652013 B.C. Ltd. v. Don Wotherspoon & Associates Ltd.

2004 BCCA 557 652013 B.C. Ltd. v. Don Wotherspoon&Associates Ltd.

COURT OF APPEAL FOR BRITISH COLUMBIA Citation: 652013 B.C. Ltd. v. Don Wotherspoon & Associates Ltd., 2004 BCCA 557 Date: 20041028 Docket: CA031602 Between: 652013 B.C. Ltd. Appellant (Plaintiff) And Don Wotherspoon & Associates Ltd. Respondent (Defendant) Before: The Honourable Chief Justice Finch The Honourable Madam Justice Southin The Honourable Mr. Justice Thackray Oral Reasons for Judgment G.S. Hamilton Counsel for the Appellant P.J. Dadson Counsel for the Respondent Place and Date: Vancouver, British Columbia 28 October 2004 [1] FINCH C.J.B.C.: The plaintiff numbered company appeals the order of the B.C. Supreme Court pronounced 3 February 2004 dismissing its claim for monies alleged to be owing under a "display rental agreement" executed 13 September 1996 between the defendant (Don Wotherspoon & Associates Ltd.) and the plaintiff's predecessor and assignor (another numbered company). I will refer collectively to the plaintiff and its predecessor and assignor as "Sign-O-Lite", which is the operating name of the display rental business involved in this dispute. [2] The agreement concerned the rental of two neon signs spelling the words "insurance" and "autoplan". The signs were installed at the defendant's place of business. The agreement was for an original term of 72 months plus 30 days commencing 1 October 1996. Paragraph 9 of the agreement provided for an automatic

renewal of the agreement for a further 72 months unless either party gave written notice at least 60 days before the expiry of the term. [3] Paragraph 9 of the agreement reads: RENEWAL... It is mutually agreed that upon expiry of this Agreement, or of any extension thereof, this Agreement shall be deemed to be renewed for a further Term as set out in this Agreement (for a minimum of 72 months) and automatically thereafter for two further identical Terms (a maximum of three (3) renewal Terms) unless either party to this Agreement, at least 60 days before the expiry of any Term or any extension thereof or renewal thereof shall have given to the other written notice to terminate the Agreement. It is agreed that such notice shall not be effective unless delivered by double registered mail or personal delivery during normal business hours to the registered office of the Owner in British Columbia at least sixty (60) days prior to expiry and that any other form of notice including verbal notice shall not under any circumstances constitute notice or be effective as notice as [sic] termination of this Agreement. [4] On 9 September 1996, the defendant executed a second agreement with Sign-O-Lite styled "standard option to purchase" under which the defendant had an option to purchase the rented signs. The option required the defendant to give notice of its exercise of the option not later

than 12 months from the date the display rental agreement was accepted by Sign-O-Lite. [5] In the summer of 2000, Sign-O-Lite received an inquiry from the defendant as to the expiry date of the display rental agreement. In response, an accounts representative of Sign-O-Lite wrote a letter dated 6 September 2000 as follows: I am writing in response to our telephone conversation in regards to the expiry date for the above mentioned Display Rental Agreement. In reviewing your file our records indicate that the expiry of this Agreement is November 30, 2002, providing all the terms and conditions have been met. Please also be advised that as of today's date the outstanding arrears are $1,049.85. I trust payment will be received in our office no later than Wednesday September 13, 2000, to bring the account up to date. If you have any further questions or concerns please do not hesitate to contact our office. [My emphasis.] [6] In the summer of 2002, the principle of the defendant, Don Wotherspoon, spoke to a representative of Sign-O-Lite concerning the possibility of purchasing the signs. Mr. Wotherspoon deposed as follows as to the content of those discussions: 8. In or around August, 2002, I contacted a representative of Sign-O-Lite because I knew that the rental contract was coming to an end and I wanted to see if Sign-O-Lite was prepared to sell the Signs. Attached hereto as Exhibit "B" is a copy of correspondence that I received from Sign-O-Lite in respect of those discussions and in which Sign-O-Lite offered to sell the Signs for $4,834.00 plus taxes.

9. Given that the Rental Agreement was, in essence, a financing agreement and that Sign-O-Lite had already been paid for the Signs, I felt and advised Sign-O-Lite's representative that $4,834.00 was an unreasonable amount to pay for signs that were originally only worth $8,550.0 [sic], and for which the Defendant had paid $24,532.56 over the course of six years.

10. Throughout my discussions with Sign-O-Lite referred to in paragraphs 8 and 9 above, I advised the representatives of Sign-O-Lite that I would replace the Signs at the end of the Rental Agreement if an agreement to purchase the signs could not be concluded. At no time was I advised by Sign-O-Lite or any of its representatives that the Rental Agreement would be automatically renewed if I did not give notice in some specific manner contemplated by the Rental Agreement. In fact, I had tried to contact the representative for Sign-O-Lite to discuss these matters on a number of occasions but my telephone calls were not returned. [7] No agreement was reached. [8] In December 2002, a representative of Sign-O-Lite advised the defendant by telephone that the display rental agreement had been automatically renewed. Mr. Wotherspoon deposed that this advice came as a shock to him. He further deposed: I was not aware of any requirement that the Defendant would have to give notice if it did not wish to continue renting the Signs. [9] The defendant declined to pay any rent for the period following 30 November 2002. It took the position that Sign-O-Lite had, by its letter of 6 September 2000, given notice to terminate the agreement on 30 November 2002. [10] Sign-O-Lite relies on the language of the display rental agreement and claims that the agreement automatically renewed on 1 November

2002 for a further period of 72 months plus 30 days, to expire on 31 December 2008. Sign-O-Lite seeks to recover the sum of $25,859.70 (the balance said to be owing under the renewed display agreement until its expiry on 31 December 2008) plus interest and costs. [11] The case was heard in the Supreme Court on application for summary trial under Rule 18A. The learned summary trial judge accepted the defendant's position, and held that Sign-O-Lite's letter of 6 September 2000 was effective to terminate the agreement. She said: [10] I am prepared to find on a balance of probabilities that the defendant was entitled to treat the letter of September 6, 2000 as constituting written notice of termination of the lease on November 30, 2002. [11] The lease agreement is to be construed against the plaintiff lessor where there are conflicting equally reasonable interpretations. [12] I cannot say that it is entirely clear that the letter meets the requirements of the lease, but, in this instance, I am of the view that the benefit of the doubt should go to the defendant. [12] The only real issue on appeal is whether the learned summary trial judge correctly held that Sign-O-Lite's letter terminated the agreement. [13] With respect, the interpretation of the letter contended for by the defendant and accepted by the trial judge is not reasonable. The renewal clause, paragraph 9, expressly

provides that "... upon expiry ..." "this agreement shall be deemed to be renewed ...". No reasonable person aware of that term would interpret the reference in Sign-O-Lite's letter of 6 September 2000 to the expiry of the agreement on 30 November 2002 as notice of Sign-O-Lite's intention to terminate the agreement. The letter is not ambiguous. It simply provided information to the defendant, at the defendant's request. [14] The unfortunate fact appears to be that Mr. Wotherspoon, by his own admission, did not read the display rental agreement, and was not aware of its terms. The defendant's reliance on the Sign-O-Lite letter of 6 September 2000 as notice of termination is simply untenable. The terms of the display rental agreement may appear to the defendant, in hindsight, to be onerous, indeed unfair, but the agreement contains an express representation by the defendant that the defendant had "full opportunity" to read the agreement and to have its terms reviewed by counsel. [15] I would allow the appeal. [16] SOUTHIN J.A.: I agree. [17] THACKRAY J.A.: I agree. [18] FINCH C.J.B.C.: The appeal is allowed. "The Honourable Chief Justice Finch"