Gogal v. Chupa, (2008) 319 Sask.R. 77 (PC)

• Judge: Green, P.C.J.
• Court: Provincial Court of Saskatchewan (Canada)
• Case Date: July 25, 2008
• Jurisdiction: Saskatchewan
• Citations: (2008), 319 Sask.R. 77 (PC);2008 SKPC 89

Gogal v. Chupa (2008), 319 Sask.R. 77 (PC)

MLB headnote and full text

Temp. Cite: [2008] Sask.R. TBEd. JL.060

Dennis Gogal v. William Chupa

(2007 No. 175; 2008 SKPC 89)

Indexed As: Gogal v. Chupa

Saskatchewan Provincial Court

Green, P.C.J.

July 25, 2008.

Summary:

In 1998, the parties entered into a cattle lease agreement. Neither received any legal advice. The plaintiff's herd was moved to the defendant's farm. While the first three years of the contract were uneventful, concerns arose with a series of deaths of cows. In May 2003, after a cow in Alberta was diagnosed with bovine spongiform encephalopathy (BSE), the price of cattle in Canada plummeted, reducing the revenue under the agreement. In 2005, the plaintiff removed his herd. In 2007, he commenced an action, seeking damages including the fair market value of 12 cows that died. The defendant counterclaimed.

The Saskatchewan Provincial Court granted judgment for the plaintiff. The plaintiff was entitled to be compensated for the fair market value of six cows ($900 each) that died between October 2001 and May 2003 and the twelve calves that would have been born in 2002 and 2003 ($450 each), resulting in an award of damages of $10,800. The counterclaim was dismissed.

Contracts - Topic 5305

Impossibility or frustration of performance - Frustration - What constitutes frustration - In 1998, the parties entered into a cattle lease agreement - Neither received any legal advice - The plaintiff's herd was moved to the defendant's farm - While the first three years of the contract were uneventful, concerns arose with a series of deaths of cows - In May 2003, after a cow in Alberta was diagnosed with bovine spongiform encephalopathy (BSE), the price of cattle in Canada plummeted, reducing the revenue under the agreement - In 2005, the plaintiff removed his herd - In 2007, he commenced an action, seeking damages including the fair market value of 12 cows that died - The defendant counterclaimed - At issue was the effect of the BSE crisis on the agreement - The Saskatchewan Provincial Court held that the agreement was frustrated by the BSE crisis and was of no force and effect after May 2003 - The effects of the BSE crisis were unexpected and wide-ranging, dramatically restricting the profitability and viability of livestock operations across Canada - This caused a significant change in circumstances for cattle operators such as the defendant - The performance of his obligations became completely untenable and inequitable following May 2003 - The parties could not have anticipated this, particularly considering that the agreement obligated the defendant to feed and care for the cattle while leaving him with no option of terminating the agreement - See paragraphs 62 to 64.

Damage Awards - Topic 1005

Contracts - General - Breach of contract - Loss of profits - In 1998, the parties entered into a cattle lease agreement - Neither received any legal advice - The plaintiff's herd was moved to the defendant's farm - While the first three years of the contract were uneventful, concerns arose with a series of deaths of cows - In May 2003, after a cow in Alberta was diagnosed with bovine spongiform encephalopathy (BSE), the price of cattle in Canada plummeted, reducing the revenue under the agreement - In 2005, the plaintiff removed his herd - In 2007, he commenced an action, seeking damages including the fair market value of 12 cows that died - The defendant counterclaimed - The Saskatchewan Provincial Court granted judgment for the plaintiff - The six year limitation period for breach of contract (s. 3(1)(f) of the Limitation of Actions Act) began in October 2001 - The plaintiff could not recover damages for cattle lost prior to that date - The onset of the BSE crisis in May 2003 frustrated the agreement, rendering it of no force and effect after that date - Six of the plaintiff's cows died while in the defendant's care between October 2001 and May 2003 - None were replaced by the defendant as required by the agreement - This constituted a breach of contract - The plaintiff was entitled to be compensated for the fair market value of the six cows ($900 each) and the twelve calves that would have been born in 2002 and 2003 ($450 each), resulting in an award of damages of $10,800 - The counterclaim was dismissed - See paragraphs 58 to 83.

Equity - Topic 1122

Equitable relief - Contracts - Unconscionability - Unconscionable bargain defined - In 1998, the parties entered into a cattle lease agreement - Neither received any legal advice - The plaintiff's herd was moved to the defendant's farm - While the first three years of the contract were uneventful, concerns arose with a series of deaths of cows - In May 2003, after a cow in Alberta was diagnosed with bovine spongiform encephalopathy (BSE), the price of cattle in Canada plummeted, reducing the revenue under the agreement - In 2005, the plaintiff removed his herd - In 2007, he commenced an action, seeking damages including the fair market value of 12 cows that died - The defendant counterclaimed, alleging, inter alia, that the agreement was unconscionable - The defendant asserted that unconscionability arose from the fact that the agreement was for a significant length (six years) and yet only the plaintiff could terminate the agreement - Further, the defendant asserted that he became the de facto insurer of the cattle as he was responsible for any that died after 30 days from the delivery date - The Saskatchewan Provincial Court rejected the argument that the agreement was unconscionable - Both men had experience in the cattle industry - Their bargaining positions and power when entering into the agreement were essentially equal - Both men made money under the agreement for the first three years - While it would have been preferable for them to obtain legal advice, the court was not satisfied that the agreement should be set aside - See paragraphs 58 and 59.

Cases Noticed:

Cricklewood Property & Invt. Trust Ltd. v. Leighton's Invt. Trust Ltd., [1945] A.C. 221 (H.L.), refd to. [para. 63].

Counsel:

The plaintiff/defendant by counterclaim represented himself;

Fred Fisher, for the defendant/plaintiff by counterclaim.

This action was heard by Green, P.C.J., of the Saskatchewan Provincial Court, who delivered the following judgment on July 25, 2008.