• Ehler Marine & Industrial Service Co. v M/V Pacific Yellowfin (Ship), 2015 FC 324
  • January 8, 2016 | Authors: Dionysios Rossi; Graham Walker
  • Law Firm: Borden Ladner Gervais LLP - Vancouver Office
  • In this case, the Federal Court gave guidance on the enforceability of service quotes, as well as the liability of a repairer when a vessel sustains damage during launch operations.

    The plaintiff, Ehler Marine & Industrial Service Co. ("Ehler"), a ship repair company, provided a quote to repair the defendants' wooden vessel, the M/V Pacific Yellowfin (the "Yellowfin"). The defendants had issued a Request for Proposal (the "RFP") in respect of the Yellowfin that asked for a "reasonably accurate estimate" for the re-fastening and re-caulking of 15 seams below the waterline per side. Ehler provided an estimate based on the RFP, stipulating that certain items of work would be billed on the basis of the actual time spent and the actual materials used to perform the work. The defendants hired Ehler on the basis of this estimate, but it was later discovered that the RFP had incorrectly described the scope of work and additional seams needed to be re-fastened and re-caulked. The parties agreed that Ehler would do the additional work, but Ehler thought the work was being done on a time and materials basis, while the defendants were under the impression that the original contract price would be prorated.

    Ehler completed the repairs, including the additional work, and the final costs exceeded the estimate. The defendants refused to pay, arguing that the estimate was an agreed upon price, and Ehler commenced an action to recover the invoiced amount.

    Justice Simpson held that the proper test for determining whether Ehler was bound by its estimate is what a reasonable man in the situation of the parties would understand the contract to be. In these circumstances, an objective reasonable bystander would have concluded that the estimate was an agreed price, particularly since the estimate had not stipulated that the items of work being disputed would be billed on a time and materials basis.

    There was also some damage caused to the Yellowfin while it was being launched after the repairs were completed. The defendants made a counterclaim, arguing that the Ehler's agent was responsible for the damage because it was an implied term of the contract that the launch would be safe. Simpson J. dismissed the counterclaim, finding that the defendants' evidence of the alleged damage was incomplete and contradictory.