Court File and Parties
Court File No.: DV-17-0031 Date: 2018 Dec 6 Ontario Superior Court of Justice
Between: BPE DEVELOPMENT INC. Plaintiff/Defendant by Counterclaim (Respondent on Appeal) – and – BRAEBURY DEVELOPMENT CORPORATION Defendant/Plaintiff by Counterclaim (Appellant)
Counsel: S. Daniel Baldwin, for the Respondent on Appeal Michael Swindley, for the Appellant
Heard: November 23, 2018 at Kingston
Judge: Tranmer, J.
Appeal Decision
[1] This is an appeal by Braebury Development Corporation (“Braebury”) from the decision dated December 1, 2016 of Deputy Judge Menard of the Kingston Small Claims Court.
[2] BPE Development Inc. (“BPE”) did not cross-appeal from the Judgment.
First Ground of Appeal
[3] Braebury submits that the learned judge erred when he failed to award to it the full amount of the insurance premium which it had paid for the property for the period running from July 1, 2015 to July 1, 2016. The learned judge prorated the quantum of the insurance premium from July 1, 2015 to September 7, 2015 and awarded that lesser sum to Braebury.
[4] The standard for review in a dispute concerning the interpretation of a contract is set out by the Supreme Court of Canada in Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, [2014] 2 SCR 633, in particular, at paragraphs 47 to 49, 50 and 54, 55. The court in Heritage Capital Corp. v. Equitable Trust Co., 2016 SCC 19, confirmed that that standard is one of palpable and overriding error, para. 24.
[5] I do not find that the learned Deputy Judge made such a legal error by applying an incorrect principle as counsel for the appellant submits so as to amount to an error on a question of law.
[6] The Deputy Judge’s decision on this point was based on the factual matrix presented in the course of the two day trial which included the testimony of Mr. Pilon of BPE; the chief financial officer for Braebury; the Second Amendment to the Purchase Agreement dated November 9, 2015 identifying the steel issue as the only outstanding issue between the parties; the Indemnity dated November 13, 2015, which states that the items listed in Schedule C which includes the subject insurance premium, have been deemed to have been billed by the Seller to the Purchaser and paid by the Purchaser to the Seller by virtue of the amount paid by the Purchaser to the Seller under the Purchase Agreement; and the Statement of Adjustments prepared by Braebury’s lawyer which confirms that the only outstanding issue was with regard to steel.
[7] I find that the learned judge made no palpable and overriding error in reaching the decision that he did on this point. His brief comment that prorating this sum “makes good sense”, must fairly be understood to be based on the evidence that he heard.
[8] I would give no effect to this ground of appeal and dismiss it.
Second Ground of Appeal
[9] Braebury also appeals the trial judge’s decision to award BPE the full amount of its claim with respect to the steel issue.
[10] The Second Amendment to the Purchase Agreement stated in paragraph 2(a) that BPE was entitled to bring a court action to challenge the Christmas Steel Report and to seek the readjustment of the purchase price in the amount of $18,012.25 on the basis that the Christmas Steel Report produced by the Purchaser was not a thorough audit by a qualified professional as required by section 3.4 of the Purchase Agreement sufficient to justify the price reduction claimed by the Purchaser.
[11] Paragraph 3.4 of the Purchase Agreement stated that the Purchaser, at the Purchaser’s expense, shall conduct a thorough audit by a knowledgeable professional of the steel purchased as against the steel used at the properties and the unused steel located in the Seller’s yard.
[12] Braebury advanced two arguments in support of its position. The second point made by Braebury, concerning an adverse inference that should have been drawn from BPE’s failure to call a witness or lead evidence as to its own audit, was dismissed by me from the Bench with oral reasons.
[13] The first point raised by Braebury is that, although the learned Deputy Judge found that the Christmas Report was not the audit as contemplated under paragraph 3.4, and gave reasons for doing so, the learned Deputy Judge failed to address and adjudicate the issue “sufficient to justify the price reduction claimed by the Purchaser”.
[14] In my opinion, for the following reasons, that latter question was not a separate, independent and distinct question from the “thorough audit” question to be adjudicated upon.
[15] Firstly, paragraph 3.4 speaks only of the audit “thorough audit”. Paragraph 3.4 identifies specifically the circumstances which will result in the price reduction claimed by the Purchaser, namely “less than 90% of the steel purchased”.
[16] Next, paragraph 2(a) does not state two requirements, namely both a “thorough audit”, and “sufficient to justify the price reduction”, as is the interpretation urged by the appellant. The latter phrase describes the nature of the standard to be met by the “thorough audit.” If there is no “thorough audit”, it cannot be sufficient to justify the price reduction.
[17] In considering the trial judge’s reasons on the issue including paragraphs 21 through 35 and paragraphs 45 to 47, he can be fairly and reasonably understood to mean that, having found that the Christmas Steel Report was not thorough or reliable and that it did not discharge the requirement placed on Braebury under paragraph 3.4 to conduct a thorough audit by a knowledgeable professional of the steel purchased as against the steel used, Braebury was not entitled to the reduction provided for under paragraph 3.4.
[18] In addition, the preamble to the Second Agreement to the Purchase Agreement makes it clear that it is a single issue for the judge to determine, “And Whereas it is the Seller’s position that the Christmas Steel Report is not a “thorough audit by a qualified professional” sufficient to justify a price reduction”. The judge clearly adjudicated upon the issue in his reasons. He found there was no such audit.
[19] It is clear under paragraph 3.4 and paragraph 2(a), quoted above, that if there is no “thorough audit”, there is no price reduction.
[20] The evidence before the learned trial judge supported his finding that there was no thorough audit.
[21] For these reasons, the second ground of appeal is dismissed.
Costs
[22] If the parties cannot resolve the issue of costs of this appeal, after reasonable efforts to do so, BPE may submit written submissions, limited to two pages plus a costs outline, within seven days of receipt of this decision. Braebury may respond in like manner, within seven days of receipt of BPE’s submissions. Failing compliance with these requirements, the parties shall be deemed to have settled costs of this appeal.