Case: O’Neill v Kings County Construction, 2019 PECA 13 (CanLII)

Keywords: implied contract; St. John Tugboat Company Ltd. v. Irving Refinery Ltd., 1964 CanLII 88 (SCC)

Synopsis:

The Parties enter into an agreement to develop lands in Heatherdale for commercial blueberry production. Kings County Construction Ltd. (“Kings County”) develops Mr. O’Neill’s property, incurring all expenses of work and equipment (valued at $113,971.80) to bring it into production. Kings County expects to receive proceeds from blueberry harvests until these expenses are re-paid in full.

From 2009-2013, Kings County receives 5 harvests from Heatherdale; starts to reduce the balance of its expenses. All of that changes in 2013. Mr. O’Neill sells his property to a third party, effectively ending Kings County’s ability to recoup its expenses (the balance sitting at $101,900.90). Kings County brings a claim in contract, implied contract, and unjust enrichment.

Applying the test of objective observation from St. John Tugboat Company Ltd. v. Irving Refinery Ltd., 1964 CanLII 88 (SCC), the Trial Judge finds an implied contract and awards damages for breach of the implied contract. The Court of Appeal agrees.

Importance:

The Court of Appeal described the Trial Judge’s findings as “…really a classic finding of silence or inaction constituting acceptance of an offer.” In other words, the conduct of Mr. O’Neill, which the Trial Judge found included permitting Kings County to come onto the land and improve it, and permitting the work to be done, signalled “assent to the offeror”. (See paras. 6-7).

Although the Court of Appeal described the scope for finding an implied contract per St. John Tugboat Company Ltd. as “limited”, certain circumstances may give rise to the inference:

[I]f a person knows that the consideration is being rendered for his benefit with an expectation that he will pay for it, then if he acquiesces in it being done, taking the benefit of it when done, he will be taken to have impliedly requested it being done; and that will import a promise to pay for it. (See para. 11).

In this case, the Court of Appeal determined that, on an objective view of the evidence, “…Mr. O’Neill’s conduct constituted an acceptance of the contractual terms offered by…Kings County, and bound him to the requirement that Kings Country be compensated for its expenses incurred in developing his land to the point of commercial blueberry production.” (See para. 11).

This is an interesting case summarizing the law of implied contracts, and offering a Court of Appeal’s perspective on the law of implied contract and remedies for breach of an implied contractual term. In this case, the Court of Appeal agreed with the Trial Judge’s finding that Mr. O’Neill’s sale of the property in question effectively ended Kings County’s ability to recover its expenses, and entitled it to recover the balance ($101,900.90) on the basis of “[n]ineteenth century jurisprudence”. (See para. 11).

Counsel for the Appellant: Brian Murphy Q.C. (Forté Law, Moncton)

Counsel for the Respondent: Matthew Bradley (Carr, Stevenson & Mackay, Charlottetown)

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