C&C Technologies International et al. v. McGregor Geoscience Ltd. et al., (2016) 370 N.S.R.(2d) 261 (SC)

• Judge: Wright, J.
• Court: Supreme Court of Nova Scotia (Canada)
• Case Date: February 26, 2016
• Jurisdiction: Nova Scotia
• Citations: (2016), 370 N.S.R.(2d) 261 (SC);2016 NSSC 55

C&C Tech. v. McGregor Geoscience (2016), 370 N.S.R.(2d) 261 (SC);

    1165 A.P.R. 261

MLB headnote and full text

Temp. Cite: [2016] N.S.R.(2d) TBEd. FE.066

C&C Technologies International Inc. and C&C Technologies, Inc. (applicants) v. McGregor Geoscience Limited and Superport Marine Services Limited (respondents)

(Hfx. No. 430818; 2016 NSSC 55)

Indexed As: C&C Technologies International et al. v. McGregor Geoscience Ltd. et al.

Nova Scotia Supreme Court

Wright, J.

February 26, 2016.

Summary:

The applicants were C&C Technologies International Inc. and its parent company, C&C Technologies, Inc. (collectively, C&C). The respondent McGregor Geoscience Ltd. (McGregor) engaged C&C International as a subcontractor to perform deepwater survey work for a proposed pipeline route off the coast of British Columbia. McGregor also secured a time charter of a research vessel needed to carry out the project from its sister company, the respondent Superport Marine Services Ltd. (Superport). The negotiations for the subcontract between McGregor and C&C International were conducted between McGregor and C&C, which led to a proposal from C&C, and a corresponding letter of intent and purchase order from McGregor, directed to each other. However, when the formal contract was drafted by C&C's corporate legal counsel, it named only C&C International and McGregor as parties and signatories but defined both in the opening paragraph as including their respective "parent, subsidiary and affiliated companies". As such, the applicants' position was that both McGregor and Superport were parties to the contract (as affiliated companies) and were both bound by it. A proposal and corresponding letter of intent formed the contract between the parties for a second project. Like the first proposal, it was stated to be offered to McGregor without any reference to its affiliates. McGregor paid all of the Superport charter invoices in full, but paid just under half of the C&C International invoices, leaving an outstanding balance of $2,484,568 US. On the opening day of trial, McGregor filed a Notice of Intention to make a Proposal under s. 50.4(1) of the Bankruptcy and Insolvency Act.

The Nova Scotia Supreme Court held that Superport was not jointly and severally liable for the debt claimed, either under the law of contract or the law of unjust enrichment.

Agency - Topic 61

General principles and definitions - Classification of agency relationships - General - The Nova Scotia Supreme Court stated that "There are three forms of legal authority which will permit an agent's conduct to bind the principal, namely, actual express authority, actual implied authority, and ostensible or apparent authority." - See paragraph 79.

Agency - Topic 305

Creation of relations - General - By implication - [See Agency - Topic 61 ].

Agency - Topic 305

Creation of relations - General - By implication - The Nova Scotia Supreme Court stated that, in order for the doctrine of ostensible authority to arise, three requirements must exist: "first there must be a representation or holding out by the principal by way of a statement or conduct indicating the agent's authority to act for him or her; second, there must be a reliance on the representation by the third party; and third, there must have been an alteration to the third party's position as a result of the reliance." - See paragraphs 85 and 86.

Agency - Topic 305

Creation of relations - General - By implication - The applicants were C&C Technologies International Inc. and its parent company, C&C Technologies, Inc. (collectively, C&C) - The respondent McGregor Geoscience Ltd. (McGregor) engaged C&C International as a subcontractor to perform deepwater survey work for a proposed pipeline route off the coast of British Columbia - McGregor also secured a time charter of a research vessel needed to carry out the project from its sister company, the respondent Superport Marine Services Ltd. (Superport) - The negotiations for the subcontract between McGregor and C&C International were conducted between McGregor and C&C, which led to a proposal from C&C, and a corresponding letter of intent and purchase order from McGregor, directed to each other - However, when the formal contract was drafted by C&C's corporate legal counsel, it named only C&C International and McGregor as parties and signatories but defined both in the opening paragraph as including their respective "parent, subsidiary and affiliated companies" - As such, the applicants' position was that both McGregor and Superport were parties to the contract (as affiliated companies) and were both bound by it - A proposal and corresponding letter of intent formed the contract between the parties for a second project - Like the first proposal, it was stated to be offered to McGregor without any reference to its affiliates - The Nova Scotia Supreme Court rejected C&C's submission that McGregor had implied or ostensible authority to bind Superport to the contract made with C&C International - The court stated that "the applicants are unable to discharge the onus of proving that Superport intentionally, by words or conduct, represented or held out McGregor as its agent in dealing with these two projects. Neither can it be said that the applicants placed reliance on any representation made by Superport or in any way altered its position arising therefrom." - See paragraphs 79 to 85.

Agency - Topic 1903

Ratification - General principles - What acts constitute ratification - The applicants were C&C Technologies International Inc. and its parent company, C&C Technologies, Inc. (collectively, C&C) - The respondent McGregor Geoscience Ltd. (McGregor) engaged C&C International as a subcontractor to perform deepwater survey work for a proposed pipeline route off the coast of British Columbia - McGregor also secured a time charter of a research vessel needed to carry out the project from its sister company, the respondent Superport Marine Services Ltd. (Superport) - The negotiations for the subcontract between McGregor and C&C International were conducted between McGregor and C&C, which led to a proposal from C&C, and a corresponding letter of intent and purchase order from McGregor, directed to each other - However, when the formal contract was drafted by C&C's corporate legal counsel, it named only C&C International and McGregor as parties and signatories but defined both in the opening paragraph as including their respective "parent, subsidiary and affiliated companies" - As such, the applicants' position was that both McGregor and Superport were parties to the contract (as affiliated companies) and were both bound by it - A proposal and corresponding letter of intent formed the contract between the parties for a second project - Like the first proposal, it was stated to be offered to McGregor without any reference to its affiliates - C&C submitted, inter alia, that Superport had ratified the contract by (a) obtaining benefits or profits thereunder and/or (b) failing to repudiate the contract within a reasonable period of time after learning that McGregor had purported to enter into the contract on Superport's behalf - The Nova Scotia Supreme Court rejected the submission - The court stated that "... the applicants have failed to prove that McGregor ever purported to act as an agent for Superport or that the contract was later ratified by a clear adoptive act performed by Superport. Nor can ratification of the contract be deemed or implied for failing to repudiate that which was already known by the applicants (i.e., that Superport was not to be a party)." - See paragraphs 96 to 104.

Contracts - Topic 1163

Formation of contract - Privity of contract - Requirement of existence of - [See Contracts - Topic 7426 ].

Contracts - Topic 7426

Interpretation - Ambiguity - What constitutes ambiguity - The applicants were C&C Technologies International Inc. and its parent company, C&C Technologies, Inc. (collectively, C&C) - The respondent McGregor Geoscience Ltd. (McGregor) engaged C&C International as a subcontractor to perform deepwater survey work for a proposed pipeline route off the coast of British Columbia - McGregor also secured a time charter of a research vessel needed to carry out the project from its sister company, the respondent Superport Marine Services Ltd. (Superport) - The negotiations for the subcontract between McGregor and C&C International were conducted between McGregor and C&C, which led to a proposal from C&C, and a corresponding letter of intent and purchase order from McGregor, directed to each other - However, when the formal contract was drafted by C&C's corporate legal counsel, it named only C&C International and McGregor as parties and signatories but defined both in the opening paragraph as including their respective "parent, subsidiary and affiliated companies" - As such, the applicants' position was that both McGregor and Superport were parties to the contract (as affiliated companies) and were both bound by it - A proposal and corresponding letter of intent formed the contract between the parties for a second project - Like the first proposal, it was stated to be offered to McGregor without any reference to its affiliates - The Nova Scotia Supreme Court held that McGregor and Superport were affiliated companies - However, "the broad use of the words 'affiliated companies' in describing the parties to the contract creates an ambiguity or uncertainty, since they are not named or identified and given the fact that both McGregor and C&C International had multiple affiliated companies. This ambiguity enables the Court to look at the extrinsic evidence surrounding the formation of the contract to ascertain the mutual intent of the negotiators as to the parties to be bound by it." - The court held that the applicants were unable to prove privity of contract with Superport (i.e., that they were both parties to the same contract) - The underlying factual matrix informed the correct interpretation of the template wording used in the description of the parties in the contract - Substance had to prevail over form - See paragraphs 56 to 78.

Contracts - Topic 7430

Interpretation - Ambiguity - Admissibility of extrinsic evidence - [See Contracts - Topic 7426 ].

Contracts - Topic 7521

Interpretation - Surrounding circumstances - General - [See Contracts - Topic 7426 ].

Restitution - Topic 63

Unjust enrichment - General - Requirement of enrichment at plaintiff's expense - The applicants were C&C Technologies International Inc. and its parent company, C&C Technologies, Inc. (collectively, C&C) - The respondent McGregor Geoscience Ltd. (McGregor) engaged C&C International as a subcontractor to perform deepwater survey work for a proposed pipeline route off the coast of British Columbia - McGregor also secured a time charter of a research vessel needed to carry out the project from its sister company, the respondent Superport Marine Services Ltd. (Superport) - The negotiations for the subcontract between McGregor and C&C International were conducted between McGregor and C&C, which led to a proposal from C&C, and a corresponding letter of intent and purchase order from McGregor, directed to each other - However, when the formal contract was drafted by C&C's corporate legal counsel, it named only C&C International and McGregor as parties and signatories but defined both in the opening paragraph as including their respective "parent, subsidiary and affiliated companies" - As such, the applicants' position was that both McGregor and Superport were parties to the contract (as affiliated companies) and were both bound by it - A proposal and corresponding letter of intent formed the contract between the parties for a second project - Like the first proposal, it was stated to be offered to McGregor without any reference to its affiliates - McGregor paid all of the Superport charter invoices in full, but paid just under half of the C&C International invoices, leaving an outstanding balance of $2,484,568 US - The Nova Scotia Supreme Court held that McGregor and Superport were affiliated companies - See paragraphs 56 to 60 - However, Superport was not jointly and severally liable for the debt claimed, either under the law of contract or the law of unjust enrichment - Regarding unjust enrichment, the court held that "The connection between the enrichment and deprivation in the present case is an indirect one and it is questionable whether or not there is a sufficient nexus between them to satisfy the first two requirements for an unjust enrichment claim. Even if it does, however, the claim clearly fails on the facts of this case because of the existence of a juristic reason for the enrichment, namely, the contractual arrangements made between McGregor and C&C International and Superport respectively." - See paragraphs 56 to 60 and 105 to 117.

Restitution - Topic 64

Unjust enrichment - General - Juristic reason for enrichment - [See Restitution - Topic 63 ].

Restitution - Topic 65

Unjust enrichment - General - What constitutes enrichment - [See Restitution - Topic 63 ].

Words and Phrases

Affiliated companies - The Nova Scotia Supreme Court discussed the meaning of this phrase as found in a contract - See paragraphs 56 to 60.

Cases Noticed:

Harbert Distressed Investment Master Fund Ltd. et al. v. Calpine Canada Energy Finance II ULC et al. (2005), 235 N.S.R.(2d) 297; 747 A.P.R. 297; 2005 NSSC 211, refd to. [para. 57].

Creston Moly Corp. v. Sattva Capital Corp. (2014), 461 N.R. 335; 358 B.C.A.C. 1; 614 W.A.C. 1; 2014 SCC 53, refd to. [para. 62].

Ventas Inc. et al. v. Sunrise Senior Living Real Estate Investment Trust et al. (2007), 222 O.A.C. 102; 85 O.R.(3d) 254; 2007 ONCA 205, refd to. [para. 63].

Maritime Travel Inc. v. Boyle (2014), 344 N.S.R.(2d) 242; 1089 A.P.R. 242; 2014 NSCA 44, refd to. [para. 85].

Firth v. Staines, [1897] 2 Q.B. 70, refd to. [para. 99].

Moore, Re (2006), 246 N.S.R.(2d) 392; 780 A.P.R. 392 (S.C. Reg.), refd to. [para. 99].

Spidell v. LaHave Equipment Ltd. et al. (2014), 349 N.S.R.(2d) 38; 1101 A.P.R. 38; 2014 NSSC 255, refd to. [para. 99].

Ziner (John) Lumber Ltd. et al. v. Kotov (2000), 137 O.A.C. 177 (C.A.), refd to. [para. 101].

Kerr v. Baranow, [2011] 1 S.C.R. 269; 411 N.R. 200; 300 B.C.A.C. 1; 509 W.A.C. 1; 274 O.A.C. 1; 2011 SCC 10, appld. [para. 106].

Peel (Regional Municipality) v. Ontario, [1992] 3 S.C.R. 762; 144 N.R. 1; 59 O.A.C. 81, refd to. [para. 112].

Pro-Sys Consultants Ltd. et al. v. Microsoft Corp. et al. (2013), 450 N.R. 201; 345 B.C.A.C. 1; 589 W.A.C. 1; 2013 SCC 57, refd to. [para. 112].

Counsel:

Daniela Bassan and Michelle Chai, for the applicants;

Ezra van Gelder and Caitlin Regan-Cottreau, for the respondent, Superport Marine Services Limited;

Tim Hill, Q.C., for the respondent, McGregor Geoscience Limited.

This application was heard in Halifax, N.S., on October 26-29, 2015, by Wright, J., of the Nova Scotia Supreme Court, who delivered the following decision on February 26, 2016.