IN THE MATTER OF A DISPUTE - British Columbia



IN THE MATTER OF THE FOREST ACT, R.S.B.C.1996, c. 157,

AND IN THE MATTER OF THE TIMBER HARVESTING CONTRACT AND SUBCONTRACT REGULATION B.C. REG 22/96 (the “Regulation”)

AND IN THE MATTER OF THE COMMERCIAL ARBITRATION ACT,

AND IN THE MATTER OF A DISPUTE

BETWEEN:

T. WILLSON TRUCKING LTD.

(the “Claimant”)

AND:

TAY CREEK LOGGING LTD.

(the “Respondent”)

A W A R D

ARBITRATOR: Vincent L. Ready

COUNSEL: D. Laurence Armstrong for

T. Willson Trucking Ltd.

Derek A. Brindle for

Tay Creek Logging Ltd.

HEARING: January 22 and 23, 2000

Fort St. John, B.C.

WRITTEN SUBMISSIONS: January 17, 2000,

February 15, 2000,

March 10 & 20, 2000,

June 9, 14, 16, 22 & 27, 2000

July 28, 2000 and

August 11 & 15, 2000

PUBLISHED: October 16, 2000

2184

INTRODUCTION

I have been appointed to arbitrate this dispute under the Timber Harvesting Contract and Subcontract Regulations, B.C. Reg. 26/96 (the “Regulations”) enacted pursuant to the Forest Act, R.S.B.C. 1996, c. 157 as amended (the “Act”). Tay Creek Logging Ltd. (“ Tay Creek”) is a contract logging company based out of Fort St. John, British Columbia. The principal of Tay Creek, Roy Lansall, has been involved in the logging industry since 1949 and has operated Tay Creek with his wife, Gloria Lansall, since 1983. In 1996, Tay Creek entered into a contract with Canadian Forest Products Ltd. (“Canfor”) to harvest timber on Crown land under Canfor’s Timber Licence No. A18154. It is a five year replaceable contract that expires on August 1, 2001. T. Willson Trucking Ltd. (“Willson Trucking”) is a subcontractor that has provided timber loading and trucking services to Tay Creek since 1992. Terry Willson is the owner of Willson Trucking.

Willson Trucking contends that it was operating under a replaceable subcontract pursuant to the Regulations, when it performed loading services for Tay Creek. Willson Trucking claims that Tay Creek refused to continue the replaceable subcontract at the commencement of the 1998-1999 timber harvesting season. By letter dated December 8, 1998 enclosing a Notice of Dispute pursuant to the provisions of Part 4 of the Regulations, Willson Trucking formally advised Tay Creek of the dispute. Willson Trucking says that Tay Creek wrongfully terminated the subcontractual relationship by giving its own loader priority and putting Willson Trucking’s loader out of work completely. Willson Trucking seeks a declaration that it holds a replaceable subcontract with Tay Creek; an Order that it be immediately reinstated with full “seniority”; damages for lost revenue for the time it was out of work; and full indemnity for its costs of the arbitration. The calculation of damages has been adjourned by agreement.

Tay Creek denies that a replaceable subcontract existed between Tay Creek and Willson Trucking on or about December, 1998. More particularly, Tay Creek argues that the relationship does not fit the definition of subcontractor in the Regulations. Alternatively, Tay Creek argues that if a replaceable subcontract did exist, Tay Creek was not required to offer a replacement subcontract because of insufficient work. In the further alternative, Tay Creek argues that if a pre-existing replaceable subcontract existed between the parties, it was terminated when Willson Trucking repudiated it in or about April, 1997.

THE ISSUES

There are four issues to be determined in this arbitration:

i) Prior to April, 1997, did a replaceable subcontract exist between Tay Creek and Willson Trucking?

ii) If so, was the replaceable subcontract terminated in April, 1997?

iii) If so, did a new replaceable subcontract come into existence after April, 1997?

(iv) If a replaceable subcontract existed, did Tay Creek breach it in or about December, 1998?

THE EVIDENCE

Evidence on behalf of Willson Trucking

Mr. Schulte operated Willson Trucking’s but ‘n top loader since 1994. He testified that at the Tay Creek operation he worked from 2:00 a.m. until 5:00 p.m., five days per week (15 hours per day inclusive of standby time). On Sundays, Mr. Schulte would service the loader and was paid by Willson Trucking for that day.

Mr. Schulte’s evidence was that in the spring of 1997, he spoke with Roy Lansall who told him that Willson Trucking would be out of work because Tay Creek had bought its own loader. He testified that Lansall, more or less, offered him a job but told him first to tell Willson that his but n’ top was finished. He says that he told Lansall that he could tell Willson himself. A few weeks later when logging had finished, Lansall phoned him at home and asked him if he had told Mr. Willson. Mr. Schulte said he had not. He testified that he never did tell Willson that Lansall said Willson Trucking would be out of work as it was not his place. However, on cross examination he admitted that Willson Trucking provided a significant part of his work and he knew that it would mean that he would be out of a job.

On cross examination, Mr. Schulte also agreed that in the spring of 1997, Willson was telling him that financially he wasn’t sure he was going to make it. He agreed that there was “chatter” about whether Willson would be forced to turn in his but n’ top loader if there was bankruptcy. He said it could be that Terry Willson said to him in the spring of 1997 that due to financial circumstances he may not be operating his loader. He did recall something to the effect of telling Roy Lansall, prior to breakup in the spring of 1997, that Terry Wilson wouldn’t have his loader very long. Also, he agreed that he may have told Gloria Lansall that he didn’t think Willson was going to be able to keep his loader and that he may go broke.

Terry Willson testified that the relationship between Willson Trucking and Tay Creek began in the 1992–93 season when Willson Trucking started performing loading services with a wheel loader at the Tay Creek operation.

Mr. Willson’s evidence was that in 1994, Lansall told him that Tay Creek had to go “roadside” and to have a job, he would need a but n’ top loader. He says that he asked Lansall for a contract at the time he bought the loader but Lansall responded by saying “if my handshake and word isn’t good enough, you can go to hell.” Willson says that he accepted that. He purchased the but n’ top loader from Finning Tractors at a cost of $500,000.

He testified that his understanding of the arrangement with Tay Creek was that as long as he was doing the job satisfactorily, he had a contract. He says that Lansall never spoke to him about wanting to quit or retire. On cross examination, he agreed that the “arrangements between Willson Trucking and Tay Creek were pretty informal.” The relationship with Tay Creek from 1991 to 1997 was that when the season started he’d expect to get a phone call and go to work for Tay Creek. He assumed the work would be steady from season to season. He stated that he was assured that he’d get seasonal work every season, although there was no specified term as to how long each season of work would be. He never had an agreement in writing or verbally regarding how many loads, tonnage, or days of work required for each of these seasons. He testified that when he bought the but n’ top loader he knew the contract between Tay Creek and Canfor was for five years but not when it was up for renewal.

During cross examination, Mr. Willson was referred to a document entitled “Daily Loader Production Broke Down, for each Loader, for the Years 1994 to 1999” prepared by Tay Creek (the “Daily Load Production List”). Mr. Willson agreed, based on these records, that he worked five months during 1996, 4 months and 3 days plus forwarding work not listed in 1997, and 3 calendar months in 1998. According to the Daily Load Production List, Willson Trucking worked 88 days in 1996, 72 days in 1997, and 49 days in 1998. He testified that he didn’t work for Tay Creek in the fall of 1998 because he had been let go by then.

Mr. Willson denies that he told Lansall that he was quitting or turning in his but n’ top loader. He testified that in April, 1997, he was able to pay bills and had money in the bank. However, Willson Trucking’s financial statements show a sharp decline of income before depreciation in 1996 and a further reduction in 1997 and a loss in 1998. He sold three trucks to help his financial situation. He agreed that another five month season would not let him sustain debt.

He testified that the 1997 season ended on April 2 or 3rd, however, there was talk of shutting down the season in February. He says that it was then that he probably phoned Lansall to complain about the short season. On cross examination, Mr. Willson testified that he recalled saying to Lansall, words to the effect of “how the hell does Canfor expect me or anyone to make a living with short seasons or hang onto equipment or make a living or to survive.” He believes he asked Lansall if they were going to do the forwarding work and Lansall said he didn’t believe so. He then phoned a supervisor at Canfor, to see if they were going to do forwarding work. Willson Trucking did get forwarding work until early April and then moved the decked logs in July and August.

With respect to forwarding, Mr. Willson explained that if Canfor cannot hold wood at the mill they will forward it. Wood is taken from roadside to a landing and in the summer it is moved to the mill. Willson trucking is paid an estimation of the load for the roadside to landing work and at the end of the season, it is paid again for reloading the wood and taking it to the mill where the actual weight is determined. In addition, Willson Trucking is paid any difference between the advances and final weight. On cross examination, Mr. Willson agreed that when Willson Trucking did the roadside to landing work, it wasn’t sure if it would get the work of taking the wood to the mill in the summer.

Mr. Willson denies calling Lansall on April 3 or 4, 1997 and telling him that he was turning in his but n’ top loader. On cross examination he stated that he didn’t recall saying words to the effect “I can’t make a go of it financially, I may have to turn in my but n’ top, I’m going to turn in my but n’ top and I am going to sell my trucks.” While he doesn’t recall, he agreed Lansall may have said “you do what you have to do”.

On cross examination, Mr. Willson also acknowledged that he may have said something to Mr. Schulte about his financial difficulties or that times were tough in February or March of 1997 before Willson Trucking did the forwarding work.

On direct examination, Mr. Willson responded to Tay Creek’s allegation that on May 27, 1997 he phoned Lansall and told him that he had changed his mind about quitting. Mr. Willson testified that near the end of May, 1997, he phoned Lansall. The conversation was about selling some trucks and he wanted to be sure it was fine with Lansall. He stated that he thought the phone call occurred before he sold the truck. He says he sold one truck before April 30 and two trucks on May 12. He testified that Lansall told him that he got a loader and they discussed trailer configurations of trucks. He says that there was no discussion about him quitting or not quitting his contract.

With respect to the alleged May 27, 1997 conversation, on cross examination Mr. Willson admitted that he did not have a clear recollection of his conversation with Mr. Lansall at the end of May, 1997. When asked about the conversation he stated “I don’t recall. Basically, I recall telling him I was selling trucks. I don’t recall telling him I’d sell the but n’ top or about changing my mind. It’s fair to say I don’t remember.” Later he conceded that he may have told Mr. Lansall that he confirmed that he was keeping his but n’ top loader.

On cross examination, Mr. Willson testified that it wasn’t until August, 1998 that Lansall told him that he had purchased a but n’ top and that there would be no work for Willson Trucking unless Tay Creek couldn’t handle it. He denied the conversation took place in 1997. However, later when Mr. Willson was asked if in June, 1997, Mr. Lansall said “I’ll try to keep you busy. It’s a bad year and you don’t work for me but I’ll try and keep you working”, he responded “it may have happened but I don’t recall.”

He testified that in the summer of 1998, he was ready, willing and able to go back to work for Tay Creek. He had seen Tay Creek trucks working but didn’t do anything at first. He phoned Lansall three weeks later (probably some time near end of August he thinks) and asked him when he would need the machine. Lansall told him he wouldn’t need the machine and that he had meant to call Willson during break up (the beginning of April) and never got around to it. Mr. Willson testified that he was “pretty mad” and he told Roy that his “word and handshake wasn’t worth very much.”

His evidence was that when he heard from Lansall in August that he would be laid off, he phoned Canfor and told them that Roy was not taking his but n’ top loader and truck back for the season. He asked them for their help in straightening it out. He got a call 2 to 3 days later from Gloria Lansall to put the truck to work.

He received a letter dated December 11, 1998 from Tay Creek, which reads as follows:

Attn.: Terry Willson

Due to cut backs and weather conditions, Tay Creek Logging Ltd. only needs one Buton Top Loader for the winter season which starts December 15, 1998.

Also as of December 18, 1998 Willson Trucking Log Truck will be laid off, as Tay Creek has seniority trucks to put to work. Therefore last haul pay for Willson Trucking Log Truck is December 18, 1998.

Yours Truly,

R. Lansall

Tay Creek Logging

Mr. Willson testified that in all the years he worked for Lansall, he was never told that his work was unsatisfactory.

Ed Giesbrecht testified on behalf of Willson Trucking. He worked 12 years for Tay Creek. In 1994, Lansall told him if he wanted to continue to do work for Tay Creek, he needed to buy a processor. He understood that the deal with Tay Creek was that he had a processing contract for five years or longer on Canfor property. Mr. Giesbrecht testified that he understood that Tay Creek’s contract with Canfor was five years and that it was renewed in 1994-1995 or just before the 1996 logging season. He bought his machine in September, 1994. At that time, he had the sense that Lansall wanted to retire in five years.

His evidence was that Lansall had mentioned quitting or retiring a couple of times. In the 1995-96 season, Lansall asked him if he wanted to buy Tay Creek out. He said yes and went to Canfor for backing and they said they’d consider it. He went back to Lansall but never got either a quote or an answer from him.

Richard Bedier also testified on behalf of Willson Trucking. He operated a wheel loader for Tay Creek from 1991 to 1997. He testified that in the spring of 1997, he went to Ontario and returned May 12, 1997. Within a few days of his return, he got a telephone call from Lansall advising him that Canfor wanted to go roadside. Lansall asked him if he would buy a but n’ top loader and he said no. He does not recall having any discussion about Willson during the phone call. Mr. Bedier testified that a few days later when he was returning equipment, he saw Lansall and recalls him saying that he didn’t think Canfor should go roadside. Again, he did not recall discussing Terry Willson at that time. However, in cross examination, he stated that the conversation could have been in June; he could not recall if there was a discussion about Terry Willson and he couldn’t be sure if they did discuss Canfor’s move to go roadside. He also agreed that he only started recalling the events of 1997 a few weeks earlier and his memory was not good.

George Bergen, a skidder operator for Tay Creek until 1995, testified on behalf of Willson Trucking. His evidence was that in 1993 and in the spring of 1994, Lansall had talked about retiring. Lansall proposed to renew his contract, which was up for renewal in 1994, and have it performed by Bergen. He testified that he bought a skidder with the understanding that Lansall would buy it back from him in the spring. However, Lansall did not buy the machine as Bergen had expected.

Evidence on Behalf of Tay Creek

Gloria Lansall testified on behalf of Tay Creek. She is married to Roy Lansall and 50 % owner in Tay Creek Ltd.

Mrs. Lansall explained that she and Roy discussed retirement in the spring of 1994. They told Bergen and the others working for them that if they wanted to stay on and buy equipment, they would keep the camp. She says that Willson was not present during that discussion. She agreed that the result of their offer to the subcontractors was that Tay Creek would sell its equipment and get cash and then have the subcontractors purchase the equipment. In the spring of 1994, Tay Creek sold equipment at Ritchie Bros. Auction.

She testified that in February, 1997, Fred Schulte told her that Terry Willson would be selling his trucks and but n’ top in the auction. She passed this information on to her husband. During a conversation on March 4, 1997, Schulte told both her and Mr. Lansall that Terry Willson would be turning his but n’ top loader back to Finning Tractors.

Mrs. Lansall testified that on April 4, 1997 Terry Willson phoned the office to speak with Mr. Lansall. Brenda Kreuger was in the office at the time. Mrs. Lansall testified that Ms. Kreuger works once per week and they were able to check their records to determine that the date of the call was April 4, 1997. She overheard Mr. Lansall say “if that’s what you have to do, there is nothing I could do.” Then after the phone conversation Mr. Lansall said “Terry Willson just packed it in…he just can’t make it any more…he’d probably be turning his but n’ top in.” On cross examination, she stated that she wasn’t totally surprised by the phone call on April 4th because she had heard Schulte talk about it in February.

Their discussion turned to what they should do. Mr. Lansall said he would phone Ritchie Bedier and give him first opportunity to buy a but n’ top. She stated that she recalled this because they had really planned on retiring and did not want to buy a piece of equipment and pay for it over the next five to six years. She regarded it as a significant event.

She testified that Roy called Bedier and he came to their house two days later while she was present. Bedier was not interested in buying a but n’ top loader. So, they discussed the matter with Mike Symes but he was not interested either. Thereafter, they decided to buy the machine themselves. She didn’t like that idea because they didn’t want to invest that money at that time when they were getting ready to retire.

In any event, Tay Creek ordered a but n’ top loader on April 11, 1997. A copy of a letter dated April 11, 1997 to Roy Lansall from John Davie of Coast Tractor confirming the order for a John Deere 792 Log Loader was entered as an exhibit.

Mrs. Lansall testified that on May 27, 1997, while in Campbell River, Willson telephoned Mr. Lansall on a hands free cell phone. She could hear both ends of the conversation. During the conversation, Willson said “I’ve changed my mind, I’m keeping my but n’ top loader.” Roy said “what do you mean, you’ve changed your mind because I’ve already ordered a but n’ top.” Willson said “can’t you cancel it.” Roy said “you can’t cancel when you’ve placed an order they have already half built it.” Then he said “I’ll be home in a few days and I’ll talk to you when I get there.” An invoice from BC Tel Mobility Cellular showing calls made to a cell phone for Tay Creek Logging on May 27, 1997 was entered as an exhibit. It shows four incoming calls to Campbell River on May 27, 1997. Mrs. Lansall testified that the call received at 2:18 p.m. was from Terry Willson.

She testified that they both said there was no possible way they could cancel the but n’ top loader. They made a commitment to John Deere and it was being fabricated. Tay Creek had a history of a good relationship with John Deere.

Brenda Kreuger testified that she prepared a document entitled “Daily Loader Production Broke Down for Each Loader for the Years 1994 to 1999” which was entered as an exhibit. In addition to the figures included in that document, Willson Trucking’s loader did forwarding work for 12 days from March 17 to April 2, 1997.

She testified that on April 4, 1997 she was in the Tay Creek office when Willson called. She recalls Lansall telling Willson “if that’s what he had to do then he’d have to do it.” Her evidence was that after the phone conversation, Lansall said “Terry Willson had phoned…he was giving his loader back and couldn’t keep it up…we’d have to decide what we were going to do because we had no loader for the fall.” She recalls the conversation because it put Tay Creek in a “spot” of having to find someone with a loader or purchasing one itself.

The last witness called on behalf of Tay Creek was Roy Lansall. Mr. Lansall is the president and 50% shareholder of Tay Creek. He is 64 years old and has worked in the logging industry since the age of 16.

Mr. Lansall testified that he signed a five year contract with Canfor in June, 1993. That contract was not assignable but had a renewal provision. The contract was renewed in 1996 and at that time became assignable. The contract dated for reference June 18, 1996 was entered as an exhibit at the hearing.

Mr. Lansall’s evidence was that in 1994, Canfor was pushing for a roadside operation. He told Willson that if he was interested he could have the opportunity, but he would have to buy a but n’ top loader. Willson Trucking would not have had a job, if it had not bought the but n’top loader. He testified that he has no idea what Willson is talking about regarding a written contract at the time he bought the but n’ top loader. He denies saying “if my word and handshake are not good you can go to hell.”

Willson bought a but n’ top and continued to work at roadside logging. At that time, it was two years into his contract with Canfor. He says that he did not discuss retirement with Willson.

He testified that he did discuss a deal with Bergen and Giesbrecht wherein he would stay five years, and they could have the work as long as he was there. However, he testified that he never discussed this deal with Willson.

Mr. Lansall testified that the reason he did not purchase the skidder back from Bergen was that Bergen had not purchased the machine according to arrangements that Mr. Lansall had made with John Deere.

With respect to forwarding work, Mr. Lansall testified that the logging season is basically five months. They usually never get in six months. In direct examination, Roy Lansall testified that forwarding work was not part of Tay Creek’s replaceable contract. Tay Creek would do forwarding work if Canfor wanted to finish a block, an area within a cutting permit, and not have to go back in for the logs during the next winter. He stated that his contract services ended when the logs were loaded onto the truck. His trucks loaded to mill or landing. It didn’t matter how he was paid because he was paid for falling, skidding, bucking and loading in the logging contract. Those were the phases of the operation. He testified that the off-loading of logs at the landing was not part of his work and another contractor could get hired to do that work.

He denies that in February, 1997, there was talk of Canfor shutting down the season. He says that he has no recollection of Willson phoning him in February, 1997 to ask how long the season would be. He also says that he has no knowledge of Willson going to Canfor regarding the forwarding work. He testified that Canfor asked him whether Tay Creek would be interested in loading the wood. He agreed to load the wood and offered Willson Trucking the position of loading it out. In the spring of 1997 when forwarding occurred, that wood was taken outside his contract block. Mr. Lansall’s contract with Canfor identifies the block that Tay Creek is involved in.

However, during cross examination Mr. Lansall admitted that his job was to get the logs from the block to the mill unless Canfor specified otherwise. He stated that it was Canfor’s financial decision whether to forward wood left on the block or have contractors go back the next winter. He says that he does road building on his block.

Mr. Lansall testified that on April 4, 1997, he spoke to Wilson on the telephone. He recalls Willson saying “I just can’t make it with Canfor’s short seasons and the way they are doing things so I’m turning my but n’ top back and I’m going to get rid of my logging trucks.” He testified that he said “Terry you’ll do what you have to do there is nothing I can do about it you’ll do what you have to do.” He recalls saying to Gloria “I guess Terry just packed it in.”

He confirmed that he had heard rumors about Willson’s financial difficulties and his call wasn’t a surprise to him. On cross examination, he agreed that he heard from Fred Schulte, in the spring of 1997, that Willson was threatening to quit. Schulte told him that Willson was turning the loader back in and he wouldn’t be back. He denies telling Schulte that Willson and his but n’ top loader were finished or offering Schulte a job in February or March.

He testified that he phoned Ritchie Bedier within a day or so and told him what happened. Bedier was surprised and Lansall asked him if he’d be interested in buying a but n’ top. Bedier said “no,” but if Lansall bought it, he’d be interested in running it. On cross examination, he says that Bedier’s recollection of that happening in May is wrong because he was away. He says that in June, he phoned Bedier and asked him to return some materials.

After Mike Symes also indicated he was not interested in the job, Mr. Lansall and his wife decided to buy their own but n’ top. He phoned John Deere Coast Tractors and bought a 792 John Deere. The new loader cost, $600,000, including financing.

He testified that it wasn’t his intention to buy a but n’ top prior to his discussion with Willson. It cost a lot of money and he had no complaints with Willson. On cross examination, he agreed that he neither confirmed, by talking or writing to Willson, that indeed he would not be back with his loader. On the strength of Willson’s call advising him that he was turning in his but n’ top loader, Mr. Lansall bought his machine. He had a contract to fulfill and needed a loader.

On cross examination, Mr. Lansall said there was no room for misinterpretation in the telephone conversation with Willson. He says he didn’t phone him because “when someone quits he quits.” He testified that he understood from the April 4th discussion that Willson would not be there next season.

Mr. Lansall also testified that on May 27, 1997, while on vacation in Campbell River, he received a call from Willson. Willson told him that he had changed his mind. Lansall said “what are you talking about” and Willson replied, “I’ve changed my mind, I’m keeping my but n’ top, I’ve sold my trucks.” Lansall replied, “it’s kind of late. I’ve already got a but n’ top on order, it’s being built.” Willson asked if Lansall could cancel the order and Lansall replied that he could not. He said that he was going to be leaving there and he’d see Willson when he got to Fort St. John.

A copy of Roy Lansall’s Scotia Bank Statement entered as an exhibit shows debit transactions for BC Ferries on May 6, 1997 and May 29, 1997. Mr. Lansall testified that he returned to Fort Saint John on June 4, 1997. Upon his return, he told Willson that he’d try to keep his loader going and he’d give him extra work. He says that this was the first time he advised Willson that Willson Trucking would not be working because Willson had said he was turning in his loader.

Mr. Lansall also testified that he didn’t feel that he had any obligation under his old agreement to put Willson back to work, because he had left. He felt bad for him and told Willson that his own loader would be number one but he’d keep him working if he could. At that time, Willson brought up the idea of buying new trucks. He testified that he said to Terry “do not buy anymore trucks, there is no more deal here.” He testified that his earlier arrangements with Willson were premised on Willson running a loader.

Mr. Lansall explained that while it didn’t make sense to buy a loader, he bought it because Willson said he was turning his in and he had a contract to fulfill with Canfor. Since he couldn’t find anyone suitable to fill the contract, he had to buy his own. He testified that he needed to have people he could totally depend on. He could not have people saying they were leaving or have machinery that was not maintained. Even on cross examination, Mr. Lansall stated that because Willson had called him and canceled and then later changed his mind, he could not depend on him.

He stated “I never explored the option of getting out of the deal with John Deere, even if I wanted to let Willson do it, I couldn’t do it because I didn’t trust that he could make it if he got into trouble in mid contract. So, I had to protect myself. I have found in business that anytime you change your mind, it comes back to bite you.” In cross examination he stated “…I couldn’t call Coast and cancel because I decided if Willson phoned me and canceled and then changed his mind, I couldn’t depend on him…I had written Willson off on the strength of his phone call. Willson was having other problems…it makes for a very shaky relationship.”

He testified that he has quite a few people working for him and has an obligation to the rest of his contractors. If he lost a loader in mid season, it would be “totally disastrous.” Loaders are hard to find and he needs dependable machinery. He testified that he never planned to eliminate Willson so he could get a loader. The previous arrangement was fine until Willson phoned and said he was turning in his loader.

He agreed that he spoke to Willson in the summer of 1998 regarding the prospect of work that season. Willson phoned him near the end of July and asked him when he was going to put his loader to work. He said that due to the early start of his own and being cut 12,000 cubic metres, he wouldn’t be able to put the machine to work. He says that Willson slammed the phone but never said anything about his handshake, word or that there was a replaceable contract.

On cross examination, when asked why he waited until December 11, 1998 to tell Terry that he didn’t have work, he answered that he had already told Willson on the phone that he wouldn’t have summer work and he wasn’t committed to bring him back. In December he let him know that there was no extra work for winter because he thought he better let him know because he was so mad in the summer.

On cross examination, Mr. Lansall testified that he couldn’t have told Willson at the time of break up that there would be no work because he wouldn’t have known at the time. He denies ever saying to Willson that he meant to call him to say he wouldn’t need him in 1997-98 season but hadn’t gotten around to it.

The Law

The Act and Regulations provide that if a number of criteria are satisfied then a party to a replaceable contract must enter into a replaceable subcontract with its subcontractors. The relevant legislative provisions are as follows.

Section 152 of the Act defines a replaceable subcontract:

“replaceable subcontract” means a subcontract

a) that includes a requirement that the contractor, by a prescribed time before expiry of the existing subcontract, must, if the subcontractor has satisfactorily performed the existing subcontract up to the time of the offer make an offer, to the subcontractor, conditional on the subcontractor continuing to satisfactorily perform the existing subcontract, of a replacement subcontract that

(i) provides for payment to the subcontractor of the amounts agreed by the parties, or failing agreement, of the amounts settled by the method of dispute resolution provided under the existing subcontract at the time of the offer, and

(ii) subject to a requirement as to length of term prescribed under section 157 (d) (ii), is otherwise on substantially the same terms and conditions as the existing subcontract, and

b) that conforms to the requirements for replaceable subcontracts prescribed under section 157.

Section 34 of the Regulations provides:

34 A contractor under a replaceable contract who enters into a subcontract that pertains to that replaceable contract must do so by means of a replaceable subcontract.

Section 1 of the Regulations defines “contract” and “subcontract”:

“contract and “subcontract” mean a contract or a subcontract, as defined in section 152 of the Act, if

a) the contract or subcontract provides that the contractor or subcontractor will carry out one or more phases of a licence holder’s timber harvesting operation under

…

(ii) a replaceable forest licence,

b) one or more of the following applies:

(i) the contract or subcontract is for a specified term of more than 6 months;

(ii) the total specified terms of

(A) the contract or subcontract, and

(B) any previous contract or subcontract entered into during the same calendar year in relation to the same licence

is more than 6 months;

(iii) during a calendar year, the total of

(A) the work performed by the contractor or subcontractor under the contract or subcontract, and

(B) similar work performed by the contractor or subcontractor under previous contracts in relation to the same licence

is more than the equivalent of 6 months full time work for a contractor or subcontractor performing similar work in similar circumstances and includes a market contract or market subcontract;

Also in Section 1of the Regulations:

“Contractor” has a meaning that corresponds to “Contract”; and

“Subcontractor” has a meaning that corresponds to “subcontract”.

“phase” when used in relation to a timber harvesting operation, means felling, bucking, yarding, skidding, processing, decking, loading, hauling…

Section 35 of the Regulations contains the replacement provisions:

35

(1) The replaceable subcontract that a contractor is required to offer to a subcontractor under section 34 must provide that, if the subcontractor has satisfactorily performed its obligations under the subcontract, and subject to the contractor continuing to satisfactorily perform the existing subcontract,

(a) the contractor must offer a replacement subcontract to the subcontractor, and

(b) the replacement subcontract must

(i) be offered 3 months or more before the expiry of the subcontract being replaced,

(ii) provide that it commences on or before the expiry of the subcontract being replaced,

(iii) be for a term no shorter than the term of the subcontract being replaced,

(iv) provide for payment to the subcontractor of amounts in respect of timber harvesting services as agreed to by the parties or, failing agreement, as determined in accordance with section 25, and

(v) otherwise be on substantially the same terms and conditions as the contract it replaces.

(2) If a replaceable subcontract does not provide for an expiry date the subcontract expires on the second anniversary of the date on which the contract commenced.

POSITIONS OF THE PARTIES

Position of Willson Trucking

Willson Trucking argues that the evidence establishes that all three criterion of the definition of “subcontract” under s. 1(b) of the Regulations are met so as to give rise to the existence of a replaceable subcontract with Tay Creek. With respect to the first criterion, Willson Trucking argues that if there is a conflict in the evidence that would have been proven had a written contracted existed, an adverse inference should be directed against Tay Creek for its failure to comply with the Regulations and provide Willson Trucking with a written contract.

Willson Trucking submits that George Bergen, Ed Giesbrecht, Fred Schulte and Terry Willson all gave evidence that the term of the subcontract was to be the renewal term of Tay Creek’s contract with Canfor. It asserts the substance of the agreement was clear. That is, if the subcontractor purchased equipment, Tay Creek would renew its contract with Canfor and the subcontract would be given terms which coincided with the renewal term with Canfor. It argues that to suggest otherwise is ludicrous. Thus, it argues the specified term of the subcontract was five years from August 1, 1996, a specified term of more than six months. Willson Trucking argues that to meet the legal requirement of certainty of terms, a contractual provision need not be precisely stated provided it can later be determined. Therefore, it submits that it matters not that Mr. Willson, on cross examination, admitted that when he bought the but n’ top loader he knew the contract between Tay Creek and Canfor was five years but not when it was up for renewal.

Moreover, Willson Trucking argues that the second temporal criterion of the definition of “subcontract” is met. It submits that in calendar year 1997, Willson Trucking worked January, February, March and just into April. In the summer, it did forwarding work for July and August. In the next fall it worked November and December. Counsel argues that even assuming there to be three separate subcontracts, Willson Trucking worked seven months plus a short part of April in calendar year 1997, for a total of 211 days.

Willson Trucking also argues that during the calendar year, it performed work that was more than the equivalent of six months full time work, thus also satisfying the third criterion of the definition of “subcontract”. It submits that a loaderman worked five days per week at an average 15 hours per day and Sundays at five hours for a total of 80 hours per week. Willson Trucking argues that the full time equivalent is 40 hours per week, thus the loader works two days equivalent full time work for each calendar day. Therefore, Willson Trucking asserts that for the calendar year of 1997 it worked more than the equivalent of six months full time work.

With respect to the forwarding work, Willson Trucking argues that forwarding is an integral part of Tay Creek’s contract with Canfor. If logs are forwarded because it is cheaper than road building, then it is simply another step in Tay Creek’s stump to dump logging operation. It argues that the loading of forwarded decked wood in July and August of 1997 pertains to Tay Creek’s replaceable contract with Canfor to deliver those logs to its mill. Furthermore, Willson Trucking argues that the fact that final payment for all the various subcontractors, including Willson Trucking, is suspended until after the forwarded wood is finally shipped to the mill and weighed is further evidence that forwarding is part of the Canfor contract.

In answer to my request for further submissions on the September 8, 1997 Schedule A, Willson Trucking argues that the Schedule A’s apply to various individual blocks, but all blocks lie within the area of Forest Licence A18154, and all timber harvested pursuant to the replaceable contract is covered by that Forest Licence. It argues that the definition of “contract” and “subcontract” in section 1(b)(iii)(B) of the Regulations provides that the test of inclusion of “similar” work is whether it is “in relation to the same licence”. As well, Willson Trucking argues that the Schedule A’s provided by Tay Creek clearly indicate that provision of a rate in subparagraph 3 (d) was made for all other timber harvesting services and for all related timber harvesting services and no doubt forwarding fell within the meaning of “other” or “related” timber harvesting activities.

Willson Trucking denies that it terminated its subcontract with Tay Creek. Given Mr. Schulte’s comments about Willson’s financial situation, it surmises that Roy Lansall must have been half expecting Willson Trucking to fold by the spring of 1997 when Mr. Willson called in February to complain about the short seasons. Willson Trucking argues that Mr. Lansall interpreted Mr. Willson’s comments as an intention to turn in his but n’ top loader at some future point in time. He relies on Gloria Lansall’s testimony that she thought Willson would “probably be turning the but ‘n top in” and Roy Lansall’s testimony that he said to Gloria and Brenda Kreuger “I guess Terry just packed it in.”

In an effort to establish that Mr. Willson’s evidence should be preferred to that of Mr. and Mrs. Lansall, Willson Trucking relies on the evidence of Ed Giesbrecht and George Bergen to call into question Mr. Lansall’s character and demeanor and to attempt to establish that he has lied to a subcontractor on a previous occasion.

Willson Trucking also argues that Mr. Lansall’s evidence of wanting to retire does not make sense given that he ordered a new but ‘n top loader to replace the one he “guessed” would be turned in by Willson Trucking. Willson Trucking raises the point that Mr. Lansall never sent a note to Mr. Willson confirming his understanding that Willson Trucking quit the contract. As well, Willson Trucking relies on the evidence that Mr. Lansall did not inquire of Coast Tractor to see if the order for a but n’ top could be cancelled after he says Willson advised him that he had changed his mind. Willson also relies on Mr. Bedier’s testimony that in mid-May or early June he was asked by Mr. Lansall to buy a new but ‘n top loader. Willson Trucking argues that if Tay Creek, after ordering its own machine on April 11, 1997, still needed a second machine in mid to late May, Roy Lansall should have been jubilant to hear that Mr. Willson had changed his mind on May 27, 1997. Willson Trucking argues that Tay Creek purchased its own loader so as to bootstrap its own machine into a seniority position.

In the alternative, Willson Trucking argues that if the call wherein Willson is alleged to have said he was going to turn in his loader is true, such a statement is not a repudiation of the subcontract. It argues that Willson Trucking could have turned in the machine and as long as it was ready with a machine to return to Tay Creek when the logging season commenced the next fall, it would not have repudiated the subcontract. Willson Trucking argues that Mr. Lansall did not take the call as a clear repudiation as he said to Gloria “I guess Terry just packed it in.” As well, Gloria remembers that Roy said Terry “would probably be turning in his loader”. Willson Trucking argues that this evidence indicates that only a possible future breach might occur and is not a repudiation of the subcontract.

Willson Trucking argues that if I accept Tay Creek’s evidence and find that it was an anticipatory breach, the contract was still not repudiated as Tay Creek failed to do anything to accept the breach. Counsel argues that Lansall’s evidence that he said to Willson “do what you’ve got to do” does not constitute an affirmative step in treating the anticipatory breach as a repudiation. Furthermore, Willson Trucking argues that the ordering of the new loader cannot be said to have been an acceptance of an alleged anticipatory breach. Willson Trucking argues that the evidence suggests that ordering the new loader was not in response to the alleged termination, rather to replace Ritchie Bedier’s wheel loader.

In the alternative, if it is found that Willson Trucking terminated the contract, Willson Trucking argues that a new replaceable subcontract did come into existence in 1997 as the three criteria of the Regulations are met. By applying the load records and utilizing the forwarding in July and August, or by applying the 14 to 16 hours per day to full time equivalent work, Willson Trucking says that in either instance it would qualify as more than six months worked under s. 1 (b) (ii) or (iii).

If a new replaceable contract had commenced in 1997, Willson Trucking argues that 1998 should not be used as it is incomplete only because of Tay Creek’s breach. It argues that the evidence shows that the work that season started in July of 1998, and but for Tay Creek’s breach, Willson Trucking would have worked far more than the requisite six month minimum.

Position of Tay Creek

With respect to the first issue, Tay Creek argues that none of the conditions of Section 1 (b) of the Regulations are met to establish a replaceable subcontract. In particular, Tay Creek argues that there is no evidence of Tay Creek and Willson Trucking expressly agreeing to a five year subcontract. It argues there was never an agreement entered into between Tay Creek and Willson Trucking for a “specified term,” thus conditions (i) and (ii) are not met.

Tay Creek disputes that Willson Trucking performed work during the calendar year that was more than the equivalent of six months full-time work. At most, it calculates Willson Trucking worked the equivalent of 4.5 months of full time work during the months of January, February, March, November and December, 1997. It argues that no expert or other evidence was led to support the approach advanced on this issue by Willson Trucking.

Furthermore, Tay Creek argues that additional work of forwarding decked wood to the mill in July and August, 1997 should not be included in the calculation of six months full-time work. It says that work was additional work to which Tay Creek was not automatically entitled under its contract with Canfor. There was no obligation on the part of Canfor to give the work to Tay Creek. It argues that the forwarding work was not under the contract and could not therefore “pertain” to the replaceable contract as required under the Act and Regulations. Thus, Tay Creek argues that that work should not be taken into account in determining the third criterion.

In answer to my request for further submissions on the September 8, 1997 Schedule A, Tay Creek advises that the provisions of that Schedule do not relate to the forwarded decked wood which was loaded from the staging area to the Mill in July and August, 1997. According to the submissions, that wood came from “harvesting operations” on the “Lands” described in the Schedule A, dated for reference January 27, 1997, being “Blocks 5, 6, 7, 8”, during the operating period January 27 to March 15, 1997.

Tay Creek argues that the evidence establishes that Mr. Willson telephoned Mr. Lansall on April 4, 1997 and that Willson told him that he was turning in his but n’ top loader. This amounted to a repudiation of the contract. Tay Creek says there is ample evidence that Lansall communicated his acceptance of the repudiation to Willson and that he agreed to terminate the contract.

Tay Creek argues that if it is found that a replaceable subcontract existed and that Willson Trucking in April, 1997 terminated the contract, a new replaceable subcontract did not come into existence. Tay Creek asserts that the uncontradicted evidence is that, at no time, was there a “specified term” of one or more subcontracts between Tay Creek and Willson Trucking whether in the same calendar year, or otherwise. Specifically, at no time after April, 1997 did Tay Creek and Willson Trucking enter into a subcontract or a series of subcontracts in relation to the same licence for a specified term of more than 6 months. Similarly, Tay Creek argues that a review of it’s daily loader production records indicates that during the calendar years 1997 and 1998, Willson Trucking did not perform “more than the equivalent of 6 months full time work.”

DECISION

The first issue that I must determine is whether the relationship between Tay Creek and Willson Trucking meets the definition of “subcontract” in s. 1 of the Regulations so as to give rise to a replaceable subcontract. It is common ground that Canfor and Tay Creek entered into a replaceable contract dated June 18, 1996 and during the logging seasons up to and including 1996-97, and during the 1997-98 season, Willson Trucking carried out the loading phase of Canfor’s timber harvesting operations under its Forest Licence No. A18154. Thus, it is not disputed that Willson Trucking meets the operational requirements of s. 1(a) of the Regulations.

In 1994, Tay Creek was being pushed by Canfor to move to a roadside operation that required the use of a but n’ top loader. I find that Tay Creek offered Willson Trucking the opportunity to continue doing the loading work on the condition that it purchase a but n’ top loader. It was made clear that refusal to do so would mean that Willson Trucking would not have a job with Tay Creek. Hence, Willson Trucking purchased the but n’ top loader at the substantial cost of $500,000.

I agree with Counsel for Willson Trucking that it would be most unlikely for someone to purchase such an expensive piece of equipment without an understanding of the length of the subcontract for which it was being purchased. However, I am left with no evidence that Wilson Trucking and Tay Creek discussed the length of the subcontract or even the amount of time remaining in Tay Creek’s contract with Canfor. Although, Willson trucking led evidence from Ed Giesbrecht and George Bergen, that they understood their deal with Tay Creek was five years or longer on Canfor property, I cannot rely on this evidence to find that Willson Trucking and Tay Creek had agreed to the same deal. Mr. Willson simply understood that if he did the job satisfactorily, he would receive a call to return to work the following season. In short, I am not satisfied that the evidence establishes that there was a specified term as to the length of the contract between Willson Trucking and Tay Creek.

In my view, a “specified term” means one that is expressed definitely or is fixed, settled or determined: Buro v. Southam Press Ltd. [1974] 6 W.W.R. 504(Alta. S.C.). There is no evidence that the parties ever discussed a definite term of the subcontract. It is not a matter where there is conflicting evidence as to the term of the contract. Simply, the parties never settled or determined the length of the subcontract. Thus, I cannot find that the subcontract was for a “specified term of more than 6 months” or that “the total specified terms of the subcontract and any previous subcontracts…[was] more than 6 months.” Therefore, the first and second temporal criteria of the s. 1(b) definition of “subcontract” are not met.

To satisfy the third criterion of the definition of “subcontract”, during a calendar year, the total of the work performed by Willson Trucking under the subcontract and similar work performed by Willson Trucking under previous contracts in relation to the same licence must have been more than the equivalent of six months full time work for Willson Trucking performing similar work in similar circumstances.

The evidence before me is that Willson Trucking’s loaderman worked on average 15 hours per day. For now, leaving aside the matter of summer forwarding work, according to Tay Creek’s “Daily Loader Production Lists”, Willson Trucking worked 88 days in 1996 and 72 days in 1997. In addition, I accept the evidence of Ms. Kreuger that Willson Trucking worked an additional 12 days in March and April, 1997, which were not recorded in that document. Given this evidence, I am satisfied that Willson Trucking worked 1320 hours in 1996 and 1260 hours in 1997.

The Oxford Dictionary definition of “equivalent” provides:

1 a. equal in value, amount, importance, etc.; corresponding; meaning the same; having the same result.

Therefore, in my view, the plain ordinary meaning of the words “is more than the equivalent of six months full time work” is that the amount of work performed is more than what equals six months full time work. I do not read s. 1(b)(iii) of the Regulations as requiring that the work be performed over the course of more than six months. Indeed, the only temporal restrictions are that the work be performed within the calendar year and that it be more than the equivalent of six months full time work. Provided during a calendar year, the subcontractor works more than what would equal six months full time work, then the temporal requirement of the definition of subcontract in s.1 (b) (iii) of the Regulations is met.

I accept that 40 hours per week is considered full time work. Although the Employment Standards Act is not applicable in these circumstances, it does provide that 40 hours is the maximum number of hours an employee can work without being paid overtime wages. By multiplying 40 hours by 26 weeks, the total number of hours for six months full time work is 1040 hours. Therefore, the duration of work performed by Willson trucking in 1996 and 1997 (excluding work performed in July and August, 1997) satisfy the third criterion of the definition of subcontract in s. 1 of the Regulations. In sum, a replaceable subcontract existed between Willson Trucking and Tay Creek in April 1997.

I now turn to the matter of forwarding work performed in July and August, 1997. The parties dispute whether that work pertained to Tay Creek’s replaceable contract with Canfor. Relevant provisions of the replaceable contract dated June 16, 1996 are as follows:

3. OPERATIONS PROVISION

3.1 Work: The Contractor shall supply all personnel, labour, accommodation, supplies, materials and equipment and do all things necessary to carry out those timber harvesting services set forth in Schedule A to this Contract (the “Timber Harvesting Services”) in respect of all the mechantable timber standing or lying on the Lands, unless otherwise instructed by the Licence Holder from time to time (the “Work”).

4. AMOUNT OF WORK

2. Operating Periods: Subject to the provisions of this Contract, the Licence Holder shall during each year of this Contract designate one or more periods (the “Operating Period”) which will commence and end on the dates set forth in Schedule A to this Contract. The details of the Work to be performed by the Contractor shall be determined by the Licence Holder no later than fourteen (14) days prior to the commencement of production for each such Operating Period, and the Licence Holder shall immediately notify the Contractor in writing of such details by preparing a new Schedule A to this Contract to be signed by the Contractor and the Licence Holder prior to the commencement of Work for the Operating Period referred to in such Schedule A to this Contract.

5. CHANGES IN AMOUNT OF WORK

5.2 Temporary Work: There shall be excluded from the Work of this Contract all Timber Harvesting Services which meet only a temporary need of the Licence Holder, as determined by the Licence Holder from time to time.

Following my initial review of the evidence and arguments of the parties, I requested that Tay Creek provide me with a copy of Schedule A referred to in its replaceable contract with Canfor. I invited the parties to provide me with additional submissions on whether the provisions of Schedule A provided that the loading of the forwarded decked wood in July and August, 1997 pertained to Tay Creek’s replaceable contract with Canfor. In response, I was provided with a copy of a Schedule A dated for reference January 27, 1997, which referred to “Lands” in Blocks 5, 6, 7 and 8 and had an operating period from January 27, 1997 to March 15, 1997. An issue arose with respect to Tay Creek presenting additional evidence with respect to that Schedule A; however, I found it not necessary to consider that evidence as I wished to first review any further Schedules A’s covering the period beyond March 1997.

Upon receipt of a number of Schedule A’s, I determined that the relevant Schedule A appeared to be the only one which had an operating period covering July and August, 1997. That one was dated for reference September 8, 1997, referred to “Lands” in Blocks 1, 2, 3, 4, 9, 10 and 11 and had an operating period from July 15, 1997 to March 15, 1998. I asked the parties to provide me with their brief submissions on whether it provided that the loading of forwarded decked wood in July and August, 1997 pertained to Tay Creek’s replaceable contract with Canfor.

Counsel for Tay Creek advised me that the provisions of the September 8, 1997 Schedule A did not relate to the forwarded decked wood which was loaded from the staging area to the mill in July and August, 1997. He advised that that wood came from “harvesting operations” on the Lands described in the Schedule A, dated for reference January 27, 1997, being “Blocks 5,6,7,8” during the operating period January 27 to March 15, 1997.

Turning to the evidence of the witnesses, Mr. Lansall testified that the loading of the forwarded decked wood in July and August, 1997 was not part of his work and that another contractor could get the additional work. There was no obligation on Canfor to give this work to Tay Creek. Indeed, Mr. Willson testified that he asked Mr. Lansall if they were going to do forwarding work and Mr. Lansall replied that he didn’t believe so. In February 1997, Mr. Willson phoned Jim Stevenson at Canfor, and asked him if they were going to do forwarding work. Therefore, it was never Mr. Willson’s understanding that Tay Creek was entitled to the forwarding work.

Although, I accept that the forwarding of the decked wood in July and August, 1997 was in relation to Forest Licence No. A18154, it was not performed under Tay Creek’s replaceable contract with Canfor. There is no Schedule A covering the work. Thus, the work did not occur within an “operating period” of the replaceable contract. It was not work to which Tay Creek was entitled to in its replaceable contract and therefore, it did not pertain to the replaceable contract as required under s. 34 of the Regulations. Rather, the forwarding of decked wood in July and August, 1997 was temporary work that was excluded from the work of the replaceable subcontract. This is consistent with paragraph 5.2 of the replaceable contract, which excludes temporary work from the contract. Therefore, the forwarding work performed in July and August, 1997 is not taken into account in determining the existence of a replaceable subcontract.

Having found that a replaceable subcontract existed between Willson Trucking and Tay Creek, I must now determine whether it was terminated by Willson Trucking in April, 1997. In reaching that determination, the issue of credibility must be addressed as it goes to the very root of this case. Most particularly, the parties’ version of conversations that took place in the spring of 1997 vary greatly. In deciding the credibility of witnesses, I rely on the following passage from the British Columbia Court of Appeal decision in Faryna v. Chorny, [1952] 2 D.L.R. 354, at pp. 356-7:

If a trial Judge’s findings of credibility is to depend solely on which person he thinks made the better appearance of sincerity in the witness box, we are left with a purely arbitrary finding and justice would then depend upon the best actors in the witness box. On reflection it becomes almost axiomatic that the appearance of telling the truth is but one of the elements that enter into the credibility of the evidence of a witness. Opportunities for knowledge, powers of observation, judgment and memory, ability to describe clearly what he has seen and heard, as well as other factors, combine to produce what is called credibility…A witness by his manner may create a very unfavourable impression of his truthfulness upon the trial Judge, and yet the surrounding circumstances in the case may point decisively to the conclusion that he is actually telling the truth. I am not referring to the comparatively infrequent cases in which a witness is caught in a clumsy lie. The credibility of interested witnesses, particularly in cases of conflict of evidence, cannot be gauged solely by the test of whether the personal demeanor of the particular witness carried conviction of the truth. The test must reasonably subject his story to an examination of its consistency with the probabilities that surround the currently existing conditions. In short, the real test of the truth of the story of a witness in such a case must be its harmony with the preponderance of the probabilities which a practical and informed person would readily recognize as reasonable in that place and in those conditions.

[emphasis added]

Applying these tests to the evidence presented at the hearing, I come to the inescapable conclusion that I cannot accept Mr. Willson’s evidence that he never said anything to Mr. Lansall that would have indicated that he was quitting the contract. There are a number of reasons why I arrive at this conclusion.

To begin, Mr. Willson’s testimony did not withstand the rigors of cross examination. In direct examination, he denied calling Mr. Lansall in April, 1997 and telling him that he was turning in his but n’ top loader. He did recall phoning Mr. Lansall near the end of May and discussing the sale of his trucks. However, he also testified that he thought the call occurred before he sold his trucks and the first truck he sold was on April 30, 1997. Moreover, in cross examination, he conceded that Mr. Lansall may have said to him “you do what you have to do.” This is consistent with a conversation having taken place in April, 1997.

On cross examination, Mr. Willson admitted that he did not have a clear recollection of his conversation with Mr. Lansall at the end of May, 1997. He conceded that he may have told Mr. Lansall that he confirmed that he was keeping his but n’ top loader. I find that such confirmation would only have been necessary if earlier, Mr. Willson had told Mr. Lansall that he was turning in his machine.

In weighing the evidence of the outright denial by Willson of the contents of the conversation on April 4, 1997 and the evidence of Tay Creek’s witnesses, I am satisfied that the true version of events is that recalled by Roy Lansall. Although the exact words recalled by the Tay Creek witnesses somewhat vary, this is to be reasonably expected given the passage of time. Since it was Roy Lansall who spoke directly to Mr. Willson, I am satisfied that his version of the conversation is most accurate.

Moreover, the evidence of Mr. Giesbrecht and Mr. Bergen does not persuade me that Mr. Lansall is not a credible witness. He testified in a straightforward manner and his testimony withstood the rigors of cross examination.

Furthermore, Mr. Willson’s denial that he told Tay Creek that he was turning in his machine is not harmonious with the preponderance of the probabilities. In 1994, the Lansall’s discussed retirement and in fact Tay Creek sold a substantial amount of equipment at an auction in the spring of that year. Their plan was to retire in the spring of 2000. Therefore, the decision by Tay Creek to purchase its own but n’ top loader in 1997 was made reluctantly only after failed attempts to find a replacement loader.

I do not accept Willson Trucking’s argument that Tay Creek’s purchase of the but n’ top loader had nothing to do with Terry Willson. In support of this argument, Willson Trucking points to the evidence of Mr. Lansall not taking steps to cancel Tay Creek’s order for a new loader. However, Tay Creek’s refusal to cancel its order must be viewed in the context of Tay Creek’s contractual obligations to Canfor and Mr. Lansall’s understanding of Willson Trucking’s financial situation at the time Mr. Willson advised him that he had changed his mind. I accept Mr. Lansall’s explanation that he did not cancel the order for the new but n’ top loader because he believed he could not depend on Willson Trucking.

I cannot accept Mr. Bedier’s evidence of having a conversation with Roy Lansall in mid May, in which he was asked if he wanted to buy a but n’top loader as evidence that casts doubt on Mr. Lansall’s evidence. On cross examination, Mr. Bedier admitted that his memory was not good and his first occasion to attempt to recall the conversations with Mr. Lansall occurred relatively recently, at approximately two years after the fact. Moreover, he admitted that there could have been conversations about Terry Willson and he couldn’t be sure that he and Mr. Lansall discussed Canfor’s move to roadside logging. Furthermore, it is clear that Mr. Bedier puts the time of the conversations in the wrong month as the evidence of Roy and Gloria Lansall and their ScotiaBank Visa account records show that they were not in Fort St. John from May 6 to 31, 1997.

Nor do I accept Mr. Schulte’s evidence that Mr. Lansall told him that he was letting Willson’s but n’ top loader go. Mr. Schulte says that he never told Terry Willson about this conversation as it wasn’t his place to do so. I find this evidence to be incredulous. As Mr. Schulte admitted, this was a significant part of his work and he was being told that he would be out of a job that was important to him. I find it difficult to accept that if Roy Lansall had said this to Mr. Schulte that he would not have gone to Terry Willson and told him about the conversation.

In short, the evidence does not suggest that Mr. Lansall’s intention was all along to purchase a new loader and bootstrap his own machine into a seniority position over Willson Trucking’s. I am satisfied the evidence establishes that the decision to purchase a new but n’ top loader was made only in response to Willson’s termination of the contract. Therefore, I find that on April 4, 1997, Terry Willson telephoned Mr. Lansall and told him that he was turning in his but n’ top loader.

The question remains whether the fact that that Mr. Willson told Mr. Lansall that he was turning in his but n’ top loader coupled with Mr. Lansall’s response “you do what you have to do” and subsequent purchase of his own but n’ top loader, constitute a repudiation of the contract in law. Counsel for Willson Trucking refers to G. Fridman Q.C., The Law of Contract in Canada. In discussing anticipatory breach, Fridman states at page 600:

Anticipatory breach occurs when a party, by express language or conduct, or as a matter of implication from what he has said or done, repudiates his contractual obligations before they fall due. What must be shown before such a breach is said to occur was stated thus by Lord Alverstone in an English case, cited and relied upon by Walsh J. of the Supreme Court of Alberta in Reed v. McVeigh:

The conduct of the party who has broken the contract is such that the other party is entitled to conclude that the party breaching the contract no longer intends to be bound by its provisions.

The authorities reveal that, for this type of breach to occur the following must be established: (1) conduct which amounts to a total rejection of the obligations of the contract; (2) lack of justification for such conduct. If, to these, is added the acceptance by the innocent party of the repudiation, then the effect will be to terminate the contract.

And at page 608:

“An unaccepted repudiation,” said Asquith L.J. in one English case, “is a thing writ in water and of no value to anybody; it confers no legal rights of any sort or kind.” Although this graphic expression has been said to be limited by the facts of the case in which it occurred, the phrase does have some merit, and does put succinctly an important aspect of the law relating to discharge by repudiation or anticipatory breach. Such repudiation will not effectively terminate the contract unless the innocent party does accept the repudiation, and is prepared to treat the contract as ended. The innocent party, in effect, has an election whether or not to treat the contract as continuing or as ended, once the party has committed an act which, in accordance with what has been said above, can be regarded as repudiating the contract.

And at page 611:

Acceptance of repudiation can take the form of conduct which reveals that the innocent party does not intend to continue with the contract. For example, in Benoit v. Town of Tracadie, the plaintiff provided ambulance services to the town. He sent a letter to the effect that if a new price agreement were not reached within 30 days he would terminate the contract. Before the 30 days expired the town made him an offer, which he refused. The town then arranged for a different ambulance service. The letter from the plaintiff was held to be notice of termination, that is, repudiation which the town had accepted by its conduct.

And at page 612:

It should be made clear, however, whether, and under what circumstances the innocent party, who elects to treat the repudiation as a breach discharging him from his obligations, is bound to do something, by way of explicit, overt, unequivocal conduct, to inform the repudiator that his choice has been made.

I am satisfied that the words used by Mr. Willson clearly evinced Willson Trucking’s intention not to be bound by any contractual relations that had previously existed for the performance of loading work. Without a but n’ top loader, Willson Trucking would not be able to perform loading for Tay Creek at the Canfor site during the next season. This amounted to a total rejection of the Willson Trucking’s contractual obligations. Tay Creek was entitled to conclude that Willson Trucking no longer intended to be bound by the contract.

Furthermore, I find that there was ample evidence that Tay Creek accepted the repudiation and agreed to terminate the contract. Mr. Lansall explicitly informed Mr. Willson that he accepted the fact that Mr. Willson would no longer be able to perform the loading services by stating “You’ll do what you have to do – if that’s what you’ve got to do – there’s nothing I can do about it.” Moreover, I find that Tay Creek accepted the repudiation by its conduct in ordering a replacement loader after Mr. Willson repudiated the contract. This constituted an overt act that confirmed Tay Creek’s intention to treat the contract as at an end. On or about June 4, 1997, Mr. Lansall advised Mr. Willson that he would not be working because he had said that he was turning in his loader. Mr. Lansall’s offer to give Willson Trucking extra work if he could, does not negate the acceptance of the repudiation.

Finally, I find that a new replaceable contract did not come into existence following the termination in April, 1997. When Willson Trucking quit the contract on April 4, 1997, Tay Creek was entitled to treat the contract as at an end. The relationship between the parties changed when Tay Creek accepted the repudiation and ordered a new but n’ top loader and informed Willson Trucking that “there is no more deal.”

It is my view, that a new replaceable contract could have come into existence had the subsequent work performed by Willson Trucking met the criteria of the definition of “subcontract”. However, there is no evidence to suggest that the parties entered into a subsequent contract or series of subcontracts in relation to the same licence for a specified term of more than six months so as to give rise to a replaceable subcontract. Nor do I find that the amount of work performed by Willson Trucking following the termination was more than the equivalent of six months full time work.

As I have found, the summer forwarding work did not pertain to Tay Creek’s replaceable contract with Canfor. Moreover, the evidence is that Willson Trucking worked only 17 days during November and December, 1997. In 1998, Willson Trucking’s loader worked only 58 days or a total of 870 hours. Therefore, Willson Trucking does not meet the temporal criterion contained in the definition of “subcontract” under s. 1(b)(iii) of the Regulations. In the result, in December, 1998, Tay Creek was not obligated to offer a replacement subcontract to Willson Trucking.

Since I have found that a new replaceable contract did not come into existence after April, 1997, the last issue of whether Tay Creek was entitled to end the contract does not arise.

It is so awarded.

Dated at the City of Vancouver in the Province of British Columbia, this 16th day of October, 2000.

_________________________

Vincent L. Ready

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