DIVISIONAL COURT FILE NO.: 190/14
DATE: 20150130
ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT
BETWEEN:
UTILITY ADVOCATES INC. Plaintiff (Appellant)
– and –
1333375 ONTARIO LIMITED o/a Four Points by Sheraton Toronto Mississauga Defendant (Respondent)
COUNSEL: Karen Zvulony, for the Plaintiff (Appellant) Vusumzi Msi, for the Defendant (Respondent)
HEARD at Toronto: January 28, 2015
SWINTON J.
Overview
1Utility Advocates Inc. (“the appellant”) appeals from the decision of Deputy Judge L. N. Shapiro dated March 11, 2014, as amended April 9, 2014, in which the judge dismissed the appellant’s claim for payment and ordered it to pay the respondent’s claim in the amount of $9,794.17 plus costs of $5,777.12.
2For the reasons that follow, I would allow the appeal, set aside the order of the trial judge, and order the respondent to pay $6,850.00 plus interest to the appellant.
Background
3The appellant carries on a business of providing audits of energy bills and making recommendations for refunds and/or savings on matters pertaining to utility costs, rates and charges. On July 21, 2008, the appellant entered into a written contract with the respondent, a numbered company carrying on a hotel and restaurant business. By that contract, the appellant was to audit the respondent’s utility bills and to determine if there were any errors and to recommend savings. If the respondent accepted a recommendation of the appellant, it was required to pay the appellant in accordance with the payment terms – essentially, half of the savings flowing from the recommendation for a period of 36 months from the date of the reduction. The contract contained an entire agreement clause.
4The appellant did an audit of the respondent’s utility bills. In August 2008 it provided a report in which it recommended that the respondent should contract its gas supply with another supplier. At the time the respondent was on long-term fixed contracts with Direct Energy and ECNG LP. The report also contained an opinion from the appellant that natural gas prices were on their way up. In fact, it turned out that natural gas prices fell over the next few months.
5The appellant recommended Summit Energy as an alternative gas supplier, providing a draft agreement with one, three and five year terms at prices lower than the respondent was currently paying. There are emails between the parties indicating that the appellant could obtain other suppliers if requested, but no request was made.
6The respondent signed a contract with Summit Energy around March 5, 2009 for gas supply for five years. The rate of 31.9 cents per cubic meter was much lower than it was previously paying. Accordingly, the appellant was entitled to 50% of the savings, and it was paid that share for a 22 month period that started in May 2009.
7The respondent refused to pay anything for months 23 to 36, leading to the appellant’s claim for $6,850.00. When the appellant brought its Small Claims Court proceeding, the respondent made a claim for overpayments made in months 1 to 22.
The Decision of the Trial Judge
8The trial judge rejected the appellant’s claim. He found that the parties’ contract required the appellant to provide a full audit, to suggest multiple suppliers and to “continue its due diligence with respect to prices considering the volatility of the market” (Reasons, para. 31). He also found that the appellant had a continued obligation to keep the respondent informed of falling markets (Reasons, para. 34). As the appellant had not met these obligations, the respondent was not required to pay the appellant for months 23 to 36.
9With respect to the respondent’s claim, the trial judge found that there had been an overpayment to the appellant. He accepted the respondent’s evidence that the savings were less than the appellant claimed because transportation charges paid to Enbridge, the distributor, had not been considered in calculating savings. Therefore, he ordered the appellant to pay $9,794.17.
10The trial judge failed to deal with the appellant’s defence that at least part of the respondent’s claim was statute-barred. The respondent brought its claim on May 7, 2012. The appellant argues that any claim before May 7, 2010 is beyond the limitation period and not recoverable, as the respondent should have been aware of the transportation charge from the bills it had received.
The Standard of Review
11On an appeal from a judge, the standard of review on questions of law is correctness. On questions of fact, the standard is palpable and overriding error, while on questions of mixed fact and law, the standard is palpable and overriding error, unless there is an error with respect to an extricable question of law (Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235 at paras. 8, 10 and 36).
Analysis
The findings with respect to the appellant’s claim
12In my view, the trial judge erred in law in finding that the appellant had legal obligations to recommend multiple suppliers and to provide ongoing disclosure about the fluctuation in gas prices, and that it breached the agreement. There is no language to support that conclusion in the parties’ contract, which contains an entire agreement clause.
13The contract opens with the words, “We, hereby retain Utility Advocates Inc. (“Advocates”) to perform a detailed audit and submit written savings and/or refund recommendations (if available) as well as process any refunds in the following service areas: … Natural Gas …”. The contract required the respondent to provide copies of monthly invoices for the listed services and other information, including existing supply contracts. The contract also dealt with submission of recommendations, but did not specify any number of recommendations. It also set out the respondent’s obligation to pay any savings if any recommendation was implemented.
14Thus, there is nothing in the express words of the contract that requires the recommendation of a number of suppliers, nor is there any continuing disclosure obligation following the audit. The appellant was required to do an audit, which it did, according to the parts of the report supplied and the evidence. It also provided a recommendation on the way to save money on natural gas services by contracting with another gas supplier.
15In certain circumstances courts can imply terms in a contract, but only if the term is obvious, and it is necessary for business efficacy (Bhasin v. Hrynew, 2013 ABCA 98 at para. 27, varied on other grounds in Bhasin v. Hrynew, 2014 SCC 71). In the present case, the trial judge erred in law in implying the terms he did, as they were not obvious, nor were they necessary to give efficacy to the contract. By the contract’s terms, the appellant was required to do an audit of invoices. If it made recommendations for savings that were implemented, the parties were to share the savings. The trial judge himself concluded that there was some benefit to the respondent from the new supply contract with Summit Energy because of the lower price and the cancellation of the existing contracts without penalty as a result of the appellant’s efforts (see Reasons, para. 37).
16Moreover, there is no implied duty of ongoing disclosure. The Supreme Court of Canada stated in Hrynew, above, that while there is a general duty of honesty in contractual performance, that “does not impose a duty of loyalty or of disclosure or require a party to forego advantages flowing from the contract” (at para. 73). Thus, the trial judge erred in implying an ongoing duty to advise on the state of the market.
17In sum, the trial judge erred in his interpretation of the contract and in finding that the appellant had breached the contract. Accordingly, the dismissal of the appellant’s claim must be set aside, and an order should go requiring the respondent to pay the outstanding amounts owed for months 23 to 36 in accordance with the contract.
The findings with respect to the respondent’s claim
18The trial judge accepted evidence from the respondent that there was an overpayment to the appellant. The respondent submitted a spreadsheet that showed a transportation charge payable to Enbridge from September 2009, which the respondent argued should have been deducted from the savings. The trial judge accepted this evidence.
19The trial judge erred in doing so. The contract defines a “saving” as the “difference ... between our [the respondent’s] actual costs and the costs we would have occurred [sic] if we had not implemented a recommendation”. Therefore, the contract requires one to determine what the appellant’s recommendation was in order to calculate savings. That recommendation, found in the August 2008 report, was for the respondent to change its gas supplier. The evidence before the trial judge was that the distributor was always Enbridge, and its charges were regulated by the Ontario Energy Board.
20The respondent accepted the appellant’s recommendation and switched to Summit Energy as its gas supplier for a fixed term of five years. I note that the contract signed with Summit Energy clearly states that it is a supplier of gas, and the price did not include “regulated transmission, distribution and other charges” that would be charged by the utility (in this case, Enbridge).
21Witnesses for the appellant explained that the invoices showed that the respondent paid a customer charge and a delivery charge separate from gas supply charges when it had contracts with the former suppliers. According to the evidence, the Ontario Energy Board changed the delivery charge into two components, which appear in September 2009 bills from Enbridge. At that point, there was a “delivery to you” charge and a “transportation to Enbridge” charge, along with the customer charge and the gas supply charge. The appellant’s witnesses stated that the delivery charge and transportation charge would be incurred, even with the former gas suppliers.
22In my view, the trial judge erred in law, both in the interpretation of the contract and in ignoring relevant evidence about the savings. He never assessed the appellant’s evidence about the charges, nor did he give any reason for rejecting it. He did not explain why he deducted the “transportation to Enbridge” charge from the savings. This was an error in light of the definition of savings in the contract, linked as it was to the particular recommendation related to gas supply. Accordingly, his order that the appellant repay the respondent, based on the transportation charges, must be set aside.
23Based on my conclusion that there is no right to claim a repayment by the respondent, I need not address the limitation period issue.
Conclusion
24For these reasons, the appeal is allowed, and the decision of the trial judge is set aside. The appellant shall have judgment against the respondent in the amount of $6,850 plus pre- and post-judgment interest in accordance with the Courts of Justice Act.
25If the parties cannot agree on costs, the appellant may make brief written submissions within 14 days of the release of this decision. The respondent shall have 10 days after the receipt of those submissions to reply. All submissions are to be made through the Divisional Court office.
Swinton J.
Released: January 30, 2015
CITATION: Utility Advocates Inc. v. 1333375 Ontario Limited, 2015 ONSC 666
DIVISIONAL COURT FILE NO.: 190/14
DATE: 20150130
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
BETWEEN:
UTILITY ADVOCATES INC. Plaintiff (Appellant)
– and –
1333375 ONTARIO LIMITED o/a Four Points by Sheraton Toronto Mississauga Defendant (Respondent)
REASONS FOR JUDGMENT
Swinton J.
Released: January 30, 2015