Scotsburn Co-Op. Services v. W.T. Goodwin Ltd., 1985 CanLII 57 (SCC), [1985] 1 SCR 54
Scotsburn Co‑operative Services Limited Appellant;
and
W. T. Goodwin Limited Respondent.
1984: March 12; 1985: February 21.
Present: Dickson, Estey, McIntyre, Lamer and Wilson JJ.
on appeal from the court of appeal for nova scotia
Contracts‑‑Purchase and sale‑‑Goods delivered to store‑‑No notice of corporate relationship‑‑Billing historically made to and paid by real estate company‑‑Bankrupt company formed to run store alleged to be actual purchaser‑‑Account unpaid‑‑Whether or not real estate company liable.
The issue is whether respondent real estate company was obligated in contract to appellant for the price of food products delivered to a supermarket. The corporate office of the real estate company (one of three companies owned by the same shareholder) was located in the same building as the supermarket.
The supermarket was originally operated by a Nova Scotia company, W.T. Goodwin Limited. In 1965, that company changed its name to Goodwin's Supermarket Limited and a new company (the respondent) was incorporated under the name of W.T. Goodwin Limited, with principal objects of acquiring and holding real and personal property. A third company, Goodwin's Discount Food Store Limited, was incorporated under New Brunswick law in 1969. By an agreement made in 1972, Goodwin's Supermarket Limited agreed to sell all its assets less liabilities to this third company. The Amherst supermarket continued to operate as before, but the agreement to sell raised doubts as to which of the companies was responsible for its operations.
Appellant was not notified of the corporate changes affecting the supermarket's ownership and continued to note on its invoices that the goods were sold to "Goodwin's Supermarket" or "Goodwin's". No invoice was made out to W.T. Goodwin Limited. Although appellant's statements of account were rendered in the name of "W.T. Goodwin Ltd.", the invoices were paid by cheques issued under the name "Goodwin's Discount Store Ltd." or "Goodwin's Supermarket‑‑Quality Foods‑‑Amherst, N.S."
Goodwin's Discount Food Store Limited went into receivership and the supermarket closed owing appellant for goods delivered. Appellant's action against W.T. Goodwin Limited (the real estate company) for the amount owed by the supermarket was allowed at trial but dismissed on appeal.
Held (Estey and Lamer JJ. dissenting): The appeal should be dismissed.
Per Dickson, McIntyre and Wilson JJ.: In the absence of cogent evidence concerning which of the companies operated the supermarket, the trial judge and appellate court differed on the ultimate determination, basically one of fact, as to whether a contract had been entered into by the real estate company with Scotsburn for the goods delivered to the supermarket. This Court, as second appellate tribunal asked to review a provincial appellate court's reversal of a trial judge's judgment on a question of fact, must be clearly satisfied that the judgment of the Court of Appeal is erroneous, either with regard to its grounds for intervention or its interpretation of the evidence in the record. The conclusion reached by the Court of Appeal was justified on the record. The findings at trial were based on the proposition that the real estate company was under an onus, which it did not discharge, of advising Scotsburn that the wrong company was being charged and therefore precluded from denying liability for the goods received at the supermarket.
The doctrine of estoppel had no application here. Scotsburn, firstly, did not plead the material facts in the statement of claim necessary to support the allegation as required by the Nova Scotia Civil Procedure Rules. In addition, the conditions necessary for the operation of estoppel‑‑representation by words or conduct inducing detrimental reliance‑‑were not satisfied. The real estate company did not make any representation by its conduct upon which Scotsburn relied to its detriment. Silence on the part of the real estate company receiving the bills was not a representation of responsibility for the goods delivered to the supermarket. Indeed, silence or inaction only constitutes a representation where the representor owes a legal duty to the representee to make the disclosure; no such legal duty was advanced here. Then, too, Scotsburn was not induced by the real estate company for it did not even know of its existence. Finally, Scotsburn suffered no detriment. Notification of the proper company to be billed would not have prevented the eventual receivership of that company and the loss suffered by Scotsburn in consequence.
Notwithstanding the uncertainty in the record, the only reasonable conclusion to draw from the testimony and documentary evidence presented at trial was that, in the latter years, the supermarket was operated by the New Brunswick company, Goodwin's Discount Food Store Limited. In any event, the Court of Appeal correctly decided that regardless of who was actually operating the supermarket, there was no evidence sufficient to establish, on a balance of probabilities, that the real estate company was the purchaser of the goods under a contract with Scotsburn. The coincidence of names and common ownership of the business were not, in themselves, sufficient to support a claim in contract against the real estate company.
Cases Cited
Saint John Tugboat Co. v. Irving Refinery Ltd., [1964] S.C.R. 614; Beaudoin‑Daigneault v. Richard, 1984 15 (SCC), [1984] 1 S.C.R. 2; Dorval v. Bouvier, 1968 3 (CSC), [1968] S.C.R. 288; Thistle v. Thistle (1980), 1980 2673 (NS SC), 42 N.S.R. (2d) 430; Karsales (Harrow), Ltd. v. Wallis, [1956] 2 All E.R. 866; Re Vandervell’s Trusts (No. 2), [1974] 3 All E.R. 205; Farrell v. Secretary of State for Defence, [1980] 1 All E.R. 166; Greenwood v. Martins Bank, Ltd., [1933] A.C. 51; Nippon Menkwa Kabushiki Kaisha (Japan Cotton Trading Company, Ltd.) v. Dawson’s Bank, Ltd. (1935), 51 Ll. L. Rep. 147, referred to; Starr Manufacturing Co. v. Spike (1893), 40 N.S.R. 626; Keewatin Electric & Diesels Ltd. v. Durall Ltd., [1976] W.W.D. 119; William A. Flemming Ltd. v. Fisher (1978), 1978 3788 (NS SC), 29 N.S.R. (2d) 338; Gelhorne Motors Ltd. v. Yee & Wilcox (1969), 1969 1165 (MB CA), 71 W.W.R. 526, distinguished.
Authors Cited
Bower, George Spencer. The Law Relating to Estoppel by Representation, 3rd ed., by Sir Alexander K. Turner, London, Butterworth's, 1977.
Corbin, A. L. Corbin on Contracts, vol. 3, St. Paul, Minn., West Publishing Co., 1960.
Cross, R. Cross on Evidence, 5th ed., London, Butterworth's, 1979.
Furmston, M. P. Cheshire and Fifoot’s Law of Contracts, 10th ed., London, Butterworth's, 1981.
Guest, A. G. Anson’s Law of Contract, 25th ed., Oxford, Clarendon Press, 1979.
Halsbury’s Laws of England, 4th ed., vol. 9, London, Butterworth's, 1974.
Halsbury’s Laws of England, 4th ed., vol. 16, London, Butterworth's, 1976.
Maudsley R. and J. Martin. Hanbury and Maudsley Modern Equity, 11th ed., London, Stevens, 1981.
Restatement of the Law of Contracts, (2d) St. Paul, Minn., American Law Institute, 1932.
Waddams, S. M. The Law of Contract, Toronto, Canada Law Book, 1977.
Williston, Samuel. Williston on Contracts, 3rd ed., Mount Kisco, N.Y., Baker, Voorhis & Co., Inc., 1957.
APPEAL from a judgment of the Nova Scotia Court of Appeal (1982), 1982 5379 (NS CA), 53 N.S.R. (2d) 642, 109 A.P.R. 642, allowing an appeal from a judgment of Hallett J. Appeal dismissed, Estey and Lamer JJ. dissenting.
Douglas A. Caldwell and Suzan Frazer, for the appellant.
David Miller, for the respondent.
The judgment of Dickson, McIntyre and Wilson JJ. was delivered by
- Dickson J.‑‑The issue is whether the respondent, W.T. Goodwin Limited, a real estate company, is obligated in contract to Scotsburn Co‑operative Services Limited for the price of food products delivered to a supermarket in Amherst, Nova Scotia. The amount‑‑$25,252.89‑‑is not in issue. The heart of the dispute is whether a contract was entered into between the parties.
I Background and Facts
Scotsburn supplies dairy goods and frozen food products throughout Nova Scotia. It has sued W.T. Goodwin Limited for products supplied to an Amherst supermarket by one of Scotsburn's corporate divisions, Brookfield Foods. Brookfield and its predecessors have been supplying goods to the Amherst store since the 1940's.
The Amherst supermarket was originally operated by a Nova Scotia company called W.T. Goodwin Limited, incorporated on April 24, 1939. W.T. Goodwin Limited changed its name to Goodwin's Supermarket Limited on August 9, 1965. Shortly thereafter, on August 16, 1965, a new company was incorporated under the former name of the grocery store operator, W.T. Goodwin Limited. The principal object of the new company, expressed in its memorandum of association, was to acquire and hold any real or personal property. It operated as a real estate holding company. It is the defendant in the present action.
There were thus, in 1965, two separate companies, Goodwin's Supermarket Limited, owning and operating the grocery store, and W.T. Goodwin Limited, a real estate holding company. Brookfield was never aware of the corporate reorganization and change of names. It continued to supply goods to the store as before.
On September 16, 1969, Goodwin's Discount Food Store Limited was incorporated under the laws of New Brunswick. It operated a supermarket in Sackville, New Brunswick. By agreement dated May 1, 1972, Goodwin's Supermarket Limited agreed to sell to Goodwin's Discount Food Store Limited all of its assets, including stock‑in‑trade and inventory, less liabilities. The Amherst supermarket continued to operate as before, however the agreement to sell gave rise to some doubt as to which company was responsible for the supermarket operation.
All three companies were controlled, directly or indirectly, by Mr. Atlee Chapman. The corporate offices of the real estate company were on the second floor of the building which housed the Amherst supermarket.
The following summary may aid in understanding the corporate picture:
The Amherst Company
(a) W.T. Goodwin Limited incorporated April 24, 1939.
(b) Name changed to Goodwin Supermarket Limited, August 9, 1965.
(c) All assets sold to Goodwin's Discount Food Store Limited and operations ceased May 1, 1972.
The Sackville Company
(a) Goodwin's Discount Food Store Limited (the Sackville company) incorporated September 16, 1969.
(b) Bought the assets of the Amherst company May 1, 1972.
(c) Went into receivership October 1980.
The Real Estate Company
(a) W.T. Goodwin Limited (the real estate company) incorporated August 16, 1965.
The dairy goods and frozen foods in question were delivered to the Amherst store by Brookfield's sales representative. The printed invoice form supplied by the driver/salesman contained the words "sold to" after which the words "Goodwin's Supermarket" or simply "Goodwin's" appeared in the handwriting of the driver/salesman. It will be recalled that "Goodwin's Supermarket" became the name of the Amherst company after the name change in 1965. The form would be signed by an employee of the supermarket over the words "received by". In no case was an invoice made out by a driver/salesman to W.T. Goodwin Limited or signed by any person having received the goods on its behalf. A photograph in evidence shows a sign over the store reading "Goodwins".
Scotsburn, through its Brookfield division, always rendered its statements of account in the name of "W.T. Goodwin Ltd." These invoices were paid by cheques issued under the name "Goodwin's Discount Food Store Ltd. [the Sackville company] and/or Goodwin's Supermarket [the name of the Amherst company after 1965]‑‑Quality Foods‑‑Amherst, N.S." The cheques were signed by Mr. Chapman as president.
In 1980, the Sackville company went into receivership and the Amherst supermarket closed its doors. Scotsburn had delivered $25,252.89 worth of products to the supermarket for which it had not been paid. Scotsburn commenced an action against W.T. Goodwin Limited, the real estate company. This company apparently possesses assets sufficient to satisfy the outstanding account. Mr. Chapman in his personal capacity was later joined as a defendant. The defendant real estate company and Mr. Chapman disclaimed liability for the price of goods delivered to the Amherst supermarket.
At trial Hallett J., of the Nova Scotia Supreme Court Trial Division, allowed the action against the real estate company. In dismissing the action against Mr. Chapman in his personal capacity, the judge considered it was clear from the evidence that Scotsburn was dealing with a corporate entity and not personally with Mr. Chapman.
The Appellate Division of the Nova Scotia Supreme Court (MacKeigan C.J.N.S., Cooper and Jones JJ.A.) allowed the appeal of the real estate company and dismissed the action. No cross appeal was taken in that Court on the question of the personal liability of Mr. Chapman and it is no longer in issue.
II Liability of W.T. Goodwin Limited
The question is whether the Appellate Division erred in concluding that the real estate company was not a party to any contract with Scotsburn for goods delivered to the Amherst supermarket.
At trial, Hallett J. concluded W.T. Goodwin Limited, the real estate company, was the purchaser of the goods and therefore liable, in contract, for the value of the goods delivered to the Amherst supermarket. He found that Scotsburn and its predecessors were not advised of the 1965 corporate reorganization and name change; Scotsburn was never advised that the statements were being sent to the wrong company; the real estate company and Mr. Chapman never objected to the fact that Scotsburn was submitting its statement of account under the name of W.T. Goodwin Limited.
Despite difficulty in determining who had been operating the Amherst supermarket and despite his earlier finding that in 1972, Goodwin's Discount Food Store Limited, the Sackville Company, had purchased all the assets and assumed all the liabilities of Goodwin's Supermarket Limited, the Amherst company, Mr. Justice Hallett concluded that the real estate company was liable.
His conclusion is best expressed in his own words [(1981), 1981 4866 (NS SC), 48 N.S.R. (2d) 291, at pp. 293‑94]:
The issue in the case is who was the purchaser of the product for which the sum of $25,252.89 is presently owing? Was it Goodwin's Supermarket Limited as contended by the defendants or Goodwin's Discount Food Store Limited which had been paying the accounts of W.T. Goodwin Limited, the company that had been billed for some fifteen years? I find that the purchaser was W.T. Goodwin Limited, the company incorporated in 1965. If Mr. Chapman did not want that company to be liable for product sold by the plaintiff to the Amherst store, he should have advised the plaintiff that it was billing the wrong company. The goods were accepted at the Amherst store and statements made out by the plaintiff to W.T. Goodwin Limited were paid. The defendants cannot now complain, after fifteen years, of having received product on a daily basis and having paid for it either weekly or bi‑weekly that some company other than W.T. Goodwin Limited was the purchaser. I do not attach any significance to the fact that the driver‑salesman of the plaintiff and its predecessors made the delivery slips out to Goodwins or Goodwin's Supermarket, Amherst. I am satisfied from the evidence the only purpose of the designation was to show at what location the delivery was made and the primary purpose of the invoice was to show the product that was delivered and the price. These invoices were accepted and it is obvious that the designation by the driver‑salesman of where a delivery is made cannot effect the legal position as to who were the parties to the contract. The onus was on W.T. Goodwin Limited to advise the plaintiff that it was not responsible for the accounts. It cannot now deny liability after having accepted the goods and caused them to be paid for over a period of fifteen years.
- The Appellate Division disagreed. The disagreement rested in large part upon the proper inference to be drawn from the evidence at trial. Cooper J.A., writing for a unanimous Court, reviewed the evidence and concluded [(1982), 1982 5379 (NS CA), 53 N.S.R. (2d) 642, at p. 649]:
In the end one is left in a state of some apparent uncertainty as to what company or division thereof was operating the Amherst supermarket, but it seems to me upon consideration of the whole of the evidence that the business was being carried on by Goodwin's Discount Food Store Limited. Mr. Chapman said so on discovery, although later in his testimony he agreed that the Discount Food company was the Sackville company and "Goodwin's Supermarket was the Amherst company". It could not have been Goodwin's Supermarket Limited because, as I have said earlier in these reasons, that company had sold all its assets to the Discount Food company. Although there is no evidence that Goodwin's Supermarket Limited had been formerly wound up it thus had been succeeded by the Discount Food company. The only reasonable understanding I can gather from the evidence is that the Amherst supermarket was operated by Goodwin's Discount Food Store Limited as Goodwin's supermarket. The cheque forms, to which I have referred in my view bear this out.
In any event I cannot find evidence that the appellant, W.T. Goodwin Limited, the company incorporated in 1965, was the buyer of the dairy products and frozen foods supplied by Scotsburn to the supermarket. Indeed, Mr. Adshade in cross‑examination was asked:
Do you think, as Office Manager of Brookfield Division in Amherst that you were ever doing business with W.T. Goodwin Limited, a holding company incorporated in 1965?
and he answered, "I guess not".
As I have said, Scotsburn had the burden in this litigation of establishing that the buyer of the dairy products and frozen foods was the appellant. I do not think, for the reasons I have given, that it has discharged this burden. Moreover, I am of the opinion that delivery of the goods was not made to the appellant but rather to the operator of the supermarket, Goodwin's Discount Food Store Ltd., which was carrying on business under the name of "Goodwin's Supermarket". It follows that Scotsburn is not entitled to recover its claim against the appellant.
The Appellate Divisions's two basic conclusions settled liability. The Court determined, after its review of the evidence, that the Amherst supermarket had been operated by Goodwin's Discount Food Store Limited, the Sackville company, carrying on business as "Goodwin's Supermarket" and that delivery of the goods had been made to Goodwin's Discount Food Store Limited as operator of the supermarket. Secondly, the Court decided that, in any event, there was no evidence sufficient to support the trial judge's conclusion that the real estate company had been the purchaser of the goods under a contract with Scotsburn.
There was no specific written or oral contract asserted in this case. The claim was simply for "goods sold and delivered". The trial court was asked to infer a contract between the parties on the basis of conduct, particularly the regular pattern of delivery and payment between Scotsburn and the supermarket. A court may, of course, look to the conduct of the parties in order to determine whether all elements of an enforceable agreement are present. In general, such agreement is manifested by an offer by one party accepted by the other with the intention of creating a legal relationship, and supported by consideration. A. G. Guest, Anson’s Law of Contract (25th ed. 1979), pp. 24‑26; S. M. Waddams, The Law of Contract (1977), p. 94ff; M. P. Furmstom, Cheshire and Fifoot’s Law of Contract (10th ed. 1981), pp. 24‑25; Saint John Tugboat Co. v. Irving Refinery Ltd., 1964 88 (SCC), [1964] S.C.R. 614.
Resolution of this case is obviously clouded by the central and critical ambiguity over which of Mr. Chapman's companies operated the Amherst supermarket. In the absence of cogent evidence on this essential point, the trial judge and the appellate court differed on the ultimate determination, basically one of fact, as to whether a contract had been entered into by W.T. Goodwin Limited, the real estate company, with Scotsburn for goods delivered to the Amherst supermarket.
The rule applicable when this Court, as second appellate tribunal, is asked to review a provincial appellate court's reversal of a trial judge's judgment on a question of fact has been recently restated by Mr. Justice Lamer in Beaudoin‑Daigneault v. Richard, 1984 15 (SCC), [1984] 1 S.C.R. 2 [at p. 8]. Lamer J. reviewed the relevant authorities and cited from Dorval v. Bouvier, 1968 3 (CSC), [1968] S.C.R. 288 where Fauteux J. wrote for the majority at p. 294:
[TRANSLATION] The principle that a second Court of Appeal must follow when it is required to review the judgment of a first Court of Appeal is also long established. It is expressed in Demers v. The Montreal Steam Laundry Company ((1897), 1897 57 (SCC), 27 S.C.R. 537 at 538):
...it is settled law upon which we have often acted here, that where a judgment upon facts has been rendered by a court of first instance, and a first court of appeal has reversed that judgment, a second court of appeal should interfere with the judgment of the first appeal, only if clearly satisfied that it is erroneous; Symington v. Symington L.R. 2 H.L. Sc. 415.
This is the rule followed in this Court and recently applied again in Pelletier v. Shykofsky, 1957 65 (SCC), [1957] S.C.R. 635. Thus, to intervene in this case, this Court would have to be clearly satisfied that the judgment of the Court of Appeal is erroneous, either with regard to its grounds for intervention or its interpretation of the evidence in the record. After giving the matter serious consideration, I cannot form such an opinion. [My emphasis.]
I am not clearly satisfied that the judgment of the Appeal Division was erroneous with regard to its grounds for intervention or its interpretation of the evidence. On the contrary, I am of the opinion that the Appellate Division's reversal of the trial judge's conclusion was justified on the record. On my reading of his judgment, the trial judge's findings appear to be based on the proposition that the real estate company was under an onus, which it failed to discharge, of advising Scotsburn that the wrong company was being billed, and was therefore precluded from denying liability for goods received at the supermarket.
The Saint John Tugboat case, supra, makes it clear that mere failure to disown responsibility to pay compensation for services rendered is not of itself always enough to bind the person who has taken the benefit of those services. Here there is no evidence that the real estate company was even the beneficiary of any services nor the recipient of goods from Scotsburn.
The trial judge appears to have been of the view that the defendant company was in some manner estopped by its conduct from denying liability. I do not believe the doctrine of estoppel has application in this case. Scotsburn did not plead the material facts in its statement of claim to support an allegation of estoppel as required by Nova Scotia Civil Procedure Rule 14.04; nor did Scotsburn attempt to amend its pleadings following examinations for discovery. See Thistle v. Thistle (1980), 1980 2673 (NS SC), 42 N.S.R. (2d) 430 (T.D.), per Hallett J.; for an annotation of the similar rule in England, see: The Supreme Court Practice, 1985 v. 1, o. 18, r. 7, (vol. 1, at pp. 261‑63); Karsales (Harrow), Ltd. v. Wallis, [1956] 2 All E.R. 866 (C.A.), at p. 869; Re Vandervell’s Trusts (No. 2), [1974] 3 All E.R. 205 (C.A.), at p. 213; Farrell v. Secretary of State for Defence, [1980] 1 All E.R. 166 (H.L.), at p. 173.
Scotsburn bears the burden of proving the presence of the elements necessary for the application of estoppel's preclusive effect. While courts are naturally reluctant to defeat a genuine claim on the basis of the rules of pleading alone, I do not think it would be appropriate to allow the plaintiff's claim on the basis of estoppel in this case. The absence of any pleading on this point renders it very difficult for this Court to know what representations by the real estate company Scotsburn relies upon and what conduct it alleges constitutes misrepresentation. In the analysis of the doctrine's application this Court has been placed in the position, not only of speculating as to the nature of the estoppel advanced by the plaintiff, but also of determining the facts capable of supporting estoppel. This type of inquiry is not well suited to the Court's appellate role.
In any event, the conditions necessary for the operation of estoppel on the basis alluded to by the trial judge are not satisfied here. The essence of estoppel is representation by words or conduct which induces detrimental reliance. A more exhaustive definition is offered in Spencer Bower and Turner, The Law Relating to Estoppel by Representation (3rd ed. 1977), at p. 4:
...where one person ("the representor") has made a representation to another person ("the representee") in words or by acts or conduct, or (being under a duty to the representee to speak or act) by silence or inaction, with the intention (actual or presumptive), and with the result, of inducing the representee on the faith of such representation to alter his position to his detriment, the representor, in any litigation which may afterwards take place between him and the representee, is estopped, as against the representee, from making, or attempting to establish by evidence, any averment substantially at variance with his former representation, if the representee at the proper time, and in the proper manner, objects thereto.
See also Halsbury’s Laws of England (4th ed. 1976), vol. 16, para. 1505; R. Cross, Cross on Evidence (5th ed. 1979), pp. 346‑53; R. Maudsley & J. Martin, Hanbury and Maudsley Modern Equity (11th ed. 1981), pp. 732‑34; Greenwood v. Martins Bank, Ltd., [1933] A.C. 51 (H.L.), at p. 57; Nippon Menkwa Kabushiki Kaisha (Japan Cotton Trading Company, Ltd.) v. Dawson’s Bank, Ltd. (1935), 51 Ll. L. Rep. 147 (P.C.), at pp. 150‑52.
As far as I can determine, W.T. Goodwin Limited, the real estate company, by its conduct, did not make any representation upon which Scotsburn relied to its detriment. The representation the trial judge advanced as precluding the real estate company from denying its contractual liability was failure to advise Scotsburn that it was billing the wrong company. Assuming that W.T. Goodwin Limited knew, through its directing mind Mr. Chapman, that the invoices were being received and paid, its silence does not constitute a representation to Scotsburn of responsibility for the goods delivered to the supermarket. Scotsburn is advancing the silence of a company it did not even know existed at the relevant time as amounting to a representation upon which it relied. Furthermore, silence or inaction will only constitute a representation where the representor owes a legal duty to the representee to make the disclosure in question: Spencer Bower and Turner, supra, at pp. 48‑50; Greenwood v. Martins Bank, Ltd., supra, at p. 57. I am not aware of any such legal duty here. Certainly none has been advanced by the appellant.
Equally, it is difficult to find any reliance by Scotsburn induced by such silence. Scotsburn was unware of the different Goodwin companies and could not be seen to have relied upon the attributes, for example, the credit worthiness of any particular company. It was, as I have said, ignorant of the real estate company's very existence.
Finally, it is difficult to see what detriment Scotsburn suffered. If the real estate company had alerted Scotsburn to the fact that it should be billing another company, i.e., the Sackville company, as operator of the Amherst store, this would not have prevented the eventual receivership of the Sackville company and the loss suffered by Scotsburn in consequence. In light of these conclusions, it is not necessary to determine whether, and to what degree, Scotsburn might have been prevented from relying upon the doctrine of estoppel by the rule that it cannot found a cause of action.
In support of the trial judge's conclusion that the real estate company was precluded from denying its liability for the price of the goods delivered to the supermarket, the appellant cited the following cases: Starr Manufacturing Co. v. Spike (1893), 40 N.S.R. 626 (N.S.S.C.); Keewatin Electric & Diesels Ltd. v. Durall Ltd., [1976] W.W.D. 119 (Man. Q.B.); William A. Flemming Ltd. v. Fisher (1978), 1978 3788 (NS SC), 29 N.S.R. (2d) 338 (N.S.S.C.T.D.); Gelhorne Motors Ltd. v. Yee and Wilcox (1969), 1969 1165 (MB CA), 71 W.W.R. 526 (Man. C.A.) None of these cases deals with the doctrine of estoppel. Furthermore, they are all readily distinguishable.
In the Starr, Flemming and Gelhorne Motors cases, the defendants attempted to deny their personal liability for goods they had ordered and received, on the basis that they had been actually acting as agents of the company to the knowledge of the plaintiff. In the case at bar, there is no suggestion that the real estate company was acting as the agent of a different company when the goods were ordered and then delivered to the supermarket. Rather, W.T. Goodwin Limited denies altogether any involvement with the transactions, and certainly, the evidence does not establish any involvement.
The Keewatin Electric case advanced by the appellant is perhaps closest, on its facts, to the one at bar. There, the defendant operated two different companies from one location. He attempted to deny one company's liability for repairs he had admittedly ordered, by attributing them to a different company than the one the plaintiff had billed and ultimately sued. The trial judge concluded the plaintiff had quite reasonably understood that the repairs were contracted for on behalf of the company billed. The defendant could not deny liability therefore by asserting a contrary intention which had not been communicated to the plaintiff. In the case at bar, W.T. Goodwin Limited denies its involvement with the transaction; the evidence that the goods were ordered on its behalf, present in the Keewatin Electric case, is not present here.
I agree with Cooper J.A. that, notwithstanding the uncertainty in the record, the only reasonable conclusion to draw from the testimony and the documentary evidence presented at trial is that, in the latter years, the Amherst supermarket was operated by the Sackville company, Goodwin's Discount Food Store Limited. There would seem to be no dispute that in prior years, from 1965 until 1972, the supermarket was operated by Goodwin's Supermarket Limited. The trial judge found that the Sackville company had purchased all the assets and assumed all the liabilities of Goodwin's Supermarket Limited; the Appellate Division concurred in this finding. I attach no particular significance to the fact that no evidence was led to establish that Goodwin's Supermarket Limited was formally wound up. The absence of such evidence does not undermine the conclusion that Goodwin's Discount Food Store Limited was operating the supermarket.
Finally, in my opinion, the Appellate Division correctly decided that, regardless of who was actually operating the Amherst supermarket, there was no evidence sufficient to establish, on a balance of probabilities, that the real estate company was the purchaser of the goods in question under a contract with Scotsburn. The appellant argues in this context that the trial judge was entitled to draw a negative inference from the failure of Mr. Chapman to testify (he was examined for discovery) and the decision of the defence to present no evidence other than the documents they submitted. As there is nothing in Hallett J.'s reasons to indicate that he relied on the conduct of the defendant's case to support the conclusions he reached, there is no need to decide whether he would have been entitled to draw the negative inferences urged by the appellant.
The evidence of the officers of Scotsburn, touching on whom they believed they were doing business with, indicates that it was not the real estate company. The plaintiff's witness Wayne Adshade gave the following evidence:
Q. Do you think, as office manager of Brookfield Division in Amherst, that you were ever doing business with W.T. Goodwin Limited, a holding company incorporated in 1965?
A. I guess not.
The account on the books of the plaintiff or its predecessor, in the name of "W.T. Goodwin Limited", antedated the incorporation of the real estate company. The following is an extract from the cross‑examination of plaintiff's witness John Wood:
Q. Now, if I put the proposition to you that the company known as W.T. Goodwin Limited, which owns property in Amherst, was not incorporated until August, 1965‑‑then that's not the company you're referring to in that ledger sheet, is it?
A. In August‑‑well, it's W.T. Goodwin Limited anyway.
Q. Yes, but if W.T. Goodwin Limited that owns property in Amherst was not incorporated until August of 1965, those invoices must have been billed to a different W.T. Goodwin Limited. Is that not correct?
A. Must have been.
And later:
Q. So in 1965, it would be fair to say that W.T. Goodwin Limited, in July of 1965 W.T. Goodwin Limited would be the company that Amherst Creamery would be dealing with?
A. I would say by the looks of this anyway.
Q. In September of 1965 they would be dealing with the same company?
A. According to this they were anyway.
Q. Yes. So there's no reason to suppose that they became involved with the holding company which was incorporated in August of 1965?
A. Well, there's no way of knowing from looking at this.
Although the invoices prepared by the driver/salesmen and the cheques in payment indicated otherwise, Scotsburn appears throughout to have regarded the original W.T. Goodwin Limited as recipient of the goods. This is an excerpt from the evidence of plaintiff's witness Roderick MacLennan:
Q. And if that company simply changed its name by marriage or otherwise, it's the same company later on?
A. It's the same company but it continued to present itself to us as a supplier as W.T. Goodwin Limited, to the best of our knowledge.
Q. Did you, or any of the Scotsburn or Brookfield companies, ever deal with the company incorporated in 1965 called W.T. Goodwin Limited which was a holding company?
A. I would say that we would not be aware of doing it as a holding company.
In the absence of any evidence establishing that Scotsburn, when it dealt with the supermarket, was doing business with the real estate company, it is impossible to infer the existence of a contract between them. The coincidence of names and the common ownership of the Chapman businesses are not, in themselves, sufficient to support a claim in contract against W.T. Goodwin Limited, a separate limited liability company. As the respondent has pointed out in its factum, if the 1965 real estate company had taken another name, Scotsburn would have no case. As well, if Goodwin's Discount Food Store Limited, which would appear to have been the company operating the supermarket, had attempted to resist an action for the price of the goods delivered to the supermarket on the basis that the invoices had been submitted to a different company, one bearing the name W.T. Goodwin Limited, I have little doubt the defence would have failed.
In my opinion, therefore, the Appellate Division correctly reversed the decision of the trial judge. Hallett J. erred in law in reaching the conclusion that the real estate company was the purchaser of the goods delivered to the Amherst store and that it was therefore responsible in contract to Scotsburn. The only reasonable inference to draw on the basis of the evidence tendered at trial is that a different company, Goodwin's Discount Food Store Limited was operating the Amherst supermarket and was contractually responsible for the goods delivered by Scotsburn. In any event, no evidence was presented by Scotsburn sufficient to discharge the burden of proof and allow the court to infer the existence of a contract between Scotsburn and W.T. Goodwin Limited.
Scotsburn might have made a claim against the original W.T. Goodwin Limited, the Amherst company, which it has throughout recorded on its books as debtor. That company was found by the Appellate Division to be now a "shell" company. Scotsburn might perhaps have had a claim against Goodwin's Discount Food Store Limited, the Sackville company. I am satisfied, however, that it does not have a claim against the real estate company. I would repeat that the personal liability of Mr. Chapman was not in issue in this Court nor in the Appellate Division. As well, Scotsburn has not pleaded nor argued in any court that the separate legal identities of the various Chapman companies should be ignored in favour of treating them as one corporate entity.
Scotsburn's action in contract must fail. I would dismiss the appeal with costs to the respondent in this Court and in the courts below.
The reasons of Estey and Lamer JJ. were delivered by
Estey J. (dissenting)‑‑The appellant (plaintiff) issued a claim against the respondent (defendant) for "the price of goods sold and delivered by the plaintiff to, for, and at the request of the defendant". The respondent denies having "ordered or received goods" from the appellant. The defence, it will be noticed, does not match the entire breadth of the claim. The issue arises by reason of the fact that the appellant delivered supplies to a retail store in Amherst, Nova Scotia, located in a building owned by the respondent and in which the respondent had an office. The respondent says that it did not operate the store in question but rather that the store was operated by another company, Goodwin's Discount Food Store Limited, now bankrupt. The appellant answers this defence or explanation by stating that for fifteen years at least it delivered the goods in question, or similar goods, to this store and submitted its account to the respondent, which account the respondent caused to be paid throughout this lengthy period by cheques not clearly those of the respondent but not clearly those of a third party either. Throughout this period, the respondent did not ask the appellant to render its account other than to the respondent. Consequently, the appellant takes the position that the respondent either operated the store directly or did so through an agent, and that the appellant is entitled to look to the respondent to pay the account in question just as the respondent paid the appellant through the years.
The corporate history of the respondent does nothing to solve these factual problems. In 1939 a company, which for ease of reference I shall call Company One, was incorporated under the name W.T. Goodwin Limited. On August 6, 1965, Company One changed its name to Goodwin Supermarket Limited. On August 16, 1965 Company Two was incorporated under the original name of Company One, that is W.T. Goodwin Limited. Company Two (the respondent) remains in existence and is the one mentioned earlier as owning the building in which the store is located and which occupied premises on the second floor of that building. By a contract dated May 1, 1972, Company One, renamed in 1965 Goodwin Supermarket Limited, entered into a contract to sell the assets of the Amherst store to Company Three incorporated on September 16, 1969 under the name Goodwin's Discount Food Store Limited, which company is now bankrupt. There is no evidence that this contract for the sale of assets was ever performed. There is no evidence as to whether Company One, renamed in 1965 Goodwin Supermarket Limited, is still in existence, and if so, whether it has any assets. A Mr. Atlee Chapman was the controlling shareholder in all three companies during all relevant times.
The issue in a nutshell can be put this way: did the respondent (Company Two) so conduct its affairs by causing the accounts directed to it by the appellant to be paid without any protest or any direction to the appellant to bill some other entity, such as Company Three (Goodwin's Discount Food Store Limited), so as to expose itself to liability for payment of the last unpaid invoices rendered by the appellant to the respondent? This issue seems to be one of high factual and low legal content.
The learned trial judge found that:
(a) Neither the respondent (Company Two), its affiliated companies nor the controlling stockholder thereof ever notified the appellant of the 1965 reorganization involving the change of name of Company One and the establishment of a new company (Company Three) for the operation of the Amherst store;
(b) At no time did the respondent, over a fifteen‑year period, make objection to the appellant about the billing of the respondent for products supplied to the Amherst store;
(c) Neither the appellant nor its personnel were directed to send the monthly statements to anyone other than the respondent throughout the fifteen‑year period in question;
(d) The respondent was the purchaser of the goods delivered to the Amherst store by the appellant;
(e) The reference on the delivery slips issued by the staff of the appellant to "Goodwin's" or "Goodwin's Supermarket, Amherst" is without significance as these documents were issued only to show the location where delivery was made.
The learned trial judge thereupon entered judgment against the respondent in the full amount of unpaid invoices, $25,252.89, together with interest at the rate of 18 per cent per annum from October 3, 1980 to the date of judgment.
- The Court of Appeal reversed the trial court and dismissed the action. After an analysis of some of the documentary and testimonial evidence, Cooper J.A. stated on behalf of the court [(1982), 53 N.S.R. (2d) 624, at p. 649]:
In the end one is left in a state of some apparent uncertainty as to what company or division thereof was operating the Amherst supermarket, but it seems to me upon consideration of the whole of the evidence that the business was being carried on by Goodwin's Discount Food Store Ltd.
The Court came to this conclusion partly because:
It could not have been Goodwin's Supermarket Limited because, as I have said earlier in these reasons, that company had sold all its assets to the Discount Food company. Although there is no evidence that Goodwin's Supermarket Limited had been formally wound‑up it thus had been succeeded by the Discount Food company.
As already noted, there is no evidence in the record in these proceedings to support this intermediate conclusion. The Court went on to conclude:
The only reasonable understanding I can gather from the evidence is that the Amherst supermarket was operated by Goodwin's Discount Food Store Ltd. as Goodwin's supermarket.
These proceedings commenced with a very simple, three‑paragraph statement of claim, the essence of which I set out in opening these reasons. By the time these proceedings reached this Court, there remained only the single issue as to whether or not the respondent was liable to the appellant for the invoiced price of goods delivered by the appellant, the amount not being in issue.
There are some important ambiguities surrounding this transaction. For example, the evidence is unclear as to the name which appeared on the Amherst store. A photograph in the evidence indicates a sign over the door bearing only the name "Goodwin's". The cheques issued in payment of the products delivered by the appellant were drawn on a printed form, the heading of which read:
GOODWIN'S DISCOUNT FOOD STORE LTD.
and/or
GOODWIN'S SUPERMARKET... Amherst, N.S.
There is nothing in the record to indicate whether the bankrupt company, or Company One or Company Two, or the controlling shareholder, ever registered or otherwise adopted the firm name or style of "Goodwin's Supermarket". The heading on the cheque, therefore, is ambiguous as to whether or not it makes reference to one or more than one entity, personal or legal.
The signature on the cheques was, throughout the period, that of Chapman, the controlling or sole stockholder of the various corporations. His signature appears below the words "Goodwin's Supermarket". There is no evidence as to the owner of the bank account against which these cheques were drawn. Mr. Chapman did not testify, although he was available in the courtroom for either party to call. He did submit to examination for discovery, and parts of that examination were read into the record. Under his signature appears the word "President" and below that is a blank line below which appear the words "Secretary‑Treasurer". No banking records of any entity were included in the record to indicate the source of funds for these payments to the appellant for the products delivered to the Amherst store. The billing documents throw no light on the problem. The invoice in the evidence is a blank document. However, counsel agreed in this Court that extracts from the accounts of the appellant, which were filed, formed a part of the invoices rendered on the form in question by the appellant to the respondent, and that by reading these two exhibits together the Court can construct the form and content of the invoices rendered by the appellant for its deliveries to the Amherst store.
Faced with all these ambiguities, the learned trial judge made the findings of fact which have been set out above. The first consideration is whether or not a Court of Appeal in such a circumstance may effectively reverse these findings and ultimately the outcome of these proceedings. Some of the findings are, of course, inferences drawn from testimony and the documentary evidence. It is trite to observe that a Court of Appeal, where credibility is not an issue and particularly where documents are the basis of the finding, is in as good a position to draw inferences and to construe documents as is the court of first instance. Such I believe to be the case where the learned trial judge found that the purchaser of the goods in question was the respondent. This was an inference drawn from a number of facts and circumstances already set forth. Here the Court of Appeal reasoned that the bankrupt company was the operator of the store, and was therefore the purchaser of the goods in question. This reasoning was based on the fact that the bankrupt company (Company Three) acquired the assets of the store from Company One. This was fundamental to the conclusion reached by the Court of Appeal. As there is no evidence that such a transfer actually occurred, it brings into question, as a matter of law, the reversal by the appellate court of the findings and conclusions reached by the trial judge.
There are other considerations revealed in the judgments which likewise do not support this intervention by the Court of Appeal. One such example is the cheque form. The identity in law of the payor is left in doubt. The respondent tendered only the cancelled cheques in evidence without explanation as to the ownership of the funds in the account upon which such cheques were drawn. There was no explanation as to the ownership of the trading name exposed at the top and bottom of the cheque. This, coupled with the name on the front of the store, raises considerable doubt as to the identity of the payor. The Court of Appeal concluded otherwise at p. 649, stating: "The cheque forms . . . in my view bear this out". In my view, this places too great a strain upon the documentary evidence, particularly where there is no support in the testimony for any such conclusion. Under some circumstances, of course, an appellate tribunal would be justified in substituting its conclusion or inferences for those of the trial court. Where this is done in the absence of supporting evidence, the appellate intervention may be set aside.
A more difficult question is raised in the second issue advanced by the appellant, namely: is the appellant entitled in law to call upon the respondent to pay, whether or not the respondent is the purchaser of the products in question, where the respondent, in these circumstances, "permitted the Appellant to treat it as if it were the purchaser, itself alone knowing the true state of affairs . . . . " We were referred to the judgment of Solomon J. of the Court of Queen's Bench of Manitoba, in Keewatin Electric & Diesels Ltd. v. Durall Ltd., [1976] W.W.D. 119 (Man. Q.B.) The Court was there confronted with an interlocking or association of companies to which the plaintiff had supplied services. The companies were commonly owned and jointly managed with common directors. The defence raised was much the same as that advanced by the respondent here. In finding judgment for the plaintiff, the learned trial judge stated:
When partners like Burshtein and Junghans decide to operate two inter‑related companies from the same office there is a very heavy onus on them to prove they were dealing on any given occasion in the name of the company for whom they claim they were dealing. I find defendant has failed to discharge that onus.
It is, of course, vital to the outcome of any proceeding where the evidence is unclear to determine whether the onus falls upon the vendor or the purchaser to establish liability. In an older case in the courts of Nova Scotia, Starr Manufacturing Co. v. Spike (1893), 40 N.S.R. 626, a like result was reached, where a defendant had ordered goods and accepted delivery without informing the plaintiff‑supplier that he intended to do so on behalf of a company. The court held that as the defendant had originally ordered the articles and allowed the plaintiff to continue to manufacture and deliver them to him under the conviction that he was the person primarily liable, he could not later rid himself of that liability.
The key question in these circumstances is whether or not, by any principle or doctrine, the respondent company should be found liable to the appellant whether or not it is in law the purchaser of these goods. Such liability might arise, for example, had the respondent, for its own benefit, over a lengthy period of time, arranged for the delivery of supplies by the appellant to the Amherst store under an arrangement whereby the appellant could look to the respondent for payment, either directly or indirectly. Estoppel is not pleaded, nor is the doctrine of acquiescence; and in any case neither party appears to have advanced either doctrine at trial in support of their position. However, what arises squarely from the evidence is the simple concept of contract. The learned trial judge made the five findings of fact summarized earlier. These findings of fact and the inferences inextricably entangled therein construct the simple factual outline of a unilateral contract. The respondent, either as the proprietor or the directing mind of a mini‑conglomerate of companies, directed the sequence of purchase, receipt and payment. The appellant constantly responded to this repeated invitation by conduct, and for fifteen years the arrangement operated on this basis, presumably profitably to all participants. When it became convenient for the respondent so to do, namely upon the intervention of the bankruptcy of the discount company, the respondent sought to shed the heretofore comfortable harness of this contractual arrangement. By this time, however, the appellant had supplied some $25,000 in products ordered by the respondent or its affiliates. It was too late in fact and in law for the respondent to change the system.
The outline of the unilateral contract in its classic form is found in the case of Carlill v. Carbolic Smoke Ball Co., [1892] 2 Q.B. 484. Since that time contracts founded upon offers calling for acceptance by action have been commonplace. Halsbury’s Laws of England (4th ed.), vol. 9., § 206, p. 82 makes clear that conduct of a party can amount in law to offer or acceptance.
The promises of any contracting party may be express, or may be inferred by implication from his conduct.
In Williston on Contracts (3rd ed. 1957), vol. 1, §36, pp. 100‑01, it is stated:
§36. Offers Implied in Fact; Contracts for Services. An offer need not be stated in words. Any conduct from which a reasonable person in the offeree's position would be justified in inferring a promise in return for a requested act or a requested promise by the offeree amounts to an offer.
The Restatement of the Law of Contracts (2d) states, at p. 14:
- How a Promise May Be Made
A promise may be stated in words either oral or written, or may be inferred wholly or partly from conduct.
More specifically, in Corbin on Contracts (1960), vol. 3, §566, pp. 312‑13, the learned author writes:
When services are rendered to a third person at the request of the defendant, it is a question of fact whether the defendant was acting merely as the third person's agent, or as a mere informant of the third person's need for services, or as one who is by implication promising to pay for the services himself. If the request and the surrounding circumstances make it reasonable for the plaintiff to believe that the request is an offer of a promise to pay, and he does so believe, there is an implied contract. [Emphasis added.]
- Each case must, in essence, turn upon a consideration of its own particular facts. However, it is of note that the courts have not shied away from finding a unilateral contract where the facts appropriately support one. In Frankel Structural Steel Ltd. v. Goden Holdings Ltd., 1971 6 (SCC), [1971] S.C.R. 250, 16 D.L.R. (3d) 736, varying (1969), 1969 27 (ON CA), 5 D.L.R. (3d) 15 (Ont. C.A.), a supplier of steel sought recovery on the balance of an account, for steel supplied to a builder, from a financier of the builder and the financier's solicitors. The builder, the purchaser of the steel, had arranged for interim financing of a building project from the defendant financier. The financing, in the form of a building mortgage, contained the familiar provisions that its preparation, execution or registration did not oblige the mortgagee to advance any part of the mortgage principal and that any advances were to be in the discretion of the mortgagee according to the progress of the building. The builder had arranged with the plaintiff for a supply of steel. However, the plaintiff‑supplier wanted assurances of payment. As a result, the builder arranged for direct contact between the plaintiff‑supplier and the solicitors representing the financier (the defendants). The plaintiff received oral assurances that its account would be paid out of the funds dispensed under the mortgage as well as a copy of a direction from the builder to the financier and its solicitors purporting to authorize the financier to pay out to the plaintiff‑supplier funds sufficient to pay for all deliveries of steel. When the builder was unable to pay on the account, the supplier turned to the financier and its solicitors. In both the Ontario Court of Appeal and this Court, liability of the financier was placed upon the basis of unilateral contract. Laskin J.A. (as he then was) stated in his reasons at the Court of Appeal, at pp. 23‑24:
I do not, however, find it necessary in the present case to consider, either in principle or on the decided cases here or elsewhere, whether the doctrine of promissory estoppel, may be used, in whole or in part, as a sword rather than as merely a shield: see Spencer Bower and Turner, Estoppel by Representation, 2nd ed., c. XIV. There is a well‑worn path to the conclusion I would reach in this case, and I need not mark out or tread upon a new one. I am of the opinion that the facts accepted by the trial Judge support the establishment of a contract between Frankel and Goden; in elementary terms, a unilateral contract arising out of a promise to pay for steel delivered to Hyacinthine. The act, having been performed, the promise became enforceable. I am not troubled in this case by any such questions as whether the promise would be enforceable if it were withdrawn before delivery of the steel was completed, or whether it would be enforceable in respect of partial delivery without having been withdrawn.
In this Court, not only was Laskin J.A.'s reasoning adopted, liability was further extended to the defendant solicitors, Gotfrid and Dennis. After quoting from the latter part of the passage set out above, Judson J. concluded at pp. 254‑55 (S.C.R.) and 739 (D.L.R.):
I am in entire agreement with these reasons as far as they go but I do not accept the conclusion reached in another part of the reasons that Frankel, through Harrison, dealt with Burnett not as representing Gotfrid & Dennis personally but as representing them as solicitors for Goden.
Frankel is not an exact picture parallel to the present case. It demonstrates that when the facts are appropriate, liability may be founded upon the simple concept of unilateral contract and one need not go through the gymnastics of more elaborate legal reasoning. Accordingly, upon the facts as outlined above, the respondent is contract‑bound to pay the indebtedness upon the basic principles of the law of contract. If any amplification of these evidentiary results is required, return to the pleadings is sufficient. The appellant pleads entitlement against the respondent because the respondent had set in motion a program for the ordering of goods and for the payment therefor, either directly by the respondent or through its corporate group. The only denial pleaded by the respondent is that the respondent did not "order or receive" the goods. This is no answer either in law or in simple language to a request for payment because of action taken by the appellant at the request of the respondent which, to the knowledge of the respondent, created indebtedness in the respondent or its affiliates, which indebtedness the respondent had retired for fifteen years.
For these reasons, I would allow the appeal, set aside the order of the Court of Appeal and restore in its place the judgment at trial, all with costs here and below.
Appeal dismissed with costs, Estey and Lamer JJ. dissenting.
Solicitors for the appellant: Patterson, Smith, Matthews & Grant, Truro.
Solicitors for the respondent: Archibald, Morley & Pare, Amherst.
