Citation: DME Ltd. v. Precision Soccer
2001 PESCTD 40
Date: 20010418
Docket: SCC-22648
Registry: Charlottetown
PROVINCE OF PRINCE EDWARD ISLAND
IN THE SUPREME COURT - TRIAL DIVISION
BETWEEN:
DIVERSIFIED METAL ENGINEERING LTD.
PLAINTIFF
AND:
PRECISION SOCCER INC.
DEFENDANT
Before: The Honourable Mr. Justice Norman H. Carruthers
Peter Toombs
Ewan W. Clark -
On behalf of Diversified Metal Engineering Ltd.
Solicitor for Precision Soccer Inc.
Place and date of hearing
Place and date of judgment
Charlottetown, Prince Edward Island
April 2, 2001
April 18, 2001

Citation: DME Ltd. v. Precision Soccer
2001 PESCTD 40
BETWEEN:
DIVERSIFIED METAL ENGINEERING LTD.
SCC-22648
PLAINTIFF
AND:
PRECISION SOCCER INC.
DEFENDANT
Prince Edward Island Supreme Court - Trial Division
Before: Carruthers J.
Heard: April 2, 2001
Judgment: April 18, 2001
[8 pages]
SMALL CLAIMS - Contract - Breach of Contract - Damages.
Peter Toombs
Ewan W. Clark -
On behalf of Diversified Metal Engineering Ltd.
Solicitor for Precision Soccer Inc.

Carruthers J.
:
[1] Alan F. Andrews, the founder and president of Precision Soccer Inc. (the defendant), conceived a concept of manufacturing an automatic soccer ball kicking machine for use during soccer practice. He took his concept to the
National Research Council Canada Industrial Research Assistance Program
(N.R.C.) for assistance. N.R.C. provides information to non-incorporated entities but provides financial assistance only to incorporated bodies.
[2] Mr. Andrews then incorporated Precision Soccer Inc. to further his concept and obtained patent rights for the machine in approximately 1998. He sought advice from Diversified Metal Engineering Ltd. (the plaintiff) in the early stages of development. The plaintiff then took the project to Ontario and had work done there on the development of a prototype machine.
[3] Mr. Andrews then brought the project back to Prince Edward Island and retained the plaintiff to further develop the project and bring the machine to market. The defendant was experiencing problems with the prototype at that time and the plaintiff claims it was to improve the machine but never guaranteed they would make it work properly.
[4] It is the nature of the agreement entered into by the parties which is the crux of this dispute.
[5] The plaintiff’s position is it agreed to do the work on a time and materials basis, whereas the defendant’s position is that the plaintiff was to complete the machine for $13,500 in accordance with the terms and conditions as outlined in two documents which were entered as Exhibits D-1 and D-2.
[6] Exhibit D-1 is a document prepared by an employee of the plaintiff and given to Mr. Andrews. It states as follows:
Fax To Precision Soccer
Attention Alan Andrews
Alan
Thank you for your recent inquiry with regard to engineering assistance. We are pleased to offer the following for your consideration.

2
Engineering (270 hrs) ...........................
$13,500.00
We will provide assistance and back-up in all aspects of design, research, and experimentation for the following areas.
1. Materials selection and verification.
2. Research and development of latch assembly.
3. Research, selection, and verification of linear actuator.
4. PLC selection.
5. Design of tee & actuator
6. Ball escape and feed system components.
7. Design refinements of foot.
8. Ball ramp design refinements.
I hope this information is helpful to you and if you have any questions with regard to this, please don’t hesitate to give me a call.
Best Regards
Keith Bulman P. Eng.
[7] Exhibit D-2, which is typed on the defendant’s stationery states:
Re; Precision Soccer subcontract
We the undersigned having a signed a contract agree to meet all necessary current technical and engineering standards to fully complete the prototype. The deliverables will be jointly signed off before final payment, which will signify completion of the subcontract technical criteria.
This document bears the following stamp:
Diversified Metal Engineering Ltd.
54 Hillstrom Ave. Charlottetown, PE C1E 2C6
GST# 12882 7573 RP0001
It also has an illegible signature after the stamp. It is to be noted there are no dates on either document.
[8] These two documents, Exhibits D-1 and D-2, came about as a result of a proposal the defendant submitted to NRC for funding to assist with the research and development of the prototype machine.

3
[9] Alan R. Brown, a Professional Engineer, is employed under a Holland
College contract with NRC and is responsible for overseeing such projects for
NRC in this Province. He testified on behalf of the defendant. He testified that he has overseen hundreds, if not thousands, of such projects. He stated that all companies who seek financial assistance through NRC have to submit a written proposal identifying certain aspects of the project. He stated that
Exhibit D-1 was submitted by the defendant in early December 1999 as part of the defendant’s proposal. He testified it was a budget cost estimate given to
NRC as a quote from a sub-contractor capable of doing the work. He also testified it was proof of a quote by the plaintiff to the defendant. He further testified that there was some ambiguous information in the defendant’s original proposal, and NRC asked the defendant to provide better information from the plaintiff regarding its quote. Thus Exhibit D-2 came into existence. He testified that he and Mr. Andrews had a meeting and Mr. Andrews prepared
Exhibit D-2 on the defendant’s stationary and then took it to the plaintiff for signature.
[10] The document was then returned to NRC who deemed it sufficient to indicate that the plaintiff would be a sub-contractor.
[11] NRC and the defendant then entered into a written contract concerning the project. A portion of this contract was entered as Exhibit D-4. It is to be noted that this written contract between NRC and the defendant bears two dates. NRC signed it on February 14, 2000, and Mr. Andrews signed it on
February 21, 2000. The first clause of the contract states:
. . .
1. This agreement comes into effect on the 10th of January 2000 and terminates on the 28th of April 2000.
. . .
[12] The defendant is now adamant that it had a written contract with the plaintiff drawn up in “black and white” as evidenced by Exhibits D-1 and D-2.
Mr. Andrews testified the contract provided that the plaintiff had contracted to complete the prototype machine with all the problems taken care of for the sum of $13,500. He does admit that when Exhibit D-2 was signed by Keir

4
MacNevin for the plaintiff that the two of them did have a discussion about a rate for engineering work and a rate for shop labour. Mr. Andrews also testified that he told Mr. MacNevin — “that is fine — you are going to charge whatever.
I have a contract in place with you and you are not going to go over that”.
[13] The plaintiff is just as adamant that it only had a verbal agreement with the defendant and that Exhibit D-1 was merely a quote or an estimate provided to the defendant so it could present a proposal to NRC.
[14] Ken Sampson, a mechanical engineer with the plaintiff, was assigned to the project as project engineer. He was to investigate and develop the design, or as he put it “to bring the machine further along the process”. He testified that he started working on the project in January 2000, and the billing was done on a time and material basis with an agreed upon rate for labour and the materials at a cost plus basis.
[15] He testified that the defendant had experienced problems in getting the prototype to do what it was designed to do, and in particular had problems with the timing, distance and force. He testified that the plaintiff was to improve these problem areas but it never gave any guarantee that the machine would work as intended. He stated that Exhibit D-1 was a document estimating the cost of engineering services to be provided by the plaintiff for the items indicated.
[16] Peter Toombs also testified on behalf of the plaintiff. He is a professional engineer as well. He testified that the plaintiff has been involved in several of these NRC funded projects since the inception of the plaintiff in
1991. He stated that an estimate is required by NRC, but that such work is highly variable due to the nature of the project. He testified that the plaintiff merely provided the defendant with an estimate and that Exhibit D-1 is an estimate only which the defendant submits to NRC with its application for funding. He testified “we would be crazy to say we would do all required on a prototype for an exact amount of money”.
[17] Mr. Toombs further testified that his understanding of Exhibit D-2 was simply that it was a document required by NRC to protect its investment in the project.

5
[18] He testified that the plaintiff was retained by the defendant to help it commercialize the machine as best it could. He states there was a verbal agreement between the parties and the agreed upon rates of labour were $65 per hour for engineering, $35 per hour for shop labour, and materials at cost plus 40%. He further testified that the two invoices as contained in Exhibit P-
1, which were tendered to the defendant, also reflect this fact. Invoice 6219 dated February 2, 2000, was for $1,283.51, and invoice 6284 dated February 25,
2000, was for $2,883.65. These two invoices total $4,167.16, which constitutes the amount being claimed by the plaintiff in this action.
[19] I agree with the plaintiff’s submission that Exhibits D-1 and D-2 do not constitute a written contract between the parties. I am satisfied on the totality of the evidence that these documents were documents which the defendant was required to submit to NRC to satisfy NRC requirements for funding. In my opinion, Exhibit D-1 is nothing more than an estimate or quote of what it might cost to do the work specified.
[20] Exhibit D-2 was prepared to resolve ambiguities which existed in the defendant’s proposal to NRC. It appears that NRC needed this document to satisfy itself that the plaintiff would be a sub-contractor. This, in itself, suggests that NRC never considered Exhibit D-1 as constituting a contract between the plaintiff and the defendant.
[21] There must be a meeting of the minds of the parties to have a legally enforceable contract, and such agreement must be clearly manifested.
Negotiations were obviously carried on between the parties about their intended relationship, but I am unable to find that Exhibit D-2 can be interpreted in such a manner as to constitute a contract between the parties. I accept the evidence of Mr. Sampson and Mr. Toombs and find there was an oral contract between the parties whereby the plaintiff would provide the defendant with labour and materials at specified rates.
February 22, 2000 Meeting
[22] The plaintiff worked on the prototype machine in January, 2000, and in early February, 2000, it decided it had developed the prototype to the point where the machine had demonstrated it would do the tasks required. It felt it would be more advantageous to the defendant to start over on a new unit and

6 improve the components of the prototype rather than continue working on the prototype as considerable expense would be involved in further development of the prototype.
[23] Mr. Sampson testified that the plaintiff had proven that the design changes were going to work, and the most effective way to proceed would be to build a completely new machine which would be used for marketing purposes.
He felt that a meeting should be held to evaluate the project and decide how best to proceed.
[24] A meeting was held on or about February 8, 2000, at the plaintiff’s place of business. Representatives of the plaintiff, including Mr. Toombs and Mr.
Sampson, attended the meeting as did Mr. Andrews representing the defendant.
[25] Mr. Andrews alleges that he was presented with an ultimatum at the meeting. He testified that Mr. Toombs said to him at the meeting words to the effect: I am not in prototype development and unless he had exclusive manufacturing rights to my product or letters to that effect from my company I was to take my machine and get out.
[26] Mr. Andrews testified that he told Mr. Toombs that he could not make such a decision on his own and that he would have to confer with his investors.
He left the meeting and immediately called Alan Brown of NRC. He later met with Mr. Brown and told him the ultimatum he had received. He then discussed the situation with his investors and others over the next three or four days. As a result of these discussions he removed his machine from the plaintiff’s premises and had no further contact with the plaintiff until he received an invoice for work the plaintiff never completed.
[27] Mr. Andrews tendered a series of nine photographs as Exhibits D-5.
They show the stage of development of the prototype when it left the plaintiff’s premises. Mr. Andrews testified that the work supposed to be done by the plaintiff was not completed.
[28] Mr. Andrews now alleges the plaintiff breached the terms of the contract and denies he owes the plaintiff the sum of $4,167.16 as the plaintiff failed to provide the defendant with goods and services as alleged.

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[29] The defendant has counterclaimed for the sum of $3,227.91 being the amount the defendant paid to the plaintiff as payment for services rendered in
1999.
[30] Both Mr. Sampson and Mr. Toombs testified there was discussion at the meeting about marketing the machine and about the advantages the plaintiff could offer the defendant in this regard. Mr. Toombs testified the plaintiff had a long term interest in the project if the plaintiff was cost competitive. He expressed concern that Mr. Andrews might be going somewhere else to get the machine manufactured as Mr. Andrews had previously discussed such a possibility with a representative of the plaintiff.
[31] Both Mr. Sampson and Mr. Toombs deny that any ultimatum was ever discussed or given to Mr. Andrews at the meeting. Mr. Toombs testified he would not have had all the company representataives at the meeting if he was going to give an ultimatum. Mr. Toombs testified he told Mr. Andrews that the company which would eventually build the machine for production was the best one to build the first machine from the prototype.
[32] Mr. Sampson and Mr. Toombs both testified they fully expected to continue working on the machine after Mr. Andrews left the meeting. They were surprised he later removed the machine from the premises without any further communications with either of them.
[33] Mr. Toombs testified he contacted Mr. Andrews after he removed the machine and inquired what the problem was that made him remove the machine. He testified that Mr. Andrews replied there was more work to be done on the machine and your people are not interested in doing it. I am taking it somewhere else.
[34] Alan Brown testified that he was informed by Mr. Andrews that the plaintiff was not interested in completing the work and Mr. Andrews was concerned as to how this development would affect his machine. He also testified that he was advised by Mr. Andrews that he was completing his contract with the plaintiff and removed the machine. He also testified that Mr.
Andrews requested another contract with NRC be approved so he could get the machine completed. He did not mention anything about Mr. Toombs having

8 given Mr. Andrews an ultimatum. The major concern seemed to be that the project was proceeding slower than expected.
[35] These two versions of the meeting on February 8, 2000, like the evidence regarding a contract between the parties, basically contradict one another. I find it strange that Mr. Brown did not testify about an ultimatum if, in fact, one had been given as Mr. Andrews claims. Mr. Andrews testified he called
Mr. Brown from the plaintiff’s premises just after he got the ultimatum and before he left the building to discuss the situation with Mr. Brown.
[36] I find that the plaintiff’s version of what transpired at this meeting has a greater ring of truth to it than the defendant’s version. It seems highly unlikely to me that the plaintiff would have given the defendant such an ultimatum without some discussion with Mr. Andrews about paying for the services rendered to date.
[37] I do not believe it really matters which version I accept as far as the plaintiff’s claim is concerned. Everyone acknowledged that the plaintiff had done work on the prototype in January and early February of 2000. The plaintiff is entitled to be paid for this work.
[38] Mr. Andrews testified that he was at the plaintiff’s shop four out of five days a week and that he spent considerable time there every day. He was, as he testified, basically a permanent fixture there during this process. He had contact with everyone from the plaintiff who was involved with the project.
The only concern he appears to have discussed with these people during this time was the lack of progress. It does not appear that he ever contested the quality of the work. His main concern was that his contract with NRC expired on April 28, 2000, and he needed the prototype completed by then to access the money from NRC.
[39] I therefore award the plaintiff the sum of $4,167.16 and its costs.
Counter-claim
[40] I have already indicated that the defendant counterclaimed for $3,227.91, being the amount of money it paid the plaintiff for work the plaintiff did on the machine in the summer of 1999.

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[41] The defendant did not pay this invoice when he left the plaintiff in the summer of 1999 and went to Ontario.
[42] Payment of this account was discussed by the parties when they resumed negotiations in December of 1999. The plaintiff took the position it would have to be paid before it did any further work on the prototype. The defendant then agreed to have this outstanding account become part of the contract he was then negotiating with the plaintiff and have it paid out of the funds he was receiving from NRC. This was done and the account was paid. I do not find merit in the defendant’s counter-claim, and I dismiss the counter-claim.
J.
April 18, 2001