In the Matter of a Dispute

51

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.