Reit-Syd Equipment Ltd. v. Trush, (1989) 60 Man.R.(2d) 153 (QB)

• Judge: De Graves, J.
• Court: Court of Queen's Bench of Manitoba (Canada)
• Case Date: July 05, 1989
• Jurisdiction: Manitoba
• Citations: (1989), 60 Man.R.(2d) 153 (QB)

Reit-Syd Equipment Ltd. v. Trush (1989), 60 Man.R.(2d) 153 (QB)

MLB headnote and full text

Reit-Syd Equipment Ltd., operating under the firm name and style of Sydor Equipment (plaintiff) v. Walter Trush (also known as Walter M. Trush) (defendant)

(88-05-00002)

Indexed As: Reit-Syd Equipment Ltd. v. Trush

Manitoba Court of Queen's Bench

Dauphin Centre

De Graves, J.

July 5, 1989.

Summary:

The plaintiff dealer/lessor of a farm combine sued the defendant lessee for damages for breach of the lease agreement. The lessee, a grain farmer, counterclaimed for downtime, but withdrew the counterclaim prior to the conclusion of trial.

The Manitoba Court of Queen's Bench allowed the dealer/lessor's action in part.

Damages - Topic 1103

Liquidated damages - Penalty - What constitutes - An agreement for lease of a combine provided a formula for the calculation of damages upon default by the lessee - Damages were to be the "termination value" as determined by a given formula less the proceeds of the sale of the equipment, including the costs of sale, interest and other costs - The agreement provided that "termination value" was the sum of unpaid lease payments, plus residual value, minus the "unearned income component" calculated using the "sum of the monthly balances" - The Manitoba Court of Queen's Bench held that this method was in the nature of a penalty on the lessee - See paragraphs 12 to 21.

Equity - Topic 1065

Equitable relief - Relief from forfeiture - Penalties - Contractual - The damages contained in a lease of a combine in the event of breach by the lessee were held to be an unenforceable penalty - The court was thus obliged to do its own assessment of the lessor's damages - The lessor repossessed the combine after two years, but it stood idle for a further two years until being sold at a fair price - The combine was now no longer manufactured - An option to purchase available to the lessee might or might not have been exercised - The Manitoba Court of Queen's Bench, in consideration of these contingencies, granted the lessee limited relief from for feiture under rule 7 of s. 63 of the Queen's Bench Act, by restricting the lessor's claim to a common law claim for reasonably foreseeable consequential loss - See paragraphs 26 to 33.

Cases Noticed:

Canadian Acceptance Corporation Limited v. Regent Park Butcher Shop Ltd. and Gauthier (1969), 67 W.W.R. (N. S.) 297 (Man. C.A.), refd to. [App.].

Thermidaire Ltd. v. H.F. Clarke Ltd. (1975), 3 N.R. 133; 54 D.L.R.(3d) 385 (S.C.C.), refd to. [App.].

Desrosiers v. Kotowicz et al., [1981] 4 W.W.R. 260; 24 Man.R.(2d) 192 (Co. Ct.), refd to. [App.].

Meunier v. Cloutier (1984), 46 O.R.(2d) 188 (H.C.J.), refd to. [App.].

Boisonault v. Block Bros. Realty Ltd. (1987), 47 Man.R.(2d) 148 (Q.B.), refd to. [App.].

Keneric Tractor Sales Ltd. v. Langille, [1987] 2 S.C.R. 440; 79 N.R. 241, refd to. [App.].

Statutes Noticed:

Queen's Bench Act, R.S.M. 1987, c. C-280; C.C.S.M., c. C-280, sect. 63, rule 7 [para. 26].

Authors and Works Noticed:

Fridman, The Law of Contract in Canada (2nd Ed. 1986), pp. 303-313 [App.].

Wright, W.T., Penalty Clauses and Liquidated Damages: What is a Genuine Pre-Estimate, Pitblado Lecture Series (1989) [App.].

Counsel:

Bernard J. Rodrigue, for the plaintiff;

Eric B. Irwin and Greg B. Hawrysh, for the defendant.

This action was heard by De Graves, J., of the Manitoba Court of Queen's Bench, Dauphin Centre, whose decision was delivered on July 5, 1989.