ONTARIO
SUPERIOR COURT OF JUSTICE
COURT FILE NO.: 2611-03
DATE: 20130812
B E T W E E N:
G. C. BUTCHER LTD.
Ian N. McLean, Counsel for the Plaintiff
Plaintiff
- and -
SUPERIOR PROPANE INC.
Defendant
Erik Penz, Counsel for the Defendant
HEARD: June 12, 2013
Ellies J.
REASONS FOR DECISION
INTRODUCTION
[1] G. C. Butcher Ltd. sold propane gas supplied by Superior Propane Inc., in Moosonee. The parties operated pursuant to agreements relating to the supply of propane gas, and to the lease of property and equipment owned by Superior. After the most recent contract expired in 2000, the parties entered into negotiations with respect to further agreements. During those negotiations, Butcher and Superior continued to perform in accordance with the terms of the expired contracts, as though they were still in effect. However, in April of 2002, Superior advised Butcher that it was terminating its arrangement with Butcher, effective June 1, 2002. Butcher later commenced an action against Superior for damages. Superior counterclaimed for damages relating to an unpaid account for propane gas supplied and for lease payments owing.
[2] In this summary judgment motion under Rule 20, Superior seeks an order dismissing Butcher’s claim and judgment on its counterclaim. The central issue is whether this is an appropriate case for summary judgment, or whether a trial is necessary. I find that this case is an appropriate one for summary judgment and that a full appreciation of the issues and the evidence leads to the conclusion that there is no genuine issue requiring a trial.
FACTS
[3] In 1990, Butcher and Superior entered into two agreements relating to the sale by Butcher of propane gas supplied by Superior. One related to the loan of storage equipment and the supply of the gas; the other related to the lease of the land owned by Superior upon which the storage equipment was located. These agreements expired in 1995. New agreements were entered into in 1997. In the interim, the parties continued to deal with each other as if the agreements were still in effect.
[4] The contracts entered into in 1997 expired in March, 2000. As they had done before, the parties continued to act in accordance with the expired agreements.
[5] In early 2001, Superior was forced to begin looking for a new property upon which to locate its storage equipment because of the development of nearby property. It became interested in a piece of property located near the Moosonee airport. However, in order to be made suitable for its intended use, the elevation of the property had to be raised approximately two feet.
[6] On September 27, 2001 Superior wrote to Butcher, proposing a new five-year fuel supply and equipment agreement. Superior made proposals relating to what it called “key elements” regarding the supply of bulk propane and the equipment in which it would be stored. With respect to the latter, Superior proposed the rental of bulk propane tanks at a price of $1,000 per month and the rental of a bulk propane delivery truck at a nominal rent of $1.00 per month. With respect to the former, Superior proposed a price for propane that involved three components, namely: the costs to Superior of propane supplied by British Petroleum at Sarnia; the cost of “estimated” rail freight, including “administrative fees”; and its profit margin. In the September 27 letter, Superior gave an example in which it set out a total cost of $.03870 per litre, including a rail freight component of $.007 and a margin of $.013 per litre.
[7] Butcher responded with a letter dated December 6, 2001 in which it made a different proposal. With respect to the equipment, it proposed that the bulk storage tanks be rented “to own” and that Butcher pay only $500 per month. As well, it proposed the “sale/rental” of a 6,000 USG vessel located in Timmins, which had not been referred to in Superior’s September 27 letter. With respect to the bulk propane, Butcher proposed that the “actual” freight cost be used, without referring to any administrative charge (however, Butcher’s letter of December 6 used the same $.007 total for this figure that Superior did in its September 27 letter). Butcher also proposed that Superior’s margin be only $.005 and not $.013.
[8] Superior did not respond to Butcher’s proposal until March, 2002. In the meanwhile, the parties corresponded about the sale of Superior’s existing property to Butcher. In a fax dated December 14, 2001 Superior offered to sell the property to Butcher “contingent on re-signing a fuel supply and equipment agreement going forward on the new site”. In January, Butcher proceeded to lease the airport property and hauled a quantity of gravel to it.
[9] In March, Butcher was approached by Superior and offered a sum of money to sell the goodwill associated with Butcher’s propane supply business. Shortly afterwards, on March 27, 2002 Butcher wrote to Superior, purporting to accept Superior’s proposal of September 27. In its March 27 letter, Butcher duplicated the terms of the September 27 letter, with two notable exceptions. First, it set out “actual rail freight rates, including administration fees” of $.00426 per litre, rather than the $.007 figure Superior had set out in its letter. Secondly, it included a paragraph in which it proposed that “insurance details” would be “worked out”, whereas the September 27 proposal had said nothing about insurance.
[10] Superior responded to Butcher’s March 27 letter with its own letter dated April 30, 2002 in which it advised that it would be terminating its arrangement with Butcher, effective June 1, 2002. The result was this lawsuit.
ISSUES
[11] In this motion, Superior argues:
(1) That its letter of September 27 was not an offer capable of creating a binding contract because it did not contain proposals regarding all of the essential terms necessary to do so;
(2) That, even if it did, the counter-proposal of Butcher dated December 6 had the effect of making it impossible for Butcher later to accept the September 27 offer;
(3) That, even if Butcher could accept Superior’s September 27 offer, Butcher’s letter of March 27 did not constitute an acceptance, because it altered key terms of the earlier offer; and
(4) That Butcher has no defence to Superior’s counterclaim.
[12] Butcher argues that this is not an appropriate case for summary judgment. It argues that a trial is required for the court to fully appreciate the issues and evidence surrounding its claim that a contract was formed between the parties. It also argues, as an alternate theory of liability, that a trial is required to fully appreciate its claim that Superior is estopped from insisting on its strict legal rights by virtue of the doctrine of promissory estoppel. It seeks the dismissal of Superior’s motion.
[13] I will deal first with Butcher’s argument that this is not a proper case for summary judgment. Before I do, however, I wish to comment on the evidence adduced in this motion.
ANALYSIS
The Evidence
[14] In support of its motion, Superior filed a brief affidavit, to which certain documents were attached, as well as a “Compendium of Evidence”. The compendium contains copies of the documents to which I have referred, including the 1990 agreements, the 1997 agreements, and the letters that were exchanged between September 27, 2001 and April 30, 2002. The compendium also contains excerpts from the transcript of the examination for discovery of Butcher’s representative, George Butcher.
[15] Most of the facts and documents relied upon by Superior are at least referred to in, if not established by, the evidence adduced by Superior. There are gaps, however. For example, in paragraph 4 of its factum, Superior sets out the facts surrounding the 1990 agreements. In support of these facts, it makes reference to three sources, namely: the documents that each party referred to in Schedule “A” of their affidavits of documents, paragraph 4 of the statement of claim, and paragraph 5 of Butcher’s responding motion record. However, none of these are sufficient to prove the 1990 agreements. The fact that a party has made reference to or produced a copy of a document during the documentary discovery stage of litigation does nothing to prove either the authenticity of the document or the truth of its contents. The reference to Butcher’s statement of claim is of no assistance because Superior actually denied the allegations in paragraph 4 of the claim. Lastly, as I will now explain, Butcher’s responding motion record does nothing to prove the 1990 agreements, or any other document.
[16] Butcher’s motion record consisted of 27 paragraphs under the heading “The Grounds for Opposing the Motion”. These grounds make reference to copies of 26 documents which are appended as attachments to the responding motion record. This, of course, is not sufficient proof of the documents. A document does not become evidence simply because it happens to be on paper. Documents must be properly proven to be admitted (: see Sopinka, Lederman & Bryant, The Law of Evidence in Canada, 3rd ed. (Markham, Ont.: LexisNexis Canada, 2009) at paragraph 18.3). This was not done by either party in connection with many documents.
[17] One other aspect of the evidence filed on the motion requires comment. During the hearing of the motion on June 12, I granted leave to Butcher to file written submissions relating to the law. However, as part of those written submissions, Butcher filed a copy of the transcript of the examination for discovery of Superior’s representative, Paul Kelly. It was improper, in my view, for Butcher to file this evidence as part of its written submissions on the law. Doing so has the effect of splitting Butcher’s factual case, making it difficult for Superior to respond without doing the same.
[18] Nonetheless, no objection has been taken to the filing of this transcript. Nor has any objection been made by either party to the manner in which the documents have been introduced into evidence on the motion. In fact, counsel for Superior made reference to some of the documents attached to the responding motion record in support of his argument on behalf of Superior. Both counsel appear to have proceeded on the basis that the documents adduced in evidence on the motion were properly before the court. For that reason, I have reviewed and relied upon all of the documents filed on the motion, as well as those portions of the transcript of the examination for discovery of Mr. Kelly referred to by counsel for Butcher in his written submissions in arriving at my decision.
Whether this is an Appropriate Case for Summary Judgment
[19] Subrule 20.04(2) requires a court hearing a motion for summary judgment to grant judgment where it is satisfied that there is no genuine issue requiring a trial with respect to a claim or a defence. Subrule 20.04(2.1) permits the judge hearing such a motion to weigh evidence, evaluate credibility, and draw reasonable inferences from the evidence. These powers, however, may be used to dispose of cases only where the court can obtain a full appreciation of the evidence and the issues in the case through the evidence introduced in the motion. Otherwise, the case should proceed to trial (: Combined Air Mechanical Services Inc. v. Flesch 2011 ONCA 264, at para. 50).
[20] Counsel for Butcher argues that this case requires a trial in order to evaluate credibility on a number of issues, including whether there was an overholding agreement between the parties at the time that Superior terminated the relationship and, if so, what the terms of that agreement were; whether there was an agreement to extend the contract in existence as of September, 2001; whether it was reasonable for Butcher to rely on the course of dealings between the parties in the past; whether Superior encouraged Butcher in his activity relating to the airport property; and whether Superior assured Butcher between March 27 and April 30, 2002 that a new contract was being drawn up.
[21] I am unable to accept this submission. There are no real credibility issues here at all. Most of the evidence in the case consists of the documents to which I have already made reference. As the Court of Appeal observed in Combined Air Mechanical (at para. 52), document-driven cases with limited testimonial evidence are ones in which the full appreciation test is often the easiest to meet.
[22] With the exception of the affidavit filed on behalf of Superior relating to documents received during the course of litigation, the only other evidence on the motion consists of the transcripts of the examinations for discovery. Counsel for Butcher argues that the discovery evidence of Mr. Kelly lacks “definition” as to what transpired between the parties. Maybe so, but that does not help Butcher in this motion.
[23] The full appreciation test has not altered either the burden of proof or the evidentiary requirements of Rule 20. The moving party has the onus of satisfying the court that there is no genuine issue requiring a trial. Where that party has introduced sufficient evidence to constitute a prima facie right to the relief sought, there arises an evidentiary burden on the responding party to support its position that there is a genuine issue requiring a trial (: Toronto-Dominion Bank v. 466888 Ontario Ltd., 2010 ONSC 3798, at para. 2).
[24] In Combined Air Mechanical, the court reiterated the often-repeated principle that in a motion such as this, each side must “put its best foot forward” with respect to the existence or non-existence of material issues to be tried. The full appreciation test has not changed this. A party seeking to avoid summary judgment on the basis that the full appreciation test cannot be satisfied is still required to “play trump or risk losing” (: Reid v. Livingston, [2004] O.J. No. 1477 (S.C.), at para. 11; Byfield v. Toronto-Dominion Bank, 2012 ONCA 49, at para. 10).
[25] Through the documents and the discovery evidence, Superior has demonstrated a prima facie right to the relief requested. Therefore, Butcher has an evidentiary burden to demonstrate that there is a genuine issue requiring a trial. That burden is not satisfied by introducing evidence that Superior’s representative was uncertain about things at discovery. It does not help Butcher to demonstrate that Superior’s representative must speculate about conversations that might have been held between the parties regarding their relationship when Butcher has not introduced any other evidence about what those relationships actually were. There is nothing in Mr. Butcher’s discovery evidence that assists Butcher and no affidavit evidence whatsoever was filed on its behalf in the motion.
[26] In my view, Butcher has failed to introduce sufficient evidence to support its position that this is not an appropriate case for determination by way of a summary judgment motion.
The Effect of Butcher’s Letter of December 6, 2001
[27] I turn now to Superior’s submission that Butcher’s letter of December 6 precluded Butcher from later accepting Superior’s September 21 proposal. I do so because, if this is correct, there will be no need to deal with Superior’s other arguments related to Butcher’s claim that there was a contract in place when Superior terminated their relationship.
[28] In order to accept an offer, the acceptance must correspond precisely with the terms of the offer. Any attempt to qualify or condition an acceptance amounts to a counter-offer (see Waddams, The Law of Contracts, 6th ed. (Toronto, Ont.: Canada Law Book Inc., 2010), at para. 60).
[29] Butcher did more than merely attempt to qualify or place conditions on the terms contained in Superior’s letter of September 27. It proposed fundamentally different terms. Most importantly, it proposed that Superior’s margin be reduced from $.013 per litre to $.005. There is no doubt that Butcher’s letter of December 6 constituted a counter-offer, rather than an acceptance.
[30] A counter-offer is an implicit rejection of the offer (see Black Gavin & Co. v. Cheung, 1980 616 (BC SC), [1980] B.C.J. No. 39, 20 B.C.L.R. 21 (B.C.S.C.) at para. 15). As professor Waddams writes in his text, of The Law of Contracts, at para. 115:
Rejection or counter-offer by the offeree generally destroys the power to accept the original offer. The offeror upon receiving a rejection or counter-offer will ordinarily feel free to deal elsewhere. It is not reasonable for the offeree to send a counter-offer and yet expect the original offer to be held open.
[31] This makes good sense. Superior should have been free, for example, to attempt to reach an agreement with some other party to sell its propane if Butcher was unwilling to do so on the terms proposed by Superior. The evidence in this case shows that Superior did, indeed, change its approach after it received Butcher’s letter of December 6. In a memo dated February 19, 2002, Mr. Paradis, an employee of Superior, makes the business case for purchasing Butcher’s goodwill and operating the Superior outlet in Moosonee using its own employees, which it then attempted to do in March.
[32] By delivering its letter of December 6, Butcher was precluded from later purporting to accept Superior’s September proposal, even if that proposal constituted an offer sufficient to create a binding contract, if properly accepted. Therefore, any claim by Butcher for damages for breach of a contract based on the September 27 letter must fail.
[33] Because of my finding on this issue, I do not need to consider Superior’s other two arguments. Instead, I will address Butcher’s argument that Superior is estopped from relying on its legal rights.
Promissory Estoppel
[34] Butcher argues that the doctrine of promissory estoppel applies in this case and that a trial is necessary in order to fully appreciate the issues and the evidence surrounding this claim. In order to succeed, Butcher must establish that Superior has, by words or conduct, made a promise or assurance which was intended to affect the parties’ legal relationship and to be acted upon by Butcher. It must also establish that, in reliance on the representation, Butcher acted on it or in some way changed its position (: Maracle v. Travellers Indemnity Co. of Canada, 1991 58 (SCC), [1991] 2 S.C.R. 50, at para. 13).
[35] In my opinion, however, Butcher has not pleaded this basis for liability in its statement of claim, at least with respect to any claim for damages related to lost profits.
[36] In paragraph 1 of its claim, Butcher seeks “special damages”, “general damages”, and “punitive damages”. No legal basis for those damages, such as “for breach of contract”, is pleaded. The crux of Butcher’s claim appears to be found in paragraphs 9 through 13 of the statement of claim. I will reproduce those paragraphs here:
The parties in 2002 realized that the agreement had expired and as such negotiated for a renewal of the agreement. The Defendant indicated to the Plaintiff that the Defendant wanted to purchase the business and as such made an offer to the Plaintiff which was unacceptable. The Plaintiff subsequently signed an acceptance of a proposal of September 27, 2001 to the Defendant on March 27, 2002. However, the Defendant advised the Plaintiff on December 10, 2002 (sic) that the Plaintiff’s acceptance of March 27, 2002 was not valid and as such the Plaintiff was advised that the arrangement with the Defendant was at an end.
Pursuant to the ongoing negotiations between the Plaintiff and the Defendant, the Plaintiff had leased new premises to run his business in the name of the Defendant and had brought 200 loads of gravel to the new site to facilitate its utilization. The Plaintiff therefore claims the sum of $50,000.00 in relation to the purchase of the gravel.
The Plaintiff had also leased the new site for a sum of $365.27 and as such this site is now without value to the Plaintiff. The Plaintiff therefore claims the sum of $2922.16 from the Defendant.
The Plaintiff states that its sole business had been the operation of the propane business in concert with the Defendant and as such claims general damages.
The Plaintiff states that the behaviour of the Defendant has been high handed and offensive and as such claims punitive damages from the Defendant.
[37] It can be seen that, even in this part of its pleading, the legal basis for Butcher’s claim is not explicitly pleaded. Therefore, it is necessary to attempt to determine the implicit legal basis for Butcher’s claim.
[38] Paragraph 9 asserts the existence of a contract. Paragraph 12 seems to claim damages for breach of that agreement. Paragraphs 10 and 11 relate solely to Butcher’s claim in connection with the supply of gravel to and the lease payments on the airport property. Paragraph 13 claims punitive damages and is based on the conduct underlying the other claims.
[39] At its highest, therefore, the claim alleges damages on three legal grounds, namely:
(1) Loss of profits resulting from the termination of the arrangement between the parties, i.e. breach of contract;
(2) Expenditures incurred in reliance on that arrangement, i.e. reliance losses; and
(3) The high-handed and offensive nature of the breach.
[40] While a very liberal reading of the statement of claim might support an argument that promissory estoppel has been pleaded with respect to the reliance losses, it is too much of a stretch to say the same with respect to the profits lost as a result of Superior terminating its relationship with Butcher. This loss is pleaded as a breach of contract claim, which I have held must fail. Moreover, even if it could be said that Butcher has pleaded promissory estoppel with respect to both the loss of profits and the reliance losses, the argument cannot succeed with respect to either type of loss, as I will explain.
[41] The only evidence of any express representation being made by Superior is the evidence given by Mr. Butcher during his examination for discovery, where he testified that, following delivery of Butcher’s purported acceptance of Superior’s September 27 proposal in March, Mr. Paradis, told him that he was “90 percent sure” that they had a deal. That does not constitute the kind of promise or assurance necessary to support a finding of promissory estoppel, in my view. Further, there is no evidence of any reliance on that statement. It came well after Butcher leased and improved the airport property and just before Superior terminated its relationship with Butcher.
[42] Butcher argues that, by its conduct in continuing to deal with Butcher prior to writing on April 30, Superior made a promise or assurance by virtue of its conduct. I am unable to agree. The fact that both parties continued to allow themselves to be governed by the terms of the expired 1997 agreements does not constitute a promise or an assurance by Superior that it will always continue to do so. Butcher’s argument amounts to an assertion that Superior promised it would forever continue to operate in the terms of the 1997 agreement, unless and until the parties could come to some new agreement. I am unable to accept that proposition. It would effectively re-write the 1997 agreements by eliminating the expiry dates or by including a clause that they would forever remain in force unless the parties agreed otherwise.
[43] Likewise, I do not view the fact that the parties were involved in discussions concerning the acquisition of the airport property and the sale of the existing property to Butcher as amounting to a promise or assurance by Superior that it would continue to operate indefinitely under the terms of the expired agreements until new ones could be reached. Even if I am wrong in that view, there is no evidence that Butcher acted in reliance on that representation, as far as lost profits are concerned. Butcher simply continued doing what it had been doing under the terms of the expired agreement. It did not, for example, miss an opportunity to sell propane supplied by a party other than Superior.
[44] Lastly, do I not view the discussions regarding the real properties as a promise or an assurance of the type that would support Butcher’s claim for reliance losses concerning the airport property. The evidence is clear that it was the parties’ intention to have Butcher lease the airport property and to have Butcher, if it wished, supply the gravel to raise the level of the property. However, all of this was expressly contingent on the parties reaching a new agreement. Butcher decided to lease the airport property and to supply the gravel without either being asked to do so or advising Superior of its intentions. This was all done in January, 2002, even before Butcher purported to accept Superior’s September “offer” in March. While it might have been confident that it was a small risk, given the history of the dealings between the parties, Butcher took a chance when it leased the airport property and improved it without any agreement existing between the parties. Unfortunately for Butcher, that risk materialized.
[45] There is no genuine issue requiring a trial of these issues. Butcher’s claim cannot succeed.
Butcher’s Claim of Bad Faith
[46] During argument on the motion, counsel for Butcher raised the issue of bad faith on Superior’s part. As a result, I requested that he address this issue in his written submissions on the law, which he did. In those submissions, counsel argues that the negotiations between the parties in the present case may be subject to the duty of good faith that governs the relationship between franchisors and franchisees and between insurers and their insureds. While I appreciate those submissions, it is clear that, even on a very liberal reading of the statement of claim, damages for breach of a duty to negotiate in good faith has not been pleaded.
[47] Therefore, there is no genuine issue in this regard requiring a trial.
Superior’s Counterclaim
[48] In its counterclaim, Superior seeks damages for the non-payment by Butcher of an invoice for gas supplied at about the same time that Superior wrote to Butcher to terminate their relationship in April of 2002, in the amount of $54,981.74. As well, it seeks lease payments owing in the amount of $6,553.75. However, Superior asks for judgment only on the unpaid invoice in its notice of motion.
[49] Butcher does not dispute owing the amount claimed by Superior for the gas it supplied. The parties agree that Butcher was able to sell all of that gas, despite the termination of its relationship with Superior. Butcher asks only to set off the amount owing against any amount found owing to Butcher in the action.
[50] As I have found that no monies are owed to Butcher in the action, judgment will go in favour of Superior on the counterclaim.
CONCLUSION
[51] Superior’s motion is allowed. An order shall issue dismissing Butcher’s claim and granting judgment against Butcher in the amount of $54,981.74, together with prejudgment interest.
[52] Superior shall have its costs of the action and of the motion. If the parties are unable to agree on those costs, written submissions may be made, as follows:
a. Superior shall have 30 days in which to serve and file written submissions of no more than 10 double-spaced pages, excluding attachments;
b. Butcher shall have 20 days from the receipt of those submissions in which to serve and file written submissions, similarly limited in length;
c. Superior shall have 10 days from the receipt of those submissions in which to serve and file reply submissions, limited to 5 double-spaced pages, excluding attachments.
Ellies J.
Released: 20130812
COURT FILE NO.: 2611-03
DATE: 20130812
ONTARIO
SUPERIOR COURT OF JUSTICE
G. C. BUTCHER LTD.
Plaintiff
– and –
SUPERIOR PROPANE INC.
Defendant
REASONS FOR DECISION
Ellies J.
Released: 20130812