1988 S.H. No. 66990 IN THE SUPREME COURT OF NOVA SCOTIA BETWEEN: 32262 B.C. LTD. and NOVA ENTERPRISES LIMITED, body corporate and JAMES MACKAY DECISION HEARD: at Halifax, Nova Scotia, before the Honourable Associate Chief Justice Ian H. M. Palmeter, on March 17th and 18th, 1993. DECISION: June 10th 1993 COUNSEL: Michael J. Wood, Esq., Counsel for the Plaintiff Peter Rogers, Esq., and Rod Jordan, Articled Clerk, Counsel for the Defendants PALMETER, A.C.J. This matter was heard by me on March 17th and 18th, 1993 and adjourned for decision. The action was commenced by the plaintiff for the alleged breach of contract of a written contract between the parties and damages therefore, or, in the alternative, damages for unjust enrichment. The defendants have counterclaimed for damages based on alleged negligent misrepresentation on the part of the plaintiff. After hearing all of the evidence and perusing the documentation tendered, have determined the facts in this case to be the following. The plaintiff (Sign‑O‑Lite) is in the business of manufacturing, selling and leasing commercial signs and has construction facility in Toronto, Ontario. The defendant (Nova) sells and services tractor trailers, and other large trucks in Nova Scotia, particularly in the Truro area. The defendant (MacKay) is the President and one of the principal shareholders of Nova. Nova had previously operated its business on the Brookside Road, north of Truro, and in 1984 moved to new location adjacent to the McClure Mills Interchange on Highway 102. In connection with this move, evidence has convinced me that Nova had encountered regulatory bureaucracy from the Department of Transportation, the Public Utilities Board, and other municipal and government agencies. This evidence has convinced me that Nova was well aware of, and wary of, governmental regulatory problems. In April of 1986, Nova made inquiries to the Nova Scotia Department of Transportation for regulatory approval to erect sign between Nova's building and Highway 102. This sign was to be 6' 15' illuminated sign which was to be moved from Nova's old building on the Brookside Road. This project was abandoned as Nova learned that the 6' 15' sign was not strong enough to act as free‑standing sign. Nova was interested in sign and had discussions with Irving Oil Limited prior to 1986 about joint sign, but this joint sign was never erected. In October of 1986, Nova was contacted by one Byard Thurber who was the Atlantic Sales Manager of the plaintiff to discuss whether it was interested in sign. Discussions took place between Thurber and Mr. Masters, the General Manager of Nova, and eventually with Mr. MacKay and other employees of Nova. The sign discussed was one which had an electronic message centre, and accept that Nova was most interested in this type of sign. also accept that Nova fully expressed its concern about regulatory approval to Thurber as result of its previous experience, and Thurber assured Nova that the Plaintiff would look after getting this approval as it was in the business of erecting signs and dealing with regulatory authorities across the country. After reaching an agreement on price and details of the sign, the contract was prepared by Mr. Thurber. In the contract, clause 40 was added by Thurber to meet the concerns of Nova regarding regulatory approval. Clause 40 reads as follows: "Subject to approval for permit from Department of Highways" On December 1st, 1986 the contract was signed by MacKay, on behalf of Nova, and by himself in his personal capacity as an accommodation party. After the contract was signed, Thurber met with numerous representatives of the Department of Transportation in an effort to obtain regulatory approval. No approval was forthcoming and there appeared to be considerable confusion on the part of the officials of the Department of Transportation as to just what approval, if any, was required. accept as fact that Thurber was aware there was opposition on the part of the officials of the Department of Highways to the erection of sign with message centre upon the Nova site which was to be acquired from the government near Highway 102. Evidence adduced has convinced me that Nova, at this time, not only knew of the efforts of Thurber to obtain regulatory approval, but was also aware of the opposition of the Department of Transportation to the erection of sign with message centre on the proposed site. In fact, MacKay attended with Thurber at the offices of senior official in Halifax who indicated that he would not approve the message centre. Thurber assured Nova that he would continue his efforts to get the message centre approved and Nova, in my opinion, agreed to go along with this course of action. The sign, including the message centre and its components, were delivered to the Nova premises in early March 1987. Personnel from Sign‑O‑Lite were sent to Nova in early March to train Nova staff on the use of the computer software, and in mid‑March, one Bell arrived from Ontario to install the Nova sign and others throughout the province. The hiring of contractor to excavate the foundation of the Nova sign was ordered by Thurber at the request of Bell in March and, as well, Nova allowed installation of the electrical connection for the software. Thurber left the employ of Sign‑O‑Lite in late March 1987 without having arranged for the regulatory approval for the sign. In early April of 1987 the concrete was poured and the steel posts for the sign were erected. The erection was consented to by Nova notwithstanding that no permit had been obtained, and that there were concerns about having message centre at that location. accept the evidence that the officers of Nova, namely MacKay and Mr. Masters, understood that there was possibility that permit would not be obtained for the message centre. It is clear from the evidence of Thurber, McKay and Masters, that nobody ever discussed what would happen if permit from the Department of Transportation was not issued. It should be noted that the original sign location was on land owned by the Department of Transportation. Negotiations had already been made by Nova to acquire this land prior to the contract with Sign‑O‑Lite and the approval for the transaction was received in November 1987, with the deed of conveyance being executed in January 1988. Evidence tendered at the hearing indicates that the Department of Transportation made its final decision not to permit the changeable message centre part of the sign on or about April 29th, 1987 although, prior to this date, representatives of the Department had telephoned both MacKay and Masters to advise of their decision. By this time the sign, minus the message centre, had been erected. In May of 1987, Mr. Gordon Wilson, the then General Manager of the Plaintiff, telephoned Mr. Masters and indicated that regulatory approval was not problem and the message centre would be erected. At this time Nova, although aware that approval had not been obtained and that there was opposition thereto by the Department of Transportation, agreed to pay to the Plaintiff the sum of $875.00 month, plus sales tax, until the installation of the message centre which was to be completed after the land was acquired from the Department of Transportation. In July of 1987, Nova paid to Sign‑O‑Lite the sum of $8,346.17 which was the balance of the deposit with monthly payments for May, June and July of 1987 in the amount of $962.50. Further payments of $962.50 were paid by Nova for the months of August, September and October 1987, at which time Nova ceased to make monthly payments. All parties agree that Nova has paid to Sign‑O‑Lite total of $16,197.53. The payments of $962.50 were made up of the agreed partial monthly rental of $875.00, plus provincial sales tax. Later in 1987, Mr. Armitage and Mr. Bradley became involved with Sign‑O‑Lite. Bradley, in particular, met with Mr. Masters of Nova in March of 1988, at which time he was advised by Masters that no permit had been issued by the Department of Transportation and that approval was not forthcoming. Although the evidence is somewhat sketchy on this point, it is my opinion that Sign‑O‑Lite wished to be allowed to erect the message centre notwithstanding the disapproval of the Department of Transportation and then let litigation proceed to determine the matter. accept the fact that Nova advised Sign‑O‑Lite that the Department of Transportation was good customer and they did not want to get into legal action with them. This apparently was the position of the parties throughout 1988. Bradley went to the Department of Transportation in Halifax following his meeting with Mr. Masters in an attempt to get approval for the message centre, or, in the alternative, to get some sort of an application to formally apply for approval. Nothing satisfactorily was resolved and there was no change in the Department's position. By letter of April 13th, 1988, Mr. MacCallum of the Department of Transportation advised Sign‑O‑Lite that the message centre would not be acceptable under theft advertising regulations. Again, on May 3rd, 1988, Mr. MacCallum wrote to Mr. Armitage, the principal officer and shareholder of Sign‑O‑Lite, advising that the decision had been made in May of 1987 not to allow the message centre, indicating that he was still not able to give approval and citing s. 46(1) of the pertinent legislation which allows Minister of Transportation to direct that sign be removed if he determines that it is menace or source of danger to traffic. Again the evidence is somewhat sketchy, but apparently some minor discussion took place in 1988 between Nova and Sign‑O‑Lite concerning the purchase of the existing sign by Nova, and the return of the message centre and software to Sign‑O‑Lite but nothing transpired. This action was commenced in January 1989. From May of 1987 until February of 1993, Nova used the signed as originally erected by Sign‑O‑Lite. In February of 1993, Nova arranged to have work done on the existing sign and to realign the various signs thereon. Since 1987 the message centre and software has remained on the Nova premises unused. Before proceeding with the issues in this action, and my decision, must make the comment that in my opinion this action should never have come on for trial. If there was ever case which begged for settlement between the parties, this is it. The inflexibility of both parties in attempting to settle has caused this problem, and after hearing the evidence and observing the demeanour of both Mr. Armitage for the Plaintiff, and Mr. MacKay for the Defendant, can understand the reason for this inflexible attitude. The issues in this action, in my opinion, boil down to simple question. Was the contract entered into by the parties, bearing the date December 1st, 1986, valid contract such as would entitle the plaintiff to claim damages for breach thereof? In the alternative, if the contract is not valid, is the plaintiff entitled to compensation for unjust enrichment by virtue of the use of the existing sign by Nova since May of 1987? In my opinion, if the contract is valid and existing contract, the plaintiff would be entitled to its damages for breach of contract pursuant to Clauses 34 and 24 of the written contract. The defendants contend that the contract is not valid or binding upon the parties by virtue of the provisions of Clause 40 of the written contract which was inserted by Mr. Thurber to allay the fears of Nova as to regulatory problems. It is necessary to examine this Clause 40 and also to determine whether parol evidence should be adduced concerning its interpretation. Clause 40 of the written contract reads as follows: "40. subject to approval for permit from dept. of highways". Mr. Thurber testified that he was aware of the concerns of Nova as to possible regulatory and bureaucratic problems and he inserted this clause to protect them. accept the submission by counsel for the defendants that this clause should be interpreted in "purposive" manner to protect the interests which the parties sought to protect by inserting the provision into an otherwise standard form document. The provision was inserted to meet the concern of Nova, and further accept the submission of the defendants that it would matter little from the point of view of Nova whether regulatory disapproval is manifested by not granting permit or by pronouncing the sign to be menace or source of danger to traffic on the highway and ordering its removal. was referred to the case of Leading Investments Limited v. Liebig (1986), 1986 CanLII 45 (SCC), 65 N.R. 209 (S.C.C.) where purposive interpretation was brought to bear on contract. LaForest J., interpreted the word "sale" in listing agreement to mean completed sale and not an agreement of purchase and sale. At p. 223 LaForest states: 'his is perhaps another way of saying that what the vendor seeks to obtain is sale not law suit" The plaintiff submits that the clause stands as it is and that no parol evidence should be admitted to indicate the dealings between the parties leading up to the execution of the written contract. With deference, think parol evidence should be admitted because in my opinion the wording of the Clause 40 is ambiguous and does not adequately address the problem which it attempted to resolve. The general nature of the rule relating to parol evidence is set out in the case of Shaw (Gordon) Concrete Products v. Design Collaborative Limited (1986), 72 N.S.R. (2d) 133. At page 137 the Nova Scotia Court of Appeal stated: "When written contract exists, the terms of the agreement govern the rights and obligations of the parties. The contract is deemed to state finally the intent of the parties and the terms upon which they agreed and prior negotiations and deemed to have been merged into and settled by the contract as finally stated. It is for that reason that courts have uniformly held that evidence of oral agreement is not admisible to add to, vary or contradict the written contract. However, oral agreements are admissible in evidence to explain ambiguous parts of the contract or to show the parties' agreement as to matter upon which the contract is incomplete or totally silent." (Emphasis mine). Also, in the case of Candlepin Machine Parts Limited v. Britten and Walker (1991), 109, N.S.R. (2d) 366, Chief Justice Glube stated at p. 374: "Before allowing extrinsic evidence to explain written agreement, there must be an ambiguity in the instrument or difficulty or uncertainty in the application of the facts; it may be admissible to explain the sense in which words are used, but not to contradict them. Where the words in the documents are clear, extrinsic or parol evidence is not admissible to alter or amend or explain the words (see Hollet v. McGrath (1972), N.S.R. (2d) 80 (T.D.))." In my opinion, there is ambiguity in Clause 40 and the parol evidence is necessary to explain the sense in which the words are used. Submissions were made as to the legal and other interpretation of the meaning of the words "approval" and "permit" but these submissions really don't assist me. Also conflicting evidence was given as to whether or not permit was required for the erection of the sign and the message centre. The plaintiff states that no permit is required and submits letter from the Department of Transportation dated April 1988, where it was indicated that "no permit is required". The defendants cite the Public Highways Act of the Province of Nova Scotia and regulations made thereunder respecting advertising signs on or near public highways in the Province of Nova Scotia, and submit that permit is required if an advertising sign is within 500 feet from the centre line of the travelled portion of the highway. In this case, the sign as erected is within 500 feet from the centre line of Highway 102 and notwithstanding the letter from the Department to Sign‑O‑Lite in April 1988, and after reading the regulations, it is my opinion that permit would be required. The plaintiff has submitted that the defendants did not prove the appropriate legislation and regulations but am convinced that can take judicial notice thereof by virtue of Section ll of the Evidence Act of the Province of Nova Scotia. Whether or not permit was required, in my opinion, makes little difference in view of the unequivocal decision of the Department in advising that it would not allow message centre at that location. Whether that disapproval came by either refusing to issue permit, or by the Minister ordering the sign removed, pursuant to the present section 48 of the Public Highways Act (formerly Section 48), really means little in light of my interpretation of Clause 40. Nova was concerned about the bureaucratic process and regulatory approval. Sign‑O‑Lite was aware of this through its manager who inserted Clause 40 in the agreement. It is not reasonable to expect Nova to erect the message centre and then get into an involved legal action with the Province of Nova Scotia, even though it was suggested that Sign‑O‑Lite might have been prepared to bear the cost thereof. The clause must be interpreted in the broadest possible way to give effect to the intentions of the parties. The onus was on the plaintiff as supposed expert in the field to get the necessary approval and to cut through all of the red tape, so to speak. This it did not do, and I accordingly find, that Clause 40 was a condition precedent to the Display Rental Agreement and since the approval was not forthcoming, the contract was null and void and the defendants are not liable for any breach thereof. The alternative claim put forth by the plaintiff in the event that it is determined that there is no enforceable contract between the parties, is that the plaintiff is entitled to compensation on the basis of unjust enrichment since it has supplied sign which has been used for the benefit of the defendants since May of 1987. As submitted by the plaintiff, unjust enrichment is part of the doctrine of restitution and the applicable principles have been stated in The Law of Restitution, P.D. Maddaugh and J.D. McCamus (Canada Law Book, Aurora, 1990 at pp. 465‑466: "Where contractual footing for the plaintiff's claim cannot be found, restitution of the value of money, goods or services provided may be sought through an action for money and had received, quantum valebat or quantum meruit. It follows from the restitutionary nature of these claims that the plaintiff must establish the conferral of benefit and that its extent will constitute the measure of the defendant's liability rather than the losses sustained by the plaintiff in conferring it. Further, it must be established that the plaintiff expected to be compensated for the benefit conferred. It is necessary to establish that the benefit was not intended as gift and that knowledge of that fact can fairly be attributed to the defendant at the time of his acceptance of the benefit. When the dispute concerns benefit transferred in the context of an offer of agreement, these elements in the plaintiffs case should be easily established. Hence, if the offeree declines the offer, the offeror will normally be entitled to recovery of money paid to the offeree, goods retained or their value, or the value of services rendered. If the offeree returns the goods only after enjoying some interim use, claim to recover reasonable rental value is allowed." In situation based on unjust enrichment, if the principles have been established, party is entitled to be compensated on quantum meruit basis. In the case before me, the contract did not come into existence because of the non‑fulfilment of condition precedent, namely approval by the Department of Transportation for the message centre. party can be compensated for unjust enrichment where contract does not come into existence due to the non‑fulfilment of condition precedent. See the case of Cyvel International Corporation v. Janif (1984) 18 C.LR. 82 (B.C.C.C.), where an agreement to install vinyl siding was subject to condition precedent that financing be arranged. In that case, the financing was not arranged and therefore no contract came into existence, however, the plaintiff had carried out the siding work. The British Columbia Court of Appeal concluded that the plaintiff was entitled to receive compensation on the basis of unjust enrichment. case somewhat analogous to the case at bar was the case of Manco Limited v. Atlantic Forest Products Limited (1971) 1971 CanLII 1077 (NB CA), 24 D.L.R. (3d) 194, where piece of equipment was provided to the defendants in anticipation of possible sale. No contract had been concluded but the New Brunswick Court of Appeal held that the plaintiff was entitled to be compensated on the basis of what would be considered reasonable rental for the equipment during the time it was used. In the case before me, Nova used the sign since May of 1987. In fact, in February of 1993, Nova made some alterations to the existing sign which, to some degree, would indicate that it wished to continue to make use of the sign. Indeed, on cross‑examination, Mr. MacKay testified that Nova was always prepared to pay "fair value" for the sign as installed, and the only debate was what amount was fair. Following the principles relating to unjust enrichment, there was conferral of benefit by Sign‑O‑Lite on Nova. Sign‑O‑Lite expected to be compensated and the benefit was not intended as gift. In my opinion Nova was fully aware of the entire situation from the beginning and took advantage of the benefit for some 74 months, as of June of 1993. Nova is not without fault in the overall circumstances of this case. The plaintiff has submitted that unjust enrichment be compensated at an appropriate monthly rental from April 19, 1987, to date, at the rate of $875.00 per month, plus provincial sales tax, less monies paid. On the other hand, Nova submits that the quantification of the unjust enrichment claim should be gross value of the signage as erected, less number of deductibles and less monies paid. I have come to the conclusion that the plaintiff is entitled to be compensated for unjust enrichment from the corporate defendant only, Nova Enterprises Limited. On the basis of the evidence placed before me, I have come to the conclusion that this compensation should be on the basis of a reasonable monthly rental which I find to be the sum of $875.00 per month, plus any provincial sales tax, if applicable, less some deductions which I shall set forth herein and less any monies paid. Nova has had the benefit of the sign as and from May 1st, 1987 to and including June 30th, 1993, total of 74 months, which would indicate total rental of $64,750.00. Total cash payments by Nova to Sign‑O‑Lite were in the amount of $16,197.53. There were two matters for which Nova claimed it should be compensated which feel bear some relationship. to the claim for unjust enrichment. They are the cost of shifting signs in February 1993 of $1,575.30 and the cost of electrical work done in 1987 in anticipation of the message centre installation and, also, the software connection. The defendant put forth the sum of $4,861.09 for the electrical work but am satisfied that the defendant has only proved the sum of $2,430.00 by reason of the voucher dated May 14th, 1987 (Exh. 3, Tab 13, Page 63). Because of the circumstances of the matter, am of the opinion that Nova should only be compensated for one‑half of the amounts for shifting the signs and the electrical work. Accordingly, my recapitulation of the claim allowed to the plaintiff for unjust enrichment from the corporate defendant only is as follows: Rental of sign on reasonable monthly basis 74 months at $875.00 $64,750.00 Less monies paid by Nova $16,197.53 Less Electrical installation 1/2 of $2,430.00 1,215.00 Less shifting signage 1/2 of $1,575.30 787.65 TOTAL 46349.82 To the amount of $46,549.82 should be added any provincial sales tax on the rental payments, if the same are applicable, and will hear argument if necessary. would further order that the plaintiff shall take possession of the message centre and the computer software, at its own expense, from the premises of Nova within sixty (60) days of the date of any order taken out pursuant to this decision, such message centre and software to be in the condition in which they now exist. And would further order that in the event that Nova wishes to purchase the sign presently existing on the site from Sign‑O‑Lite, it shall have the option of doing so by paying the sum of $7,350.15 to Sign‑O‑Lite within 60 days of the date of any order taken out pursuant to this decision. It should be noted that in calculating this amount have taken the estimate to replace the existing sign of $31,153.92 as of 1987 (Exh. 3, Tab 29, Page 107) and depreciated that figure annually at the rate of 20% over six and one‑half years. In the event that Nova does not wish to purchase the existing sign, Sign‑0‑Lite shall have the right to remove such sign from the land at its own expense within 60 days from receiving notice from Nova that it does not wish to purchase to sign, or within 60 days from the end of the 60 day period granted to Nova to purchase the sign. With regard to the counterclaim of Nova on the evidence presented to me, I can find no negligent misrepresentation on the part of Sign‑O‑Lite or its employees. All parties were fully aware of what was going on in relation to the Department of Transportation and, in my opinion, allowed the erection of the sign without knowing if approval would or would not be granted, although at the time of such erection both parties were aware of disapproval from certain officials of the Department. have dealt with some of the other claims advanced in the counterclaim, in the claim for unjust enrichment. I would, accordingly, dismiss the counterclaim without costs to any party. am prepared to hear counsel as to costs and pre‑judgment interest on the award for unjust enrichment. PALMETER, A.CJ., S.C. CANADA PROVINCE OF NOVA SCOTIA C.H.: 79254 IN THE SUPREME COURT OF NOVA SCOTIA BETWEEN: 32262 B.C. LTD. and NOVA ENTERPRISES LIMITED, body corporate and JAMES MACKAY DECISION Palmeter, A.C.J., S.C.
The plaintiff sought damages for an alleged breach of a written contract or, in the alternative, damages for unjust enrichment. The defendants counterclaimed for damages based on alleged negligent misrepresentation by the plaintiff. The plaintiff had agreed to supply and erect a large sign for the defendant. The agreement was subject to receiving approval from the Department of Highways for a changeable message centre which was to be part of the sign. The plaintiff was to apply for the permit, as it was the signage expert. Although approval was never received, the sign was delivered and installed. The message centre was never activated, although the equipment was in place at the defendant's warehouse. Dismissing the claim for breach of contract and allowing the unjust enrichment claim, that government approval was a condition precedent to the agreement. Since approval was not forthcoming, the contract was null and void. The plaintiff's alternative claim for unjust enrichment was allowed against the corporate defendant, based on a reasonable monthly rental. The defendant's counterclaim was dismissed, as there was no negligent misrepresentation by the plaintiff.