Valley Equipment Ltd. et al. v. Deere (John) Ltd., (2000) 223 N.B.R.(2d) 264 (TD)

• Judge: Glennie, J.
• Court: Court of Queen's Bench of New Brunswick (Canada)
• Case Date: September 01, 1999
• Jurisdiction: New Brunswick
• Citations: (2000), 223 N.B.R.(2d) 264 (TD)

Valley Equipment v. Deere Ltd. (2000), 223 N.B.R.(2d) 264 (TD);

    223 R.N.-B.(2e) 264; 572 A.P.R. 264

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[French language version follows English language version]

[La version française vient à la suite de la version anglaise]

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Temp. Cite: [2000] N.B.R.(2d) TBEd. FE.031

Valley Equipment Limited, Raymond Cook and Nida Cook (plaintiffs) v. John Deere Limited (defendant)

(F/C/704/95)

Indexed As: Valley Equipment Ltd. et al. v. Deere (John) Ltd.

New Brunswick Court of Queen's Bench

Trial Division

Judicial District of Fredericton

Glennie, J.

January 14, 2000.

Summary:

Valley Equipment Ltd. became a John Deere dealer in 1964. In 1995 John Deere ter­minated the relationship because Valley's general manager resigned. Par­ticularly, John Deere alleged that the resig­nation contra­vened s. 2(b) of its dealer agreements with Valley and consequently it was entitled to terminate the relationship. Valley et al. sought damages from John Deere, alleging that the termination was wrongful.

The New Brunswick Court of Queen's Bench, Trial Division, allowed the action.

Editor's note: for a related decision see 171 N.B.R.(2d) 300; 437 A.P.R. 300 (T.D.).

Contracts - Topic 2524

Variation or alteration - By parties - Waiver - General - The New Brunswick Court of Queen's Bench, Trial Division, reviewed the law of waiver - See para­graphs 269 to 271.

Contracts - Topic 2525

Variation or alteration - By parties - Waiver - By conduct - Valley Equipment Ltd. became a John Deere dealer in 1964 - In 1992, John Deere pressured Valley into a certain course of conduct, including the incorporation of a new company - John Deere insisted that the course of conduct was necessary for Valley to maintain its John Deere relationship - By 1995, Valley had implemented all of the required changes - Nonetheless, John Deere ter­minated the relationship for alleged cause when Tracey, the general manager that was hired on John Deere's recommendation, resigned - John Deere alleged that the resignation contravened s. 2(b) of its dealer agreements - Valley sued for damages - In allowing the action, the New Brunswick Court of Queen's Bench, Trial Division, stated that John Deere waived its right under the dealer agreements to use Tracey as a reason to cancel the dealer agreements where it referred Tracey to Valley and even took part in the drafting of a docu­ment that actually dealt with his possible departure - See paragraphs 269 to 272.

Contracts - Topic 3502

Performance or breach - Obligation to perform - Good faith - Exercise of - The New Brunswick Court of Queen's Bench, Trial Division, reviewed the law of good faith as a requirement in the performance of contracts - See paragraphs 200 to 212.

Contracts - Topic 3502

Performance or breach - Obligation to perform - Good faith - Exercise of - [See Contracts - Topic 3524 ].

Contracts - Topic 3524

Performance or breach - Breach - Bad faith - John Deere terminated a 30 year dealer­ship relationship with Valley Equip­ment for alleged contravention of its dealer agreements - Valley attempted to sell the dealer to a third party - However, John Deere discounted the third party as viable to take over the business without giving their proposal any consideration - Valley et al. sought damages from John Deere, alleging that the termination was wrongful - In allowing the action, the New Bruns­wick Court of Queen's Bench, Trial Divi­sion, held that John Deere breached its obligations to act in "good faith" when it terminated the agreement and again when it failed to consider the third party pur­chaser - See paragraphs 200 to 231.

Contracts - Topic 3793

Performance or breach - Continuing per­formance - Economic compulsion - Val­ley Equipment Ltd. became a John Deere dealer in 1964 - In 1992, John Deere pressured Valley into a certain course of conduct, including the incorporation of a new company - John Deere insisted that the course of conduct was necessary for Valley to maintain its John Deere relation­ship - By 1995, Valley had implemented all of the required changes - Nonetheless, John Deere terminated the relationship for alleged cause when Tracey, the general manager that was hired on John Deere's recommendation, resigned - John Deere alleged that the resignation contravened s. 2(b) of its dealer agreements - Valley sued for damages alleging, inter alia, that eco­nomic compulsion by John Deere forced them to spend a large amount of money on investments and other business costs - Consequently, John Deere should be held liable for these costs - The New Bruns­wick Court of Queen's Bench, Trial Divi­sion, agreed - Valley was economically com­pelled to proceed with the John Deere's demands after investing 27 years with them and should be compensated ac­cordingly - See paragraphs 238 to 253.

Contracts - Topic 3944

Performance or breach - Relief from for­feiture - When available - [See Equity - Topic 1061 ].

Contracts - Topic 4023

Remedies for breach - Damages - Extent of liability - Losses attributable to breach -John Deere wrongfully terminated its dealer agreements with Valley Equipment et al. - In awarding damages, the New Brunswick Court of Queen's Bench, Trial Division, calculated damages based on the loss of the sale of the business to a third party, which sale was rejected by John Deere ($500,000), together with the loss of the sale of the inventory to the third party ($160,000), together with a sum for loss of inventory, the computer system, office furniture, special tools and other items equalling $30,000.

Contracts - Topic 4032

Remedies for breach - Damages - Wrong­ful repudiation - [See Contracts - Topic 4023 ].

Contracts - Topic 9903

Promissory estoppel - General principles - Persons entitled to rely on - [See Estoppel - Topic 1163 ].

Contracts - Topic 9905

Promissory estoppel - General principles -What constitutes promissory estoppel - The New Brunswick Court of Queen's Bench, Trial Division, reviewed the law of prom­issory estoppel - See paragraphs 258 to 264.

Contracts - Topic 9912

Promissory estoppel - Where applicable - Requirement of detrimental reliance - [See Estoppel - Topic 1163 ].

Contracts - Topic 9915

Promissory estoppel - Where applicable - Requirement of promise - [See Estoppel - Topic 1163 ].

Damage Awards - Topic 1001

Contracts - General - [See Contracts - Topic 4023 ].

Equity - Topic 1061

Equitable relief - Relief from forfeiture - General - The New Brunswick Court of Queen's Bench, Trial Division, stated that a cancellation clause contained in a com­mercial dealer agreement was not a for­feiture which a court and a court of equity should grant relief against - See paragraph 282.

Equity - Topic 3607

Fiduciary or confidential relationships - Relationships which are not fiduciary - After reviewing fiduciary obligations in the commercial context, the New Brunswick Court of Queen's Bench, Trial Division, stated that absent exceptional circum­stances fiduciary duties did not arise in a manufacturer-dealership relationship - See paragraphs 231 to 237.

Estoppel - Topic 1163

Estoppel in pais (by conduct) - Represen­tation - By conduct - Practice or course of conduct - Valley Equipment Ltd. became a John Deere dealer in 1964 - In 1992, John Deere pressured Valley into a certain course of conduct, including the incor­poration of a new company - John Deere insisted that the course of conduct was necessary for Valley to maintain its John Deere relation­ship - By 1995, Valley had implemented all of the required changes - Nonetheless, John Deere terminated the relationship for alleged cause when Tracey, the general manager that was hired on John Deere's recommendation, resigned - John Deere alleged that the resignation contravened s. 2(b) of its dealer agree­ments - Valley sued for damages - In allowing the action, the New Brunswick Court of Queen's Bench, Trial Division, stated that the clear under­standing between the parties was that if Valley and the new company did what John Deere asked of them, which they did, then the new com­pany would become an authorized John Deere dealer - John Deere, by terminating the dealership based on the happening of an event (the resig­nation of Tracey) which originated with John Deere (the hiring of Tracey), com­mitted an act inconsistent with its repre­sentations and it should be accordingly estopped from breaching its representations to Valley - See paragraphs 1 to 266.

Cases Noticed:

Crawford et al. v. Agricultural Develop­ment Board (N.B.) et al., [1997] Law Post N.B.C. No. 4280; 192 N.B.R.(2d) 68; 489 A.P.R. 68 (C.A.), refd to. [para. 200].

Deere (John) Ltd. v. G.A.E.L. Inc. et al. (1994), 96 Man.R.(2d) 106 (Q.B.), refd to. [para. 201].

McKinlay Motors Ltd. v. Honda Canada Inc. (1989), 80 Nfld. & P.E.I.R. 200; 249 A.P.R. 200; 46 B.L.R. 62 (Nfld. T.D.), refd to. [para. 204].

Atlantic Richfield Co. v. Razumic, 390 A.2d 736 (S.C. Pa.), refd to. [para. 205].

Great Lakes Harvestore Systems Ltd. v. Smith (A.O.) Engineered Storage Prod­ucts Co. (1998), 55 O.T.C. 154 (Gen. Div.), refd to. [para. 210].

Esmail v. Petro Canada, [1995] O.J. No. 924 (Gen. Div.), refd to. [para. 211].

Gateway Realty Ltd. v. Arton Holdings Ltd. and LaHave Developments Ltd. (1991), 106 N.S.R.(2d) 180; 288 A.P.R. 180 (S.C.), affd. (1992), 112 N.S.R.(2d) 180; 307 A.P.R. 180 (C.A.), refd to. [para. 212].

Hardware Agencies Ltd. v. Medeco Secur­ity Locks Canada (1995), 39 C.P.C.(3d) 297 (Ont. Gen. Div.), refd to. [para. 233].

Riverside Cycle Ltd. v. Hazen et al. (1994), 93 Man.R.(2d) 182 (Q.B.), refd to. [para. 233].

Daly et al. v. Petro Canada et al. (1995), 162 N.B.R.(2d) 81; 415 A.P.R. 81 (T.D.), refd to. [para. 236].

Jirna Ltd. v. Mister Donut of Canada Ltd., [1970] 3 O.R.(2d) 629 (H.C.), refd to. [para. 236].

Stott v. Merit Investment Corp. (1988), 25 O.A.C. 174; 63 O.R.(2d) 545 (C.A.), refd to. [para. 239].

Violette (W.H.) Ltd. v. Ford Motor Co. of Canada Ltd. (1980), 31 N.B.R.(2d) 394; 75 A.P.R. 394 (Q.B.), affd. (1981), 34 N.B.R.(2d) 238; 85 A.P.R. 238 (C.A.), refd to. [para. 240].

Hughes v. Metropolitan Railway Co. (1877), 2 App. Cas. 439 (H.L.), refd to. [para. 258].

Central London Property Trust Ltd. v. High Trees House Ltd., [1947] 1 K.B. 130, refd to. [para. 259].

Combe v. Combe, [1951] 1 All E.R. 767 (C.A.), refd to. [para. 260].

Burrows (John) Ltd. v. Subsurface Surveys Ltd. et al., [1968] S.C.R. 607, refd to. [para. 261].

Maracle v. Travellers Indemnity Co. of Canada, [1991] 2 S.C.R. 50; 125 N.R. 294; 47 O.A.C. 333, refd to. [para. 262].

Belliveau v. Blanchard et al. (1989), 100 N.B.R.(2d) 62; 252 A.P.R. 62 (Q.B.), refd to. [para. 269].

Saskatchewan River Bungalows Ltd. v. Maritime Life Assurance Co., [1994] 2 S.C.R. 490; 168 N.R. 381; 155 A.R. 321; 73 W.A.C. 321; 115 D.L.R.(4th) 478; [1994] 4 W.W.R. 37, refd to. [para. 270].

Leader Window Fashions Ltd. v. Home Products Inc. (1993), 8 B.C.L.R.(2d) 272 (S.C.), affd. [1993] B.C.J. No. 1182 (C.A.), refd to. [para. 271].

Scandinavian Trading Tanker v. Flora Petrolera Ecuatoriana, [1983] 1 All E.R. 301 (C.A.), affd. [1983] 2 All E.R. 763 (H.L.), refd to. [para. 282].

Ev's Truck & Equipment Inc. v. Mack Canada Inc. (1993), 50 C.P.R.(3d) 94 (B.C.S.C.), refd to. [para. 288].

McKay's Dairy Ltd. v. Hayes, [1986] N.B.J. No. 460, refd to. [para. 290].

Statutes Noticed:

Judicature Act, R.S.N.B. 1973, c. J-2, sect. 26(1) [para. 281].

Authors and Works Noticed:

Black's Law Dictionary (5th Ed.) [para. 148].

CCH Canada Ltd., Business Franchise Guide, p. 453 [para. 276].

Earle, Wendy J., Fiduciary Duties and the Franchise Relationship (1997), vol. 7, No. 3 [para. 235].

Halsbury's Laws of England (4th Ed.), vol. 16, para. 1471 [para. 269].

O'Brien's Encyclopedia of Forms and Precedents (11th Ed. 1992), p. 23-1 [para. 274].

Oxford English Dictionary, vol. 2 [para. 148].

Snell, Principles of Equity (29th Ed. 1990), generally [para. 264].

Counsel:

Eugene J. Mockler, Q.C., for the plaintiffs;

Wayne R. Chapman, Q.C., and Cynthia J. Benson, for the defendant.

This matter was heard on August 3-6, 17-20, 30, 31 and September 1, 1999, before Glennie, J., of the New Brunswick Court of Queen's Bench, Trial Division, Judicial District of Fredericton, who delivered the following judgment on January 14, 2000.