COURT FILE NO.: CV-11-441460

DATE: 20131217

ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

BURTON RETAIL MEATS INC

Plaintiff

– and –

IGLOO REFRIGERATION LTD. c.o.b. as IGLOO FOOD EQUIPMENT

Defendant

Bohdan H. Bodnaruk, for the plaintiff

Joseph Malmazada, for the defendant

HEARD: November 6, 7, 8, 12 and 13, 2013

Stinson J.

[1] This lawsuit concerns a dispute over an agreement for the purchase and sale of refrigeration equipment. The plaintiff was the purchaser. At the relevant time it was in the process of designing, constructing, outfitting and opening a retail meat store. The defendant was the vendor. It carries on business as a supplier and distributor of food equipment and food-related refrigeration equipment, including display freezers and coolers, walk-in freezers and coolers and related equipment. These items are used to store and display refrigerated goods and foodstuffs, at retail outlets and elsewhere. The dispute between the parties centres on the terms upon which the plaintiff agreed to purchase and the defendant agreed to sell and deliver certain equipment that the plaintiff required in order to open and operate its retail store.

facts

[2] The plaintiff corporation is owned and controlled by Robert Rowe Sr. Mr. Rowe Sr. also controls an affiliated corporation known as Burton Meats Inc. (“BMI”). BMI has a plant located on Rexwood Road in Mississauga. It also operates a small retail outlet at that location. In early 2011, Mr. Rowe Sr. decided that he wanted to open a second retail location. He incorporated the plaintiff for that purpose and set about the necessary steps to locate premises and prepare them to operate the new business. He ultimately located and leased premises at 1900 Dundas Street West in Mississauga, which had previously been occupied by a liquor store.

[3] In addition to redesigning and renovating the leased premises for use as a retail meat store, the plaintiff needed to outfit it with appropriate refrigeration equipment. This included retail display freezers and coolers, as well as a large walk-in combination cooler and freezer. Display coolers and freezers can be purchased more or less pre-assembled and ready to plug or wire into electrical outlets, somewhat akin to residential appliances but on a larger and more robust scale, and with glass doors and display windows as appropriate. They can be acquired from dealers in such goods, of which the defendant is one. Walk-in coolers and freezers, however, require more elaborate design work, and entail the installation of manufactured panels that serve as freezer or cooler walls, floors, ceilings, and doors. They also require appropriate refrigeration equipment such as compressors and the like that must be selected, fitted and often remotely located, according to the size and operating requirements of the end user.

[4] BMI and Mr. Rowe Sr. had experience with both types of product at its main plant and retail store. Indeed, one of the display units at the BMI retail store was one that had originally been sourced from the defendant. BMI therefore had some familiarity with the type of equipment sold by the defendant.

[5] As part of the planning process for the new store, Mr. Rowe Sr. assigned to his son, the vice president of BMI, Robert Rowe Jr., the task of sourcing possible refrigeration equipment. In particular, he asked him to conduct an exploratory visit to the defendant’s offices, plant and warehouse, located on Norfinch Drive in Toronto. For that purpose, Mr. Rowe Jr. attended at the defendant's premises in early April 2011. There is a dispute whether Mr. Rowe Jr. was accompanied on this initial visit by the bookkeeper for the plaintiff and BMI, Philip Blackwood. In any event, this attendance by Mr. Rowe Jr. at the defendant's premises began the course of dealings that ultimately lead to this litigation.

[6] The defendant is also a family-owned business. Its President and owner is Stan Snieg. Mr. Snieg’s son Edward is employed as a salesperson in the defendant’s business. When Mr. Rowe Jr. (and possibly Mr. Blackwood) attended at the defendant’s premises in early April 2011, he asked to meet with a sales representative. He was introduced to Edward Snieg who continued as the defendant's sales representative on the transaction.

[7] I do not propose to recite on a step-by-step, blow-by-blow basis the complete course of the dealings between the parties over the following six month period. Rather, I propose to provide an overview with sufficient detail to place in context the issues I am called upon to decide. There are very few contentious facts, which I will highlight and to which I will return when I make my findings of fact.

[8] The chronology of key events follows.

Early April 2011

[9] Mr. Rowe Jr. (and possibly Mr. Blackwood) visit the defendant's premises and meet with Edward Snieg. They discuss and view various types of equipment that will be suitable or required for the new retail store. They also discuss the requirement for a walk-in combination cooler-freezer to be installed. There is a factual dispute whether their attention is drawn to a sign on the wall of the showroom setting out the defendant’s conditions of sales. That sign (which is located above the desks used by the defendant's sales staff) states in full as follows:

CONDITIONS OF SALES

MERCHANDISE AND EQUIPMENT

All sales must be in writing on sales order form, or invoice to be a valid sale.
Igloo Food Equipment must receive a minimum of a 30% deposit as a down payment at the time of the order.
Final payment must be received by Igloo Food Equipment three days before the delivery of the merchandise.
If the payment on the delivery as agreed in writing, it must be by cash, certified cheque, money order or bank draft. No other payment will be accepted. The delivery person must receive the final payment by any of the above methods before the unloading and installation of the equipment.
In the event that the delivery of the merchandise is delayed by the purchaser, then the account must be paid immediately in full and is considered as final payment due.
Once the payment is received, Igloo agrees to store the merchandise for the customer for up to six months free of charge at the Igloo Food Equipment location.
In the event of the cancellation of the merchandise ordered, the 30% deposit will be considered as a nonrefundable cancellation fee.

[signed] The Management of Igloo Food Equipment

April 27, 2011

[10] An initial quotation is prepared by Edward Snieg and sent via email to Mr. Blackwood on behalf of the plaintiff. There is a factual dispute whether the quotation is preceded by a visit to the defendant's premises by Mr. Blackwood and Mr. Rowe Sr. The initial quotation lists the following:

No.

QTY

ITEM

DESCRIPTION

RSC6

6FT REFRIGERATED CURVED GLASS MEAT DISPLAY (IGLOO)

EIF/C 100

8FT BUNKER FREEZER (IGLOO)

TGF-72F

TURBO AIR 3 GLASS SWING DOOR FREEZER

CFC

6 x 16 x 8 COOLER FREEZER COMBO

6 x 6 COOLER

6 X 10 FREEZER WITH FLOOR

COMPLETE WITH OUT [sic] 2 OUT DOOR COMPRESSORS

COIL & ACCESSORIES INCLUDED

DELIVERY & INSTALLATION INCLUDED

ELECTRICAL & PLUMBING BY OTHER

[11] Over the next several weeks there are various communications back and forth between the parties regarding, among other things, the design and specifications for the combination walk-in freezer and cooler and the design and layout of the store more generally to accept the equipment that the plaintiff wishes to acquire.

Early June 2011

[12] By this stage plans for the design and renovation of the retail store are progressing and Mr. Rowe Sr. and his contractor, Alan Acheson, are proceeding with the permitting process. Mr. Rowe Sr. and Mr. Blackwood attend at the defendant’s premises and meet Edward Snieg in order to decide on the final details of the equipment purchase. Mr. Rowe Sr. decides that he wants to add an additional item, a 4 foot merchandiser. There is again a factual dispute whether Edward Snieg draws their attention to the sign on the wall of the warehouse setting out the defendant's conditions of sale.

June 7, 2011

[13] Mr. Edward Snieg prepares and sends to the plaintiff a form of sales order and an invoice. The items listed are as follows:

Quantity

Item

Description

RSC6

"IGLOO" 6' REFRIGERATED CURVED GLASS MEAT DISPLAY CASE

EIF/C100

"IGLOO" 8' ISLAND FREEZER

TGF-72F

"TURBO AIR" 3 GLASS SWING DOOR FREEZER

WIC/WIF

6' x 16' x 8' COOLER FREEZER COMBO

20M4

"IGLOO" 4' REFRIGERATED SELF SERVE OPEN MERCHANDISER

[14] Both documents provide for a 30% deposit in the amount of $22,000. They further provide that the balance of the purchase price is due three days before delivery. Mr. Rowe Sr. takes exception to the requirement to pay the balance three days prior to delivery and telephones Edward Snieg to discuss this point. There is a factual dispute concerning what is said in that conversation. Following the conversation, a revised form of invoice is issued by the defendant in which the words "balance due 3 days before delivery" are replaced with the words "balance due on installation/delivery day". An internal copy of the original invoice found among the defendant's records contains a handwritten change in which the words "3 days before" are struck through and the words "on delivery/installation" are written.

June 8, 2011

[15] Having received the revised invoice, the plaintiff pays the required deposit of $22,000.

June – July – August 2011

[16] Work on the new premises proceeds. There is intermittent communication between the parties regarding requirements for electrical and plumbing connections. The plaintiff’s contractor, Mr. Acheson, who is carrying out the renovation work, becomes involved in some of these communications. Delays are experienced by the plaintiff in the renovation and construction process due in part to permitting problems. For its part, the defendant places orders with its suppliers for the various items that are required to fill the plaintiff's order. Some items need to be ordered from an overseas supplier and have a long lead time.

August 9, 2011

[17] Mr. Acheson (the contractor) sends an email to the defendant in which he mentions "approximate schedule to be September 12 on site with equipment." This is the first written record of any communication between the parties in which a date for delivery of the equipment is mentioned.

August 18, 2011

[18] In response to an inquiry from the defendant about when the plaintiff was going to be ready to receive the equipment, Mr. Blackwood responds that the plaintiff is in the process of getting the location ready to open and that this will be done in about 2 to 3 weeks.

August 19, 2011

[19] The defendant replies by email to Mr. Blackwood's August 18 message stating as follows:

Thank you for getting back to me. I would like to let you know that your order for three meat cases and one open merchandiser is coming at the end of September.

We currently have two meat cases in stock and we are holding them for you.

Due to the warranty issues, we would like to sell those two units and replace them with the three units coming at the end of September?

Please let us know if there is a possibility that your opening will take longer than three weeks.

Late August 2011

[20] In response to the defendant's August 19 email message, Mr. Rowe Sr. and Mr. Blackwood arrange to attend at the defendant's premises to meet Stan Snieg to discuss the equipment order. Stan Snieg is unavailable, so they end up speaking with Edward Snieg. According to Mr. Rowe Sr., he was not prepared to have part of his order sold to someone else in case that might make it impossible for the defendant to deliver all the equipment when the plaintiff required it.

September 15, 2011

[21] Edward Snieg sends an email to Mr. Acheson "wondering if there is a date in mind when we will be able to deliver the equipment".

September 18, 2011

[22] Mr. Acheson responds as follows:

We should be good for the walk in around the 27^th…. How does that work for you?”

Ongoing delays in the renovation/construction project are such that delivery on the September 27 is not arranged, because the premises are not yet ready to receive the equipment.

September 27, 2011

[23] Edward Snieg sends the following email to Mr. Rowe Sr.:

Hi Bob,

I have just been instructed to let you know that management has advised me that payment must be made tomorrow or they will sell your equipment to other customers that need it now. I have been advised that they have no problem holding the equipment for you however long you need as long as payment is made. This is out of mine and Stan's hands. Please advise to management Walter or Ken. My sincere apologies as it is management who has the final say.

Sincerely Edward.

September 28, 2011

[24] Edward Snieg sends a further email to Mr. Rowe Sr. as follows:

Hi Bob

We have emails from your people with delivery dates for the equipment that have come and gone. You are in breach of contract and the deposit is nonrefundable. Full payment of the equipment ready to deliver is overdue and must be paid. Once full payment is received, we are willing to store the equipment without further charges to avoid possible damages at other facilities. Full payment was due today September 28, 2011 as per email and telephone conversation. Delays due to your permits, construction or any other issues are not in any way related to your payment obligations to Igloo Food Equipment.

September 29, 2011 at 11:11 AM

[25] Mr. Rowe Sr. sends the following email to Edward Snieg:

Good morning Edward

In response to your email of Tuesday, September 27 at 7:10 PM I am as shocked as you are. Your apologies are appreciated.

You requested I advised management Walter and Ken of my position.

Walter and Ken, Burton Meats Retail purchased from Igloo Food Equipment in invoice number 6660 a total of $84,204.21 of equipment. Upon request we submitted to you a deposit of $22,000, which represents 30% of total cost, with the balance payable upon delivery/installation of equipment. Please see invoice for further detail.

September 27, 2011, out of the blue, we were sent an email demanding payment in full, which is a balance of $62,204.21. At no point were we advise [sic] that additional payment had to be made on the order coming in. Your email also advised me that if payment is not received by September 28, 2011 at noon, you are going to sell our equipment.

Gentlemen please review our contract. Do you have my entire equipment (order) ready to be delivered? I think we are still missing equipment. Our contract clearly states, balance due on installation/delivery day. Surely you can’t be serious in asking me to pay for equipment that you do not have ready to be delivered. I was made to understand that only the following product is available for delivery:

2 Igloo 6' refrigerated curved glass meat display case – ordered 3 $13,860.00

3 Turbo Air 3 Glass Swing Door Freezer $23,697.00

1 Igloo 8' Island Freezer $ 9,030.00

0 Igloo 4' Refrigerated Self Serve Open Merchandiser – ordered 1 __________

$46,587.00

Taxes $ 6,056.31

$52,643.31

Less deposit 30% $22,000.00

Payable $30,643.31

Burton Meats Retail Inc. is willing to accept partial delivery of our order on Wednesday, October 5, 2011 even though that was not the agreement. A certified cheque in the amount of $30,643.31 will be available at 1900 Dundas Street West upon delivery of equipment.

Please be advised that if the above equipment is not delivered on the indicated date, we will be formally requesting that are deposit be returned to us on October 6, 2011.

Kindly respond to our proposal by 4 PM today September 29, 2011.

September 29, 2011 – at 12:23 PM

[26] Edward Snieg responds to Mr. Rowe's email by enclosing three separate invoices: one for the equipment that is ready to deliver, stating it was "due yesterday"; a second for the walk-in cooler/freezer, stating that it is "overdue" and a third for the remainder of the equipment, due when the outstanding equipment arrives at the defendant’s warehouse.

Between September 29 and October 4, 2011

[27] The parties exchange a series of email messages, each complaining about the position being taken by the opposite party, relating to timing of delivery, schedules for delivery, subdivision of invoices and availability of equipment. The upshot of these exchanges is an arrangement by which the defendant agrees to put all items ready for delivery on one invoice, with a balance of due of $47,706.31. The defendant states that it will deliver the equipment to the plaintiff's site, but that payment is due via certified cheque to the delivery driver prior to any equipment being removed from the delivery truck.

[28] By email on October 4, 2011 the plaintiff responds to the payment issue as follows:

As per your invoice, we will have a certified cheque ready for your driver upon delivery, however based on our agreement, your driver will receive the cheque when equipment is safely delivered into the facilities and verified. We will however show him the certified cheque to confirm that it is available for him.

The plaintiff also requests a full breakdown of the items being delivered. Further email messages are exchanged in which each party asserts its position: the plaintiff that the equipment must be delivered into its premises before payment will be turned over; the defendant that payment must be made in full before the equipment is unloaded from the truck. The plaintiff repeats its request that the freezer/cooler components need to be itemized.

October 5, 2011

[29] The plaintiff readies its premises at 1900 Dundas Street West to receive the equipment, by removing the front window from the store. The defendant's personnel and trucks arrive at the plaintiff's site with the equipment aboard two trucks. The defendant's representative requests payment before unloading the trucks. Mr. Rowe Sr. insists that the equipment be unloaded before payment will be turned over. An impasse is reached. The defendant's trucks return to the defendant's plant with the equipment. Later that day the defendant notifies the plaintiff that it is welcome to attend at its premises to pick up the equipment, provided the plaintiff pays in advance. The plaintiff does not accept that proposal.

Subsequent events

[30] In light of the impasse and the non-completion of the transaction, the plaintiff sources the required refrigeration equipment from another supplier on an expedited basis. It is able to do so and it opens the store for business in early November 2011. The plaintiff incurs net increased costs of $8,071.51 by reason of having to seek another supplier to provide the equipment and installation that was to be provided by the defendant. For its part, the defendant returns some of the equipment that was custom-ordered for the plaintiff, for which it incurs a restocking charge of $3,445.75. It resells the remaining equipment and suffers net losses of $10,987.

[31] By statement of claim issued December 8, 2011 the plaintiff sues for breach of contract, claiming damages of $17,542 and the return of its deposit of the amount of $22,000. In its statement of defense and counterclaim, the defendant claims damages for breach of contract in the amount of $42,000.

Issues and analysis

[32] In this lawsuit, each side asserts that the opposite party breached the terms of their contract. On behalf of the plaintiff, it is argued that the defendant wrongfully refused to deliver the equipment that had been ordered, despite the plaintiff’s willingness to pay by certified cheque once the equipment was unloaded and inspected. For its part, the defendant asserts that the plaintiff was in breach by refusing to turn over payment for the equipment as a precondition for it being unloaded. It asserts that the plaintiff, in effect, refused to accept the goods despite the terms of the parties' agreement. The central question to be decided in this case, therefore, is: what were the terms of the parties' agreement in relation to delivery and payment?

[33] The parties submitted a statement of agreed facts. Among the agreed-upon facts is that the amended invoice sent by the defendant to the plaintiff – that is, the one that included the words "balance due on installation/delivery day" – formed the contract between the parties.

[34] Although the parties agreed in a statement of agreed facts that the amended invoice formed the contract between them, that document contains some notable omissions. It does not specify a delivery date upon which the defendant is to supply the goods that have been ordered. It does not address the question about what happens if the defendant fails to deliver on time or not at all. It does not address the question of what happens if the defendant tries to deliver the goods but the plaintiff is not ready to receive them. It does not provide for partial shipments or splitting of the order into separate deliveries and separate billings. There is no mention of other terms and conditions that govern the relationship. There is no express reference to the requirement for payment to be made before unloading or otherwise.

[35] Although the written contract is notable for its many omissions, in my view most of those gaps are of no consequence in view of the way in which events unfolded. It is apparent from the record that, by late September, the defendant was becoming anxious to effect delivery of the order. This was the case despite the fact that the defendant did not yet have in stock and therefore it could not deliver all of the equipment that the plaintiff had ordered. The defendant was becoming unhappy at the plaintiff’s unwillingness to fix a specified date by which it would take delivery. For its part, the plaintiff was not yet ready to receive the equipment, because its premises were not yet finished.

[36] The result of the foregoing pressures was the exchange of emails in the last few days of September, in which the defendant insisted that the plaintiff accept delivery and asserted that the plaintiff was in default. The plaintiff denied any default and also asserted that the defendant was not entitled to split the invoices as it had. The plaintiff contended that the time for delivery had not yet come, since the premises were not yet ready.

[37] Despite the foregoing differences, in the early days of October 2011 the parties reached a partial compromise. The plaintiff agreed to accept a partial delivery on October 5, despite the fact that the premises were not yet ready and all the equipment was not yet available. The defendant also agreed to proceed on this basis, but insisted that payment be by way of certified cheque. Accordingly, the parties agreed to resolve their disputes concerning timing of delivery, partial delivery, defaulted invoices, etc. on this basis. To this extent, by their communications and emails they amended the underlying agreement contained in the amended invoice.

[38] One issue that the parties did not resolve at this time was the precise sequence of delivery and payment. As previously noted, the parties took opposing positions: the plaintiff that it would not release the cheque until the equipment was delivered into its premises; the defendant that it would not remove the equipment from its truck until a certified cheque was in hand. Before me each asserted the correctness of their position and further that by taking the stance it did, the opposite party breached the parties' contract.

Assessment of evidence

[39] As I have noted, this is a case in which there are very few contentious facts. Indeed, the central issue is one of contractual interpretation: what meaning should be given to the words in the parties' contract "balance due on installation/delivery day". To the extent that evidentiary findings regarding the events that transpired may bear on that question, I will proceed to assess the evidence of the principal witnesses.

[40] The principal witness for the plaintiff was Mr. Rowe Sr. For the most part, the evidence of Mr. Rowe Sr. was straightforward and logical. It was consistent with the documentary record and the testimony of Mr. Rowe Jr. and Mr. Blackwood. For example, Mr. Rowe Sr. testified that he did not attend at the Igloo premises until shortly before the revised quotation and sales order were prepared in early June 2011. He denied visiting Igloo before this time. In this respect his evidence was confirmed by that of Mr. Rowe Jr. and Mr. Blackwood. The documents also reflect Mr. Rowe Sr.’s decision to add an additional piece of equipment, the self-serve open merchandiser. Significantly, there is no record of any email communications between the defendant and Mr. Rowe Sr. prior to this time. Indeed, the record includes an email message from Edward Snieg to "Robert@Burtonmeats.com" on May 9, 2011 that states "Following up to see if you have made a decision regarding the equipment." The email address for Mr. Rowe Sr. is "Bob@Burtonmeats.com". He goes by the name "Bob", while his son goes by the name "Rob" or "Robert". The email of May 9, 2011 begins with the salutation "Hi Rob"; I infer that it was intended by Edward Snieg for Mr. Rowe Jr.. The fact that Edward Snieg sent this email to Mr. Rowe Jr. on May 9 is consistent with the plaintiff’s evidence that Mr. Rowe Sr. had not become directly involved with the defendant by this time.

[41] Mr. Rowe Sr. was not seriously challenged or contradicted on cross-examination. Overall, his testimony appeared credible and reliable.

[42] The other two main witnesses for the plaintiff were Mr. Blackwood and Mr. Rowe Jr. In relation to Mr. Blackwood, he was a calm witness who gave straightforward non-argumentative answers. He, too, was not seriously challenged on cross-examination. His evidence was also consistent with the documentary record.

[43] In relation to Mr. Rowe Jr., his evidence was limited to his initial attendance at the defendant’s premises. He had no further substantive involvement in the transaction. His evidence was consistent with that of Mr. Blackwood and the documentary record. He, too, was not seriously challenged on cross-examination.

[44] Turning to the testimony on behalf of the defendant, the two principal witnesses were Stan Snieg and his son, Edward Snieg. I had several concerns regarding the testimony of Stan Snieg. On a number of occasions his answers on cross-examination were not responsive to the questions posed. From time to time he seemed to be arguing his case with respect to the terms of the parties' agreement, instead of answering questions as to facts. His answers sometimes varied. For example, to begin with he insisted that the conditions on the wall applied to most of the sales. He then said that there are different conditions. Then he said that they apply to all sales. Then he answered that there are different conditions and that it depends on the sale. He finally allowed that the terms and conditions on the wall would more or less apply to all sales. He asserted, however, that everyone was aware of the defendant's terms and conditions. This lack of internal consistency in his evidence and his tendency to step out of the role of witness and into the role of advocate gave me concerns about his testimony.

[45] Stan Snieg was also argumentative with respect to the question whether it was possible to prepare a detailed listing of the various items of equipment that comprise the walk-in cooler, walk-in freezer combination was possible. He insisted that this was never done. This seemed to me to be an unreasonable overgeneralization: it might not be necessary to list every last wire, bolt and nut (as Mr. Snieg tried to suggest), but the various major components could be itemized without difficulty – e.g. six wall pieces of certain dimension; two door pieces of certain dimension; two compressors of certain specification (and serial number) etc. Stan Snieg’s dogmatic insistence that a detailed list could not be prepared did not ring true with me.

[46] Stan Snieg was also shown to have overstated his evidence on occasion. He testified that he saw the walk-in freezer and walk-in closet combination loaded onto the delivery truck at his plant. He was then forced to admit that the driver had gone elsewhere to pick it up first. He then conceded that he had not seen it loaded, explaining that he sought at the back of the truck where it was tied up. His evidence on this point was thus not candid or accurate when first given.

[47] There was also a significant conflict between the testimony of Stan Snieg and Edward Snieg regarding the handwritten notation on the defendant's copy of the original invoice, in which the words "3 days before" are stroked out and the words "on delivery/installation" are written in. According to Stan Snieg, he thought the handwriting was that of his son. The evidence of Edward Snieg was that he believed the handwriting was that of his father. Given that these two gentlemen are father and son, and they work together regularly in a family-owned business, I find it strange and hard to believe that they are unable to recognize one another's handwriting. It seemed that neither of them was willing to accept responsibility for the handwritten note on one of their own documents.

[48] Additionally, Stan Snieg testified that the change in relation to timing of payment came about after he received a telephone call from Edward Snieg, who was with the plaintiff at the time. By contrast, during his examination in chief, Edward Snieg said that he received a call from Mr. Rowe Sr. telling him not to come and pick up the deposit cheque unless he removed the requirement of payment three days before delivery. Edward Snieg said that he then went to speak to his father and they agreed to change this requirement. In this respect, the testimony of father and son are also in conflict. As stated below, while there were flaws in the testimony of Edward Snieg, they were far less pronounced than the shortcomings in the testimony of Stan Snieg.

[49] For the foregoing reasons, I have concerns about the reliability and credibility of the testimony of Stan Snieg.

[50] Turning to the evidence of Edward Snieg, I have already noted that, in several respects, it conflicted with the testimony of his father. Apart from that conflict, there were two other features of Edward Snieg’s testimony that concern me. I have already discussed one. This was his email of May 9, 2011 addressed to Mr. Rowe Jr. If one accepts Edward Snieg’s evidence that he only met Mr. Rowe Jr. once, in early April, it is difficult to understand why he sent an email to Mr. Rowe Jr. on May 9 "Following up to see if you have made a decision regarding the equipment." Indeed, according to Edward Snieg, by this time (i.e. before the end of April) he had met with Mr. Rowe Sr. and Mr. Blackwood. If that evidence is accurate, it is difficult to understand why he would be reverting to corresponding with Mr. Rowe Jr. A more logical explanation would be that, as of May 9, he had not yet met with Mr. Rowe Sr.

[51] Another point of significance was the testimony of Edward Snieg that, on October 5, 2011, the defendant offered to remove the equipment from the truck so that the plaintiff could inspect it on the driveway. He went on to testify that Mr. Rowe Sr. did not want to look at it; he just wanted it in his store. Curiously, neither of the delivery persons for the defendant who testified were asked about or mentioned this fact. Indeed, such an offer would be inconsistent with the defendant's supposed hard and fast rule that the truck does not get unloaded until payment is received. This late recollection by Edward Snieg struck me as unusual. This point was never suggested to either Mr. Rowe Sr. or Mr. Blackwood when they were in the witness stand.

[52] For the above reasons, overall, when comparing the testimony of the plaintiff's principal witnesses and those of the defendant's principal witnesses, I found the evidence of the former to be more persuasive. Accordingly, wherever there is a material difference between the testimony on behalf of the plaintiff and that on behalf of the defendant regarding any of the exchanges or dealings between the parties, I prefer and accept the testimony proffered on behalf of the plaintiff.

[53] Among other things, this means that I accept the testimony of the plaintiff’s witnesses that at no time during their attendances at the defendant’s premises was their attention drawn to the terms and conditions of sale posted on the wall. I further find that when Mr. Rowe Sr. and Edward Snieg spoke on the telephone in June 2011, regarding the original invoice term that required payment three days in advance, Mr. Rowe Sr. made it clear that he was not prepared to deal with the defendant on those terms. I further find as a fact that, on that occasion Mr. Rowe Sr. informed Edward Snieg that he would only pay when the product was delivered and installed. Edward Snieg then spoke with Stan Sneig and subsequently called Mr. Rowe Sr. back and told him that the payment terms proposed by Mr. Rowe Sr. were okay. This led to the words being written on the defendant's internal copy of the original invoice providing for payment "on delivery/installation". In turn, this led to the revised invoice being submitted which provided for payment "on installation/delivery day". On this basis, Mr. Rowe Sr. agreed to and did pay the deposit.

Legal analysis

[54] I now return to the underlying question, namely, the meaning of the words "balance due on installation/delivery day" as contained in the parties' contract. The defendant insists that it at no time agreed to waive or vary from its consistent policy that no goods are unloaded before payment by certified cheque is received. I have already found as a fact that the plaintiff's attention was not drawn to that provision (or any others) contained in the sign found on the wall of the defendant’s premises setting out the defendant's conditions of sale. There is no reference to that requirement in any of the contractual documents. It would have been a simple thing for the defendant to recite that additional term or refer to it in the invoice that formed the contract. It chose not to do so.

[55] The position of the plaintiff is that the words mean what they say: that is, payment is due on the date that the defendant effects delivery and installation. This means, the plaintiff argues, that the defendant was entitled to payment only after it had delivered and installed the equipment, and not before. The only variation in that requirement was when the plaintiff agreed to pay for the walk-in cooler and walk-in freezer combination on October 5, despite the fact that it was not going to be installed until a later date. There was no other agreement by the plaintiff to pay the defendant before it had performed the contract.

[56] In Ventas, Inc. v. Sunrise Senior Living Real Estate Investment Trust (2007), 2007 ONCA 205, 85 O.R. (3d) 254 (C.A.) the Court of Appeal summarized the principles applicable to the interpretation of commercial contracts as follows (at para. 24):

Broadly stated … a commercial contract is to be interpreted,

(a) as a whole, in a manner that gives meaning to all of its terms and avoids an interpretation that would render one or more of its terms ineffective;

(b) by determining the intention of the parties in accordance with the language they have used in the written document and based upon the “cardinal presumption” that they have intended what they have said;

(c) with regard to objective evidence of the factual matrix underlying the negotiation of the contract, but without reference to the subjective intention of the parties; and (to the extent there is any ambiguity in the contract),

(d) in a fashion that accords with sound commercial principles and good business sense, and that avoids a commercial absurdity.” [Citations omitted]

[57] The starting point for interpreting a contract is to look at the plain and ordinary meaning of its words. Where the language is unambiguous, extrinsic evidence it is not admissible to alter, vary, interpret or contradict the words used in the contract. Regardless of any ambiguity, the courts may always have regard to the context and to the objective evidence of the surrounding circumstances underlying the negotiations: 3869130 Canada Inc. v. I.C.B. Distribution Inc., 2008 ONCA 396, 66 C.C.E.L. (3d) 89 at para. 32.

[58] In relation to ambiguity and the potential use of parol evidence, in Dunn v. Chubb Insurance Co. of Canada (2009), 2009 ONCA 538, 97 O.R. (3d) 701 (C.A.) the Court of Appeal stated as follows (at para. 34):

A contractual provision is ambiguous if it is reasonably susceptible of more than one meaning …. Extrinsic or parol evidence may be admitted to assist in resolving an ambiguity …. For example, extrinsic evidence regarding the negotiations leading up to an agreement may be admitted if the contract is ambiguous, but not if the language of the contract is clear …. [citations omitted]

[59] In the present case the words used by the parties provide that the purchase price will be paid “on installation/delivery day.” Starting from the proposition that effect should be given to all words, the inclusion of the terms “delivery” and “installation” suggests that the parties intended that payment would be made on the day that the goods were both delivered and installed. The language used does not expressly state whether payment had to be tendered before or after the delivery and installation were effected. The contract is “reasonably susceptible of more than one meaning” and thus is ambiguous. I am therefore entitled to consider objective evidence of the factual matrix underlying the negotiation leading up to the agreement.

[60] On the facts as I have found them, the subject of the timing of payment was expressly discussed when the parties made their contract in June 2011. Specifically, when Edward Snieg proffered the original invoice containing the provision that required payment three days in advance of delivery, Mr. Rowe Sr. responded that the plaintiff would only pay when the product was (past tense) delivered and installed. After consulting with his father, Edward spoke again with Mr. Rowe Sr. and told him “okay”, meaning the defendant was prepared to assent to the payment terms required by the plaintiff. This exchange led to the handwritten change on the defendant’s internal copy of the invoice stating "on delivery/installation" and the revised invoice providing for payment "on installation/delivery day". The exchanges between the parties and the subsequent alterations to the invoice are objective evidence that I may consider.

[61] The new wording was inserted in the invoice after the parties orally agreed that payment would be due only after delivery and installation was completed. This evidence points to the conclusion that the ambiguity in the contract regarding timing of payment should be interpreted to mean that payment was not required or due until after delivery and installation of the equipment had been completed. Although the plaintiff subsequently agreed to accept and pay for the equipment that was to be delivered on October 5, despite the fact that not all the equipment it had ordered was available and the premises were not yet ready (and thus installation of the freezer/cooler combination could not be completed then) there was no other alteration to the previously-agreed upon understanding that payment was not due until after delivery.

[62] The defendant argues that the plaintiff had ample opportunity to inspect the equipment, either at the defendant’s warehouse/showroom or on the trucks at the time of delivery. With respect, that argument misses the point. The desire of the plaintiff to inspect the products may have been part of its motivation to insist on delivery before payment was due, but that does not alter the underlying agreement that contemplated payment only after delivery. The term “delivery” is defined in the Sale of Goods Act, R.S.O. 1990, c. S.1 as “the voluntary transfer of possession from one person to another”. Plainly, the defendant refused to transfer possession of the equipment until it had received payment from the plaintiff. In this respect – that is, by insisting on receiving payment first - the defendant failed or refused to comply with its contractual obligation to deliver the goods first, and thereby breached the parties’ agreement.

[63] The plaintiff was ready, willing and able to perform its obligations (as the parties had modified them by their negotiations between September 29 and October 4, 2011) in that the plaintiff was prepared to accept delivery and to pay by way of certified cheque. There was no default by the plaintiff that would warrant the forfeiture of its deposit.

[64] It follows from the foregoing that the plaintiff is entitled to succeed on its claim, and the counterclaim of the defendant fails.

DAMAGES

[65] After it refused to unload the equipment at the plaintiff’s premises on the morning of October 5, the defendant notified the plaintiff that the plaintiff could pick up the equipment at the defendant’s warehouse that day, provided it paid in advance. The plaintiff chose not to accept that proposal and instead sourced the required equipment elsewhere. In the course of so doing, the plaintiff incurred net extra expenses of $8,071.51 to complete the outfitting of its store.

[66] The question arises whether the plaintiff mitigated its loss and acted reasonably in doing so. As the innocent party in a breach of contract situation, a plaintiff is obliged to take all reasonable steps to reduce or mitigate its damages. The plaintiff’s decision to go to another source for its equipment, to my mind, was more motivated by pique on the part of Mr. Rowe Sr., than reason. If the plaintiff was concerned that it have an opportunity to inspect the goods before accepting delivery, it could easily have arranged to do so at the defendant’s warehouse, and taken delivery there and then, without incurring extra costs. I therefore hold that the plaintiff did not take reasonable steps to mitigate its loss, and it should therefore bear the extra expenses it incurred.

[67] That said, because it was the defendant and not the plaintiff who breached the parties’ agreement and brought their dealings to an end, the defendant is not entitled to retain the plaintiff’s deposit. I therefore award the plaintiff damages of $22,000. The plaintiff is also entitled to pre-judgment interest on that sum.

[68] Although I have dismissed the counterclaim, I am required to assess the defendant’s damages. Based on the evidence presented, the loss proved by the defendant totalled the net sum of $14,432.75. I would not have allowed the claim for commission to Edward Snieg in respect of the abortive sale, since it was part of the defendant’s cost of performing the transaction with the plaintiff.

CONCLUSION and DISPOSITION

[69] For these reasons, I award judgment for the plaintiff in the amount of $22,000.00 plus pre-judgment interest. The counterclaim of the defendant is dismissed.

[70] In relation to costs, if the parties cannot agree, they may make written submissions as follows:

(a) The plaintiff shall serve its bill of costs on the defendant, accompanied by written submissions within fifteen days of the release of these reasons.

(b) The defendant shall serve their response on the plaintiff within fifteen days thereafter.

(d) In all cases, the written submissions shall be limited to three pages, plus bills of costs. I expressly invite counsel for the plaintiffs to submit the bill of costs they would have tendered on the defendant if they had been successful in resisting the motion.

(f) I direct that counsel for the plaintiff shall collect copies of all parties' submissions and arrange to have that package delivered to me in care of Judges' Administration, Room 170 at 361 University as soon as the final exchange of materials has been completed. To be clear, no materials should be filed individually: rather, counsel for the defendant will assemble a single package for delivery as described above.

[71] I note that the amount recovered by the plaintiff is within the jurisdiction of the Small Claims Court, and thus rule 57.05(1) is applicable. If the parties are unable to reach agreement on costs, I invite them to address this point in their written submissions.

___________________________ Stinson J.

Released: December 17, 2013

COURT FILE NO.: CV-11-441460

DATE: 20131217

ONTARIO

SUPERIOR COURT OF JUSTICE