Brotherston v Christiansen et al, 2018 MBCA 70

Citation: Brotherston v Christiansen et al, 2018 MBCA 70 Date: 20180626 Docket: AI17-30-08887 IN THE COURT OF APPEAL OF MANITOBA Coram: Madam Justice Freda M. Steel Madam Justice Diana M. Cameron Madam Justice Janice L. leMaistre BETWEEN : BILL CHRISTIANSEN and KEN VEITCH ) INVESTMENTS LTD. ) ) (Plaintiffs) Respondents ) ) J. A. Kagan - and - ) for the Appellant ) TOM BROTHERSTON ) ) (Defendant) Appellant ) G. A. Stefanson and ) I. B.

Scarth - and - ) for the Respondents ) GEORGE BROTHERSTON and PETER ) HANCOCK ) ) Appeal heard: (Defendants) ) March 5, 2018 ) - and - ) ) BETWEEN : ) Judgment delivered: ) June 26, 2018 TOM BROTHERSTON ) ) (Plaintiff by Counterclaim) Appellant ) ) - and - ) ) BILL CHRISTIANSEN ) ) (Defendant by Counterclaim) Respondent ) cameron JA [ 1 ] The defendant Tom Brotherston (the defendant) appeals the judgment of the motion judge granting

summary judgment to the plaintiff Bill Christiansen (the plaintiff) for a debt owing in the amount of $167,668.50 plus interest and costs. The appeal also concerns the

summary dismissal of the defendant’s counterclaim against the plaintiff. [ 2 ] This case is a classic example of the confusion that arises when parties fail to properly document transactions involving significant amounts of money. It also involves the confusion that arises when oral reasons for judgment and the resulting court orders are not clearly articulated. However, despite the confusion, for the reasons that follow, I would dismiss the appeal.

Background [ 3 ] George Brotherston (George), the defendant’s brother, was the owner of a convenience store and gas station known as Ministic Place (Ministic), located on Stevenson Island near the remote community of Garden Hill, Manitoba. At that time, George

and the plaintiff had a business relationship wherein the plaintiff supplied George with fuel for Ministic and, in return, was compensated for the cost of fuel and a surcharge for delivery. [ 4 ] During the time that George owned and operated Ministic, he was not responsible for the day-to-day operation of it. Rather, a long-term employee, Peter Hancock (Hancock), performed that function. [ 5 ] On January 1, 2014, George leased Ministic to the defendant.

The lease provided that the defendant not “assign or sublet the Premises, in whole or in part, or allow the Premises to be used by any other person without the written consent of [George]”.

After the defendant leased Ministic, Hancock continued to work in the same position as he had when George was operating the business. [ 6 ] At all relevant times, the plaintiff was an employee of Northland Petroleum Ltd., (Northland), a wholesale petroleum product distributor. [ 7 ] In March of 2014, the plaintiff and the defendant entered into a verbal agreement for the provision of fuel to Ministic for the purposes of resale (the agreement). The parties to; the nature of; and the terms of the agreement constitute the core of the dispute in this proceeding.

The plaintiff asserts that he, personally, sold the fuel to the defendant at a price of $1.70 per litre and that he was to be repaid as the fuel was sold and, otherwise, upon demand. [ 8 ] The plaintiff also says that he arranged for Ken Veitch Investments Ltd. (Veitch) to finance the purchase of the fuel.

There is no dispute that the plaintiff caused 189,805 litres of fuel to be delivered to Ministic in March of 2014. [ 9 ] Finally, the plaintiff asserts that he monitored the depletion of the fuel by asking either the defendant or Hancock for the flow rate totalizer readings from the fuel tanks on a weekly basis. He kept a log of the depletion of the fuel and, by November 23, 2014, there was none left. He asserts that, while he was paid a portion of the debt owed for the fuel, he was not paid the full amount. [ 10 ] The defendant denies that he entered into the agreement with the plaintiff.

He states that the agreement was with the plaintiff’s employer, Northland. He also denies that the agreement was for the purchase of fuel. Rather, he contends that it constituted a consignment agreement. [ 11 ] Next, the defendant claims that there was no agreement as to the exact price of the fuel and that the price was to be determined based on the “best prevailing price for gasoline in the area at the time of delivery.” In his view, that price was $1.54 per litre.

His counterclaim is founded on his assertion that, based on this price, the money that he did pay toward the fuel constituted an overpayment. [ 12 ] Finally, the defendant claims that he sold Ministic to Hancock in early October 2014 and that part of the sale agreement involved Hancock assuming responsibility for any money owed for the fuel sold after Hancock took ownership of Ministic. He maintains that the plaintiff agreed to Hancock being responsible for this liability. [ 13 ] While the defendant, and later Hancock, made payments for the fuel, the plaintiff maintains that full payment of the debt was not made.

He originally sued George, the defendant, and Hancock for the balance of the money owing. However, he discontinued his action against George. The plaintiff then proceeded with the

summary judgment motion that is the subject of this appeal, asking that his claim be granted against the defendant and Hancock and that the defendant’s counterclaim be dismissed. [ 14 ] Hancock did not appear at the

summary judgment motion. The motion judge issued judgment against him in favour of both the plaintiff and Veitch for the full amount of the claim plus interest and costs. Thus, the balance of the proceeding concerned only the plaintiff’s action against the defendant and the defendant’s counterclaim. The Decision of the Motion Judge [ 15 ] The motion judge commenced his reasons by reviewing the law relating to

summary judgment and contracts. He observed that the test to be applied in the determination of whether a verbal agreement had been entered into by the parties was whether a “reasonable person in the situation of that party would have believed and understood that the other party was consenting to identical terms”. See Matic et al v Waldner et al , 2016 MBCA 60 at paras 55-64 .

In particular, the motion judge was concerned with whether there was reasonable certainty as to the essential terms of the agreement, namely “who the parties to the [agreement] were, what the price of the fuel was, and when payment was to be made.” [ 16 ] After considering the evidence, the motion judge found that an objective, reasonable person would conclude that: • the agreement constituted a verbal contract between the plaintiff and the defendant; • the contract was for the purchase and sale of fuel and payment became due when the fuel was sold or on demand; • the fuel was not sold on consignment; • the agreed price for the fuel was $1.70 per litre; • the fuel was delivered; and • all of the fuel was sold and payment was owing. [ 17 ] He also found that a reasonable, objective person would not conclude that the plaintiff knew about the sale of Ministic by the defendant to Hancock or agree to let the defendant “off the hook” for any fuel payments. [ 18 ] After making the above findings, the motion judge stated, “There are no credibility issues here that need to go to trial when the material facts are viewed objectively -- because all of the credibility issues evaporate.”

[19] The motion judge then applied the test for

summary judgment, and held that the plaintiff had proven on a prima faciebasis that his action would succeed and that the defendant had not established a genuine issue for trial. Thus, he granted

summaryjudgment to the plaintiff, holding the defendant jointly and severally liable with Hancock. [20] The motion judge dismissed the motion for

summary judgment by Veitch against the defendant on the basis that Veitchwas not a party to the contract between the plaintiff and the defendant. [21] Regarding the defendant’s counterclaim, the motion judge did not specifically state that he was dismissing it. However,he did say that it was “only a smokescreen and totally unsupported by the evidence.” Grounds of Appeal [22] In his factum, the defendant raises three grounds of appeal.

First, he asserts that the motion judge erred in finding thatthe plaintiff had proven his claim on a prima facie basis in circumstances where the credibility of the parties was in issue. Second, hesays that the motion judge erred in finding that there was no genuine issue for trial as the evidence was insufficient for him to make therequisite findings of fact. Finally, he argues that the motion judge erred in granting

summary judgment on only the plaintiff’s claimwithout addressing his counterclaim, which involved largely the same issues. [23] At the hearing of the appeal, the defendant raised an additional argument, being that the judgment of the motion judgewas inconsistent with the

summary judgment that he granted against Hancock and inconsistent with the pleadings filed by the plaintiff. When canvassed by the Court, counsel for the plaintiff agreed that he would be in a position to argue these points and the Court allowedthe additional argument to proceed. Law [24] Pursuant to Manitoba, Court of Queen’s Bench Rules, Man Reg 553/88, r 20,

summary judgment is available to either aplaintiff or a defendant. The test is set out in Homestead Properties (Canada) Ltd v Sekhri et al, 2007 MBCA 61 (at paras 14-15, 19): The test is to the same effect regardless of whether the moving party is the plaintiff or the defendant. When the defendant moves, ashere, he must prove, on a prima facie basis, that the plaintiff’s action must fail. If he meets that burden, then the plaintiff has the burdento establish that there is a genuine issue for determination. He must show that his claim is “one with a real chance of success” (seeHercules Managements Ltd. v.

Ernst & Young, (SCC), [1997] 2 S.C.R. 165 at para. 15; see also Manitoba HydroElectric v. Inglis (John) Co. et al. (1999), (MB CA), 142 Man.R. (2d) 1 (C.A.)). If he fails to do so,

summaryjudgment dismissing the claim will follow. When a plaintiff moves, he must prove, on a prima facie basis, that his action will succeed. If he meets that burden, then the defendanthas the burden to establish that there is a genuine issue for determination. If he fails to do so,

summary judgment granting the claim willfollow. As was made clear in Blanco et al. v. Canada Trust Co. et al., 2003 MBCA 64, 173 Man.R. (2d) 247 at para. 62, regardless ofwho is the moving party, the analysis is a two-step process. Parties moving or responding on

summary judgment matters ought to put their best and strongest case before the court, since the motion,and possibly the case, will be disposed of on the basis of the evidence before the court. [25] A decision on

summary judgment is a discretionary decision. The standard for appellate intervention is high. Thedecision should not be interfered with absent reversible errors of fact or law unless the decision is so clearly wrong as to yield an unjustresult (see Perth Services Ltd v Quinton et al, 2009 MBCA 81 at para 28; and Lenko v The Government of Manitoba et al, 2016 MBCA52 at paras 34-36). Analysis and Decision The

Summary Judgment [26] The first two grounds of appeal deal with the motion judge’s decision regarding

summary judgment. That is whetherthe motion judge erred in finding that the plaintiff had presented a prima facie case that his action would succeed and, if so, whether heerred in finding that the defendant had not met the burden to establish that there existed a genuine issue for determination.

The evidencepresented and the arguments relied on by the defendant regarding both these issues are the same. [27] The plaintiff’s evidence consisted of his affidavit with supporting documents, the affidavit of the president of Veitch,and the transcript of the plaintiff’s cross-examination of the defendant. [28] There was also an affidavit and supporting documents sworn by George evidencing his lease of Ministic to thedefendant and his denial of liability to the plaintiff. [29] The evidence filed by the defendant consisted of his affidavit alone.

Aside from his affidavit, he relied on some of thedocuments provided by the plaintiff and one document attached to George’s affidavit. The defendant did not file any documents relatingto his business relationship with the plaintiff, the terms of the agreement, the amount of fuel sold, the price he charged for the fuel or themoney he received for the fuel that was sold. In his cross-examination, he stated that he did not have knowledge of the latter three items.

[ 30 ] Importantly, the defendant did not file any documents relating to the alleged sale of Ministic to Hancock. [ 31 ] The defendant did not exercise his right to cross-examine the plaintiff. [ 32 ] Nonetheless, the defendant maintains that there existed credibility issues that required determination by way of a trial and that there was insufficient evidence for

summary judgment. [ 33 ] It is true that, in cases where a credibility contest exists,

summary judgment is generally not available. However, as was stated by Beard JA in Heritage Electric Ltd et al v Sterling O & G International Corporation et al , 2017 MBCA 85 (at para 16 ): [A] court is still required to take a hard look at the evidence to see whether there is really an issue of credibility or whether the evidence is so overbalanced in one direction that the credibility issue evaporates.

The cogency of the evidence that the parties provide must be considered in light of the significance of the matters at issue, the cost of litigation and the need for proportionality that was endorsed by the Supreme Court of Canada in Hryniak v Mauldin , 2014 SCC 7 , and adopted by this Court. (See Caisse Populaire de la Salle Credit Union Ltd v River Ridge Properties Ltd , 1997 CarswellMan 67 at para 11 (CA) ; Manitoba Hydro Electric Board v John Inglis Co Limited et al , 2000 MBQB 218 at para 20 ; Haji-Hamzeh v Wawanesa Mutual Insurance Co , 2005 MBCA 17 at para 4 ; Lenko v The Government of Manitoba et al , 2016 MBCA 52 ; 2016 MBCA 84 ; 2016 MBCA 85 ; and Janz et al v Janz et al , 2016 MBCA 39 at paras 45-46 , 49.) [ 34 ] I now turn to each of the defendant’s arguments with respect to the credibility and sufficiency issues he raises. [ 35 ] First, the defendant argues that he entered into the agreement with Northland and not the plaintiff.

He bases his assertion on the fact that he had previously purchased aviation fuel for his airplanes from Northland, and that he discussed the agreement with the plaintiff at Northland’s place of business. In support of his position, he relies on an email detailing the balance owing for the fuel that the plaintiff sent to Hancock, which was signed by the plaintiff by way of an electronic signature purporting to be from Northland. In addition, the plaintiff sent a request for payment to George on Northland letterhead.

Finally, the defendant relies on his belief that, historically, George purchased fuel from Northland for Ministic. In his view, the question of who was party to the agreement raised both an issue of credibility and the issue of who should be the proper party to the action. [ 36 ] As earlier stated, the motion judge held that there was certainty of contract between the plaintiff and the defendant. I am not convinced that he erred in his determination. It must be noted that the cheques that the defendant wrote in partial payment for the fuel were not to Northland but to Veitch.

The defendant denied knowledge of this fact by stating that he left it to the plaintiff to fill in the payee for the cheques. He also denied that he had ever looked at one of the cashed cheques. There is nothing to indicate that any payment was made to Northland or that it was a party to the agreement.

There is also nothing to indicate that the defendant was aware of the two requests for payment made by the plaintiff using Northland’s electronic signature and letterhead. [ 37 ] Furthermore, attached to George’s affidavit is a letter that shows that George did not deal with Northland when he was operating the fuel facilities at Ministic.

In that letter, George specifically stated that he and the plaintiff had done business over the course of many years and that, “You and I dealt on a cash basis.” The letter is addressed to the defendant personally and not to Northland. [ 38 ] Finally, the affidavit of the president of Veitch stated that the plaintiff arranged for the financing of the purchase of the fuel, not Northland. [ 39 ] Next, the motion judge rejected the defendant’s position that the plaintiff provided the fuel to the defendant pursuant to a consignment agreement.

He found that no reasonable person would do so because the cost to reclaim it would be prohibitive. He also stated that the argument about whether payment was due on demand or upon the sale of the fuel was a “red herring” because the fuel was sold and payment was owing. [ 40 ] Again, what we are left with is the bare assertion by the defendant that the agreement was for the consignment of the fuel such that the plaintiff retained ownership of the fuel as well as the responsibility for anything that might happen to it.

In my view, despite the fact that the defendant was to pay the plaintiff as the fuel was sold, the evidence does not support his position that the agreement was one of consignment. [ 41 ] For example, the defendant agreed that the plaintiff had no control over the price for which the fuel was resold. If the plaintiff retained ownership over the fuel, surely he would have some control over the price to be charged for it. There is no evidence that the parties believed that the plaintiff retained ownership over the fuel and would be able to retrieve it in the event that it was not sold by Ministic.

Nor is there any evidence that the parties believed that the plaintiff would be liable if anything happened to the fuel while it was in the possession of the defendant. The only evidence is that the plaintiff demanded payment for the fuel. [ 42 ] In any event, I agree with the motion judge that the point really is moot in light of the fact that the fuel is gone and payment is due. [ 43 ] The defendant also disputes that he was responsible to pay the plaintiff $1.70 per litre of fuel. He maintains that there was never an agreement regarding the price of the fuel.

Rather, he says that it was to be determined based on “the best prevailing price for gasoline in the area at the time of the delivery or words to that effect.” He asserts that the best prevailing price was $1.54 per litre. His position regarding the alleged agreement to the price for the fuel also forms the factual foundation for his counterclaim. [ 44 ] In rejecting the defendant’s argument, the motion judge held that a reasonable business person would not “take the risk of buying fuel in bulk and then spending a lot of money and incurring a lot of risk to ship it to a northern remote community for resale

without knowing . . . the actual price he would be getting” for the fuel. He noted that the defendant (while he did not know the exact price) admitted that he sold the fuel for more than $1.70 per litre. He rejected the defendant’s assertion that the best price for fuel at the relevant time was $1.54 per litre because it was based on hearsay, not supported by any documentation and did not indicate whether that price included shipping costs. [ 45 ] The documents filed by the plaintiff showed that the price that the plaintiff calculated as owing for the fuel was $1.70 per litre.

In cross-examination, the defendant admitted that he knew that he was being charged $1.70 per litre. It was for that reason that he talked to another gas station owner in the area to find out what that owner paid per litre as he felt he was being charged too much.

Aside from the defendant’s allegation, nothing in the evidence shows that the defendant disputed the amount that he was to pay per litre of fuel or that he communicated his disagreement to the plaintiff. [ 46 ] Again, I am not convinced that the motion judge erred in his consideration of the price of the fuel and whether there existed a true credibility issue. [ 47 ] Next, the defendant argues that, in October 2014, he sold Ministic to Hancock, that Hancock accepted liability for the fuel and that the plaintiff agreed to this arrangement. [ 48 ] The motion judge held that a reasonable, objective person would not conclude that the plaintiff knew about the sale of Ministic to Hancock, nor that the plaintiff would agree to let the defendant “off the hook for any future payments” and only look to Hancock for the payments.

In support of this finding, he noted that the written lease between George and the defendant required George’s written signature to an assignment, which he did not provide. (I note parenthetically that the motion judge refers to “Bill’s written consent” when he meant George’s written consent.) He also noted that at no point did the records of the plaintiff show a cut-off date in the recording of fuel dissipation pursuant to which Hancock would be liable.

He stated that the verbal comments that the defendant attributed to the plaintiff indicating his consent to Hancock being liable for the fuel were “ambiguous at best”. [ 49 ] The defendant argues that, because the plaintiff did not file a reply to his affidavit denying that he agreed that Hancock would be liable for the payment of the fuel, his evidence constitutes the only evidence regarding the sale of the business and, more importantly, the agreement of the plaintiff to Hancock’s assumption of liability. [ 50 ] The defendant has not satisfied me that the motion judge erred.

There is no documentary evidence regarding the purported sale of Ministic to Hancock. The only evidence to support the allegation that Hancock assumed liability for the fuel is the fact that, after October 2014, Hancock wrote cheques for payment of the fuel.

However, this is just as consistent with the fact that the defendant simply allowed Hancock to run the business. [ 51 ] Furthermore, in cross-examination, the defendant agreed that the terms of the sale of Ministic to Hancock that he swore to in his affidavit were not included in the document of sale that he claimed existed between him and Hancock. [ 52 ] Regarding the plaintiff’s knowledge of and consent to the transfer of liability, the defendant asserts that, when he told the plaintiff that Hancock would be taking over the store, the plaintiff stated, “‘Ok, if you and George trust him then I trust him’ or words to that effect”.

The motion judge found this evidence to be too vague to constitute proof of his assertion. I am not convinced that he erred in this regard. [ 53 ] At the end of the day, the motion judge took a hard look at the evidence of both parties in determining whether the evidence was so overbalanced that the issue of credibility evaporated. There is an evidentiary basis to support the motion judge’s conclusion that the essential terms of the agreement had been settled.

A verbal contract had been made between the plaintiff and the defendant, the price per litre was $1.70 and payment was due as the fuel was sold or otherwise upon demand. Simply put, the fuel was provided and sold, and the balance which remains unpaid is $167,668.50. [ 54 ] The defendant has not shown that the motion judge erred in fact or law and I am not convinced that his decision granting

summary judgment was so clearly wrong as to yield an unjust result. Was the Counterclaim Addressed? [ 55 ] The defendant argues that the motion judge did not make any ruling regarding his counterclaim that, assuming a price of $1.54 per litre, he paid too much for the fuel. In his view, the counterclaim is still an ongoing claim. The defendant maintains that, to grant

summary judgment on the plaintiff’s claim yet allow the counterclaim to proceed in a situation where the evidence is the same for both, could create inconsistent findings and duplicative proceedings. [ 56 ] The portion of the judgment drafted by the parties and signed by the motion judge relating to the defendant simply states: [T]he plaintiffs’ motion for

summary judgment against the defendant Tom Brotherston be and is hereby allowed and that the defendant, Tom Brotherston shall pay to the plaintiff, Bill Christiansen, the sum of $167,668.50 plus pre-judgment interest. [ 57 ] I agree that, at first blush, the judgment appears to only deal with the plaintiff’s claim for

summary judgment. However, when looked at in the context of the entire proceeding, it is evident that the ruling was intended to cover both the plaintiff’s claim and the defendant’s counterclaim. [ 58 ] First, the plaintiff’s notice of motion specifically states that he is seeking

summary judgment allowing his claim as well as dismissing the defendant’s counterclaim.

[ 59 ] In his reasons, the motion judge acknowledged that the defendant contested the motion and requested a trial. He noted that the defendant asked that his counterclaim be included in the trial of the plaintiff’s claim. He indicated that he would deal with that counterclaim later. The findings made by the motion judge specifically addressed the issue of the price that was to be paid per litre of fuel. Finally, after finding in favour of the plaintiff, the motion judge found that the counterclaim was a “smokescreen and totally unsupported by the evidence.” [ 60 ] In my view, although it could have been more clearly stated, the wording of the judgment is sufficient to allow that

summary judgment be granted both in favour of the plaintiff’s claim and in dismissing the counterclaim, as requested by the plaintiff. Inconsistency of the Verdict [ 61 ] As earlier indicated, the defendant argues that the granting of

summary judgment against him in favour of the plaintiff is inconsistent with the

summary judgment against Hancock wherein the claims of both the plaintiff and Veitch were granted. [ 62 ] The defendant also argues that the effect of the finding of the motion judge was to hold him and Hancock jointly liable. He argues that such a finding is inconsistent with the pleadings, which asserted that only one person was the owner of Ministic at any given time. In his view, having found Hancock liable, it was not then open for him to find the defendant liable. [ 63 ] I disagree. Queen’s Bench r 20.08(1) provides: Action may proceed for other relief 20.08(1) A plaintiff who obtains

summary judgment may proceed against the same defendant for any other relief and against any other defendant for the same or any other relief. [ 64 ] The claim of the plaintiff and Veitch against the defendant, George and Hancock was based on an agreement for the supply of gas and, in the alternative, on the principles of quantum meruit and unjust enrichment.

The plaintiff and Veitch allege that the defendant and Hancock enjoyed a benefit and that the plaintiff and Veitch suffered a corresponding deprivation for which there is no juristic reason. [ 65 ] Although Hancock filed a statement of defence, it did not provide a meaningful or substantive response to any of the allegations in the statement of claim. [ 66 ] On September 2, 2016, an order was made permitting substitutional service on Hancock.

In that order, Hancock was specifically directed to comply with certain timelines, failing which “judgment may be noted against him at the contested hearing of the plaintiffs’ motion for

summary judgment”. Hancock failed to meet the timelines and failed to appear at the hearing of the motion although served. [ 67 ] In these circumstances, the motion judge was entitled to enter judgment against Hancock on the basis of the defendant’s pleading that Hancock agreed to take over some of the debt, quantum meruit or unjust enrichment, and to impose joint and several liability. [ 68 ] Therefore, for all of the above reasons I would dismiss the appeal. JA I agree: JA I agree: JA