Fairway Farms Ltd. v. SPI Marketing Group Inc., (2010) 364 Sask.R. 287 (QB)

• Judge: Herauf, J.
• Court: Court of Queen's Bench of Saskatchewan (Canada)
• Case Date: December 17, 2010
• Jurisdiction: Saskatchewan
• Citations: (2010), 364 Sask.R. 287 (QB);2010 SKQB 461

Fairway Farms v. SPI Marketing (2010), 364 Sask.R. 287 (QB)

MLB headnote and full text

Temp. Cite: [2011] Sask.R. TBEd. JA.012

Fairway Farms Ltd. (plaintiff) v. SPI Marketing Group Inc. (defendant)

(2005 Q.B.G. No. 2136; 2010 SKQB 461)

Indexed As: Fairway Farms Ltd. v. SPI Marketing Group Inc.

Saskatchewan Court of Queen's Bench

Judicial Centre of Regina

Herauf, J.

December 17, 2010.

Summary:

The plaintiff sold hogs to Worldwide. Worldwide paid the defendant (plaintiff's marketing agent), who then paid the plaintiff after deducting its fee. Worldwide received hogs for which it did not pay either the defendant or the plaintiff. Worldwide subsequently filed a Plan of Compromise or Arrangement under the Companies' Creditors Arrangement Act. The plaintiff, as an unsecured creditor, filed a proof of claim which was accepted by the monitor. Although the plaintiff opposed approval, the Plan was approved by the court and the plaintiff received shares in the restructured Worldwide in satisfaction of its claim. The plaintiff then sued the defendant, submitting that it was liable for the debt. At issue on a motion for a pre-trial determination of an issue was whether the plaintiff's claim against the defendant should be dismissed because it was bound by the Plan and its claim was satisfied by the issuance of the shares.

The Saskatchewan Court of Queen's Bench, in a judgment reported (2008), 309 Sask.R. 295, declined to dismiss the claim before trial. If the defendant and Worldwide were jointly liable, the claim against the defendant would be dismissed, because the claim against Worldwide was satisfied by the restructuring Plan which the plaintiff was bound by. However, if the defendant and Worldwide were jointly and severally liable, the fact that the plaintiff no longer had a claim against Worldwide did not preclude an independent claim against the defendant. That issue had to be determined at trial. The matter proceeded to trial.

The Saskatchewan Court of Queen's Bench dismissed the plaintiff's action. There was no contract between the plaintiff and defendant obligating the defendant to pay the plaintiff for its direct sales to WWP. The defendant's role was limited to that of an intermediary who collected from WWP and remitted the monies collected, less its administrative fee, to the plaintiff. Where WWP did not pay the defendant, there was nothing to remit to the plaintiff.

Contracts - Topic 1104

Formation of contract - General principles - Oral contracts - [See Contracts - Topic 1503 ].

Contracts - Topic 1503

Formation of contract - Consensus or agreement - What constitutes a consensus necessary for a binding contract - FFL sold hogs to WWP - Until 1998, SPI had a monopoly on all hog sales as marketing agent - After 1998, FFL continued to sell its hogs through SPI under a written contract, under which SPI guaranteed payment to FFL, after deduction of SPI's administration fee - When the contract terminated in 2003, FFL continued to use SPI's services to collect the purchase price (less SPI's fee) from WWP - Prior to recent sales to WWP, SPI notified FFL, and other producers, that it no longer guaranteed payment and would pay producers for direct sales to WWP only when WWP paid them - All parties knew that WWP was in financial trouble - When WWP obtained protection under the Companies' Creditors Arrangement Act, it owed FFL almost $240,000 - WWP had not paid SPI, so SPI did not pay FFL - FFL sued SPI on an alleged oral contract, submitting that an implied term of that oral contract continued to guarantee payment - The Saskatchewan Court of Queen's Bench dismissed the claim - FFL failed to prove an oral contract between it and SPI respecting FFL's direct sale of hogs to WWP - A past written contract, which had expired, did not prove the existence of a present oral contract - There was no discussion of, or agreement on, the essential terms of a contract, including price - SPI acted as an intermediary for payment, performing a clerical or accounting role only - SPI was a licensed livestock dealer under the Animal Products Act, which obligated it to pay producers within three days - However, that obligation applied only respecting sales to SPI - Where FFL sold directly to WWP, there was no sale to SPI (i.e., SPI not acting in its capacity as a livestock dealer).

Cases Noticed:

Gainers Ltd. v. United Packinghouse Workers of America, Local 319 (1964), 47 W.W.R.(N.S.) 544 (Alta. S.C.), refd to. [para. 39].

Saskatchewan Wheat Pool v. Canada, [1983] 1 S.C.R. 205; 45 N.R. 425, refd to. [para. 42].

Cherkewich Yost & Heffernan Law Office v. Green Lake (Northern Village) (2000), 196 Sask.R. 13; 2000 SKQB 306, refd to. [para. 42].

Acme Grain Co. v. Wenaus, [1917] 3 W.W.R. 157; 36 D.L.R. 347 (Sask. C.A.), refd to. [para. 45].

Moores v. Daley Brothers Ltd. (1996), 138 Nfld. & P.E.I.R. 343; 431 A.P.R. 343 (Nfld. T.D.), refd to. [para. 46].

Gilchrist Vending Ltd. v. Sedley Hotel Ltd. (1968), 66 D.L.R.(2d) 24 (Sask. Q.B.), refd to. [para. 46].

Direct Lumber Co. v. Western Plywood Co., [1962] S.C.R. 646, refd to. [para. 49].

Counsel:

Daniel P. Kwochka, for the plaintiff;

Gary G.W. Semenchuck, Q.C., and Marissa Burnell-Higgs, for the defendant.

This action was heard before Herauf, J., of the Saskatchewan Court of Queen's Bench, Judicial Centre of Regina, who delivered the following judgment on December 17, 2010.