Canadian Elevator Industry Educational Program v. Gilby, 2012 NSSC 274

JudgeWright, J.
CourtSupreme Court of Nova Scotia (Canada)
Case DateJuly 17, 2012
JurisdictionNova Scotia
Citations2012 NSSC 274;(2012), 321 N.S.R.(2d) 255 (SC)

Cdn. Elevator Ind. v. Gilby (2012), 321 N.S.R.(2d) 255 (SC);

    1018 A.P.R. 255

MLB headnote and full text

Temp. Cite: [2012] N.S.R.(2d) TBEd. OC.007

The Canadian Elevator Industry Educational Program (appellant) v. Andrew Gilby (respondent)

(Hfx. No. 383979A; 2012 NSSC 274)

Indexed As: Canadian Elevator Industry Educational Program v. Gilby

Nova Scotia Supreme Court

Wright, J.

September 27, 2012.

Summary:

The claimant, Canadian Elevator Industry Educational Program (CEIEP), sought recovery of $10,000 from the defendant student, Gilby, for breach of contract, plus interest as therein provided, together with legal fees and disbursements on a solicitor-client basis.

A Small Claims Court adjudicator awarded CEIEP the sum of $1,000, plus prejudgment interest of $100. CEIEP appealed.

The Nova Scotia Supreme Court allowed the appeal, except with respect to the denial of solicitor-client costs. In the final result, Gilby was obligated to pay to CEIEP the sum of $10,000 with interest thereon at the specified contractual rate from the date of default.

Contracts - Topic 1801

Severable agreements - General - [See second Contracts - Topic 4046 ].

Contracts - Topic 4004

Remedies for breach - General - Ancillary obligations - [See Courts - Topic 6204.5 and Interest - Topic 5118 ].

Contracts - Topic 4046

Remedies for breach - Liquidated damages and penalties - Whether deposit or amount specified is a penalty or liquidated damages - The claimant, Canadian Elevator Industry Educational Program, sued the defendant for breach of contract - The defendant had agreed, in consideration of the claimant paying for the cost of his four-year training program, that, for five years after completion of the training, he would not accept employment with a non-union elevator company - The defendant breached the contract, 5.5 months short of the expiration of the five year term - The claimant sought recovery of the full cost of training ($10,000) pursuant to the stipulated remedy clause (5(a)) - A Small Claims Court adjudicator awarded the claimant $1,000 - The defendant left his unionized employment 10% earlier than he should have - "Without it [the remedy clause] being pro-rated, it takes on the character and quality of a penalty and colours the entire contract" - The Nova Scotia Supreme Court held that the adjudicator erred in his characterization of clause 5(a) as a penalty clause from the standpoint of when the breach occurred, rather than at the time the contract was made - Clause 5(a) was a provision for liquidated damages, being a genuine pre-estimate of damages - Even if clause 5(a) was in the nature of a penalty, it did not cross the line of unconscionability - "Overall, this is not a situation where this court should interfere with the general principle of freedom of contract" - See paragraphs 34 to 38.

Contracts - Topic 4046

Remedies for breach - Liquidated damages and penalties - Whether deposit or amount specified is a penalty or liquidated damages - The claimant, Canadian Elevator Industry Educational Program, sued the defendant for breach of contract - The defendant had agreed, in consideration of the claimant paying for the cost of his four-year training program, that, for five years after completion of the training, he would not accept employment with a non-union elevator company - The defendant breached the contract, 5.5 months short of the expiration of the five year term - The claimant sought recovery of the full cost of training ($10,000) pursuant to the stipulated remedy clause - A Small Claims Court adjudicator severed "the non pro-rated portion of the $10,000" and effectively replaced it with an obligation to pay for only the pro-rated period of time that the defendant did not contribute to the unionized industry as contracted for - Using a rounded up factor of six months for the defendant's premature departure, the adjudicator found that the defendant left his unionized employment 10% earlier than he otherwise should have and was therefore obligated to pay $1,000 - The Nova Scotia Supreme Court held that the adjudicator erred in his misuse of the doctrine of severance - "In purporting to sever 'the non pro-rated portion of the $10,000', he went well beyond the mere excision of the impugned provision by incorporating a new provision that pro-rated damages to the unexpired term of the contract." - See paragraphs 39 to 43.

Courts - Topic 6204.5

Provincial courts - Nova Scotia - Small Claims Court - Jurisdiction - Costs (incl. taxation and awarding of) - An educational program sued a student for breach of contract - Clause 5(b) of the contract stipulated that if legal action was required to collect any monies payable by the student, the student was to pay the program's legal fees and disbursements on a solicitor-client basis - The proceeding was transferred to the Small Claims Court after the parties agreed that the claim for legal fees and disbursements would be "a monetary award in respect of a matter or thing arising under a contract", as referred to in s. 9(a) of the Small Claims Court Act (N.S.) - An adjudicator ruled that he did not have jurisdiction to make an award of the solicitor-client costs claimed under clause 5(b) - The Nova Scotia Supreme Court held that the adjudicator was correct - Firstly, s. 9(a) of the Act should not be interpreted so broadly as to encompass the payment of solicitor-client costs - "Rather, it connotes some form of damages arising under the contract, with the subject of costs being expressly dealt with elsewhere in the legislation" - Nor could the parties contract out of the Act (s. 14) - The Act permitted only a very specifically limited regime for the recovery of party-and-party costs - Accordingly, the agreement made by the parties for the treatment of solicitor-client costs was void - See paragraphs 44 to 50.

Damages - Topic 703

Time for assessment - General principles - Breach of contract cases - [See first Contracts - Topic 4046 ].

Damages - Topic 808

Assessment - General - Time for determination of assessment - [See first Contracts - Topic 4046 ].

Damages - Topic 1100

Liquidated damages - General - [See first Contracts - Topic 4046 ].

Interest - Topic 5045

Interest as damages (prejudgment interest) - Statutes - Application of - [See Interest - Topic 5118 ].

Interest - Topic 5118

Interest as damages (prejudgment interest) - Breach of contract - Liquidated damages -Clause 5(b) of the parties' agreement stipulated that if legal action was required to collect any monies payable by the defendant to the claimant, the defendant was to pay the claimant's legal fees and disbursements on a solicitor-client basis, together with interest at the stipulated rate as determined from the date of the agreement - A Small Claims Court adjudicator interpreted that clause to mean that interest was to be associated only with legal fees payable, in respect of which he declined jurisdiction - He did, however, provide for prejudgment interest to be paid from the date of the breach, which he fixed at $100 - The Nova Scotia Supreme Court held that clause 5(b) could not reasonably bear the adjudicator's interpretation - "Rather, that clause should reasonably be interpreted as providing for interest at the specified rate to be paid on the [liquidated] damages recoverable. ... By virtue of s. 16 of the Regulations made under s. 33 of the Small Claims Court Act, an adjudicator may award prejudgment interest at a rate of 4% per annum in the same circumstances in which prejudgment interest may be awarded by the Supreme Court. That permissive language should have resulted here in an award of interest calculated at the prevailing prime rate as determined by the Royal Bank of Canada as contracted for by the parties." - See paragraphs 51 to 54.

Cases Noticed:

Brett Motors Leasing v. Welsford Ltd. (1999), 181 N.S.R.(2d) 76; 560 A.P.R. 76 (S.C.), refd to. [para. 23].

Dunlop Pneumatic Tyre Co. v. New Garage and Motor Co., [1915] A.C. 79 (H.L.), refd to. [para. 27].

Nguyen et al. v. Tran et al., [2012] O.T.C. Uned. 2418; 2012 ONSC 2418, refd to. [para. 28].

Renaud v. Graham, [2007] O.T.C. Uned. 303 (S.C.), refd to. [para. 29].

Peachtree II Associates - Dallas L.P. et al. v. 857486 Ontario Ltd. et al. (2005), 200 O.A.C. 159, refd to. [para. 30].

KRG Insurance Brokers (Western) Inc. v. Shafron et al., [2009] 1 S.C.R. 157; 383 N.R. 217; 265 B.C.A.C. 1; 446 W.A.C. 1; 2009 SCC 6, refd to. [para. 40].

Statutes Noticed:

Small Claims Court Act, R.S.N.S. 1989, c. 430, sect. 9(a) [para. 46].

Counsel:

Raymond Larkin, Q.C., for the appellant;

Devin Maxwell, for the respondent.

This appeal was heard on July 17, 2012, at Halifax, Nova Scotia, before Wright, J., of the Nova Scotia Supreme Court, who delivered the following decision on September 27, 2012.

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3 practice notes
  • Table of cases
    • Canada
    • Irwin Books Remedies: The Law of Damages. Third Edition Limiting Principles
    • June 21, 2014
    ...[1974] SCR 592, 40 DLR (3d) 371, 11 CPR (2d) 206 .................... 36, 298, 301 Canadian Elevator Industry Education Program v Gilby, 2012 NSSC 274 .......................................................................523–24, 530, 531 Canadian Faces Inc v Cosmetic Manufacturing Inc, 201......
  • Judicial Oversight of Remedy Stipulation
    • Canada
    • Irwin Books Remedies: The Law of Damages. Third Edition Limiting Principles
    • June 21, 2014
    ...was made. 9 In Federal Business Development Bank v Fredericton 5 Ibid at 87. 6 Canadian Elevator Industry Education Program v Gilby , 2012 NSSC 274 [ Gilby ]. 7 (1970), 14 DLR (3d) 110 (BCCA) [ Hughes ]. 8 (1975), 9 OR (2d) 716 (HCJ) [ Craig ]. See also Amiri v One West Holdings , 2012 BCSC......
  • Puddingstone Inc. v. Chambers et al., [2015] N.S.R.(2d) Uned. 196 (SmCl)
    • Canada
    • Nova Scotia Small Claims Court of Nova Scotia (Canada)
    • November 23, 2015
    ...or unreasonable penalties (that will not be enforced by the Court): see, e.g., Canadian Elevator Industry Education Program v. Gilby , 2012 NSSC 274 at paragraphs 27 to 32 and Walker v. Rouvalis , 2007 NSSC 137 at paragraphs 20 and 21. [58] The question of whether or not the charges stipula......
1 cases
  • Puddingstone Inc. v. Chambers et al., [2015] N.S.R.(2d) Uned. 196 (SmCl)
    • Canada
    • Nova Scotia Small Claims Court of Nova Scotia (Canada)
    • November 23, 2015
    ...or unreasonable penalties (that will not be enforced by the Court): see, e.g., Canadian Elevator Industry Education Program v. Gilby , 2012 NSSC 274 at paragraphs 27 to 32 and Walker v. Rouvalis , 2007 NSSC 137 at paragraphs 20 and 21. [58] The question of whether or not the charges stipula......
2 books & journal articles
  • Table of cases
    • Canada
    • Irwin Books Remedies: The Law of Damages. Third Edition Limiting Principles
    • June 21, 2014
    ...[1974] SCR 592, 40 DLR (3d) 371, 11 CPR (2d) 206 .................... 36, 298, 301 Canadian Elevator Industry Education Program v Gilby, 2012 NSSC 274 .......................................................................523–24, 530, 531 Canadian Faces Inc v Cosmetic Manufacturing Inc, 201......
  • Judicial Oversight of Remedy Stipulation
    • Canada
    • Irwin Books Remedies: The Law of Damages. Third Edition Limiting Principles
    • June 21, 2014
    ...was made. 9 In Federal Business Development Bank v Fredericton 5 Ibid at 87. 6 Canadian Elevator Industry Education Program v Gilby , 2012 NSSC 274 [ Gilby ]. 7 (1970), 14 DLR (3d) 110 (BCCA) [ Hughes ]. 8 (1975), 9 OR (2d) 716 (HCJ) [ Craig ]. See also Amiri v One West Holdings , 2012 BCSC......

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