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ARBITRATION DECISION BRIEF: Disagreement between the parties on the price and credits applied on each transaction.

Continuing with our series of articles summarizing past DRC arbitration decisions. We believe this will help members to better understand how the DRC Dispute Rules and Regulations (R&R) apply in the event of a dispute. DRC Dispute R&R state that all DRC arbitrations are private and confidential. As such, the names of all parties, including arbitrators and companies are not included. A reminder that DRC’s sole role is as administrator of the arbitration process; DRC does not participate in any hearings. Therefore, this summary is based solely on the arbitrator’s written decision and may not reflect important information shared with the arbitrator through written briefs or verbal testimony.

Case: DRC File #20083 – Parties Domiciled – Canada

Facts

  • Between August 2017 – September 2017 the Respondent, and the Claimant, had dealings whereby the Claimant sold squash, peppers, and tomatoes to the Respondent. 
  • The dealings that led up to the orders were mostly between “Y”, an employee of the Respondent, and “X”, a Claimant employee. “Z”, an employee of the Respondent also had, but to a much lesser extent, some communications with “X.” Both “Y” and “X” had had dealt together in the past.  
  • There was a total of 16 invoices that were the subject matter of this dispute.  

Issue

Whether the prices and credits for each transaction were discussed and agreed between the parties.

Arbitrator’s Analysis/Reasoning

QUESTION 1: What was the agreement between the parties with respect to pricing?

The Arbitrator, in his analysis, found that, based upon the evidence presented by the parties, the following matters were not in dispute:

  1. There were phone discussions between “Y” and “X” which led to the Claimant delivering produce, especially squash, peppers, and tomatoes, to the Respondent.
  2. The Claimant would issue an invoice for the produce delivered on the day of shipping.
  3. The Respondent issued short payments for the produce.
  4. The Respondent’s alleged agreement that the costs of the produce shipped by the Claimant would be determined by USA market after the fact was not indicated in writing.

Based upon the above set of facts, the Arbitrator determined if any amounts were owed to the Claimant by the Respondent.

With respect to the reason for the “short payments,” the Respondent maintained that they were the result of credits owing based on the USA market. There was very little evidence demonstrating what the eventual USA market prices were. The Respondent offered no evidence to demonstrate the produce received from the Claimant was eventually distributed. Based on the evidence adduced (cited), the Arbitrator was unable to determine whether the Respondent resold the produce received from the Claimant at a profit, loss, or cost.   

The Claimant denied the existence of any agreement where the prices for the produce were to be determined at a later date, dependent on the USA market, as alleged by the Respondent.  According to the Claimant, the Respondent pursued them for the produce, not the other way around. The Claimant maintained that the Respondent received what they ordered and should therefore have to pay the invoices.

With respect to pricing, in the Arbitrator’s point of view, it was incumbent on the Respondent to adduce (cite) evidence showing that the parties had agreed that the prices were to be governed by the USA market. None was put forward. 

With respect to alleged quality issues, the evidence does not demonstrate that any alleged quality issue for which a credit was not provided by the Claimant was brought to the attention of the Claimant in a timely fashion. The Arbitrator also found that the Respondent did not engage the services of a third party quality inspection, such as a CFIA inspection, to report on any quality issue. 

The Arbitrator accepted that the invoices were the best indicator of the price discussed and agreed between the parties at the time the orders were placed.

QUESTION 2: Who should pay for the costs of the arbitration?

Article 53 of DRC’s Operating Rules – Part 6 – Mediation & Arbitration Rules provides that the Arbitrator shall determine liability for costs and that the Arbitrator may apportion costs between the parties. It further provides that in awarding costs, the Arbitrator shall take into account the purpose of achieving a just, speedy and economical determination of the proceeding on its merits. Given the Claimant’s overall success, the Arbitrator ordered that the Respondent pay the Claimant the sum of US$6,220.65 as costs of the arbitration. 

Arbitrator’s Decision

The Respondent is to pay the Claimant the sum of CND$72,775.50 in damages, plus US$6,200.65 filing fee, within 30 days from the date of this Decision and Award.

DRC Comments

There are several points in this decision that DRC members must take into consideration in their transactions:   

  • As a receiver/buyer, if you have received produce in deteriorated condition, you must request a federal inspection unless otherwise agreed. 
  • Timely notice of a problem is essential when claiming damages.
  • Properly documenting the terms of the transactions is essential and helps prevent misunderstandings.

For more information regarding the sections of DRC Trading Standards applied to this dispute, refer to the following sections:

DRC Trading Standards: