Date Issued: November 23, 2020

File: SC-2020-003999

Type: Small Claims

Civil Resolution Tribunal

Indexed as: N S D Disposal Limited v. Fast Freight Transport Ltd., 2020 BCCRT 1319

Between:

N S D DISPOSAL LIMITED

Applicant

And:

FAST FREIGHT TRANSPORT LTD.

Respondent

INTRODUCTION

1.      This dispute is about a waste disposal services contract. The applicant, N S D Disposal Ltd. (NSD), says the respondent, Fast Freight Transport Ltd. (Fast Freight), signed a contract with them but then terminated the agreement before service began. NSD claims liquidated damages of $1,735.18.

2.      Fast Freight says that it signed the contract on the condition that NSD would release Fast Freight from its pre-existing waste disposal contract. It says NSD did not do so, and so it does not owe NSD anything under their contract.

3.      NSD is represented by an employee. Fast Freight is represented by its owner, Bhupinder Aujla.

JURISDICTION AND PROCEDURE

4.      These are the formal written reasons of the Civil Resolution Tribunal (CRT). The CRT has jurisdiction over small claims brought under section 118 of the Civil Resolution Tribunal Act (CRTA). Section 2 of the CRTA states that the CRT’s mandate is to provide dispute resolution services accessibly, quickly, economically, informally, and flexibly. In resolving disputes, the CRT must apply principles of law and fairness, and recognize any relationships between the dispute’s parties that will likely continue after the CRT process has ended.

5.      Section 39 of the CRTA says the CRT has discretion to decide the format of the hearing, including by writing, telephone, videoconferencing, email, or a combination of these. Here, I find that I am properly able to assess and weigh the documentary evidence and submissions before me, and I find that there are no significant issues of credibility or other reasons that might require an oral hearing. Further, bearing in mind the CRT’s mandate that includes proportionality and a speedy resolution of disputes, I find that an oral hearing is not necessary in the interests of justice.

6.      Section 42 of the CRTA says the CRT may accept as evidence information that it considers relevant, necessary and appropriate, whether or not the information would be admissible in a court of law. The CRT may also ask questions of the parties and witnesses and inform itself in any other way it considers appropriate.

7.      Where permitted by section 118 of the CRTA, in resolving this dispute the CRT may order a party to do or stop doing something, pay money or make an order that includes any terms or conditions the CRT considers appropriate.

ISSUE

8.      The issue in this dispute is whether Fast Freight is required to pay NSD $1,735.18 in liquidated damages under the parties’ waste disposal services contract.

EVIDENCE AND ANALYSIS

9.      In a civil proceeding like this one, as the applicant NSD must prove its claim on a balance of probabilities. Fast Freight made submissions but did not file any evidence, despite having the opportunity to do so. While I have read all of the parties’ evidence and submissions, I have only addressed them to the extent necessary to explain my decision.

10.   It is undisputed that on May 28, 2018, the parties signed a contract under which NSD agreed to provide monthly waste disposal services to Fast Freight. The combined monthly charge for garbage and cardboard disposal service was to be $122, plus an 8% fuel surcharge. The contract also provided for a $75 delivery fee.

11.   The contract’s written “Service Start Date” was July 15, 2018. However, clause 1 of the “Terms and Conditions”, set out on the contract’s front page, states that the service start date is either the date written or the expiry date of the customer’s current waste collection service contract, whichever is later. The contract states that it is binding on the parties from the date on which it was signed and continues in force for an initial term of 24 months from the service start date.

12.   Clause 8 of the parties’ contract provides that if Fast Freight terminates the contract before the expiration of any term, Fast Freight agrees to pay NSD liquidated damages determined by a formula. It says if NSD has not yet provided service when Fast Freight terminates the contract, Fast Freight must pay as liquidated damages 50% of the projected billing for the first month of service, multiplied by the number of months in the initial term.

13.   It is undisputed that when Fast Freight signed the contract with NSD, it was already under contract with a third-party waste disposal company, WCC. Fast Freight says that NSD assured it that they would take care of terminating Fast Freight’s contract with WCC.

14.   The evidence shows that NSD sent 3 letters by registered mail to WCC on May 28, 2018, June 11, 2018, and June 22, 2018. These letters each requested a copy of Fast Freight’s contract with WCC, including the contract’s renewal date, and they purported to provide notice that Fast Freight was terminating its contract with WCC.

15.   On July 12, 2018, Fast Freight emailed NSD and requested the contract it signed with them be canceled because it was still under contract with WCC for at least another year. NSD responded on July 16, 2018 and explained that their contract would take effect on the expiry of Fast Freight’s contract with WCC. NSD requested that Fast Freight provide them with a copy of its contract with WCC to confirm the expiry date.

16.   On July 17, 2018, Fast Freight provided NSD with a copy of its contract with WCC, which confirmed it would expire on May 17, 2020. The contract provided it could only be terminated on written notice delivered by registered mail between 120 and 90 days from the end of the contract’s term, otherwise it would automatically renew.

17.   The evidence shows that NSD sent a letter to WCC dated January 18, 2020, providing formal notice that Fast Freight was terminating its contract and had arranged a new provider. The registered mail tracking information shows that WCC received this letter on January 29, 2020, which I find was within the contract’s cancellation period.

18.   I find that NSD emailed Fast Freight on at least 5 occasions between July 18, 2018 and March 25, 2020 to confirm that their service would start on May 18, 2020. At least 4 of NSD’s emails also reminded Fast Freight not to sign or re-sign any contract with its current or another waste disposal provider.

19.   On March 26, 2020, Fast Freight emailed NSD and stated it had already cancelled NSD’s services so did not know why it kept sending reminders. I infer that Fast Freight was referring to its July 12, 2018 email to NSD about cancelling the contract. There is no other evidence before me that Fast Freight attempted to cancel NSD’s services.

20.   In response, on April 9, 2020, NSD sent Fast Freight a letter providing it with 3 options: (1) to honour the contract it signed with NSD on May 28, 2018, (2) to renegotiate its agreement with NSD, or (3) to terminate the contract and pay liquidated damages in the amount of $1,699.18 (including GST), by April 24, 2020. NSD did not explain how they arrived at the $1,699.18 figure.

21.   On May 6, 2020, Fast Freight sent a letter to NSD advising that it had decided to stay with WCC for its waste disposal needs and would not require NSD’s services. In further correspondence between the parties, NSD reiterated Fast Freight’s options. On May 15, 2020, Fast Freight requested extra time until July 10 to decide how it would proceed, which NSD declined to provide.

22.   On May 22, 2020, NSD applied for CRT dispute resolution because it says it believed Fast Freight had re-signed an agreement with WCC and, therefore, had no intention of honouring the contract it signed with NSD. NSD says Fast Freight’s actions amount to a breach of contract.

23.   Fast Freight argues that a material term of their contract was that NSD would ensure it properly terminated the WCC contract and NSD failed to do so, rendering Fast Freight’s contract with NSD void. Fast Freight says it only sent its March 26, 2020 email to NSD stating it would like to cancel their contract, after the WCC contract had already been renewed for another term.

24.   As noted above, Fast Freight chose not to submit any evidence. While parties are under no obligation to provide evidence during the tribunal decision process, failing to do so can lead to an adverse inference. I find that an adverse inference is appropriate in this case because I would have expected Fast Freight to produce evidence that NSD did not properly cancel Fast Freight’s contract with WCC so that it automatically renewed. As also noted above, I find that NSD did send a letter to WCC by registered mail to cancel Fast Freight’s contract, within the required cancellation window. In the absence of any evidence to the contrary, I find that NSD properly terminated Fast Freight’s contract with WCC.

25.   I note that NSD’s email reminders to Fast Freight not to re-sign any contracts with their current provider also included a notice, in bold type, that Fast Freight may be approached by its current provider to pre-sign, re-sign or extend its current service agreement. Further, Fast Freight’s contract with WCC was not set to automatically renew until May 18, 2020. On balance, I find Fast Freight actively renewed its agreement with WCC, when it knew or ought to have known it had a valid contract with NSD. I find this conclusion is supported by Fast Freight’s May 6, 2020 letter to NSD stating it had decided to stay with WCC. Therefore, I find that Fast Freight terminated its contract with NSD as of May 6, 2020, when service was set to begin on May 18, 2020.

26.   Clause 8 of the parties’ contract requires Fast Freight to pay NSD liquidated damages if it terminates the contract before NSD starts providing service, according to the stated formula. Liquidated damages are a contractual pre-estimate of the damages suffered by a party in the event of a breach of contract. I acknowledge that this clause is onerous on Fast Freight. However, in Tristar Cap & Garment Ltd. v. Super Save Disposal Inc., 2014 BCSC 690, the British Columbia Supreme Court held that a similar contract was enforceable under similar circumstances, and this decision is binding on me.

27.   This means NSD is entitled to liquidated damages calculated at 50% of the projected first month’s rate of $122, plus 8% fuel surcharge, multiplied by the 24-month initial contract term. This equals $131.76 ÷ 2 = $65.88 × 24 months, for a total of $1,581.12. I also find that NSD is entitled to GST on the liquidated damages, based on section 182(1) of the federal Excise Tax Act and the CRT’s non-binding but helpful analysis in Super Save Disposal Inc. v. New Generation Concrete Ltd. 2019 BCCRT 319. Therefore, I award NSD $1,660.18.

28.   I do not agree that NSD is entitled to a $75 delivery charge because it never completed a delivery. This amount accounts for the difference between what NSD claimed and what I have awarded.

29.   Turning to interest, I find that the parties’ contract provided for 24% annual interest on overdue accounts. However, NSD did not claim interest in this dispute. Further, I note that section 1 of the Court Order Interest Act (COIA) provides for pre-judgement interest. However, COIA section 2(b) says that a court must not award interest under section 1 if there is an agreement about interest between the parties. I find that the COIA applies to the CRT as well as courts, and that the contract between NSD and Fast Freight contains an agreement about interest. So, I find NSD is not entitled to pre-judgement interest under the COIA on the $1,660.18, and I make no order for interest.

30.   Under section 49 of the CRTA and CRT rules, the CRT will generally order an unsuccessful party to reimburse a successful party for CRT fees and reasonable dispute-related expenses. I find NSD is entitled to reimbursement of $125 in CRT fees. Neither party claimed any dispute-related expenses.

ORDERS

31.   Within 30 days of the date of this decision, I order Fast Freight to pay NSD a total of $1,785.18, broken down as follows:

a.    $1,660.18 in liquidated damages, and

b.    $125 in CRT fees.

32.   NSD is entitled to post-judgment interest, as applicable.

33.   Under section 48 of the CRTA, the CRT will not provide the parties with the Order giving final effect to this decision until the time for making a notice of objection under section 56.1(2) has expired and no notice of objection has been made. The time for filing a notice of objection is 28 days after the party receives notice of the CRT’s final decision.

34.   The Province of British Columbia has enacted a provision under the COVID-19 Related Measures Act which says that statutory decision makers, like the CRT, may waive, extend or suspend mandatory time periods. This provision is expected to be in effect until 90 days after the state of emergency declared on March 18, 2020 ends, but the Province may shorten or extend the 90-day timeline at any time. A party should contact the CRT as soon as possible if they want to ask the CRT to consider waiving, suspending or extending the mandatory time to file a Notice of Objection to a small claims dispute.

35.   Under section 58.1 of the CRTA, a validated copy of the CRT’s order can be enforced through the Provincial Court of British Columbia. A CRT order can only be enforced if it is an approved consent resolution order, or, if no objection has been made and the time for filing a notice of objection has passed. Once filed, a CRT order has the same force and effect as an order of the Provincial Court of British Columbia.