DirectCash ATM Processing Partnership et al. v. Rockwood Motor Inn, (2015) 314 Man.R.(2d) 76 (QB)

• Judge: Bond, J.
• Court: Court of Queen's Bench of Manitoba (Canada)
• Case Date: January 22, 2015
• Jurisdiction: Manitoba
• Citations: (2015), 314 Man.R.(2d) 76 (QB);2015 MBQB 15

DirectCash v. Rockwood Motor Inn (2015), 314 Man.R.(2d) 76 (QB)

MLB headnote and full text

Temp. Cite: [2015] Man.R.(2d) TBEd. FE.037

DirectCash ATM Processing Partnership and DirectCash ATM Management Partnership (plaintiffs) v. 2132320 Manitoba Ltd. and the said 2132320 Manitoba Ltd., operating as Rockwood Motor Inn (defendant)

(CI 10-01-65373; 2015 MBQB 15)

Indexed As: DirectCash ATM Processing Partnership et al. v. Rockwood Motor Inn

Manitoba Court of Queen's Bench

Winnipeg Centre

Bond, J.

January 22, 2015.

Summary:

The defendant purchased and installed an ATM machine and entered into a written agreement with the plaintiff for the processing of ATM transactions. The agreement provided for an automatic renewal for a five year term at the end of the initial five year term, unless the defendant gave the plaintiff three months' notice of its intent to terminate. The defendant failed to give the required notice of termination and disconnected the ATM. The plaintiff's action for breach of contract sought liquidated damages in accordance with the agreement in the amount of profit that the plaintiff would have received had the ATM remained connected for the five year renewal term.

The Manitoba Court of Queen's Bench granted judgment for the plaintiff in the amount claimed.

Contracts - Topic 2109

Terms - Express terms - Renewal clauses - The defendant entered into a written agreement with the plaintiff for the processing of ATM transactions - The agreement provided for an automatic renewal for a five year term at the end of the initial five year term, unless the defendant gave the plaintiff three months' notice of its intent to terminate - The defendant failed to give the required notice of termination and disconnected the ATM - The plaintiff's action for breach of contract sought liquidated damages in accordance with the agreement in the amount of profit that the plaintiff would have received had the ATM remained connected for the five year renewal term - The Manitoba Court of Queen's Bench held that the automatic renewal clause was valid and enforceable - The defendant was aware of the clause - The late notice's effect was that the contract automatically renewed for five years - The agreement was binding and enforceable as it was written - There was a presumption that parties to a written contract had expressed every material term that they intended to govern their agreement - Although the automatic renewal clause might seem onerous or unfair in hindsight, it was agreed to by the parties - There was a need for certainty and security in commerce - Parties to agreements had to be able to expect that the agreements would be enforced - See paragraphs 16 to 27.

Contracts - Topic 4045

Remedies for breach - Liquidated damages and penalties - Enforceability of liquidated damages or penalty clause - The defendant entered into a written agreement with the plaintiff for the processing of ATM transactions - The agreement provided for an automatic renewal for a five year term at the end of the initial five year term, unless the defendant gave the plaintiff three months' notice of its intent to terminate - The defendant failed to give the required notice of termination and disconnected the ATM - The plaintiff's action for breach of contract sought liquidated damages in accordance with the agreement in the amount of profit that the plaintiff would have received had the ATM remained connected for the five year renewal term - The Manitoba Court of Queen's Bench held that the liquidated damages clause was not a penalty clause and was valid and enforceable - The court rejected the defendant's assertion that, as the breach of contract was the failure to give three months' notice, the plaintiff's damages were limited to three months' revenue - The notice period was not the proper measure of damages - The defendant had no unconditional right to terminate the agreement on notice either during the initial term or during any subsequent term - The defendant had a right to prevent the agreement from renewing and had failed to do so - The damages that would flow from the breach of contract were equal to the loss of revenue that would have been received for the duration of the agreement - See paragraphs 28 to 44.

Contracts - Topic 4046

Remedies for breach - Liquidated damages and penalties - Whether deposit or amount specified is a penalty or liquidated damages - [See Contracts - Topic 4045 ].

Contracts - Topic 4048

Remedies for breach - Liquidated damages and penalties - Penalty - What constitutes - [See Contracts - Topic 4045 ].

Damage Awards - Topic 1005

Contracts - General - Breach of contract - Loss of profits - [See Contracts - Topic 4045 ].

Damages - Topic 1003

Mitigation - General principles - Mitigation - What constitutes - The defendant entered into a written agreement with the plaintiff for the processing of ATM transactions - The agreement provided for an automatic renewal for a five year term at the end of the initial five year term, unless the defendant gave the plaintiff three months' notice of its intent to terminate - The defendant failed to give the required notice of termination and disconnected the ATM - The plaintiff's action for breach of contract sought liquidated damages in accordance with the agreement in the amount of profit that the plaintiff would have received had the ATM remained connected for the five year renewal term - The Manitoba Court of Queen's Bench, in granting judgment for the plaintiff, rejected the defendant's assertion that the plaintiff had failed to mitigate its loss by failing to send a sales representative to the defendant to try to "save the contract" after the defendant gave its notice (late) to terminate - The defendant's claim of lack of mitigation had to be considered in the context of its own actions, which were to "unplug" the ATM and immediately begin using the services of another provider - The defendant did not advise the plaintiff of any service problems, if there were any, and failed to honour its obligation under the agreement to allow the plaintiff the right of first refusal - The defendant had simply given notice to terminate and had apparently back-dated the letter to bring it within the three months' notice requirement - See paragraphs 45 to 48.

Damages - Topic 1042

Mitigation - In contract - What constitutes reasonable remedial measures - [See Damages - Topic 1003 ].

Damages - Topic 1102

Liquidated damages - Penalty - General - [See Contracts - Topic 4045 ].

Damages - Topic 1103

Liquidated damages - What constitutes a penalty - [See Contracts - Topic 4045 ].

Damages - Topic 5713

Contracts - Breach of contract - Loss of profits - [See Contracts - Topic 4045 ].

Cases Noticed:

Seven Oaks Inn Partnership v. DirectCash Inc. (2013), 429 Sask.R. 301; 2013 SKQB 342, folld. [para. 10].

Tilden Rent-A-Car Co. v. Clendenning (1978), 83 D.L.R.(3d) 400 (Ont. C.A.), refd to. [para. 17].

Super Save Gas Disposal Inc. v. Mr. Rent-A-Car (Downtown) Ltd., 2009 BCPC 392, refd to. [para. 18].

652013 B.C. Ltd. v. Wotherspoon (Don) & Associates Ltd. (2004), 205 B.C.A.C. 25; 337 W.A.C. 25; 2004 BCCA 557, refd to. [para. 20].

Johnson v. BFI Canada Inc. et al. (2010), 258 Man.R.(2d) 268; 499 W.A.C. 268; 326 D.L.R.(4th) 497; 2010 MBCA 101, refd to. [para. 22].

Shaw Cablesystems (Manitoba) Ltd. v. Canadian Legion Memorial Housing Foundation (Manitoba) (1997), 115 Man.R.(2d) 85; 139 W.A.C. 85; 143 D.L.R.(4th) 193 (C.A.), refd to. [para. 25].

Luxor (Eastbourne) Ltd. v. Cooper, [1941] A.C. 108 (H.L.), refd to. [para. 25].

Caisse populaire de La Salle Credit Union Ltd. v. River Ridge Properties Ltd. et al. (1997), 115 Man.R.(2d) 115; 139 W.A.C. 115 (C.A.), refd to. [para. 26].

Marvco Color Research Ltd. v. Harris and Harris, [1982] 2 S.C.R. 774; 45 N.R. 302, refd to. [para. 26].

Shatilla v. Feinstein, [1923] 3 D.L.R. 1035 (Sask. C.A.), refd to. [para. 30].

Super Save Disposal Inc. v. Blazin Auto Ltd., [2011] B.C.T.C. Uned. 1784; 2011 BCSC 1784, refd to. [para. 31].

Dunlop Pneumatic Tyre Company v. New Garage and Motor Company, [1915] A.C. 79 (H.L.), refd to. [para. 32].

Dundas v. Schafer (2014), 310 Man.R.(2d) 135; 618 W.A.C. 135; 2014 MBCA 92, refd to. [para. 32].

Tristar Cap & Garment Ltd. v. Super Save Disposal Inc., [2014] B.C.T.C. Uned. 690; 2014 BCSC 690, refd to. [para. 33].

Hamilton v. Open Window Bakery Ltd. et al., [2004] 1 S.C.R. 303; 316 N.R. 265; 184 O.A.C. 209; 2004 SCC 9, dist. [para. 37].

Agribrands Purina Canada Inc. v. Kasamekas et al. (2011), 278 O.A.C. 363; 334 D.L.R.(4th) 714; 2011 ONCA 460, dist. [para. 37].

2438667 Manitoba Ltd. et al. v. Husky Oil Ltd. et al. (2007), 214 Man.R.(2d) 257; 395 W.A.C. 257; 2007 MBCA 77, refd to. [para. 45].

Counsel:

John B. Martens, for the plaintiffs;

Richard M. Beamish, for the defendant.

This action was heard by Bond, J., of the Manitoba Court of Queen's Bench, Winnipeg Centre, who delivered the following judgment on January 22, 2015.