2438667 Manitoba Ltd. et al. v. Husky Oil Ltd. et al., (2007) 214 Man.R.(2d) 257 (CA)

• Judge: Scott, C.J.M., Monnin and Steel, JJ.A.
• Court: Court of Appeal (Manitoba)
• Case Date: February 07, 2007
• Jurisdiction: Manitoba
• Citations: (2007), 214 Man.R.(2d) 257 (CA);2007 MBCA 77

2438667 Man. v. Husky Oil (2007), 214 Man.R.(2d) 257 (CA);

      395 W.A.C. 257

MLB headnote and full text

Temp. Cite: [2007] Man.R.(2d) TBEd. JL.005

2438667 Manitoba Ltd., M.N.G. Enterprises Ltd. and 3726631 Manitoba Ltd. (plaintiffs/respondents) v. Husky Oil Limited and Mohawk Canada Limited both carrying on business as "Husky Oil Marketing Company" (defendants/appellants)

(AI 06-30-06368)

Husky Oil Limited (applicant/appellant) v. 2438667 Manitoba Ltd., M.N.G. Enterprises Ltd. and 3726631 Manitoba Ltd. (respondents/respondents)

(AI 06-30-06578)

(2007 MBCA 77)

Indexed As: 2438667 Manitoba Ltd. et al. v. Husky Oil Ltd. et al.

Manitoba Court of Appeal

Scott, C.J.M., Monnin and Steel, JJ.A.

June 15, 2007.

Summary:

The plaintiffs operated three gas stations. The defendant, Husky Oil Ltd., was their gas supplier. In September 2000, the plaintiffs issued a statement of claim, seeking a declaration that in August 1999, Husky entered into binding agreements with the plaintiffs by which it agreed to new volume rebates proposed by the plaintiffs. The plaintiffs sought an order directing that Husky pay the monthly rebates proposed by the plaintiffs until the expiration of their agreements with Husky.

The Manitoba Court of Queen's Bench found that a binding agreement was made in August 1999 and it awarded the plaintiffs judgment for $688,699.55. With respect to the issue of mitigation, the court held that the plaintiffs' failure to seek alternate suppliers was not unreasonable in view of a threat by Husky to sue them for breach of restrictive covenenants if they did so. Husky appealed, arguing that: (1) the court erred in concluding that it was reasonable for the plaintiffs to not contract with alternate suppliers; (2) having elected to continue their business relationship with Husky, the plaintiffs were estopped from advancing any claim for damages; and (3) the damages payable to the plaintiffs should be reduced to account for the negative contingency that Husky not only could have invoked the termination clauses, but likely would have done so.

The Manitoba Court of Appeal dismissed the appeal. The plaintiffs had no duty to mitigate their loss as asserted by Husky, the issues of waiver and estoppel by conduct did not assist Husky and the court rejected Husky's argument that the plaintiffs' damages should be reduced to take into account theoretical negative contingencies.

Damages - Topic 64

General principles - Considerations in assessing damages - Contingency allowance - The plaintiffs operated three gas stations - Husky Oil Ltd. was their gas supplier - In September 2000, the plaintiffs issued a statement of claim, seeking a declaration that in August 1999, Husky entered into binding agreements with the plaintiffs by which it agreed to new volume rebates proposed by the plaintiffs - The plaintiffs sought an order directing that Husky pay the monthly rebates proposed by the plaintiffs until the expiration of their agreements with Husky - The trial judge found that a binding agreement was made in August 1999 and he awarded the plaintiffs judgment for $688,699.55 - Husky appealed, arguing that the damages payable to the plaintiffs should be reduced to account for the negative contingency that Husky not only could have invoked the termination clauses in the agreements with the plaintiffs, but likely would have done so - The Manitoba Court of Appeal rejected Husky's argument that the plaintiffs' damages should be reduced to take into account theoretical negative contingencies - The court stated that "one might well ask, why should a negative contingency be applied when Husky now says that they 'would have invoked the Termination Clauses' when in fact they did not do so. In my opinion, that is the end of the matter" - See paragraphs 66 to 69.

Damages - Topic 1042

Mitigation - In contract - What constitutes reasonable remedial measures - The plaintiffs operated three gas stations - Husky Oil Ltd. was their gas supplier - In September 2000, the plaintiffs issued a statement of claim, seeking a declaration that in August 1999, Husky entered into binding agreements with the plaintiffs by which it agreed to new volume rebates proposed by the plaintiffs - The plaintiffs sought an order directing that Husky pay the monthly rebates proposed by the plaintiffs until the expiration of their agreements with Husky - The trial judge found that a binding agreement was made in August 1999 and he awarded the plaintiffs judgment for $688,699.55 - With respect to the issue of mitigation, the trial judge held that the plaintiffs' failure to seek alternate suppliers was not unreasonable in view of a threat by Husky to sue them for breach of restrictive covenants if they did so - Husky appealed, arguing that the trial judge erred in concluding that it was reasonable for the plaintiffs to not contract with alternate suppliers - Husky also argued that, having elected to continue their business relationship with Husky, the plaintiffs were estopped from advancing any claim for damages - The Manitoba Court of Appeal rejected the arguments - The plaintiffs had been threatened with litigation if they moved to a new supplier and they had no duty to mitigate their loss as asserted by Husky - The issues of waiver and estoppel by conduct did not assist Husky for the same reasons - See paragraphs 51 to 65.

Estoppel - Topic 1388

Estoppel in pais (by conduct) - Circumstances where doctrine not applicable - Conduct of person raising estoppel - [See Damages - Topic 1042 ].

Waiver - Topic 1002

Contracts - Acts constituting waiver - [See Damages - Topic 1042 ].

Cases Noticed:

Michaels et al. v. Red Deer College, [1976] 2 S.C.R. 324; 5 N.R. 99, refd to. [para. 35].

Baud Corp., N.V. v. Brook, [1979] 1 S.C.R. 633; 23 N.R. 181; 12 A.R. 271, refd to. [para. 36].

Asamera Oil Corp. v. Sea & Oil General Corp. - see Baud Corp., N.V. v. Brooks.

Johnson et al. v. Agnew, [1980] A.C. 367 (H.L.), refd to. [para. 37].

Wile v. Cook, [1986] 2 S.C.R. 137; 69 N.R. 67; 75 N.S.R.(2d) 66; 186 A.P.R. 66, refd to. [para. 37].

Findlay v. Howard (1919), 58 S.C.R. 516, refd to. [para. 39].

Freeman v. BC Tel, [1997] B.C.T.C. Uned. I65; 33 C.C.E.L.(2d) 39 (S.C.), refd to. [para. 39].

Lyons v. Multari (2000), 136 O.A.C. 281; 3 C.C.E.L.(3d) 34 (C.A.), refd to. [para. 39].

Panchaud Frères S.A. v. Etablissements General Grain Co., [1970] 1 Lloyd's Rep. 53 (C.A.), refd to. [para. 45].

Keneric Tractor Sales Ltd. v. Langille, [1987] 2 S.C.R. 440; 79 N.R. 241; 82 N.S.R.(2d) 361; 207 A.P.R. 361; 43 D.L.R.(4th) 171, refd to. [para. 51].

Coutts v. Jessel (Brian) Autosports Inc. et al. (2005), 212 B.C.A.C. 16; 350 W.A.C. 16; 2005 BCCA 224, refd to. [para. 51].

Kern v. Steele (2003), 220 N.S.R.(2d) 51; 694 A.P.R. 51; 2003 NSCA 147, refd to. [para. 51].

British Westinghouse Electric & Manufacturing Co. v. Underground Electric Railways Co. of London Ltd., [1912] A.C. 673 (H.L.), refd to. [para. 52].

Western Canada Directories v. Midwest Litho Ltd. (1973), 37 D.L.R.(3d) 139 (Sask. C.A.), refd to. [para. 54].

Cohnstaedt v. University of Regina (1994), 116 Sask.R. 241; 59 W.A.C. 241 (C.A.), refd to. [para. 54].

Mosher v. Epic Energy Inc. et al. (2001), 154 B.C.A.C. 225; 252 W.A.C. 225; 2001 BCCA 253, refd to. [para. 54].

Tasse Brothers Ltd. v. Tome and Americo's Super Markets Ltd. (1983), 21 Man.R.(2d) 121 (C.A.), refd to. [para. 54].

Smith v. Tamblyn (Alberta) Ltd. (1979), 23 A.R. 53 (Q.B.), refd to. [para. 56].

Garrett v. Quality Engineered Homes Ltd., [2006] O.T.C. 141 (Sup. Ct.), consd. [para. 57].

Copperview Haven Ltd. et al. v. Waverly Park Estates Ltd. et al., [1984] 4 W.W.R. 672 (B.C.C.A.), consd. [para. 60].

Walker v. Sharpe (1921), 56 D.L.R. 668 (Sask. C.A.), consd. [para. 63].

Canadian Flexible Skate Co. v. Monarch Brass Manufacturing Co., [1925] 2 D.L.R. 387 (Ont. C.A.), consd. [para. 64].

Chisholm v. Equisure Financial Network Inc. et al., [1999] N.S.R.(2d) Uned. 64; 1999 NSCA 127, refd to. [para. 67].

Authors and Works Noticed:

Fridman, Gerald Henry Louis, The Law of Contract in Canada (4th Ed. 1999), pp. 819, 820 [para. 35].

Waddams, Stephen M., The Law of Contracts (5th Ed. 2005), para. 604 [para. 45].

Waddams, Stephen M., The Law of Damages (2006 Looseleaf Ed.), para. 15.140 [para. 53].

Counsel:

W.J. Burnett, Q.C., and M.L. Grande, for the appellants;

T.E. Bock and S.A. Zacharias, for the respondents.

These appeals were heard on February 7, 2007, before Scott, C.J.M., Monnin and Steel, JJ.A., of the Manitoba Court of Appeal. The following judgment of the Court of Appeal was delivered by Scott, C.J.M., on June 15, 2007.