Court of Appeal for Ontario

CITATION: S & J Gareri Trucking Ltd. v. Onyx Corporation, 2016 ONCA 505 DATE: 2016-06-24 DOCKET: C59373

BEFORE: Cronk, Blair and MacFarland JJ.A.

BETWEEN

S & J Gareri Trucking Ltd.

Plaintiff (Respondent)

and

Onyx Corporation

Defendant (Appellant)

COUNSEL: Kyle Armagon, for the appellant Ian Latimer, for the respondent

HEARD AND RELEASED ORALLY: June 17, 2016

On appeal from the judgment of Justice Graeme Mew of the Superior Court of Justice, dated August 20, 2014.

ENDORSEMENT

[1] The appellant, Onyx Corporation, and the respondent, S & J Gareri Trucking Ltd. are in the business of providing snow removal services to municipalities. Together with a third company, Harlow Contracting Inc., they competed for a contract with the City of Mississauga.

[2] Onyx was the successful bidder and entered into a five-season contract with the City. Its bidder deposit of $75,002.81 – representing 1% of the price it would receive over the five years – was retained by the City as a performance bond for the duration of the contract.

[3] The contract called for twenty specialized snow-removal trucks; however, Onyx did not have that many trucks at the time. It therefore entered into subcontracts with Gareri and Harlow to supply two and five trucks, respectively. Gareri and Harlow each provided Onyx with a deposit in an amount corresponding to their proportionate share of the Onyx deposit for Onyx’s fixed term of five seasons.

[4] The subcontracts were made orally between the principals of the corporations and remained entirely oral because Onyx refused to commit them to writing. The primary issue at trial and on appeal is the interpretation of the oral subcontracts. More specifically, the issue is whether the parties agreed to a five-season term (the duration of the main contract) or to a season-by-season term subject to rights of cancellation.

[5] Onyx terminated the subcontracts after the first season because it had acquired more trucks of its own. Gareri and Harlow sued in separate actions for wrongful termination of the subcontracts, and the actions were tried together. The trial judge found that the subcontracts were for a five-season term, that Onyx had wrongfully terminated them, and that the plaintiffs were entitled to damages based on the revenues they could reasonably have expected to have generated from them (with certain adjustments for mitigation and other factors).

[6] Onyx appeals only from the judgment in favour of Gareri. We would not interfere with the trial judge’s findings or his award of damages, and dismiss the appeal.

[7] The trial judge applied the correct principles applicable to the interpretation of contracts in general and to oral contracts in particular. He held that when dealing with contracts which are substantially or wholly oral: (i) it is necessary to distill from the words and actions of the parties what they intended: see G.H.L. Fridman, The Law of Contract in Canada, 6th ed. (Toronto: Carswell, 2011) at 16; (ii) evidence of the parties’ subjective intentions has no independent place in determining the terms of their bargain: Eli Lilly & Co. v. Novopharm Ltd., 1998 791 (SCC), [1998] 2 S.C.R. 129 at para. 54; (iii) the test of what the parties agreed to requires an objective determination; and (iv) the contract must include the requisite elements of offer, acceptance and consideration.

[8] The trial judge considered the evidence, particularly the factual matrix surrounding the making of the Gareri subcontract. He placed considerable weight – as he was entitled to do – on the fact that Gareri and Harlow had provided deposits to Onyx that exactly mirrored their proportionate share of the Onyx deposit with the City for the full five-year period. In addition, although he noted that the fact the written contract prepared by Mr. Gareri (but not accepted) proposed a five-year term would not alone have turned the interpretation question, the trial judge was alive to that fact. The trial judge made adverse credibility findings as against the principals of Onyx and found the plaintiffs’ evidence credible. He accepted the versions of Mr. Gareri and Mr. Madeiros (the principal of Harlow).

[9] We see no error in his approach to the interpretation of the subcontract or in the interpretation he reached. His findings and conclusion were entirely open to him on the record. Onyx essentially seeks to re-argue the case on appeal. We cannot interfere on that basis.

[10] Nor would we interfere with the trial judge’s assessment of damages. He applied the proper measure of damages, namely what was necessary to put Gareri in the same position it would have been in had the subcontract not been breached. On that basis, he held that Gareri was entitled to the revenue it could reasonably have expected to generate from the Onyx subcontract, less adjustments for some minor administration fees it would no longer be required to pay and any revenues generated through its mitigation efforts. He made no error in this respect. The parties had agreed on quantum.

[11] The appeal is therefore dismissed.

[12] Costs are awarded to the respondent in the agreed amount of $12,500 inclusive of disbursements and all applicable taxes.

“E.A. Cronk J.A.”

“R.A. Blair J.A.”

“J. MacFarland J.A.”