Newswest Corp. v. Glendar Holdings Ltd. et al., 2001 SKQB 336

• Judge: Laing, J.
• Court: Court of Queen's Bench of Saskatchewan (Canada)
• Case Date: June 28, 2001
• Jurisdiction: Saskatchewan
• Citations: 2001 SKQB 336;(2001), 209 Sask.R. 56 (QB)

Newswest Corp. v. Glendar Holdings (2001), 209 Sask.R. 56 (QB)

MLB headnote and full text

Temp. Cite: [2001] Sask.R. TBEd. JL.015

Newswest Corp. (plaintiff) v. Glendar Holdings Ltd., Glen Roney and Darleen Roney (defendants)

(1999 Q.B.G. No. 650; 2001 SKQB 336)

Indexed As: Newswest Corp. v. Glendar Holdings Ltd. et al.

Saskatchewan Court of Queen's Bench

Judicial Centre of Saskatoon

Laing, J.

June 28, 2001.

Summary:

The plaintiff was a wholesale distributor of newspapers, books and magazines to retail stores. The plaintiff sued the defendants for damages for loss of profits resulting from the first defendant's termination of a supply agreement. The plaintiff alleged breach of contract and the tort of conspiracy to injure.

The Saskatchewan Court of Queen's Bench dismissed the action, holding that the first defendant was legally entitled to terminate the supply agreement.

Company Law - Topic 4183

Directors - Liability of directors - For torts - The plaintiff, a wholesale distributor of newspapers, books and magazines to retail stores, refused to renegotiate a supply agreement with the first defendant - The first defendant's owners sold its assets to a new company, also owned by them, and the first defendant simply ceased to do business - The new company used a different distributor - The plaintiff sued the companies and their owners, alleging breach of contract and conspiracy to injure - The Saskatchewan Court of Queen's Bench held that, if the contract had been breached, the two corporate defendants would have been jointly and severally liable for conspiracy to injure, but not the individual defendants - In following legal advice that the contract could be legally terminated, they acted in their role as directors of the first defendant - See paragraphs 36 to 39.

Company Law - Topic 4185

Directors - Liability of directors - Inducing breach of contract by company - [See Company Law - Topic 4183 ].

Contracts - Topic 1106

Formation of contract - General principles - Duty to negotiate in good faith - [See both Contracts - Topic 3502 ].

Contracts - Topic 3502

Performance or breach - Obligation to perform - Good faith - Exercise of - The plaintiff, a wholesale distributor of newspapers, books and magazines to retail stores, refused to renegotiate a supply agreement with the first defendant - The first defendant's owners sold its assets to a new company, also owned by them, and the first defendant simply ceased to do business - The new company used a different distributor - The plaintiff sued the companies and their owners for damages for loss of profits - The Saskatchewan Court of Queen's Bench held that there was no breach of contract - The agreement specifically allowed the first defendant to sell its business and cease to be a customer - It was not appropriate to imply a covenant of good faith performance where, inter alia, the plaintiff did not act in good faith when negotiating the contract - See paragraphs 22 to 35.

Contracts - Topic 3502

Performance or breach - Obligation to perform - Good faith - Exercise of - The Saskatchewan Court of Queen's Bench stated that "... if the law has reached the point where the good faith obligation has independent application with respect to contract formation, contract performance, and contract enforcement (and I do not know that it has), the absence of good faith of a party at one stage, should preclude that party from receiving the benefit of the good faith obligation at another stage, at least at this point when it is not settled as a matter of law that an independent obligation of good faith exists at any of the stages." - See paragraph 33.

Contracts - Topic 7415.1

Interpretation - General principles - Good faith - The plaintiff, a wholesale distributor of newspapers, books and magazines to retail stores, refused to renegotiate a supply agreement with the first defendant - The first defendant's owners sold its assets to a new company, also owned by them, and the first defendant simply ceased to do business - The new company used a different distributor - The plaintiff sued the companies and their owners for damages for loss of profits - The Saskatchewan Court of Queen's Bench held that there was no breach of contract - The agreement specifically allowed the first defendant to sell its business and cease to be a customer - There was no basis for the application of a good faith doctrine to the interpretation of the contract where: 1) the plaintiff did ot act in good faith when negotiating the contract and 2) the contract was at best ambiguous and an application of the good faith obligation could not overcome the application of the contra proferentem rule which operated in favour of the defendants - See paragraphs 22 to 35.

Contracts - Topic 7433

Interpretation - Ambiguity - Contra proferentem rule - [See Contracts - Topic 7415.1 ].

Damages - Topic 5858

Contracts - Sale of goods - Breach by buyer - Loss of anticipated profits - The plaintiff was a wholesale distributor of newspapers, books and magazines to retail stores - The plaintiff sued the defendants for damages for loss of profits resulting from the termination of a supply agreement - The Saskatchewan Court of Queen's Bench dismissed the action, but provisionally assessed damages - The court rejected the defendants' argument that damages should be based on the plaintiff's loss of net profit, not gross profit - The plaintiff established that as a wholesaler of products of which there was no finite amount, any sales to new customers were always incremental - A non-completed sale resulted in a loss of the gross profit margin for that sale which flowed through to the bottom line - See paragraphs 42 to 47.

Damages - Topic 5874

Contracts - Sale of goods - Termination - Measure of damages - [See Damages - Topic 5858 ].

Torts - Topic 5086

Interference with economic relations - Conspiracy - Conspiracy to injure - The plaintiff, a wholesale distributor of newspapers, books and magazines to retail stores, refused to renegotiate a supply agreement with the first defendant - The first defendant's owners sold its assets to a new company, also owned by them, and the first defendant simply ceased to do business - The new company used a different distributor - The plaintiff sued the companies and their owners alleging, inter alia, conspiracy to injure - The Saskatchewan Court of Queen's Bench held that the two individual defendants had not committed the tort of conspiracy to injure where, inter alia, their predominant purpose was not to injure the plaintiff but to benefit their company - See paragraph 36.

Torts - Topic 5086

Interference with economic relations - Conspiracy - Conspiracy to injure - [See Company Law - Topic 4183 ].

Cases Noticed:

Gilford Motor Co. v. Horne, [1993] Ch. 935 (C.A.), dist. [para. 28].

Jones v. Lipman, [1962] 1 W.L.R. 832 (Ch. Div.), dist. [para. 28].

Saskatchewan Economic Development Corp. v. Patterson-Boyd Manufacturing Corp., P-B Fabricators Ltd. and Western Metal and Supply Co., [1981] 2 W.W.R. 40; 6 Sask.R. 325 (C.A.), dist. [para. 28].

Star Cabs Ltd. v. Casawn Enterprises Inc. et al. (1982), 21 Sask.R. 182 (Q.B.), dist. [para. 28].

Culzean Inventions Ltd. v. Midwestern Broom Co. et al., [1984] 3 W.W.R. 11; 31 Sask.R. 180 (Q.B.), dist. [para. 28].

Carson Restaurants International Ltd. v. A-1 United Restaurant Supply Ltd., [1989] 1 W.W.R. 266; 72 Sask.R. 205, (Q.B.), dist. [para. 28].

Canada Cement LaFarge Ltd. et al. v. British Columbia Aggregate Lightweight Aggregate Ltd. et al., [1983] 6 W.W.R. 385; 47 N.R. 191 (S.C.C.), refd to. [para. 36].

Normart Management Ltd. v. West Hill Redevelopment Co. et al. (1998), 113 O.A.C. 375; 155 D.L.R.(4th) 627 (C.A.), refd to. [para. 36].

Kepic v. Tecumseh Road Builders et al. (1987), 23 O.A.C. 72; 18 C.C.E.L. 218 (C.A.), refd to. [para. 37].

ADGA Systems International Ltd. v. Valcom Ltd. et al. (1999), 117 O.A.C. 39; 168 D.L.R.(4th) 351 (C.A.), refd to. [para. 37].

Authors and Works Noticed:

Belobaba, Edward, Good Faith in Contract Law (1985), Law Society of Upper Canada Special Lectures 73, generally [para. 31].

Fridman, G.H.L., The Law of Contract in Canada (4th Ed. 1999), pp. 478 [para. 24]; 556 [para. 31].

Lewison, K., The Interpretation of Contracts (1997), paras. 1.02 [para. 24]; 2.03 [para. 25].

O'Byrne, Shannon, Good Faith in Contractual Performance (1995), Can. Bar Rev. 70, generally [para. 31].

Potter, Richard, Annotation to MDS Health Group v. Medical Arts Centre Ltd. (1994), 12 B.L.R.(2d) 211, generally [para. 31].

Potter, Richard, Case Comment on McKinley Motors Ltd. v. Honda Canada Inc. (1990), 46 B.L.R.(2d) 111, generally [para. 31].

Counsel:

D.C. Hodson, for the plaintiff;

B.C. Valkenburg, for the defendants.

This action was heard by Laing, J., of the Saskatchewan Court of Queen's Bench, Judicial Centre of Saskatoon, who delivered the following decision on June 28, 2001.