DATE: 20050324

DOCKET: C41685

COURT OF APPEAL FOR ONTARIO

RE:

GREEN LANE ENVIRONMENTAL GROUP LTD. (Plaintiff/ Respondent) – and – ARCHIE LEACH and 1422961 ONTARIO LIMITED (Defendants/Appellants)

BEFORE:

McMURTRY C.J.O., ARMSTRONG and LANG JJ.A.

COUNSEL:

Robert E. Hutton and Craig A. Bryson

for the appellants

John O’Sullivan

for the respondent

HEARD:

March 11, 2005

On appeal from the judgment of Justice H.A. Rady of the Superior Court of Justice dated March 24, 2004.

E N D O R S E M E N T

[1] This is an appeal from Rady J.’s judgment in which she determined that the parties had made a mutual mistake as to the method of calculation of monies owing under a contract.

[2] The appeal centres on the factual underpinning for that finding of mutual mistake. Factual findings are entitled to a high degree of deference and, absent palpable and overriding error, will not be overturned. Similarly, inferences drawn from findings of fact are entitled to a high degree of deference. Where, however, a trial judge has misapprehended the evidence, made a finding in the absence of evidence, or considered irrelevant factors, her decision is subject to review (Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235).

[3] This case turned on the interpretation of a one-page written contract in which Green Lane Environmental Group Ltd. (“Green Lane”) agreed to dispose of approximately 2000 cubic metres of soil for 1422961 Ontario Limited (“142”) at a cost of $40.00 per cubic metre. Based on that contract, 142 expected to receive an invoice from Green Lane for approximately $80,000.00. Instead, 142 received an invoice for $236,582.89.

[4] The difference resulted from the method of calculation that Green Lane employed. Rather than measuring the actual soil removed, Green Lane measured the amount of soil that could have been removed had the 122 trucks employed for the purpose each been filled to capacity. The volume capacity of the trucks was 5,471 cubic metres resulting in a significantly higher invoice than for the estimated volume of 2,000 cubic metres or the 2,486 cubic metres of soil actually removed. In support of its choice of measurement, Green Lane led evidence at trial that it is industry custom to calculate volume in this way.

[5] The trial judge found that the parties had not turned their minds to the question of how the volume of soil would be measured. Based on this finding, she determined that the parties had made a mutual mistake about the method of measurement and that there was a gap or ambiguity in the contract. To fill that gap, the trial judge implied a term into the contract that volume would be calculated using the industry standard.

[6] In our view, in arriving at this conclusion, the trial judge misapprehended the evidence in three respects: in the factual foundation to her finding of mutual mistake and a gap in the contract; in her factual determination that volume could not be calculated from weight; and in her interpretation of the evidence of industry standard.

[7] On the first point, the evidence established that any misconception about the method of calculation was unilateral on the part of Green Lane. Although Green Lane testified that it believed the calculation would be based on industry standard, there was no evidence that 142 believed anything other than that it would be billed on the basis of what the contract specified, namely the actual volume of soil removed. There was no mutual mistake because extrapolation from truck capacities was unnecessary: the actual soil volume was easily capable of measurement in a number of ways.

[8] The parties employed one of those ways when they agreed, using a post-completion calculation, that 2,486 cubic metres of soil had actually been removed. The trial judge, however, rejected this agreement, which was binding on her, holding instead that it did “not assist in a determination of the issue”. Instead she preferred Green Lane’s post-completion extrapolation of volume from the average volume capacities of the trucks utilized. In so doing, the trial judge placed reliance on the fact that the volume of soil was not calculated at the time that it was loaded into the trucks but was instead weighed upon its arrival at the landfill site.

[9] With respect to the second point, Green Lane’s own experts testified that volume could be calculated from the weight of the soil removed: specifically, they testified that a cubic metre of soil weighed about 1.8 tonnes. That Green Lane was familiar with calculating volume from weight is a logical inference from the fact that Green Lane did so for other purposes, because, by government regulation, it could only deposit a limited number of cubic metres in its landfill site per year.

[10] Regarding the third point, the trial judge misapprehended the evidence about industry standard. When the experts gave evidence about industry standard, they also gave evidence that industry practice would also dictate that Green Lane was obliged to inform its customer about the particulars of that standard. There was no evidence that Green Lane did so.

[11] The contract was clear on its face that Green Lane would dispose of approximately 2000 cubic metres of soil at $40.00 per cubic metre. As agreed by the parties, Green Lane actually removed 2,486 cubic metres of soil. At a cost of $40 per cubic metre, 142 calculated that it should have been billed $99,440.00 plus GST for a total of $106,360.80.

[12] Accordingly, the appeal is allowed and the judgment below is set aside. 142 is liable on the contract to pay Green Lane $106,360.80. The funds that have been paid into court shall be paid out in accordance with this determination.

[13] As 142 succeeds on this appeal, it is entitled to costs of the appeal. We are also of the view that 142 is entitled to its trial costs as it seems that the amount paid into court exceeded the amount for which 142 was liable. Accordingly, costs are payable by Green Lane to 142 in the amount of $23,000 for trial and $7,500 for the appeal, both inclusive of disbursements and GST.

Signed: “R.R. McMurtry C.J.O.”

“Robert P. Armstrong J.A.”

“S.E. Lang J.A.”