IN THE PROVINCIAL COURT OF SASKATCHEWAN CIVIL DIVISION Citation: 2018 SKPC 006 Date: January 30, 2018 File: 531/17 Location: Regina Between: Reliable Truck Trailer Ltd. and Super Save Disposal (Saskatchewan) Inc. Shealagh Mooney For the Plaintiff James R. Kitsul For the Defendant JUDGMENT DEMONG, Introduction [1] Reliable Truck Trailer Inc., hereafter referred to as ‘Reliable’, is mobile vehicle and associated equipment repair company situated in Pense, Saskatchewan. In the summer of 2015 it entered into an oral agreement with Super Save Disposal (Saskatchewan) Inc., hereafter referred to as ‘Super Save’, in which it agreed to provide, on ‘call out’ basis, repair services for Super Save’s fleet of trucks and associated equipment. When required, it would also provide shop supplies and parts to effect those services. [2] Between the summer of 2015 and June of 2016, it provided shop supplies, parts, and services on number of occasions. Early in the relationship, Super Save paid Reliable’s invoices as they were presented, but in or about November of 2015 it ceased to pay invoices as they became due. Reliable inquired as to the reasons why its invoices were not being paid, and it received what might best be described as less than clear and cogent explanation, other than that Super Save felt that some of the charges were too high. Some of these invoices were negotiated, reduced, and paid, and others were simply left unpaid without explanation. [3] Eventually Reliable demanded payment of its outstanding invoices and Super Save offered much smaller sum of money in satisfaction of those accounts. Reliable was not prepared to accept the lesser amount and it now brings this action to recover the amount that it says is due. It says that it provided goods and services on 22 separate occasions and invoiced Super Save total of $18,380.42. It was paid only $8,614.17. It seeks to recover the difference, which equates to the principal sum of $9,766.25. It seeks prejudgment interest on that amount and its legal costs for having to bring this action. [4] Super Save has defended the action and maintains that the amount that was charged for some of the goods and services that were provided was greatly in excess of the amounts that it should have been charged, and that, therefore, the amount sought was unreasonable. It argues that in the absence of an express term in the agreement as to the amount that could be charged for each of the goods and services that were provided, Reliable is not free to charge whatever it chooses to charge. It argues that this Court should determine the amount that is due by importing into the contract, an implied term, to the effect that the parties agreed to charge, and pay, reasonable price for the goods and services that were provided. [5] Reliable concedes that there was no overarching agreement on the totality of the prices to be charged for goods and services, but maintains that there had been, for short period of time, convention that had developed whereby Super Save agreed to four things. First, it alleges that the parties, either expressly or by inference, agreed that Reliable could charge minimum three hour call out charge on each occasion that Reliable was called out to provide services. Second, it argues that Super Save agreed to let Reliable charge an hourly rate for travel time to and from any given worksite. Third, it argues that it should be allowed to charge for the time it took to locate and obtain certain parts that it needed to do the repairs, (known as ‘parts call out’), and, that Super Save should also be required to pay for the actual time incurred by Reliable to source and obtain those parts. Fourth, it alleges that by virtue of the fact that Super Save did not originally take issue with Reliable’s practice of charging for each small product that it used in the course of providing mechanical services, it is now estopped from claiming that Reliable was not at liberty to charge for these ‘shop supplies’ at an amount in excess of ten percent of the total invoice. [6] In reply, Super Save adamantly denies that there was ever an express or implied agreement to allow Reliable to charge minimum three hour ‘call out fee’ for the services it provided, or to charge for travel time without express pre-approval. Second, it says that it made it absolutely clear to Reliable that it should, firstly, access Super Save’s own products, and if these were unavailable, it should have contacted Super Save. This would allow Super Save the opportunity to contact supplier to provide part in short order and at reduced cost. It argues that Reliable effectively padded its accounts by purchasing at higher rates and charging for unneeded travel time to obtain those additional products. Third, it says that Reliable has charged it for greater quantity of shop supplies than what was necessary to provide good and reasonable repair services. It argues that the amount it has been charged for these supplies should never have exceeded the industry norm that is to say, an amount not in excess of ten percent of the total services that were invoiced, to maximum of one hundred dollars. Finally, it argues that there were occasions in which Reliable charged for time that it did not expend in the performance of its duties. It argues that Reliable is subject to an overarching principle under this contract one of good faith. Since Super Save could not monitor Reliable’s time on each occasion that it performed services, Reliable had to ensure that the time it charged was accurate, and if it did not, then it has breached its contract with Super Save. The Law [7] I accept that the law demands, that in the absence of an express term in a contract which stipulates a price to be paid for goods, or services, or both, an implied term that the parties agreed to pay a fair and reasonable price for those goods and/or services be imported into that agreement. This Court has dealt with this principle, otherwise known as contractual quantum meruit, on countless previous occasions. Authority for this principle of law can be found by reference to our Court of Appeal’s decision in CH2M Hill Energy Canada, Ltd. Consumers’ Co-operative Refineries Ltd., 2010 SKCA 75 (CanLII), 362 Sask 104. [8] also accept that in ascertaining what might constitute fair and reasonable price to pay for goods and services, court is free to consider, as the litigants have invited me to do, fee which an industry would consider to be customary. [See Generally: Saskatchewan Government Insurance Medynski (Lakeland Towing), 2012 SKQB 157 (CanLII), 396 Sask 104 [Medynski]. Medynski identified other factors for consideration, including the cost to the claimant providing the service, the value placed on the service by the recipient, the contract price, and, what the recipient had previously paid for the same service but because the parties have not founded their arguments, or led evidence on these latter factors, they do not come into play in this decision. [9] also accept that the principles surrounding the law of estoppel by convention have been articulated and summarized by our Supreme Court in Ryan Moore, 2005 SCC 38 (CanLII) at para 59 [2005] SCR 53. Those essential principles demand that before estoppel by convention can be applied, the parties’ dealings must have been based on mutual assumption of fact or law, created by statement, conduct, or implied by silence, whereby one party has conducted itself (or acted) in reliance on that shared assumption so as to change its legal positions. In so doing, the party has suffered detriment, such that it would be unfair or unjust to allow one of the parties to resile or depart from the common assumption. [10] Finally, note that Reliable, as plaintiff in these proceedings, carries the burden of proof, on balance of probabilities, to convince the Court that it is entitled to the quantum of damages that it seeks. The Evidence, Findings of Fact, and Analysis [11] This Court finds itself, once again, embarking on what is, in essence, an accounting, based on an oral agreement, to be undertaken long after the provision of goods and services, based not necessarily on what either party had thought were the respective rights and obligations of the other, but rather, based on the evidence of experts who played no role in the provision of those goods and services. To any erstwhile reader of Provincial Court judgments, would urge you to give some consideration to setting down, in written form, those essential terms that will define any contractual relationship that you may wish to entertain. [12] Before discussing the accounting that is necessary, I wish to deal with the plaintiff’s argument regarding estoppel by convention. While I appreciate plaintiff counsel’s clear and cogent legal analysis of this area of law, I am not satisfied that the plaintiff has provided a sufficient evidentiary foundation upon which that legal argument can be predicated [13] While the parties agreed on flat labour rate of $85.00 per hour, the parties disagree on four significant things. First, the plaintiff says that it understood that it could charge for travel, but the defendant says that this was never part of the agreement (unless discussed beforehand where significant travel was anticipated). Second, the plaintiff was of the view that it could charge for three hour minimum attendance, but the defendant adamantly denies that this was agreed to. Third, the plaintiff maintains that it could charge for miscellaneous, but rather nominal shop supplies, at an identified value per part regardless of whether or not the quantum charged for those parts exceeded ten percent of the total invoice, but the defendant says that it did not agree to this term. Fourth, the plaintiff says that it could, when necessary, source larger but still rather nominal supplies (and charge for the larger retail price) without seeking pre-approval from the defendant, something which the defendant states was absolutely not in the agreement. [14] have heard evidence from each party asserting their respective views on these issues, and each of the parties present credibly. Because the evidence is in direct contradiction, it is incumbent on the plaintiff to lead some additional evidence to meet the burden of proof necessary to show that convention developed whereby the defendant habitually paid on the terms articulated by the plaintiff. [15] There was no evidence led as to precisely when the contract commenced, and therefore, have no evidence as to how much time elapsed, nor do know how many invoices may have been presented by the plaintiff and approved by the defendant, before the defendant started to take issue with the invoices. am, therefore, unable to determine how long the supposed ‘convention’ of paying these assorted costs occurred. Summer in Saskatchewan runs from June 21st until September 21st. When did the contract commence? While the parties both acknowledge that concerns were first raised in November of 2015, had three previous invoices been submitted, or was it ten or fifty or more? The Court has no way of knowing. [16] It is clear that prior to November of 2015 the defendant did not take issue with the invoices that were being submitted. The defendant has given evidence that this is precisely because the defendant thought the prices were within the confines of the agreement that it says it entered into to the effect that they would not take issue with fair and reasonable price. [17] It was only in November of 2015 that the defendants felt that they were being charged too much. None of the pre-November invoices were submitted into evidence. If they had been, and if they confirmed that convention had developed whereby the plaintiff was charging minimum of three hours for job that took less time; or that travel time was being included; or that there was specific charge for miscellaneous parts that exceeded fair and reasonable price; or that retail prices and downtime for obtaining parts were charged without the express authorization of the defendant, then an evidentiary foundation would exist for the plaintiff’s position, but as have said, none of these invoices were tendered into evidence. [18] Any argument advancing estoppel by convention must, at minimum, show the existence of mutual assumption, that is to say, practice or convention that had developed, over sufficient time, to convince court that the plaintiff would have relied upon this practice to its detriment. Unfortunately, while the plaintiff asserts that the convention had developed, the defendant denies it. Where is that additional evidence which would tip the balance in favour of the plaintiff? There is none. There is only an assertion which, in turn, has been denied by the defendant. [19] Nor am satisfied that the defendant’s failure to identify precisely why they were paying some accounts, but not others after November of 2015, would be evidence of the estoppel by convention that the plaintiff seeks to advance. say this because find as fact that the parties did not share the same mutual assumptions. The defendant felt that the charges would, simply put, be fair and reasonable, albeit at stated rate of $85.00 per hour. The plaintiff felt that it could charge differently, and in manner already described earlier in this judgment. Because no evidentiary foundation has been established to satisfy me that there was mutuality of assumption on the manner of invoicing for goods and services rendered, am not prepared to consider the estoppel by convention argument advanced by the plaintiff. [20] Even if this evidence had been led, I would still have reservations in accepting this argument, because I have heard no convincing evidence of detriment reliance. Plaintiff’s counsel has invited me to conclude that had the defendant not complied with its obligation to pay in accordance with these assumptions, then the plaintiff would have turned to alternative and more lucrative work. But there was no evidence presented in court on this point. That is to say, I did not hear any representative of the plaintiff assert that the plaintiff had the opportunity to seek more lucrative work, but declined to accept that more lucrative work, in reasonable reliance of an understanding that the defendant would pay the amount of money that it was seeking on the terms that it thought existed under the agreement. In fact, the evidence leads me to conclude otherwise. Notwithstanding the defendant’s ongoing concerns with the invoices that were submitted, and notwithstanding the defendant’s directions to reduce accounts on occasion, and notwithstanding that many invoices were not paid for an extended period of time, the plaintiff stood ready and willing to continue to work for the defendant. well understand plaintiff counsel’s desire to have me find the existence of detrimental reliance, but cannot find it on the evidence presented, and am not prepared to infer its existence. It would be as simple to draw an inference in favour of the defendant to the effect that the terms of the agreement as posited by the defendant, were being followed by the plaintiff up until November of 2015, when the plaintiff started to charge for goods and services in different manner. [21] Because I cannot, on the evidence, identify the express terms of the contract stipulating the price to be paid for the various goods and services that were provided, I am obligated to import an implied term to the effect that the parties agreed to charge, and pay, a fair and reasonable price. Twenty-two invoices are in dispute. Each of the parties have presented their own reasons why they feel the invoices as presented were either fair or inflated, and each called an expert to speak to what fair and reasonable price would be for each of the goods and services that were provided. Those experts have, in turn, looked to each of the invoices that are in dispute and have provided their opinion as to whether that particular invoice was fair and reasonable, and if not, what the price should have been, and why. [22] Before going through each invoice, wish to make certain findings which will assist in that endeavour. First, find that the parties were in general agreement that parts which would cost significant amount of money would not be purchased by the plaintiff unless it had first discussed the matter with the defendant. This seems to be reasonable industry standard. would expect that mechanic would exercise some discretion and contact client to advise of significant but unexpected cost for particular part. The problem is that no evidence was led as to where that price point would be, and can certainly understand the difficulty on the part of the plaintiff, on each and every occasion, in attempting to contact the defendant to ascertain whether or not he could, or should, source the part himself or seek the assistance of the defendant. While the defendant has offered oral evidence on what might have constituted the discounted price that it could have obtained if it had sourced the part rather than letting the plaintiff source the part, none of this evidence was supported with satisfactory evidence as to what that discounted price would actually be, and, in my view, these discounted amounts were only offered as an estimate. Therefore, am unwilling to discount invoices for this reason alone. That is to say, will not consider the defendant’s argument that reduce one or more invoices simply because the plaintiff incurred additional time and arguably higher retail cost to acquire certain parts what has been identified in the invoices as ‘parts call out’. [23] Second, accept the defendant’s evidence as it relates to those shop supplies that are necessarily included in any repair service. The defendant has led evidence to the effect that incidental goods, identified generally as shop supplies, such as brake cleaner, lubricants, washers, nuts, and bolts and other sundry items are not, in the repair industry, generally charged on piece meal basis, but rather are incorporated into an invoice as constituting the supplies component of the services delivered. These are, invariably, valued at ten percent of the total services charged, to maximum of one hundred dollars. accept the defendant’s expert evidence in this regard and will consider this sensible and practical protocol when assessing fair and reasonable quantum to be assessed for each invoice. [24] Third, am satisfied that in businesses such as the plaintiff’s, the industry anticipates that either travel time to and from the work location is regularly billed and paid for, or alternatively, that minimum period of time is charged for the call out. The evidence does not, however, suggest that both of these are normally charged. Were this so, there would be an element of double recovery. By example, an oil change may only take one hour. To charge three hour minimum charge for this service and then charge an additional one-half hour travel time to and from the vehicle in question, at stated rate of eighty-five dollars an hour, would mean that client is paying the equivalent of four hours, or $340.00 for an oil change, something which the defendant properly points out as completely unrealistic. Similarly, the plaintiff is, think, correct from an industry standard point of view, when it argues that it would be equally unreasonable for defendant to call out service provider to travel one-half hour to vehicle on the road side to change tire, and then drive home for one-half hour, all the while employing not only the plaintiff but his vehicle, and be charged only $42.50 for the time it took to change the tire. This would equate to an effective hourly rate for the employment of person and supporting supply vehicle for rather nominal rate of $28.50 per hour. [25] The evidence before the court suggested that the industry does regularly charge minimum number of hours per call. The defendant suggested that it would be between one and three hour minimum. The plaintiff suggested two to four hour minimum. am satisfied that three hour minimum charge, would, on the somewhat limited evidence provided to this Court, be reasonable industry standard. [26] Finally, where the remainder of the expert evidence conflicts, prefer the evidence provided by the defendant’s expert. The plaintiff’s expert was previous partner of the plaintiff, having sold his share of the company to Mr. Baran year earlier. This caused me concern as to his willingness to be objective. In addition, the evidence that he gave, more often than not, was given in an off-the-cuff manner, often without explanation or clarification. The bald assertion, for example, that an invoice looked ‘okay to him’ or ‘seemed fair’, without any further explanation, was not particularly helpful to the court. By comparison, the defendant’s expert took the time to explain why he felt that particular repair service took particular amount of time. [27] With these considerations in mind, have looked to the calculations and allowed three hour minimum charge out fee. have allowed an additional hour on parts call out and have allowed the actual price paid for those parts obtained. have limited the shop supplies to ten percent of the labour component of the invoice, and where the parties’ evidence conflicts as to the number of hours that should have been charged, have preferred the evidence of the defendant, subject to three hour minimum charge. have reviewed each invoice and make the following adjustments, which are inclusive of taxes: Invoice Amount Charged Adjusted Amount 431 $577.67 $308.55 432 $981.20 $514.25 526 $517.48 $352.55 578 $645.16 $308.55 583 $1,850.20 $1,291.40 595 $1,994.85 $1,131.35 597 $570.63 $359.98 598 $500.50 $361.35 599 $1,466.30 $884.95 600 $639.79 $322.85 601 $505.86 $308.50 605 $1,081.57 $617.10 606 $362.17 $308.55 607 $366.30 $312.68 608 $328.07 $308.55 609 $322.57 $308.55 610 $1,074.22 $529.91 611 $477.70 $308.55 612 $322.57 $308.55 617 $1,502.46 $813.45 622 $617.31 $361.35 623 $845.63 $580.80 Total Charged $18,702.99 Adjusted $10.902.32 [28] I find that a fair and reasonable price to be paid for the goods and services provided by the plaintiff to the defendant for the period of time for which the plaintiff went unpaid equates to the sum of $10,902.32. As it has been agreed between the parties that the sum of 8,614.17 was paid, there remains due and owing the sum of $2,288.15. award prejudgment interest on that sum from June 30th of 2016 in the further sum of $22.70. [29] The results of this trial have been mixed. The plaintiff has received some but not nearly all of the money that it was seeking. The defendant has been successful in reducing the amount of money that was sought, but not entirely. The plaintiff has not quantified its costs, but the defendant asks that this Court grant it out of pocket expenses that it incurred in having to retain an expert to give evidence on the issue of fair and reasonable price to be paid for the goods and services rendered. The defendant properly points out that this trial had to be adjourned on one occasion because the plaintiff had not adequately prepared, and that it had, therefore, incurred the cost of having his expert attend not once, but twice. [30] The defendant has submitted two statements of account from their expert. The first, for his initial attendance, equates to $1,032.30 broken down as $250.00 for travel from Grasswood, Saskatchewan, and eight hours at unit price of $85.00 per hour, for acting as an expert witness for the further sum of $680.00. Taxes were charged in addition to these sums. The second account is in the sum of $1,853.48 which includes $250.00 for travel to Regina and back, and two full eight hour days at $85.00 per hour for trial attendance. [31] While success is mixed, the defendant has properly pointed out that good faith performance of contract is an organizing principle of contract law, and as our Supreme Court noted in Bhasin Hrynew, 2014 SCC 71 (CanLII), [2014] SCR 494 parties to an agreement have common law duty to act honestly in the performance of contractual obligations. The defendant points out that while the accounts rendered by the plaintiff started to feel inordinately high commencing in November of 2015, it was not until sometime later that one of the managers of the defendant watched video recording of the plaintiff work for only couple of hours, and subsequently submit bill for greater number of hours. found that evidence credible, and the plaintiff provided no meaningful explanation. am satisfied that one of the reasons that the parties were unable to resolve this matter, and why this trial had to proceed, was to show that there was compelling evidence of the plaintiff’s failure to comply with its duty of honesty, and its corresponding tendency to pad an invoice. [32] am prepared to award portion of the costs that the defendant is seeking. am prepared to award the cost of the expert’s travel to and from Grasswood (a round trip distance of 500 kilometers) at per kilometer rate of $.42 for each of the two occasions that he was required to attend. disregard the eight hours billed for giving evidence on the first occasion as no trial proceeded at that time. award the further sum of $340.00 to reflect what consider to be reasonable two hours for the expert to prepare to give his evidence, and another two hours for his attendance at trial. In total award the defendant costs in the sum of $760.00 which will be set off against the plaintiff’s damages award. [33] In conclusion, award the plaintiff the sum of $1,550.85, which sum is to be paid immediately. P. Demong,
HELD: On the basis of the evidence presented by the parties’ experts and in absence of an express term in the contract, the court read in an implied term that the parties agreed to pay a fair and reasonable price and awarded the plaintiff such portion of the amount sought as was fair and reasonable. The plaintiff did not provide a sufficient evidentiary foundation to establish estoppel by convention as it did not tender the invoices that were paid. Even if such evidence had been led, there was no convincing evidence of detrimental reliance as the plaintiff presented no evidence that it would have turned to alternative and more lucrative work.