Cite as: Xerox Canada Inc. v. L & R Equities Ltd., 1988 NSSC 13 S. H. No. 63367
IN THE SUPREME COURT OF NOVA SCOTIA TRIAL DIVISION BETWEEN: XEROX CANADA INC. Plaintiff - and -L h R EQUITIES LIMITED Defendant HEARD: at Halifax, Nova Scotia before the Honourable Mr. Justice John M. Davison, in Chambers on Tuesday, April 12th, 1988 DECISION: May 10, 1988
COUNSEL: Mr. Tim Hill, Esq., for the Plaintiff Mr. Charles Lienaux, Esq., for the Defendent
S.H. No. 63367
IN THE SUPFSKE COURT OF NOVA SCOTIA
TRIAL DIVISION
BETWEEN : XEROX CANADA INC.
Plaintiff
- and -L 6 R EQUITIES LIMITED Defendant
DAVISON, J.:
This is an application for summary judgment pursuant
to the terms of Civil Procedure Rule 13.01 which reads as
follows: Where a defendant has filed a defence
or appeared on a hearing under an
originating notice, the plaintiff may,
on the ground that the defendant has
no defence to a claim in the originating
notice or a part thereof except to
the amount of any damages claimed,
apply to the court for judgment against
the defendant.
By an Originating Notice and Statement of Claim
issued the 8th day of February, 1988, Xerox (the Plaintiff)
claimed from L & R Equities Limited (the Defendant) the sum of $8,473.20 in respect of monies due under a contract to lease
a photocopier and a Memorywriter typewriter. In support of
the application, the Plaintiff submitted the Affidavit of Andre
Gagnon, the Credit Manager of the Plaintiff, to which was
attached as an exhibit the contract between the parties. The
relevant terms of the contract, as it related to remedies
available to the parties, were:
DEFAULT
The following constitute Events
of Default under this Agreement:
(a) Failure of Customer to pay any
amount due under this Agreement;
Upon occurrence of any of the JSvent
of Default Xerox shall be entitled
to:
(a) recover amounts due under this
Agreement and unpaid;
(d) consider the Agreement repudiated and after giving Customer written notice of such, to recover . a . s . liquidated damages an amount equal to There followed a formula for calculating the liquidated damages.
On the 25th day of February, 1988, the Defendant filed a document entitled "DEFENCE and CLAIM AGAINST THIRD PARTY" which was attached to an Originating Notice (Third Party). Under Civil Procedure Rule 17, a Third Party proceeding is to be in Form 17.02(a) which is an Originating Notice (Third Party) to which there is attached two schedules - the Plaintiff's Statement of Claim is Schedule "A" and the Statement of Claim of the Defendant against the ~hirdP arty is Schedule "B". The
Defence of the Defendant to the claim of the Plaintiff is a
separate document and does not form part of the Third Party
proceedings.
I will deal with this application on the same basis
as if the Defence had been filed as a separate document. In
that respect, the only portion of the "DEFENCE AND CLAIM AGAINST
THE THIRD PARTY" which could be attributed to the Defence relates
to admissions as to particulars of incorporation of the parties
and a general denial with respect to the balance of the Statement
of Claim which deals with the cause of action and remedies
of the Plaintiff against the Defendant. The remainder of the
"DEFENCE AND CLAIM AGAINST THE THIRD PARTY" relates to alleged
negligent misrepresentations made by the Third Party, John
D. Conn, a land surveyor, and the claim against the Third Party
is founded in negligence. On the 25th day of February, 1988,
the Defendant filed an "AMENDED DEFENCE and CLAIM AGAINST THIRD
PARTY" with the additions being refinements of its claims against
the Third Party and are immaterial in the consideration of
the matter before me.
On the 29th day of March, 1988, the solicitor for
the Defendant filed a Notice of Discontinuance which stipulated
that "the proceeding commenced in this matter by the Defendant
against the Third Party is hereby discontinued". At this point,
the only pleading which could be said to be on record on behalf
of the Defendant was a general denial of the claim of the
Plaintiff.
In responding to the application, the solicitor for the Defendant, Charles D. Lienaux, filed an Affidavit wherein he deposed that he was corporate counsel to the Defendant and that between November of 1986 and June of 1987 the Defendant was engaged in a dispute with the City of Halifax with respect to the issuance of development and building permits on lands in the south end of Halifax and that while delays were being experienced with respect to this matter, the accounts of the Defendant were placed in abeyance. Lienaux went on to attest that in or about May of 1987, the demand for payment made by Xerox was placed in his hands for determination and that he reviewed the case of Burry v. Centennial Properties Limited (19791, 38 N.S.R. (2d) 450 and advised L & R that it was entitled to withhold payment of the account and to claim indemnity against the surveyor who caused the delays based on a claim of negligent misrepresentation. The passage in the judgment on which Mr. Lienaux based his opinion to his client was that which appears at page 466 and reads as follows: All the defendant must show is that
the plaintiff is claiming against him
something for which the third party
is liable to the defendant and it then
becomes convenient to have the common
issues tried at the same time unless good reason is shown by one of the parties to convince the Court that it would be unfair to have a joint trial of the two causes.
- 5 - It should be noted that at this point in its judgment, the
court was addressing the submission that Civil Procedure Rule
17.02 should be confined to actions for contribution or
indemnity.
Mr. Lienaux's Affidavit goes on to state that he
advised the Defendant to withhold payment of the Plaintiff's
account pending resolution of the issue with the surveyor and
that subsequent to this opinion the Plaintiff commenced this
action. Mr. Lienaux goes on to say that a solicitor was retained
on behalf of the surveyor and that that solicitor convinced
him that his Third Party proceedings were inappropriate and
that the two matters in dispute did not arise from the same
factual circumstances. As a result, Mr. Lienaux filed the
Notice of Discontinuance.
Mr. Lienaux's Affidavit goes on to dispute the
amount of the claim that is being advanced and suggest that
some of the figures are duplicitous in that compensation for
the typewriter rental was also included in the rental for the
copier.
To grant the Order requested, I must be satisfied
that there is no fairly arguable point to be argued on behalf
of the Defendant: Carl B. Potter Ltd. v. Anti1 Canada Ltd
(1976). 15 N.S.R. (2d) 408 (C.A.). There is an onus upon the
Defendant to disclose the nature of its defence and facts which
indicate a bona fide defence, There is no information in t h e Defence in this a c t i o n to suggest that there is a bona f i d e defence or any fairly arguable po in t . The Defence is only a denial of the allegation set out in the Statement of claim. As I understand the Defendant's subrnissionl it is alleging t h a t it did no t have any intention of repudiating the cont rac t but relied on legal advice to the effect that it could withhold payment and continue prosecution of Third Party proceedings. The Defendant says that because it did n o t i n t e n d to repudia te , it did n o t elect to treat the claim of the P l a i n t i f f as rescinding the contract . The Defendan t refers to Arsenaulr and Arsenault v. -Moat (19801, 34 N.S-R-51 and t h e several references t h e r e i n by Glube, J. (as she then w a s } to passages from C h e s h i r e and Fifoot's Law of Contracts, (0th e d l , i n c l u d i n g t h e following passages at 563 and 568: A BREACH of contract, no matter vhat form it m y taker always entit les the innocent party to maintain an action for damages, but the rule established by a long l i n e of authorities is that the right of a party to treat a contract as discharged arises only in t w o t y p e s of case, First ly , where the party in default has repudiated the contract before performance is due or before it has been f u l l y performed. Secondlyr where the party in default has committed vhat in modern judicial parlance is called a fundamental breach, A breach is of t h i s nature if, having
regard to the contract as a whole,
the promise that has been violated is of major as distinct from minor importance. Further at page 568:
It must be observed that, even if one
of the parties wrongfully repudiates
all further liability or has been guilty
of a fundamental breach, the contract
will not automatically come to an end.
Since its termination is the converse
of its creation, principle demands
that it should not be recognized unless
this is what both parties intend. The
familiar test of offer and acce-ptance
serves to determine their common
intention. Where A and B are parties
to an executory contract and A indicates
that he is no longer able or willing
to perform his outstanding obligations,
he in effect makes an offer to B that
the contract shall be discharged.
Therefore B is presented with an option.
He may either refuse or accept the
offer. More precisely, he may either
affirm the contract by treating it
as still in force, or on the other
hand he may treat it as finally and
conclusively discharged. The
consequences vary according to the
choice that the he prefers. (Emphasis
added
If the innocent party chooses the first option and, with full knowledge of the facts, makes it clear by words or acts, or even by silence, that he refuses to accept the breach as a discharge of the contract, the effect is that the status quo -ante is preserved intact. The contract 'remains in being for the future on both sides. Each [party] has a right to sue for damages
for past or future breaches."
The Defendant submits this authority for the
proposition that it is for the trier of fact to determine whether
or not there has been a repudiation which goes to the root
of the contract. With respect, the contract between the parties
in this proceeding already defined what amounts to repudiation
and the parties have already agreed as to what effect that
repudiation has with respect to the continuance or termination
of the contract. There has been nonpayment of monies due under
the agreement and the parties agreed that that shall constitute
an Event of Default. The parties also agreed that upon an
Event of Default, the Plaintiff shall be entitled to recover
monies due under the contract and consider the Agreement
repudiated which, by the terms of the contract, permits recovery
of liquidated damages.
In other words, the parties agreed in the contract
that an Event of Default will be sufficient indication of the
intention of the Defendant not to perform its side of the
contract. The Defendant cannot be heard to say subsequently
that it made a mistake or that he did not intend to repudiate
the contract when all the ingredients of repudiation as defined
in the contract exist.
There is nothing in the pleadings to substantiate
that the Defendant has a fairly arguable point. The Affidavits
filed only confirm my view that there is no defence to the
claim for liquidated damages.
There does appear to be a legitimate dispute as
to the quantum of damages. I will grant an Order by which
judgment will be entered for the Plaintiff with damages to
be assessed.
The Plaintiff shall have its costs of the
application.
Halifax, Nova Scotia
May 10, 1988
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