Contracts - Case Summaries
The database contains 27 case summaries relating to Contracts . The summaries are sorted in reverse date order with 20 summaries per page. If there are more than 20 summaries, use the navigation links at the bottom of the page.
Contracts - Alleged breach of contract for the right to operate the commercial fishery rights of a First Nation.
Aboriginal Rights - Whether or not Provincial Superior Court has jurisdiction over case involving Band Council administering a commercial fishing contract.
Practice - Application for an Injunction restraining party from interfering with or terminating contract.
Marion et al. v. Perley et al., 2015 NBQB 147
This case involved an alleged agreement whereby the plaintiff paid a First Nation for the exclusive right to manage and operate its commercial fisheries for the 2013, 2014 and 2015 fisheries. The agreement allegedly gave the plaintiff full control over the commercial fishery operations, the right to lease licences at will from the First Nation and be the designate as defined by Fisheries and Ocean's (DFO) guidelines.
The contract worked well until there was a change in composition of the Band council. After that time there were a number of alleged breaches including forwarding a resolution to DFO that appointed a new chief councillor as the "fishing authority".
As a preliminary matter the court had to determine whether it had jurisdiction, as the Defendants argued that the Federal Court had jurisdiction because the Band Council was a "federal board, commission or other tribunal". In upholding its jurisdiction the court ruled that because the Band Council decisions being reviewed involved a private commercial matter, it was not acting as a "federal board, commission or other tribunal".
With respect to the request for an injunction, the court applied the three part test set out in RJR MacDonald Inc. v. Attorney General (Canada) (1994), CanLII 117 (SCC). The court had no difficulty finding that there was a serious issue to be tried. The court also found irreparable harm, based upon (a) the fact that the Band Council was under third party management by the Department of Aboriginal Affairs and (b) if the contract were terminated there would be a ripple down effect impacting other parties the plaintiff had contracted with such as fishing captains and crews who were supposed to fish for the plaintiff. With respect to balance of convenience, since the three year contract would end approximately seven months after the decision was being issued, the court ruled in favour of the status quo.
Based upon its application of the RJR MacDonald test, the court granted the injunction to the end of 2015.
Contracts - Licence Swap Between Father and Son - Interpretation of Transfer Back Clause
Arbitration Clause - Scope of Judicial Review
Layman Estate v. Layman, 2014 NLTD 66
Contracts - Agreement re sale of Licence - Abandonment
Quinlan Brothers Limited v. Coady, 2013 NLCA 31
This case involved a somewhat convoluted fact situation involving three related agreements to sell a fish boat and two fishing licences. After the agreement to sell the fish boat was partially frustrated by a moratorium on cod fishing, both parties walked away from a partially completed contract to sell one of the fishing licences. Several years later after the purchaser sold the licence, the original vendor sued the purchaser. In finding for the original purchaser the trial judge found that the contract had been abandoned. Upon appeal, the appeal court applied Jedfro Investments (U.S.A.) Limited v. Jacyk, 2007 SCC 55 decision to hold that the agreement had not been abandoned. It did so on the basis that there had been no new agreement to abandon the old agreement. The Court ruled that the trial court had erred in implying such an agreement.
Contracts - Dissolution of Fishing Partnership
Tremblett v. Tremblett, 2012 CanLII 67443
This case involved two brothers who fished together in Newfoundland for a period of 17 years. Initially they fished for groundfish and borrowed money together to purchase a vessel that they jointly owned. When government policy would not allow a partnership to hold a fishing licence, a valuable crab licence was put solely in the name of one brother. Upon dissolution of the partnership, the brother holding the crab licence took the position that the licence did not form part of the jointly held property.
The court examined fourteen factors set in VanDuzer, "The Law of Partnerships and Corporations" and concluded that that a partnership existed that included the crab licence. In doing so, the court relied upon the folowing factors:
(1) The parties shared the profits of the venture equally;
(2) The Paties shared responsibilty for the debts;
(3) The parties jointly owned the boats up to the time when DFO would not put a crab licence into a boat owned by a partnership;
(4) Prior the the falling out, the brother holding the crab licence described the business as a partnership in a TAGS application; and
(5) the parties paid all costs equally.
After finding that the business, including the crab licence, was a partnership, the court made an order for the surplus assets to be divided between the partners and also made an order that a share of the profits made since the dissolution be paid to the partner who did not hold the crab licence.
Contracts - Enforcement of trust agreement over groundfish licence - quantum meruit award for opportunity grounfish licence gave to original holder to obtain additional licences
Devereauz v. Lewis, 2011 NLTD 132
Contracts - Bonus Payments from fish buyers
Matchim v. BGI Atlantic Inc., 2010 NLCA 9
This case involved a dispute between a crab buyer and a crab harvester over whether or not an oral promise to pay a 60 cent per pound bonus above the union negotiated price for crab was a legally enforceable contract. At the trial level, the trial Court relied in part upon the case of Philpott et al v. Sullivan (2007), 267 Nfld. & P.E.I.R. 183) to find that the promise was a discretionary payment that attracted no legal obligation (para. 30).
Upon appeal, the a majority judgement of the Court granted an appeal and found a legally enforceable obligation to pay a bonus. It did so, in part, upon the following grounds:
The fact that the discussions regarding payment of 60 cents above and beyond the union price took place in the context of a commercial setting (para. 65-6);
The use of the words "fair market price" instead of "union negotiated price" in the supply and trust agreements; and
The existence of an arbitration clause to resolve disputes between parties regarding price.
A separate minority judgement would have overturned the decision of the trial Court, but would have remitted the matter back for trial instead of granting judgement.
Judicial Review - jurisdiction of Superior Court - whether action in contract and tort a collateral attack on jurisdiction of Federal court
Torts - whether action in tort and contract a collateral attack on jurisdiction of court - No duty on Minister to explain enforceability of contract
Contracts - whether action in tort and contract a collateral attack on jurisdiction of court - Not Enforceable if fettering Discretion
Andrews v. Canada (A.G.), 2009 NLCA 70
This case involved a superior court action by a group of snow crab fish harvesters who alleged that they had a contract with the Minister of Fisheries whereby they gave up their historic right to a proportionate share of a relatively large increase in the total allowable catch of snow crab in the 1990's in exchange for a promise from the Minister of Fisheries that he or she would maintain their traditional catch levels at the 1988-93 levels unless conservation required an overall reduction in the total allowable catch below 1993 levels. As a result of alleged failures of the Minister to honour this commitment in 2000 and thereafter, this group commenced a superior court action alleging breach of contract or alternatively negligence. They claimed damages in excess of $23,000,000.
In an application by the Crown to strike the statement of claim, one of the main issues that arose was the whether or not the superior court had jurisdiction. The Crown argued that the action was a collateral attack on the exclusive jurisdiction of the Federal Court to hear matters of judicial review under section 18 of the Federal Court Act. The plaintiffs argued that there was concurrent jurisdiction under s. 17 of the Federal Court Act and s. 21(1) of the Crown Liability Act. The Applications Judge (2008 NLTD 145 link]), after reviewing a number of authorities including Genge v. Canada (A.G.), 2007 NLCA 60, stated that since judicial review is not a pre-requisite for an action in contract or tort (see Genge para. 40), a court must determine the true nature of the application. In doing so, the court distinguished a number of cases cited by the plaintiffs, such as Keeping v. Canada (A.G.), 2003 NLCA 21, as cases not involving the exercise of ministerial discretion. Since no contractual right to quota could exist until the Minister exercised his or her discretion each year to approve a quota, the true nature of the action was an attack on the Minister's discretionary power (para. 42 trial level decision). Similarly, no negligence in entering into an agreement could be established that was independent of the Minister's exercise of discretion to approve quota. In characterizing the action as a matter of judicial review outside the jurisdiction of the superior court, the court concluded that "[w]here the allegations are fundamentally tied to the decision-making authority of the Minister, there is no room for an action in tort or contract because the impugned action was not independent from the exercise of ministerial authority" (para. 43). As result, the Applications Judge held the statement of claim did no disclose a reasonable cause of action and declined jurisdiction and refused to grant a stay pending a superior court action.
Upon appeal to the Court of Appeal, the decision of the Applications Court was upheld with Wells, J.A. dissenting and with partially different reasons being provided by Barry, J.A. and Welsh, J.A..
Both majority decisions agreed upon the law to be applied as summarized by Welsh, J.A: as follows:
To summarize, the above decisions support several conclusions. First, where, pursuant to legislation, a minister is authorized to exercise discretion in the public interest, that discretion may not be constrained for future use or fettered either directly or indirectly, unless the legislation otherwise provides. Indirect fettering includes exposing the minister or government to liability for damages or payment of compensation for failure to exercise the discretion in a particular way. Despite the apparent harshness of the result, an agreement, implied undertaking or representation having the effect of fettering the minister’s authority is unenforceable and damages are not available. Nonetheless, the minister must act in good faith, not arbitrarily, and must not base his or her decision on considerations irrelevant or extraneous to the statutory purpose. Finally, while damages are not available, a claim for unjust enrichment may be permitted. (para. 83)
However, the two majority judgements varied somewhat on their application of the law to the facts. Welsh J.A. applied the law similarly to that of the Applications Judge by holding that a "claim for damages for failure to exercise the discretion in a particular manner amounts to an improper indirect fettering of the Minister's discretion. . . . The same analysis applies and the same conclusion follows whether the claim is made in contract or tort . . ." (para. 84).
Barry J.A. agreed with Welsh's analysis of the contract claim, but with respect to the tort claim, he added that the pleadings did not set out any duty owed by the Minister to the Applicants. The Applicants must "be taken to know the law and , specifically, the rule against fettering ministerial discretion. Given that knowledge, how can this Court say the Minister owed any duty to explain the limitations on the enforceability of any commitment regarding quotas? In my opinion, no such duty existed." (para. 98).
The dissenting reasons are set out at paragraphs 1 to 58 of the judgement.
Editor's note: Although it did not likely affect the outcome of the decision, all three judges in reviewing the jurisprudence on judicial review of discretionary decisions appear to have overlooked the fact that the requirement of the decision maker to act in good faith, not arbitrarily, and to base his or her decision on considerations irrelevant or extraneous to the statutory purpose are in addition to the needs to meet the requirements of natural justice. In this regard see the editorial comments at the end of the Arsenault digest (link).
(Attorney General) v. Telezone Inc, 2010 SCC 62
Editor's postscript: Since this case was decided, the Supreme Court of Canada released Canada (Attorney General) v. Telezone Inc, 2010 SCC 62, which over-ruled the Genge Canada decision and stated that "where a plaintiff's pleading alleges the elements of a private cause of action, I think the provincial superior court should not in general decline jurisdiction on the basis that the claim looks like a case that could be pursued on judicial review" (para. 76). However, the provincial superior courts and the Federal Court do have the residual discretion to stay a damage claim if, in its essential character it is a claim for judicial review with only a thin pretence of a private wrong (para. 78).
Contracts - Illegality Practice - Resulting trusts over Licences
Hurley v. Power, 2008 NSSC 363
This case involved a claim by a plaintiff who allegedly paid $130,000 for a lobster licence. Since DFO regulations prevented him from holding it himself, he arranged to have it held by a nominee who later sold it and kept the proceeds of sale. In an action against the various parties involved, the court refused to impose a trust over the licence because it had been sold and transferred to a purchaser who had no knowledge of the trust. Although the licence had apparently been purchased by the plaintiff with money obtained from illegal activities (illegal cigarette and alcohol sales), the court was prepared to grant judgement against the party who received the money (but no longer held the licence) because:
In the case at bar, the ‘illegality’ upon which the Defendants would seek to rely refers to the source of Hurley’s funds [the plaintiff], and possibly to his failure to disclose their existence to a relevant authority - in other words, his ‘general depravity’. However, the source of the purchase funds need not be established to prove the existence of the trust relationship arising between the parties in respect of the property purchased. The underlying ‘illegal transaction’, if indeed one exists, is simply not relevant.
Moreover, illegality should only exceptionally lead to such a severe consequence as the forfeiture of a person’s property, especially where that forfeiture would be in favour of a person who was a willing party to the illegality.’
Contracts - Trust Agreement made for purpose of circumventing residency Requirements and limit of one fishing Licence
Loder v. Citifinancial Canada Inc., 2007 NLCA 78
the applicant did not come to court with clean hands.
Upon appeal, the appeal court reviewed the authorities and concluded that "the authorities do not support the restrictive view stated by the Chambers Judge" [para. 15]. The court further stated:
Clearly the foregoing decisions, including those of this Court in Green v. Harnum, confirm that the registered holder of a DFO fishing license can bind himself or herself contractually respecting not only disposition of the license but the ongoing economic benefits therefrom, and that conversely non-license holders can enforce agreements with license holders in that regard. As noted in B.C. Packers there is no express statutory or regulatory prohibition against the transfer of a beneficial interest in a fishing license. [para. 21]
Practice - Ascertainment of Income From Fishing Licences - Effect of Deliberate Obstruction of Evidence
Contracts - Dissolution of Partnership
Harnum v. Green , 2007 NLCA 57
This case involved a fishing enterprise type partnership where one partner continued to carry on the enterprise after the break up of the partnership. This appeal concerned the following issues:
(1) Whether the trial judge erred in law in determining that the value of the assets, for the purpose of sharing between the partners, is the value at the time of distribution and sale of the assets rather than the estimated value as at dissolution;
(2) Whether the trial judge erred in determining the share of post-1999 income of the partnership payable to the departing partner on the basis of the estimates, without admitting the income tax returns of the partner who continued the business; and
(3) Whether the trial judge erred in ordering that the licences and the boat be sold.
With respect to item one (time of valuation), the appeal court ruled that the time of the valuation would be the time at which the assets are distributed. As a result the departing partner retained the benefit of an increase in value of the assets.
With respect to item two (entitlement to post break up income), the court ruled that "[w]here a partnership has existed and has either been dissolved, or if there has not been a formal dissolution but a partner has 'otherwise stopped being a partner', without a final settlement of accounts as between the partners, and one or more partners continue to use the assets, name or business connections and earn income, that income must be accounted for to the partner or partners who have not continued to make use of the partnership assets, name or business connections" (para. 60).
In this case, the only real income producing assets were the fishing licences. Since the partner that continued to carry on the business deliberately obstructed the court's ability to provide the other partner with an accounting, the court relied upon the unchallenged expert evidence of the departing partner regarding the the type of income that fishing enterprises of the same type normally earned during the relevant time period.
With respect to item three (order for sale of licence and vessel), since there was a true dissolution of the partnership, under the provisions of the Partnership Act, a partner is entitled to insist that the partnership property be sold to ascertain its true value.
Contracts - Trust Agreements
Philpott and Hopkins v. Sullivan, 2007 NLTD 111
This case involved a dispute between a fish processor and a fisher over the enforceability of a trust agreement, which provided that the fisher would hold a crab licence as bare trustee for the processor. When the processor commenced and action to enforce the trust, the fisher raised a number of defences including non est factum, unconsciounability, and contrary to public policy. After reviewing all of the evidence, the court rejected all of these defences. With respect to the argument that the agreement was void as being contrary to public policy, the court said as follows:
The agreement is not unenforceable on public policy grounds. It is true that the License-holding arrangement was structured as it is because of the regulatory requirements of the Department of Fisheries and Oceans. However, the parties to the agreement are not seeking to act or conduct themselves in a manner contrary to the regulations. The fishing activity contemplated by the License is not being carried on in a manner contrary to the regulations. Similar agreements have been considered enforceable by the Courts. I restrict my comments on the enforceability of the agreement to the particular circumstances of this case, noting in particular that it is a dispute between the parties to the agreement. Where third-party interests are involved, or where the purpose of the trust arrangement clearly is to effect a result which is contrary to the intent of the regulatory structure, the result may be different. [para 38 - footnotes omitted]
Contracts - Agreement with Processor - Implied Terms re Liability for shortfall
Ocean Fisheries Ltd. v. Mitchell, 2006 BCSC 713
This case involved an agreement between a herring fish harvester and a fish processor whereby the fish processor advanced money to the fish harvester in exchange for an agreement to deliver fish. The agreement did not address the issue of what would happen if there were not enough fish landed to cover the funds advanced. At trial evidence was lead that it was the custom of Ocean Fisheries Ltd. to require its fish harvesters to assume the risk of a shortfall. There was no evidence either way with respect to the practice of other fish harvesters. Based upon the conclusion that it would not be commercially sensible for a fish processor to advance funds and not expect to get it back, the court implied a term into the contract that the fish harvester would be liable for any shortfall.
Contracts - Frustration by Change in Minister's Policy
Doucette v. Jones, 2006 NBCA 63
See: Article about trial level decision as upheld by court of appeal: Licence Trusts and Frustration of Contracts.
Contracts - Partnerships - accounting And Valuation
Garland Estate v. Garland, 2005 NLTD 140
This case involved a application by the estate of a deceased partner for an accounting from the remain partner with respect to a fishing partnership. After reviewing the applicable law and the fishing assets, the court found that the property in question, including fishing licences, was partnership property , valued the property and ordered a pay out.
Practice - Lease of lobster licence - Mandatory injunction for return to original holder of licence
Shand Fisheries v. Goreham & Goreham, 2004 NSSC 272
Practice – Contracts - Bankruptcy - No discharge granted pending further payments of licence revenue
Dugas (Re Bankruptcy) v. , 2004 NBCA 15
This case involved a bankrupt fisher who because of poor health, arranged for another person to fish his crab licence. At issue was the extent to which the trustee in bankruptcy could collect the revenue received from the licence revenue. Although it was agreed that the licence itself was exempt from seizure (see s. 2 of the Bankruptcy Act), the court ordered that the revenue from the licence in 2003 was payable to the trustee. From that money the trustee was obliged to pay all necessary expenses relating to the fishery.
Editor’ note: For other cases on Bankruptcy as it relates to fishing licences see:Re Bennet (1988), 67 C.B.R. (NS) 314 (B.C.S.C.); Waryk v. Bank of Montreal (1990) 80 C.B.R. (N.S.) 44 (B.C.S.C.); Caisse Populaire de Shippagan Ltee v. Ward  N.B.J. No. 378 (N.B.Q.B.); Careen v. Fewer & Strathie Ltd. 2003 NLCA 33 (digested herein).
This case was upheld on appeal.
See also 2004 NBQB 200 where an application for discharge is refused.
Contracts - Existence and scope of partnership
Caul v. Caul, 2004 NLTD 223
This case involved a family fishing business. After the father retired, the five sons sought direction from the court as to who if any of them were partners. After reviewing the law of partnership in general and as it applies in fishing enterprises, per Johannes Estate v. Sheaves (1996), 23 B.C.L.R. (3d) 283, the court held that two of the five sons were partners. Some of the factors that influenced the finding of partnership between the two brothers were:
Sharing of profits;
Sharing of responsibility for losses, including guaranteeing debts;
Joint ownership of property;
Participation in management;
Tax filings as partners;
Signing authority for bank accounts and contracts;
Held selves out as partners; and
Some of the factors that influenced a finding that the remaining three brothers were not partners were:
One did not believe he was a partner;
They did not share responsibility for losses, including guaranteeing debts;
They did not own partnership property jointly;
They did not control the business or participate in management;
They did not make tax filings as partners; and
They did not have signing authority.
Practice – Bankruptcy – Order Granting Trustee to Sign Licence Documents Contracts – Breach - Order Granting Trustee to Sign Licence Documents
Careen v. Few & Strathie Ltd. , 2003 NLCA 33
This case involved the breach of agreement respecting the purchase and sale of a fishing licence. This agreement included a declaration of trust concerning the status of the licence prior to it being transferred to the purchaser. Prior to the licence being completely paid for and prior to the transfer of the licence, the vendor made an assignment in bankruptcy. In order to facilitate the completion of this transaction by the trustee, a court made an order authorizing the trustee to sign documents in place of the bankrupt vendor. Upon appeal by the bankrupt, the court refused to set aside the order and revised the order to provide that “any benefits, and any obligations necessary to claim those benefits, of the agreement . . . flow through to the trustee in bankruptcy, and for greater certainty, the authority of the trustee in bankruptcy to sign, in the place of [the bankrupt] any and all documentation required by the Department of Fisheries and Oceans, or others, to effect the transfer of fishing licences . . . is confirmed.”
Editor’s note: It is not known whether or not D.F.O. recognized the validity of this order and transferred the licence?
Post script: The use of trust agreements on the East coast of Canada has been challenged in a discussion paper released by D.F.O. entitled "Preserving the Independence of the Inshore Fleet in Canada's Atlantic Fisheries" December 2003 www.dfo-mpo.gc.ca/afpr-rppa
Practice – Stay Pending Appeal of Order for Transfer of Licence Contracts – Enforcement of Agreement to Hold Licence as Nominee
D.E. & Sons Fisheries Ltd. v. Goreham , 2003 NSCA 31
This case involved an action by a fish processing company to enforce an alleged agreement by a fisherman to hold a lobster licence as nominee for the company. Upon a summary judgement application, the court gave judgement for the fish processing company and ordered the fisherman to execute all necessary documents to transfer the licence to a nominee of the fish processor. The fisherman appealed the decision and sought a stay of execution of the order pending appeal.
The Court of Appeal applied the test set out in Fulton Insurance Agencies Ltd. v. Purdy (1990), 100 N.S.R. 92d) 341 (C.A.) to deny the stay for the following reasons:
(1) The applicant satisfied the first part of the test by establishing it had an arguable case on the appeal;
(2) Since the applicant could be compensated in damages and the respondent appeared to have the financial ability to pay the damages, there was no irreparable harm; and
(3)There were no exceptional circumstances, such as an egregious error on the face of the judgement, which would make it fit and just to grant a stay.
Contracts – For Sale of Licence
Baker v. Smith, 2002 NSCA 98
This case involved an application for specific performance of a contract to whereby a purchaser would fish a vendor’s snow crab licence and purchase it when it became transferable. The Court of Appeal upheld the ruling of the trial judge refusing to enforce the contract for the following reasons:
There was no agreement or “meeting of the minds” on an essential term of the contract regarding the details of future employment of the purchaser by the vendor; and
The deal was subject to the parties entering into a written contract, which they failed to do.