CITATION: G & K v Drummond 2017 ONSC 2457
COURT FILE NO.: 749/15
DATE: 2017/APRIL/20
THE SUPERIOR COURT OF JUSTICE
B E T W E E N:
G & K SERVICES CANADA INC.
Plaintiff
- and –
KEITH DRUMMOND
Defendant
R E A S O N S F O R J U D G M E N T
BEFORE THE HONOURABLE JUSTICE K.E. PEDLAR
on the 22nd day of February, 2017
at PERTH, Ontario
APPEARANCES:
M. Romeo Counsel for the Plaintiff
D. Heeley Counsel for the Defendant
THE SUPERIOR COURT OF JUSTICE
T A B L E O F C O N T E N T S
W I T N E S S E S
WITNESSES
Examination in-Chief
Cross- Examination
Re- Examination
ENTERED ON PAGE
REASONS FOR JUDGMENT 1
Transcript Ordered: February 24th, 2017
Transcript Completed: April 18, 2017
Ordering Party Notified: April 18, 2017
WEDNESDAY, FEBRUARY 22ND, 2017
R E A S O N S F O R J U D G M E N T
PEDLAR, J. (Orally):
Well, I’m going to give you my reasons now. This thing has gone on too long, as far as I am concerned. You had a trial and now an appeal, and it has been a couple of years since your trial, I think, sometime in ’15. But without quoting every paragraph of every case, it is pretty clear that we do not really disagree, you do not really disagree very much on the law, and it is mixed fact and law. It is how the judge at trial applied the facts to the law in this case, and he was obviously sympathetic to the defendant.
I mean, I read his decision and he says, you know, “I have sympathy. It had some appeal to me. A Small Claims Court is a court of equity, and have a big law firm and a big company out of Minnesota, a small businessman in Smith Falls, winner-takes-all situation,” and, you know, he is sympathetic to the defendant for sure.
And he wanted to look at the law, and was allowed to look at the law before he made his ruling. So, yes, we have that standard of how when the law is interpreted and the facts are applied, then it has to be a palpable and overriding error, and it is a question, and everybody agrees on this question, of constructing the intentions of the parties at the time the contract was entered into.
Any findings that the trial judge makes, I have to give deference to, because I was not there and this is an appeal. It is not a de novo hearing, so I have to, by law, give deference to his rulings. And these types of contracts have resulted in a fair bit of litigation. There is a presumption that they are enforceable and reasonable. That is the law, but they can be challenged, and if they are demonstrated to be unreasonable and oppressive, or unfair at a fairly high level, then they can be overturned.
The big issue here, and I think it keeps slipping back and sliding back in between it, whose onus is it? And I think it is clearly the defendant/appellant’s onus to show the court, demonstrate that the contract, in fact, the provision for early termination is oppressive and grossly unfair, and is unreasonable.
So, in the judge’s decision, I have it at page 81 of the transcript. I have page 14 up in the top corner, but it is 81. He says,
“So, Mr. Heeley’s made the argument that, in fact, the plaintiff hasn’t called evidence to prove the 50 per cent is reasonable, but what this case stands for,” and he was quoting the second case, the Roynat case, “but this case stands for the proposition that this is now, if you’re going to make that argument, Mr. Heeley, becomes a reverse onus situation. In fact, you did not introduce any evidence, either, and, in fact, the onus is on you to introduce some evidence other than saying ‘Where can I get 50 per cent other than maybe only stocks in a bank, or something?’ There’s no evidence one way or the other, so, therefore, the plaintiff succeeds.”
So, to me, he addressed that question of onus correctly and that we are inadvertently putting a reverse onus on the plaintiff that he does not have in law. He does not have a reverse onus to prove this is reasonable. It is presumed to be reasonable and there has to be evidence to show it is unreasonable. So, there is no onus on the plaintiff to produce their financial statements. This is a contract entered into between two adults. Forget that one is a big corporation, one is a little corporation, or a little small business. It is two adult people addressing their minds, because a corporation is a person, and, you know, 50 per cent markup is on the profit, on the transaction, not on the total business, and the examples given are not anything beyond common-sense.
It is obvious that there is a significant cost operating a business like this, that is, delivery of laundry services. I do not need to know the details of that. There is no onus on the plaintiff, or respondent on this motion to provide that evidence that it is reasonable.
These people entered into a contract. Contracts mean what they say. And this is a pretty simple contract, two pages, and all the business about drivers, and trucks, and facility, everybody, you have to be completely naïve not to understand that. So, they make an investment in materials, and services, and products to deliver that all up front. They have costs. They have to come up with a figure, and these two people agreed to a figure. Of course, there is huge infrastructure to service clients, but how would you come up with an exact figure other than putting some number down on paper, and then you either create that or you do not.
So, as the Dunlop case says, you know, if it is hard to really come up with proof at a hearing, then why in the heck would you expect a Small Claims Court case to get into that kind of stuff? You have a contract that is agreed to it in advance, and that is part of the value of these predetermined damage contracts, and unless they are on their face grossly unfair, it is an onus that is on the person who is challenging. So, liquidated damages are exactly appropriate in these kinds of circumstances, and nobody wants to try and start calling all that evidence that is required by a process to determine damages in a Small Claims Court action. It would be crazy and very, very expensive.
So, I do not see that the onus has been met. The contract itself is simple and the renewal is not automatic. It is automatic, unless you give notice. You can get out of it. You do not have to renew it. It is not automatically going to happen. It is only if you are asleep at the switch it does, but you can opt out, and that did not happen. So, to me, there is no evidence.
I have to look at the trial judge’s findings, “entered into willingly, no evidence of undue pressure, no evidence presented by the defendant that this was unreasonable, just argument.” Well, that is not enough. It is presumed to be a pre-estimated damage and it is not a crazy number. It is a heavy number for this local small business, but, you know, he should have talked to Mr. Heeley before he signed the contract, not afterwards, maybe. It is unconscionable if it exceeds an amount greater than the greatest possible loss. How the heck would I know? And that has to be established by the person challenging it, and it has to be – is it unreasonable to prorate it over the remaining term of the contract rather than the whole length of the contract? So, 50 per cent of what remains, it is only half of the amount due under the contract.
So, I just think it is just a sad tale. I sympathize with the defendant, like the trial judge did, but I think he made the right call. Provision of services, simple contract, six years of experience with the same provider of services, did not give them any fair chance to deal with any issues he had, any complaints. They tried to at some level, anyway, respond to that and there was not a willingness to do that. So, in the absence of evidence by the defendant in the original trial, there is just no discharge of the onus. And there are strong policy reasons to allow people to set their own value on performance and that avoids lengthy trials in Small Claim Court numbers.
And the trial judge found that the defendant, when he complained in his termination letter, the plaintiff acted in good faith to remedy and keep him as a client. That was not what his choice was, but he says the witnesses acted in good faith. So, there was a finding that he did not breach the contract regarding quality, because he is entitled to notice and entitled to try and remedy it. So, I think there is no evidence of palpable error here. He did, I think - he was very sympathetic and he had to apply the law. I’m sympathetic, but I have to apply the law. I hate to see this kind of thing happen, but .... costs, what do you want for costs?
FORM 1
Certificate of Transcript
Evidence Act, Subsection 5(1)
I, Marie Findlay, certify that this document is a true and accurate transcription of the recording of G&K Services Canada Inc. and Keith Drummond in the Superior Court of Justice held at, Perth, ON, taken from 1811-CR01-20170222-095129-10-PEDLARK.dcr and has been certified in Form 1.
(Date) (Signature of authorized person)
Marie Findlay,
ACT ID 4127763268,
1-855-443-2748