Date: 20010724
Docket: T-251-98
Neutral citation: 2001 FCT 823
BETWEEN:
458093 B.C. LTD.
Plaintiff
- and -
BENNIE DIETTERLE, AND THE OWNERS
AND ALL OTHERS INTERESTED
IN THE SHIP "RYAN" AND THE SHIP "RYAN"
Defendants
REASONS FOR JUDGMENT AND JUDGMENT
LAFRENIÈRE P.
[1] These written reasons confirm those I gave orally at the conclusion of a two day trial dismissing the Plaintiff's action with costs and ordering the release of the vessel "Ryan" from arrest.
[2] The Plaintiff brings this action to recover the amount of $24,818.55, plus interest and costs, which it claims remains owing by the Defendant Ben Dietterle ("Mr. Dietterle") pursuant to the terms of an oral agreement. The Plaintiff alleges the debt arises from losses incurred during the roe herring fishing season of 1997 and is calculated according to a profit or loss distribution formula agreed to by the parties. Mr. Dietterle denies having entered into any agreement as alleged in the Statement of Claim and, in particular, disputes any liability to indemnify the Plaintiff for its losses.
The Plaintiff's evidence
[3] The Plaintiff is a company which operates under the business name of BC Golden Roe. The company's business involves harvesting, processing and marketing roe herring for sale to markets in Japan. Mr. Michael Rekis, who has worked as a commercial fisherman for 35 years, is the Plaintiff's president and 50% shareholder.
[4] Mr. Rekis was the first of two witnesses called on behalf of the Plaintiff. He testified that he began to fish roe herring in 1973. Based on his experience, the roe herring industry was known to be very lucrative. That is until 1997, when for the first time his company incurred significant losses.
[5] Mr. Rekis stated that at the beginning of every fishing season, the Plaintiff would hire fishermen on a contract basis to harvest roe herring. The company purchased fishing licences, which were in limited supply, and then leased them to the fishermen. In addition, his company provided specific services to the fishermen, such as packing, trucking and air surveillance of fishing conditions. In return, the fishermen were required to fish exclusively for, and deliver their entire catch to, the Plaintiff.
[6] Prior to 1996, contracts between the Plaintiff and its fishermen were rarely in writing. Mr. Rekis explained that in order to avoid any misunderstanding, the Plaintiff decided to implement written agreements that year and retained the services of a lawyer to prepare a standard agreement.
[7] For the 1997 fishing season, the Plaintiff hired seven fishermen, including Mr. Dietterle. Mr. Rekis had been acquainted with Mr. Dietterle for approximately ten years. He telephoned Mr. Dietterle in late 1996 to inquire whether he would fish for his company during the coming fishing season. Mr. Rekis explained to Mr. Dietterle, in general terms, how the profit from the sale of roe herring would be divided between the company and the fishermen. According to Mr. Rekis, Mr. Dietterle agreed during this telephone call to fish for the Plaintiff, on the understanding that fishing licences would be leased to him.
[8] Mr. Rekis testified that he subsequently met Mr. Dietterle around January 10, 1997 in a bar in Nanaimo. At the time, Mr. Rekis was aware that Japan was experiencing an economic downturn and that there was uncertainty in the market of roe herring. Nevertheless, the Plaintiff had already committed itself to purchase fishing licences at a fixed price.
[9] During the course of the meeting, Mr. Rekis handed a copy of the company's standard contract to Mr. Dietterle. Mr. Rekis advised Mr. Dietterle that his company would supply him with four fishing licences at a cost of approximately $18,000 each and that the cost would be recovered from Mr. Dietterle's profits after the herring was processed and sold. According to Mr. Rekis, Mr. Dietterle said that he would review the document and return an executed copy either by mail or at their next meeting.
[10] Mr. Rekis stated that since he had already reviewed most of the terms of the agreement with Mr. Dietterle during their earlier telephone conversation, the focus of their discussion was a review of the projected costs of the services which were to be provided by the company and how those costs would be allocated and recovered from the fishermen. Mr. Rekis recalls in particular reviewing paragraph 6 of the agreement (Exhibit 1) with Mr. Dietterle, which is reproduced below:
6. It is agreed that the final settlement formula for valuation of Product and profit distribution shall be calculated and allocated between B.C. Golden Roe and the Fisherman as follows:
a) For product derived from the Licences procured from financing efforts of B.C. Golden Roe, and where the Fisherman has not provided adequate security for the Loan, the net amount calculated as follows in paragraph 9(c) shall be divided equally between B.C. Golden Roe and the Fisherman (fifty-fifty) for Product up to the statistical average.
If the Fisherman's production has exceeded the statistical average (area tonnage quota divided by number of licences in that area) then the net amount will be divided sixty percent (60%) for the Fisherman and forty percent (40%) B.C. Golden Roe on the remaining Product over the statistical average.
b) For product derived from licences where the Fisherman has provided adequate security for the Loan, the net amount calculated as follows in paragraph 6(c) will be paid entirely to the Fisherman:
c) Net amount is calculated as follows:
Value of Product $
Less the aggregate of:
i) Gross Herring Sales $
ii) Licence costs (average price paid) $
iii) Packing costs (average) $
iv) Commission $ 350.00 per ton
v) Processing costs $ 1,250.00 per ton
vi) Trucking costs (if any) $
vii) Miscellaneous (plane, scout boat, ice, pro rata basis) $
=======================
NET AMOUNT: $
The Fisherman's share of the remaining balance is to be paid to the Fisherman within ten (10) days of final sales or by July 31, 1997, whichever is earlier.
[11] Mr. Rekis acknowledged that he did not discuss who would be responsible for the expenses if a loss occurred since he had not contemplated such a scenario. He merely assumed that the fishermen would cover their share of the losses, as had been the practice in the industry.
[12] Mr. Rekis testified that he spoke to Mr. Dietterle on a number of occasions after their meeting in Nanaimo to inquire as to when he could expect to receive the signed copy of the contract. Mr. Dietterle offered a number of excuses over the next few weeks and repeatedly provided assurances that a signed copy would be forwarded shortly. Mr. Rekis indicated that he reluctantly allowed Mr. Dietterle to fish for his company on the strength of the assurances provided. In the end, the Plaintiff never received a signed contract from Mr. Dietterle.
[13] The opening of the fishery took place on March 10, 1997. Following the closing that same day, the fish were loaded onto packers and forwarded to the Plaintiff's processor, a company called Aero Trading. The fish was sold in mid-July and it soon became apparent that the Plaintiff was faced with a shortfall between expenses incurred and sale proceeds of some $244,000.
[14] Mr. Rekis reviewed a number of documents to explain how the Plaintiff calculated the fishermen's share of the loss. The Plaintiff deducted from the sale proceeds of each fishermen's catch the cost of their fishing licences. A further deduction was then made for their share of expenses, such as packing and processing, apportioned according to the tonnage of fish caught by the fishermen. Mr. Rekis also explained how the cost of the seaplane was allocated between the fishermen. An itemized invoice with a breakdown of expenses was prepared and sent to each fisherman.
[15] The amount claimed by the Plaintiff from the fishermen was reduced after Aero Trade agreed to forgive an amount of $100,000, on condition that the Plaintiff pay its outstanding account by December 31, 1997. Mr. Rekis spoke to Mr. Dietterle on numerous occasions before the expiration of the Aero Trade deadline to find out when payment could be expected. Mr. Rekis testified that Mr. Dietterle recognized his liability for the debt, but maintained that he was unable to pay.
[16] The following fishing season, Mr. Rekis was unable to put up collateral for his company to operate. He therefore agreed to work for another company, Capilano Pacific (Capilano). His job involved securing and leasing fishing licences on behalf of Capilano.
[17] In January 1998, Mr. Rekis was approached by Mr. Dietterle who was looking to lease fishing licences from Capilano. Mr. Rekis advised Mr. Dietterle that he could not obtain any licences from Capilano unless he agreed to pay 50% of his profit to pay down his debt to the Plaintiff. Mr. Dietterle begrudgingly agreed to the arrangement. As a result, an amount of $13,805.68, representing half of Mr. Dietterle's profit for the 1998 fishing season, was paid to the Plaintiff in July 1998 to reduce his debt.
[18] In cross-examination, Mr. Rekis acknowledged that by January 1997 he was aware that there would be a significant drop in the price of roe herring that season. He disagreed however that a loss was inevitable at that point and insisted that a profit could be made, albeit much lower than in previous years.
[19] Mr. Rekis conceded that the written agreement did not provide that the risk of loss would be borne by the Defendant, as alleged in the Statement of Claim. He maintained however that the industry standard was that in the event of a loss, fishermen were liable to reimburse expenses incurred on their behalf. According to Mr. Rekis, this was understood by Mr.Dietterle.
[20] Mr. Herman Gruhm was the second witness called by the Plaintiff. As director and shareholder of the Plaintiff, he was familiar with the standard agreement used by the company. He testified that he met with Mr. Dietterle on his boat at French Creek just before the fishing season opened in 1997. He asked Mr. Dietterle if he had yet to sign the contract. Mr. Dietterle replied that he didn't have it with him but assured Mr. Gruhm that it would be signed and given to Mr. Rekis.
[21] Mr. Gruhm next spoke to Mr. Dietterle around June 1997 when it became apparent that there would be a loss for the fishing season. Mr. Gruhm said that over the course of numerous telephone conversations Mr. Dietterle expressed great concern about his personal financial situation. According to Mr. Gruhm, Mr. Dietterle never disputed his liability to the company. The only concern expressed was his inability to pay and his fear that he could be forced to sell his house as a result.
The Defendants' evidence
[22] Mr. Dietterle testified that he was a fisherman by trade, with over 45 years of experience. He used to own his own fishing licences but sold most of them in 1985. He acknowledged having fished in 1997, but claimed that his dealings were solely with Mr. Rekis, and not the numbered company (the Plaintiff).
[23] Mr. Dietterle stated that he recalled being contacted by Mr. Rekis in the Fall of 1996. He didn't "really recall" having a meeting with him in Nanaimo in January 1997. He conceded however that a meeting may have taken place, but he had no recollection of it. He testified that he was given a brown envelope at some point by Mr. Rekis and was told that it contained a contract. Mr. Dietterle stated that he simply threw the envelope on the seat of his car and never looked inside or even opened it.
[24] Mr. Dietterle insisted that he had not been advised by Mr. Rekis that he would be liable to the Plaintiff if a loss was experienced by the company. His understanding was that he would only be liable for his own personal expenses.
[25] Mr. Dietterle said that he delivered between 42 to 44 tons of fish to the Plaintiff. He picked apart at length the calculation of his share of expenses by the Plaintiff. He denied ever agreeing to contribute to the costs of the seaplane in the North and disputed the manner in which other expenses were attributed to him.
[26] As for the evidence of Mr. Gruhm, Mr. Dietterle denied ever discussing the contract with him.
[27] In cross-examination, Mr. Dietterle admitted that he had not mentioned the brown envelope during his examination for discovery. He recognized that he had agreed to fish in return for Mr. Rekis providing financing for his fishing licences. He was adamant however that there was never any discussion regarding shared responsibility for loss. Mr. Dietterle maintained that he had never lost money from fishing and that it was therefore not of concern to him.
[28] Mr. Dietterle testified that his recollection of the meeting with Mr. Rekis was not very clear. He could not recall the conversation but maintains that if there was a serious discussion regarding the terms of an agreement, he would have remembered. When asked if he recalled whether Mr. Rekis reviewed paragraph 6 of the contract with him, Mr. Dietterle could neither confirm or deny it.
[29] Mr. Dietterle explained that he didn't look inside the brown envelope because he "didn't consider it pertinent". He acknowledged that Mr. Rekis asked him when they met subsequently in Comox whether the contract had been signed and that his response was that he did not have it with him. When asked by counsel for the Plaintiff whether he ever told Mr. Rekis that he would not be signing the agreement, Mr. Dietterle replied: "I never said that I would sign it".
[30] With respect to the arrangement with Capilano in 1998, Mr. Dietterle confirmed that he had agreed to pay half of his profit to Mr. Rekis in return for fishing licences, but only because he had no other choice if he wanted to fish that season.
[31] The second witness called was Terry Henshaw, a businessman involved in the fishing industry since 1964. He testified that the practice in the fishing industry regarding shared responsibility for expenses in the event of a loss was mixed. Although contracts in the fishing industry could be either verbal or in writing, he was only personally aware of oral agreements when individual fishermen were involved.
Submissions of the parties
[32] The parties are agreed that there are three issues to be determined:
(1) Was there an agreement between the parties ? (2) If so, what were the terms of the agreement ? (3) Is the Defendant responsible for loss claimed by the Plaintiff ?
[33] Mr. Doran, counsel for the Plaintiff, submits that the evidence clearly establishes that an oral agreement was reached between the parties, that the terms of the agreement are the same as reflected in the unexecuted contract and that the Defendant is liable, either expressly or by implication, to reimburse the Plaintiff for his share of the Plaintiff's losses.
[34] Mr. Doran maintains that the Defendant is bound by the terms of the written contract despite his protestations. He says that the terms of the agreement were fully reviewed by the Defendant and the fact he did not sign is of no consequence. By his conduct, which counsel characterizes as reckless, the Defendant signified his intention to be bound by the agreement. Counsel points out that Mr. Dietterle never disputed his liability for the debt before the action was commenced. He argues as well that the contract should be interpreted in light of the industry standard which provides that fishermen are required to reimburse expenses incurred on their behalf, even in the event of a shortfall.
[35] Mr. Evans counters on behalf of the Defendant that there is simply no evidence that his client agreed to indemnify the Plaintiff for expenses incurred in the event of a loss. He submits that it was never discussed, nor even contemplated by the parties. Counsel maintains that the Defendant delivered the fish he caught and fulfilled all the requirements of his arrangement with Mr. Rekis. Mr. Evans argues in addition that the Plaintiff failed to establish its damages, despite having been put on notice that the Defendant would hold it to the strictest proof.
Analysis
[36] The Plaintiff contends that a valid and binding agreement was reached between the parties notwithstanding the fact that Mr. Dietterle's failed to sign the contract. Whether or not a binding oral agreement was concluded depends on the particular facts of each case: Mark Fishing Company Limited v. Northern Princess Seafood Limited, (1990) 38 F.T.R. 299 at 305.
[37] Having carefully considered the evidence adduced at trial, I conclude that a meeting did take place in Nanaimo on January 10, 1997 between Mr. Rekis and Mr. Dietterle. I further find that during the course of this meeting, Mr. Rekis reviewed the terms of the written contract with Mr. Dietterle and that those terms were understood by him. I further find that Mr. Dietterle was aware, or ought to have been aware, of all the terms of the written agreement when he participated in the opening of the fishery in March 1997 and had therefore, by his conduct, accepted them.
[38] In making the above findings of fact, I have preferred the testimony of Mr. Rekis over that of Mr. Dietterle. Mr. Rekis' account of his dealings with Mr. Dietterle was provided in a straightforward manner, without hesitation or exaggeration. Moreover, Mr. Dietterle did not seriously dispute Mr. Rekis' clear recollection of events. Significantly, Mr. Dietterle did not protest that the terms contained in the letter of agreement were out of the ordinary, unfair or otherwise deviated from standard terms in the industry. Indeed, the fact that Mr. Dietterle fished that season, availing himself of the Plaintiff's licences, confirms than a mutually satisfactory agreement was reached between the parties.
[39] Mr. Dietterle, for his part, was less forthcoming as a witness. He contradicted himself on a few occasions and only reluctantly admitted facts when confronted in cross-examination. His selective memory was particularly problematic. It conveniently failed him when faced with facts which could be seen as adverse to his position (e.g. how and when he received a copy of the written contract). He couldn't even remember whether a meeting took place with Mr. Rekis in Nanaimo, a fairly significant event which one would be expected to recall.
[40] I am satisfied that on a balance of probabilities an oral agreement was reached between the parties, at the latest by January 10, 1997, on the same terms as those reflected in the letter of agreement (Exhibit 1).
[41] The next issue to be determined is whether, by the terms of the oral agreement, Mr. Dietterle is liable to reimburse the Plaintiff for the shortfall related to expenses incurred on his behalf.
[42] The Plaintiff concedes that the agreement does not expressly provide for the right of recovery directly from the fisherman in the event of a loss. It maintains however that the term is implied and that reference should be made to the practice in the industry (accepting personal responsibility for one's expenses in the event of loss) in interpreting the agreement.
[43] The first step in interpreting an agreement is to determine whether the language at issue has a plain and unambiguous meaning with regard to the particular issue in the case. The plainness or ambiguity of contractual language is determined by reference to the language itself, the specific context in which the language is used and the broader context of the contract as a whole. Where the contractual language is found to have a clear meaning, there is no need to look further.
[44] In my view, the agreement between the parties, taken as a whole, is unambiguous. The Plaintiff essentially agreed to arrange financing for leasing of fishing licences to the fisherman, to provide certain services and to pay the fisherman his share of the sale proceeds after deducting expenses in accordance with paragraph 6(c). In return, the fisherman undertook to fish exclusively for the Plaintiff and to deliver quality product to the Plaintiff, personally assuming the costs of harvesting and delivery and the risk of loss until the product is delivered to the Plaintiff.
[45] The rights and obligations of the parties are clearly defined. The fisherman assumes certain risks by entering into the agreement, as does the Plaintiff. The agreement is plainly structured so as to allow recovery of expenses by the Plaintiff from the final price payable to the fishermen. There is no provision imposing personal liability on the fisherman in the event of loss.
[46] The only risks assumed by the fisherman are found at paragraphs 7 and 9 of the agreement. At paragraph 7, the risk relates to herring roe lost while in the fisherman's possession and through his negligence until the product is delivered the Plaintiff. At paragraph 9, the fishermen agrees to bear his own costs and expenses for harvesting and delivery of the product, irrespective of the final price payable for the catch.
[47] Even if there was an ambiguity, the agreement would have to the interpreted strictly against the party having drafted it. In this case, the consequences of a loss were clearly not contemplated by the Plaintiff. In the absence of a provision making the fisherman personally liable, the Plaintiff is restricted to recover expenses incurred from the sale proceeds.
[48] As a result, resort need not be had to any extrinsic evidence to interpret the agreement. In any event, the Plaintiff has failed to establish the existence of a long-standing and consistent practice. The evidence before me suggests the industry recognized a moral as opposed to legal obligation on the part of fishermen.
[49] I conclude that the agreement between the parties did not contemplate, nor does it allow for, recovery from Mr. Dietterle.
[50] In light of the above finding, it is not necessary for me to address the question of damages. However, the issue was fully argued before me and I will deal with them briefly. The Defendant put the Plaintiff on notice that it would be put to the strict proof of damages. The evidence regarding the quantum of damages was somewhat confusing, based in part on numerous adjustments and recalculations performed by the Plaintiff. In cross-examination, Mr. Rekis was ill-placed to explain certain discrepancies in the calculation of damages, partly due to the fact that he was relying on documents prepared by a third party. In the end, the Plaintiff failed to establish with sufficient precision the exact amount claimed against Mr. Dietterle.
[51] Mr. Dietterle was successful at trial and is entitled to his costs. However, I am only prepared to award him half his costs in light of his failure to admit that an oral agreement had been reached between the parties, thereby unduly complicating and lengthening this proceeding. I therefore fix costs at $5,000, inclusive of disbursements, to be paid by the Plaintiff to Mr. Dietterle.
JUDGMENT
[52] The action is dismissed, with costs fixed at $5,000 payable by the Plaintiff to the Defendant, Bennie Dietterle. The vessel, which was arrested at the start of the proceeding, shall be released forthwith.
"Roger R. Lafrenière"
Prothonotary
Toronto, Ontario
July 24, 2001
FEDERAL COURT OF CANADA
Names of Counsel and Solicitors of Record
COURT NO: T-251-98
STYLE OF CAUSE: 458093 B.C. LTD.
Plaintiff
- and -
BENNIE DIETTERLE, AND THE OWNERS
AND ALL OTHERS INTERESTED
IN THE SHIP "RYAN" AND THE SHIP "RYAN"
Defendants
DATE OF HEARING: WEDNESDAY, OCTOBER 25, 2000, AND
THURSDAY, OCTOBER 26, 2000
PLACE OF HEARING: VANCOUVER, BRITISH COLUMBIA
REASONS FOR
JUDGMENT AND JUDGMENT BY: LAFRENIÈRE P.
DATED: TUESDAY, JULY 24, 2001
APPEARANCES BY: Mr. Robert Doran
For the Plaintiff
Mr. Norman B. Evans
For the Defendant
SOLICITORS OF RECORD: Fritz Lail Shirreff & Vickers
Barristers and Solicitors
Suite 201 - 15127 - 100th Avenue
Surrey, British Columbia
V3R 0N9
For the Plaintiff
Solicitors of Record
(Cont'd)
Evans & Company
Barristers & Solicitors
P.O. Box 40, 148 Weld Street
Parksville, British Columbia
V9P 2G3
For the Defendant
FEDERAL COURT OF CANADA
Date: 20010724
Docket: T-251-98
Between:
458093 B.C. LTD.
Plaintiff
- and -
BENNIE DIETTERLE, AND THE OWNERS AND ALL OTHERS INTERESTED IN THE SHIP "RYAN" AND THE SHIP "RYAN"
Defendants
REASONS FOR JUDGMENT
AND JUDGMENT
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