, there was some communication that is significant. On October 7, Mr.

Schnare advised Mr. Cameron in a text that he “did the papers with the bank yesterday and [was] waiting for them to go to my lawyer.” He then mentioned that he was setting up several types of insurance and would let Mr. Cameron know when he “heard from anyone.” [ 20 ] On October 15, an obviously impatient Mr. Cameron texted Mr. Schnare as follows: Hello Scott our contract is 15 days overdue I gave you a reduced price on the boat because you said you would have financing on or before September 30, 2020. This hasn’t happened causing financial issues and a great deal of stress.

Thus I have decided to adjust the boat price back to 315,000 today and will be listing with a brokerage. If you have any arrangements to close this deal by October 16, 2020 give me a text. [ 21 ] It appears that communication totally broke down at this time. No effort was made to close, or to specify a new closing date other than the mention of October 16. Mr. Cameron ended up selling the boat to someone else some six months later. He did not return the deposit. This claim was not brought until September 2022.

The pressures imposed by the pandemic may have played a role in this delay, but this delay was not really explained. [ 22 ] The boat was eventually sold for $300,000.00, with no commission. [ 23 ] The Defendant retained the $20,000.00 deposit and so has actually received $320,000.00 for the boat. Forfeitures [ 24 ] I have already touched upon the law concerning time is of the essence.

I also wish to comment on how the law regards forfeitures. [ 25 ] While it is generally true and trite law that equity abhors a forfeiture, it has been sympathetic to sellers retaining “deposits” paid on purchases where those deposits represent a good faith pre-estimate of the damages that would be suffered upon the buyer’s failure to close a transaction. [ 26 ] A true “deposit” that is subject to forfeiture must be reasonable or proportional to the price paid.

That makes it a factual question. [ 27 ] If the deposit is excessive, even a defaulting buyer stands a chance of recovering it, or part of it, on equitable grounds. [ 28 ] But if the transaction goes off the rails without a breach on the part of the buyer, the seller cannot retain the deposit on any grounds. [ 29 ] So, the two principal questions here are: a. Was the deposit of $20,000.00 disproportionate to the purchase price of $310,000.00? b. Did the buyer breach the contract, subjecting it to forfeiting the deposit? [ 30 ] The first question should be answered in the negative.

A deposit of roughly 6.5% of the cost is not on its face disproportionate. [ 31 ] As for the second question, it seems clear that once Mr. Cameron allowed time to cease to be of the essence on September 30, 2020, it was incumbent upon him (assuming he wanted to keep the transaction alive) to set a new reasonable closing date. It was not until October 15 that he mentioned any future date, which date was October 16. In my view, that was not a reasonable date. [ 32 ] Moreover, his statement that he was raising the price to $315,000.00 can reasonably be read as a repudiation of the agreement on his part.

In his testimony, he suggested that this was only if it was re-listed with a broker, but it is as easily read as an effort to charge Mr. Schnare the higher price. [ 33 ] As stated in the Ontario Court of Appeal cases cited above, “ a party who is not ready to close on the agreed date and who subsequently terminates the transaction without having set a new closing date and without having reinstated time of the essence will itself breach or repudiate the agreement .” [ 34 ] By selling the boat to a third party and by raising the price, without having set a reasonable new closing date, Mr.

Cameron repudiated the agreement.

[35] The Defendant cites Diamond 11 Excavating and Demolition Ltd. v. Dhunna, 2018 BCSC 2230 at para 51 for the propositionthat: Courts may imply a reasonable completion date if it would be equitable to do so and enable an otherwise legitimate contract to operate.A completion date may be implied in equity if the Court can be satisfied of a reasonable completion date considering the context andcircumstances of the case. [36] I do not find this concept applicable to this case.

The court was never in a position to imply a closing date, as the Defendantsold the boat to a third party long before the matter was brought to court. Mr. Cameron made it clear in his communication that theClaimant had mere hours to close or he would no longer be bound by the agreement, or by the price. [37] Once Mr. Cameron repudiated the agreement, the contract was at an end. In my opinion, this repudiation disentitled him fromretaining the deposit. [38] The parties raised a number of other legal issues and arguments, which I do not find to be determinative.

Counsel for theDefendant suggests that under clause 8 of the agreement, Mr. Cameron was in a position to terminate the agreement without incurringany responsibility to refund the deposit. [39] It will be recalled that

article 8 reads: 8. Time is of the essence in completing this sale and if the balance of the Purchase Price is not paid on or before the closing date forany reason within the control of the Purchaser but beyond the control of the Vendor, the Vendor may, at the Vendor's option, cancel thisagreement. [40] The fallacy in this argument is that as of September 30, the financing was not in place and Mr. Schnare could have exercisedhis right to terminate the deal without forfeiting his deposit. Once time ceased to be of the essence, there was no longer a closing date,and consequently no right to terminate the agreement.

Article 8 would not operate in the absence of a new closing date having beenestablished. Otherwise, the

article is devoid of meaning. [41] I appreciate that the agreement was not drafted by a lawyer, but the clear meaning of what was drafted is that the vendor’s rightto terminate and retain the deposit is dependent upon time remaining of the essence. [42] I find that Mr. Cameron is obliged to return the deposit. The “improvements” [43] As noted earlier, Mr. Schnare performed some work on the boat in anticipation of his eventual ownership. Most of thisinvolved painting and antifouling. Mr. Cameron testified that neither of these processes was required.

He stated that not all boat ownersconsider antifouling necessary. And it appears that the painting was more a matter of personal preference than necessity. [44] I accept Mr. Cameron’s evidence that he cautioned Mr. Schnare against doing this work until he actually owned the boat. [45] There are three requirements to be satisfied before an unjust enrichment can be said to exist: an enrichment, a correspondingdeprivation and absence of any juristic reason for the enrichment: Pettkus v. Becker, (SCC), [1980] 2 S.C.R. 834. [46] So, to establish an unjust enrichment, there first must actually be an enrichment.

In the case here, the evidence stronglysuggests that Mr. Cameron did not receive any benefit. There is no evidence that the value of the boat was increased. In fact, the boatsold for $5,000.00 less than what Mr. Schnare had agreed to pay. Having found that there was no enrichment, there is no need toconsider the other elements.

Conclusion [47] In the result, the Defendant is liable to pay to the Claimant the sum of $20,000.00. [48] There was no claim made for prejudgment interest, and in view of delays attributable to the Claimant I would not order interest. [49] The Claimant is also entitled to its costs of $199.35. [50] It is ordered that the Defendant pay to the Claimant the sum of $20,199.35. Eric K. Slone, Small Claims Court Adjudicator