Indexed as:

Big Chief Petroleums Ltd. v. Gas & Go Services Inc.


Big Chief Petroleums Ltd., Plaintiff, and

Gas & Go Services Inc., Malden Petroleums Inc. and Michael

Faubert, Defendants

[1983] O.J. No. 455

74 C.P.R. (2d) 137

Supreme Court of Ontario - High Court of Justice

Toronto, Ontario

Potts J.

Heard: May 20 and 25, 1983.

Judgment: August 15, 1983.

(4 pp.)

William K. Kendrick, for the Plaintiff.

R. Colautti, for the Defendants.

1 POTTS J.:-- This is a motion for an interlocutory injunction restraining the defendants from breaching a gasoline supply contract entered into on February 16, 1981.

2 On February 18, 1981, the defendant, Gas & Go Services Inc. purchased a gas station from Tecumseh Ice and Fuel (1979) Ltd. A dealer's contract between Gas & Go Services Inc. and Tecumseh was entered into under which Gas & Go Services Inc. agreed to purchase its entire requirements of motor fuel for resale from Tecumseh for twenty years. There have been some variations made to the contract by oral agreement, most importantly in the price structure. Because of gasoline wars, the original pricing agreement was changed such that the agreed price to be paid to the plaintiff was Go Services' retail price minus 1.8 cents per litre. On February 10, 1983, Tecumseh assigned its dealer's contract to the plaintiff, Big Chief Petroleums Ltd.

3 The defendant alleges that it was not receiving continuous supplies from the plaintiff in the first week of February, 1983, and for that reason, it lawfully repudiated its contract. The plaintiff alleges that any interruption of supply was caused by the defendant accepting deliveries of motor fuels from other sources. The evidence is obviously conflicting on this point.

4 Even if one were to find that the petroleum supplies were interrupted due to the fault of the plaintiff, that fact would have to be construed in light of the contract between the parties, which includes the following provision:

  1. However, in the event of product shortage and/or allocations as stated above, the customer shall be at liberty to purchase the balance of his fuel requirements from another source only during the period such product shortage and/or allocation and this Agreement shall remain in full force and effect.

5 At minimum, a substantial issue has been raised by the applicant: Yale v. Atlantic Pizza Delight Franchise (1968) Ltd. et al. (1977), 17 O.R. (2d) (Div. Ct.) at 513.

6 Turning to the balance of convenience, I must find that the plaintiff will suffer harm which could not be adequately compensated in damages if it is to be successful: American Cyanamid v. Ethicon et al. (1975), 1 All E.R. 504. The plaintiff is a party to a supply contract with Sunoco Inc., in which the plaintiff has minimum purchase requirements. For the two years prior to the breach, the sales by the plaintiff to the defendant represented approximately 20% of its deliveries of motor fuels to its retail dealers. The plaintiff alleges that it will not be able to honour its minimum purchase requirements unless the defendant is required to honour its contract with the plaintiff. From the period February 10 to March 31, 1983, the plaintiff has already fallen below its projected sales. If the supply contract between the plaintiff and Sunoco is terminated, the financing received from Sunoco becomes due and the security over the plaintiff's assets may be realized upon if the plaintiff cannot find alternative financing.

7 While the plaintiff's situation could be serious if it cannot meet its obligation with Sunoco, it is unclear to me whether the damage is irreparable. First, the plaintiff admits that Sunoco has not yet threatened to terminate its supply agreement. Second, the plaintiff has the capacity to find substitute customers for its petroleum products. Indeed, in the cross-examination upon his affidavit the deponent for the plaintiff corporation stated that since Big Chief Petroleums has gone into business, it has added a dealer, acquired a station and eliminated a dealer assigned to it. There is obviously some latitude for the plaintiff to mitigate its position and possible meet its annual minimum requirement pursuant to its contract with Sunoco. Even if it fails to meet those requirements, there is no evidence before me that Sunoco will take steps that would cause irreparable harm to the plaintiff.

8 Because the plaintiff has failed to prove that its potential harm cannot be adequately compensated by damages, this application fails. However, the defendant Gas & Go Services Inc. shall keep full and complete records which could be used to determine how much and what kind of petroleum products have been delivered and purchased during the time this action takes to come to trial. These records shall be made available to the plaintiff if requested.

9 Costs to the defendant in the cause.