CITATION: 2081430 Ontario Inc. v. Econo Petroleum Inc., 2017 ONSC 2275
COURT FILE NO.: DC-16-86-00
DATE: 20170410
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
B E T W E E N:
2081430 ONTARIO INC. and 2057235 ONTARIO INC.
A. Munkin, for the Plaintiffs/ Respondents
Plaintiff/Respondent
- and -
ECONO PETROLEUM INC. and ARORA TRADING LTD.
M. Wiffen, for the Defendants/ Appellant
Defendants/Appellant
AND BETWEEN:
VLADIMIR GORBATCHEVSKI
M. Fish, for the Plaintiff/ Respondent
Plaintiff/Respondent
- and -
ECONO PETROLEUM INC.
M. Wiffen, for the Defendant/ Plaintiff by Defendant’s Claim / Appellant
Defendant/Plaintiff
by Defendant’s Claim/Appellant
HEARD: March 24, 2017, at Brampton
REASONS FOR JUDGMENT
[On appeal from a Decision of Deputy Judge Acri of the
Small Claims Court at Brampton dated July 12, 2016]
ANDRÉ J.
[1] The appellant Econo Petroleum Inc. (“Econo”) appeals the decision of Deputy Judge Acri ordering Econo to pay 2081430 Ontario Inc. (“208”) $11,462.92 for unpaid commissions.
[2] Econo also appeals the Deputy Judge’s decision that Econo must repay a deposit which Mr. Vladimir Gorbatchevski paid to it.
BACKGROUND FACTS
208’s Claim Against Econo
[3] The principal of 208, Mr. Taljinder Singh, testified at trial that 208 acted as a sales representative for Econo from 2006 to 2011, pursuant to an informal agreement. During this period, 208 made sales to Ontario gas stations. Econo supplied gasoline to these stations and was then paid by them. Econo then paid 208 a commission based on the amount of fuel it sold to 208’s customers.
[4] Econo’s principal, Mr. Goldy Singh, testified at trial that:
(a) From 2008 to 2010, Econo paid 208 commissions of 0.3 cents for each litre of gasoline sold to all of 208’s customers other than Dost, and 0.1 cents for each litre of gasoline sold to Dost, regardless of the volume of gasoline it sold.
(b) Ordinarily, the commissions owing for the full calendar year would be paid on the first quarter of the following calendar year, unless 208 requested an early payment.
(c) Mr. Singh promised to bring customers to Econo which he did. Mr. Singh was not a full time commissioned salesperson. The two men discussed commissions but it was very loosely arranged, was dependent on sales and the vicissitudes of the market, and was not on a fixed schedule of payment. There was no formal written contract.
(Transcript of Proceedings, January 16, 2016, pages 180-188.)
[5] Taljinder Singh, also testified that Econo paid his company its full commission from 2008 to 2010 but did not pay the commissions owed to 208 for the period January to November, 2011. Econo did not dispute this evidence.
[6] Both Goldy Singh and Taljinder Singh testified that Econo periodically produced a summary of its sales to 208’s customers. The amount of commissions owing to 208 would then be calculated based on these summaries. (Transcript of the Evidence, page 183.)
[7] Econo provided 208 with a summary of sales for 2011, but only for the period January to March. 208 subsequently obtained a court order forcing Econo to provide 208 with its sales summary for the period from April to October 2011.
Vladimir Gorbatchevski’s Claim Against Econo
[8] Mr. Gorbatchevski operated a gas station which he leased from 2057235 Ontario Inc. (“205”). He purchased fuel from Econo. Mr. Gorbatchevski paid Econo a security deposit of $25,000. He terminated his lease of the gas station on October 2011, after deciding to return to Russia to care for his ailing father. 208 then leased the gas station from 205 and continued to purchase fuel from Econo.
[9] Mr. Gorbatchevski testified that when he closed his business, he owed Econo $3,203. He therefore sought reimbursement from Econo of $21,796.86. After Mr. Gorbatchevski ended his lease of the gas station, 208 purchased gasoline from Econo, using Gorbatchevski’s account with Econo. Taljinder Singh later contacted Econo and advised them that 208, rather than Gorbatchevski was responsible for the fuel which 208 had ordered from Econo. However, Econo then claimed that because Mr. Gorbatchevski had not given proper notice of the termination of his lease, he was required to pay for the fuel which 208 had ordered.
[10] Econo maintained at trial that it was unclear whether Mr. Gorbatchevski or 208 had purchased the gasoline, despite being informed by 208 that it had made the purchase.
DEPUTY JUDGE ACRI’S DECISION
[11] Deputy Judge Acri held on July 13, 2016 that:
(1) While he could not find that Tajinder Singh was a commissioned salesperson in the traditional sense, there was “some informal” arrangement between Taljinder Singh and Goldy Singh;
(2) He did not accept Goldy Singh’s evidence that when Taljinder Singh left Econo, that he did not discuss outstanding commissions. He further held that it made no sense that Taljinder Singh would wait a year to contact Goldy Singh about outstanding commissions;
(3) Deputy Judge Acri further held that:
[I]t is apparent that they (Goldy Singh and Taljinder Singh) conducted themselves in a particular manner for a number of years that was mutually satisfactory. Econo was happy for the extra business, and compensated [Taljinder] Singh for that, notwithstanding the informality of the arrangement. While there are inconsistencies in the evidence of both parties, I find that it is only upon [Taljinder] Singh leaving in November 2011 that Econo found itself in a less favourable financial position in the following year and decided not to pay the commissions that had accrued during the prior year. The documentation on volume of sales was undisputed by Goldy.
[12] Regarding Mr. Gorbatchevski’s claim against Econo, Deputy Judge Acri concluded that:
I further find that Econo has unfairly and improperly retained the security deposit of Gorbatchevski. Given that the station was in more or less continuous operation, and that Singh ordered the gas that was billed to Gorbatchevski, the only conclusion is that the deposit is owed back to Gorbatchevski, less the undisputed amount he acknowledges that he owes Econo.
[13] Deputy Judge Acri then ordered judgment for 208, in the amount of $11,462.92 and for Gorbatchevski in the amount of $21,796.86.
POSITION OF THE PARTIES
Econo
[14] Econo submits that:
(1) The learned Deputy Judge erred in finding that Econo was indebted to 208, without finding that there was an agreement between the two. Even if such an agreement existed, was the commission payable by Econo to 208 a required commission or a discretionary one?
(2) The learned Deputy Judge erred by failing to consider Econo’s claim for a set-off for damages due to the manner in which 208 terminated its relationship with Econo without notice.
(3) Even if Econo was obligated to pay 208 and there was no set-off, the Deputy Judge erred in calculating Econo’s indebtedness to 208.
(4) 208 should be responsible for paying the outstanding balance owed to Mr. Gorbatchevski rather than Econo.
208’s Position
[15] There was a binding oral agreement between Econo and 208 for commissions based on sales of petroleum to 208 clients. The parties scrupulously followed a formula for payment of commissions between 2008 and 2011. The Deputy Judge did not err in his finding that 208 was owed commissions for petroleum sales between January and November, 2011.
[16] There is no basis for Econo’s set-off claim for damages. Econo presented no evidence of any damages it suffered from 208’s alleged failure to provide notice of termination of its agreement with Econo.
[17] The Deputy Judge did not err in his calculation of the commissions owed to 208. The judge relied on numbers produced by Econo. His calculation of the commissions owed to 208 did not amount to “palpable and overriding error”.
Gorbatchevski’s Position
[18] Mr. Gorbatchevski submits that:
(1) There is no reason why 208 should pay him. He paid the deposit to Econo rather than 208. He had no contract with 208.
ISSUES
[19] This appeal raises the following issues:
(1) What is the appellate standard of review?
(2) Did the learned Deputy Judge err in finding that Econo was indebted to 208, without finding that there was an agreement between the two?
(3) Did the learned Deputy Judge err in law by failing to award set-off damages to Econo due to 208s alleged failure to give sufficient notice before ending its business relationship with Econo?
(4) Did the learned Deputy Judge err in calculating Econo’s indebtedness to 208?
(5) Did the learned Deputy Judge err by finding that Econo, rather than 208, was responsible for reimbursing Mr. Gorbatchevski the remainder of the deposit he paid to Econo?
ISSUE NO. ONE: What is the appellate standard of review?
[20] The standard of appellate review of a trial judge’s factual findings and findings of mixed fact and law is that of palpable and overriding error: Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235.
[21] The standard of appellate review of a trial judge’s findings of law is one of correctness.
ISSUE NO. TWO: Did the learned Deputy Judge err in finding that Econo was indebted to 208, without finding that there was an agreement between the two?
[22] The Court of Appeal’s decision in Maple Ridge Community Management Ltd. v. Peel Condominium Corporation No. 231, 2015 ONCA 520, 2015 CarswellOnt 20397 at paras. 31 and 35 is dispositive of this ground of appeal:
[31] The level of requisite detail in reasons will be lessened "[w]here the record discloses all that is required to be known to permit appellate review”: Hill v. Hamilton-Wentworth Police Services Board, 2007 SCC 41, [2007] 3 S.C.R. 129, at para. 101. If a detailed record is available, the appellate court should not intervene “simply because it thinks the trial court did a poor job expressing itself”: R. v. Sheppard, 2002 SCC 26, [2002] 1 S.C.R. 869, at para. 26.
[35] Reasons from the Small Claims Court must be sufficiently clear to permit judicial review on appeal. They must explain to the litigants what has been decided and why: Doerr v. Sterling Paralegal, 2014 ONSC 2335, at paras. 17-19. However, appellate consideration of Small Claims Court reasons must recognize the informal nature of that court, as well as the volume of cases it handles and its statutory mandate to deal with these cases efficiently. In short, in assessing the adequacy of the reasons, context matters: Massoudinia v. Volfson, 2013 ONCA 29, at para. 9. Just as oral reasons will not necessarily be as detailed as written reasons, reasons from the Small Claims Court will not always be as thorough as those in Superior Court decisions. Failing to take the Small Claims Court context into account only serves to restrict access to justice by unnecessarily imparting formality and delay into a legal process that is designed to be informal and efficient.
[23] Taljinder Singh testified that he had an arrangement with Goldy Singh where in exchange for commissions, he obtained clients for Econo. From 2008 to 2010, Econo paid him commissions based on a fixed formula. Goldy Singh partly corroborated Taljinder Singh’s testimony that Econo paid him commissions at a fixed rate during this period. Goldy Singh denied the existence of a formal contract with 208. However, it was open to the Deputy Judge to find that there was an agreement between the two which required Econo to pay 208 an agreed upon commission in exchange for the business which Taljinder generated for Econo.
[24] The following passage of Donohue J. in Angel v. Beepat, 2016 ONSC 4179, at para. 19 is apposite in this case:
… If the alleged agreement has not been reduced to writing, the Court must consider what the parties said and did and assess objectively whether, in context, their words and actions establish an intention to be bound. The genesis and aim of the transaction is an aspect of the relevant context for consideration.
(Quoting Dickson J. in Le Soleil Hotel and Suites Ltd. v. Le Soleil Management Inc, 2009 BCSC 1302, at para. 328.)
[25] Second, it was open for the Deputy Judge, based on the trial record to find, as he clearly did, that the commission paid by Econo to 208 was mandatory rather than discretionary. Payment of the commission, based on the evidence including that of Goldy Singh, was not simply an act of charity. It was inextricably linked to the volume of gas purchased by 208’s clients from Econo. The greater the sales, the greater the commission. The parties were guided by this simple principle for four to five years. The Deputy Judge’s reasons are not deficient merely because the reasons did not explicitly set out the conclusion that Econo was required to pay a commission to 208 on account of the business 208 generated for Econo. This conclusion inexorably flows from his decision.
ISSUE NO. THREE: Did the learned Deputy Judge err in law by failing to award set-off damages to Econo due to 208’s alleged failure to give sufficient notice before ending its business relationship with Econo?
[26] Taljinder Singh testified that there was never any discussion between Goldy Singh and himself regarding any notice requirement for termination of their agreement. There was no evidence from Goldy Singh about any notice required from either party for termination of their agreement. To the contrary, Goldy Singh testified that there was no agreement between Econo and 208.
[27] Based on the above evidence, it was open to the Deputy Judge to conclude that “there can be no set off for alleged losses suffered after the end of the relationship as a result of a breach of a contract that Goldy Singh claims did not exist.”
[28] Econo submits that the Deputy Judge made “mutually inconsistent findings” about whether there was a binding contract between Econo and 208 which constitutes a palpable and overriding error. On one hand, he found that there was a binding agreement between Econo and 208; on the other hand, he held there was no binding contract which Econo could allege was breached by 208.
[29] In my view, the Deputy Judge did not make inconsistent findings about the existence of a contract between Econo and 208. He found that there was an agreement between the two, even if informal. He also concluded that Econo could not seek a set-off for damages based on a contract which Econo claimed never existed. In other words, there was no agreement or provision that governed the end of the parties’ informal relationship. It was open to the Deputy Judge to find that no damages, contractual or otherwise, flowed from the termination of the parties’ relationship.
[30] Is there an implied duty to provide reasonable notice of termination of a verbal contract?
[31] Econo relies on Hillis Oil & Sales v. Wynn’s Canada, 1986 44 (SCC), [1986] 1 S.C.R. 57, page 67 and 1193430 Ontario Inc. v. Boa-Franc Inc., 2005 39862 (ON CA), para. 44, for the proposition that 208 was under an implied duty to provide reasonable notice of termination of their agreement to Econo. Specifically, Econo relies on the following passage in Hillis Oil for that position:
If a distributorship agreement does not contain a provision for termination without cause it is so terminable only upon giving reasonable notice of termination.
[32] Unlike the case at bar, both Hillis Oil and 1193430 Ontario Inc. involve written contracts. Second, as the Court in 1193430 Ontario Inc. noted at para. 45, what is reasonable will depend on the circumstances of each case including factors such as the expectation of the parties, the duration of the relationship and the dependency of the business of the terminated party. Goldy Singh regarded his relationship with 208 as an act of charity and his payment of a commission discretionary. It would have been incongruous that he would have believed that there was an implied duty to provide reasonable notice in the event that 208 terminated its arrangement with Econo without notice.
[33] Even if the Deputy Judge erred in finding that 208 had no obligation to give Econo reasonable notice of the termination of their relationship, Econo fell short of quantifying any resultant loss.
[34] Econo relies on two letters as proof of loss after 208 terminated the agreement. The first, dated January 15, 2013, makes reference to a “sudden drop in volume in the 4th quarter of last year”. This drop disqualified Econo from a volume discount of $30,000 for 2012. Similarly, a letter dated December 1, 2014 indicated that Econo’s 2012 “gasoline purchases” was approximately 9 million litres less than the required 165 million litres contracted volume between Econo and a company that delivered fuel for Econo.
[35] Significantly however, there is nothing linking this drop in volume to 208’s termination of the agreement. The first letter refers to a “sudden drop” in the last quarter of 2012, more than 9 months after 208 terminated his agreement with Econo. Goldy Singh testified, however, that the letter referred to 2011 rather than 2012. Furthermore, it is unknown whether Econo’s 2012 gasoline purchases was less than that of 2011.
[36] For the above reasons, Econo failed to prove any losses it suffered as a result of 208’s termination of the agreement.
[37] Therefore, this ground of appeal fails.
ISSUE NO. FOUR: Did the learned Deputy Judge err in calculating Econo’s indebtedness to 208?
[38] Econo submits that 208 has not proven its damages as a matter of law. The Deputy Judge erroneously relied on a sales summary provided by 208 and a cheque which covered the period from January 2011 to March 2011, which the Deputy Judge mistakenly concluded applied to the period from January to November 2011.
[39] Both Taljinder Singh and Goldy Singh testified that the commissions paid to 208 were based on summaries of sales provided by Econo. Econo initially provided sales summaries for January to March 2011 and for the rest of the year as a result of a court order. There was no dispute concerning the formulas which Econo relied on to pay 208. Deputy Judge Acri applied this formula to conclude that the commissions owed for the period January to March 2011 was $11,821.91 while that for the rest of the year was $35,009.15.
[40] Taljinder Singh also gave uncontradicted evidence that Econo never paid 208 any commissions for sales during the first week of November 2011 which worked out to be $1,695. Based on these outstanding amounts, the learned Deputy Judge concluded that Econo owed 208 commissions of $48,526.05 from January to November 2011. The Deputy Judge then reduced that amount by $37,063.14 for an unpaid invoice payable to Econo, to conclude that the outstanding amount of commissions payable to 208 was $11,462.91.
[41] I find no error in the Deputy Judge’s determination of the amount owed to 208. It was open to him to rely on the evidence of Econo and 208 to determine the commissions outstanding for the period January 2011 to November 2011.
[42] For this reason, this ground of appeal must fail.
ISSUE NO. FIVE: Did the learned Deputy Judge err by finding that Econo, rather than 208, was responsible for reimbursing Gorbatchevski the remainder of his deposit to Econo?
[43] Econo submits that to the extent that 208’s claim for unpaid commissions fails, then 208 ought to be held responsible for the payment to Mr. Gorbatchevski of the amount owing to him.
[44] It was open to Deputy Judge Acri to find that Gorbatchevski was not responsible for the 208’s gas purchase after Gorbatchevski had ceased his involvement in the gas station. Gorbatchevski gave the $25,000 deposit to Econo, rather than 208. The Deputy Judge was correct in deciding that Econo, rather than 208, should reimburse Gorbatchevski.
[45] To that extent, this ground of appeal fails.
CONCLUSION
[46] Econo’s appeal of Deputy Judge Acri’s decision is dismissed.
COSTS
[47] Econo seeks costs of $2,700 on a partial indemnity basis and $2,043.20 in disbursements.
[48] 208 seeks costs in the amount of $8,840.27 on a similar basis, while Mr. Gorbatchevski seeks costs of $3,151.51, also on a partial indemnity basis.
[49] 208 and Mr. Gorbatchevski were successful in this appeal. However, given the relatively uncomplicated issues in this appeal, the amount of Econo’s indebtedness to 208, and the fact that Econo did not do anything to unnecessarily prolong the litigation, I find that the costs claimed by 208 are excessive. In my view, the amount of costs that can be considered fair and reasonable is $3,500 inclusive.
[50] Similarly, the costs claimed by Mr. Gorbatchevski are excessive. The factum filed by Mr. Gorbatchevski’s counsel amounted to 16 paragraphs. The sole issue raised by Mr. Gorbatchevski was a very simple one which did not require, on its own, a great deal of preparation or court time.
[51] In my view, costs in the amount of $1,600 inclusive are fair and reasonable for Mr. Gorbatchevski.
COSTS ORDER
[52] Econo is ordered to pay costs, fixed in the amount of $3,500 inclusive, to 208 within ninety (90) days of today’s day.
[53] Econo is ordered to pay costs fixed in the amount of $1,600 inclusive, to Mr. Gorbatchevski within ninety (90) days of today’s date.
André J.
Released: April 10, 2017
CITATION: 2081430 Ontario Inc. v. Econo Petroleum Inc., 2017 ONSC 2275
COURT FILE NO.: DC-16-86-00
DATE: 20170410
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
B E T W E E N:
2081430 ONTARIO INC. and 2057235 ONTARIO INC.
Plaintiff/Respondent
- and –
ECONO PETROLEUM INC. and ARORA TRADING LTD.
Defendants/Appellant
AND BETWEEN:
VLADIMIR GORBATCHEVSKI
Plaintiff/Respondent
- and -
ECONO PETROLEUM INC.
REASONS FOR JUDGMENT
ANDRÉ J.
Released: April 10, 2017