PLB Holdings Corp. et al. v. Gehring et al., (2002) 322 A.R. 205 (QB)

• Judge: Bensler, J.
• Court: Court of Queen's Bench of Alberta (Canada)
• Case Date: February 28, 2002
• Citations: (2002), 322 A.R. 205 (QB);2002 ABQB 594

PLB Holdings Corp. v. Gehring (2002), 322 A.R. 205 (QB)

MLB headnote and full text

Temp. Cite: [2002] A.R. TBEd. JL.039

PLB Holdings Corp., PLB Holdings Corp. operating as Mountain Truck, and Phillip Charles Briddon (plaintiff) v. James B. Gehring, John Lavoie and Earl Lyons (defendant)

(No. 0101-08900; 2002 ABQB 594)

Indexed As: PLB Holdings Corp. et al. v. Gehring et al.

Alberta Court of Queen's Bench

Judicial District of Calgary

Bensler, J.

June 19, 2002.

Summary:

PLB bought and sold motor vehicles. Lavoie found a vehicle for PLB to buy. The vehicle purportedly belonged to Gehring. As a condition of the sale, PLB made Lavoie sign an indemnity agreement that "warranties" and would hold PLB harmless for any losses connected with the vehicle. PLB resold the vehicle at an auction. The vehicle turned out to be stolen. PLB had to compensate the auction house. PLB then invoked the indemnity agreement and sued Lavoie. The statement of claim also named Gehring and another as defendants. Lavoie raised the following defences: lack of consideration, failure to comply with the execution requirements of the Guarantees Acknowledgement Act, PLB was reckless or negligent in purchasing the vehicle and PLB failed to mitigate its damages.

The Alberta Court of Queen's Bench rejected all four defences and allowed the action.

Contracts - Topic 2866

Consideration - What constitutes consideration - Benefit to third person - General - Lavoie found a vehicle for PLB to buy

from its purported owner Gehring - As a condition of the sale, PLB made Lavoie sign an indemnity agreement that "warranties" and would hold PLB harmless for any losses connected with the vehicle - PLB resold the vehicle at an auction - The vehicle turned out to be stolen - PLB had to compensate the auction house - PLB then invoked the indemnity agreement and sued Lavoie - Lavoie defended by raising lack of consideration - The Alberta Court of Queen's Bench rejected this defence and allowed the action - PLB agreed to complete the sale from Gehring in consideration for Lavoie's consenting to the indemnity agreement - In addition, the sales contract was not merely for the benefit of a third party - Lavoie received $500 upon completion of the vehicle sale - Therefore, it was clear that in consideration for entering the indemnity agreement, PLB agreed to contract with Gehring for the sale of the truck, an agreement from which Lavoie also derived a benefit - See paragraph 15.

Contracts - Topic 2868

Consideration - What constitutes consideration - Entering contract with third person - [See Contracts - Topic 2866 ].

Guarantee and Indemnity - Topic 2517

Discharge and other defences of surety - General - Noncompliance with guarantee legislation - [See Guarantee and Indemnity - Topic 4103 ].

Guarantee and Indemnity - Topic 4103

Continuing guarantees - What constitutes a continuing guarantee - Lavoie found a vehicle for PLB to buy from its purported owner Gehring - As a condition of the sale, PLB made Lavoie sign an indemnity agreement that "warranties" and would hold PLB harmless for any losses connected with the vehicle - PLB resold the vehicle at an auction - The vehicle turned out to be stolen - PLB had to compensate the auction house - PLB then invoked the indemnity agreement and sued Lavoie - Lavoie defended by saying that the indemnity agreement did not comply with the execution requirements of the Guarantees Acknowledgement Act - More particularly, Lavoie said that the Act applied because the indemnity agreement came within the "continuing guarantee" exception to s. 1(a)(iv) of the Guarantees Acknowledgement Act that provided that the Act did not apply to "a guarantee given on the sale of ... an interest in goods and chattels" - The Alberta Court of Queen's Bench rejected the argument and allowed PLB's action - The indemnity agreement was not a "continuing guarantee" - Consequently, s. 1(a)(iv) operated to make the Act inapplicable - See paragraphs 8 to 14.

Cases Noticed:

Crown Lumber Co. v. Engel (1961), 36 W.W.R.(N.S.) 128 (Alta. C.A.), consd. [para. 7].

Kamitomo v. Pasula et al. (1983), 50 A.R. 280 (Q.B.), refd to. [para. 8].

Bryan & Co. v. Enico Construction Ltd. et al. (1994), 158 A.R. 341; 22 Alta. L.R.(3d) 333 (Q.B.), refd to. [para. 8].

Goodyear Tire & Rubber Co. of Canada v. Knight (1960), 33 W.W.R.(N.S.) 287 (Alta. C.A.), dist. [para. 10].

Westeel-Rosco Ltd. v. Edmonton Tinsmith Supplies Ltd. and Roy (1985), 68 A.R. 24; 43 Alta. L.R.(2d) 136 (Q.B.), dist. [para. 11].

Associates Capital Services Corp. v. Multi Geophysical Services Inc. and Kondrat (1987), 82 A.R. 293; 54 Alta. L.R.(2d) 85 (Q.B.), dist. [para. 12].

Alpine Canada Alpin v. Oppenheim et al. (1999), 245 A.R. 252 (Q.B.), refd to. [para. 17].

Stevenson Estate v. Siewert et al. (2000), 266 A.R. 35; 228 W.A.C. 35; 191 D.L.R.(4th) 151 (C.A.), refd to. [para. 17].

Statutes Noticed:

Guarantees Acknowledgement Act, R.S.A. 2000, c. G-11, sect. 1(a) [para. 6]; sect. 1(a)(iv) [para. 8]; sect. 3 [para. 6].

Counsel:

David McKenzie, for the plaintiff;

James MacInnis, for the defendant.

Bensler, J., of the Alberta Court of Queen's Bench, Judicial District of Calgary, heard this action on February 28, 2002, and delivered the following reasons for judgment on June 19, 2002.