Executive Summary: Key Legal and Evidentiary Issues

• Airways obtained summary judgment for $248,191.42 in unpaid vehicle rental invoices against Latium, which was upheld on appeal.

• Latium failed to particularize or prove the terms of any alternative contract it alleged governed its rental arrangements with Airways.

• Evidence demonstrated Latium's operations manager requested and received Airways' standard form contract — including its early termination and repossession clause — prior to leasing 36 vehicles.

• The Tempo KB decision relied upon by the Applications Judge was overturned on appeal, but its reversal did not alter the outcome as the Court independently upheld summary judgment.

• Airways' standard form contract permitted termination of any rental on 24 hours' notice, negating Latium's claims of improper termination and unilateral rate increases.

• Latium's counterclaim for breach of contract was dismissed on appeal, as the Court exercised inherent jurisdiction finding the counterclaim rested on the same unparticularized contractual terms.

The business relationship and the pipeline project

Latium Fleet Management Inc. (Latium) and Davlyn Corporation Ltd., operating under the registered trade name Airways Truck Rentals, Leasing, Sales (Airways), are both in the vehicle leasing business in Alberta. Airways owns the vehicles it leases to customers, while Latium does not own the vehicles it leases to its commercial customers. The two companies had a longstanding relationship stretching back to approximately 1997, during which Latium would rent a few vehicles at a time from Airways on an as-needed basis. This pattern changed significantly in 2021 when Latium entered into a two-year contract with its customer, Pacific Atlantic Pipeline Construction (Pacific), in December 2020 to supply vehicles for a pipeline project. To fulfill this obligation, Latium arranged to lease 36 vehicles from Airways between May 11, 2021 and March 3, 2022. Notably, there was no written supply contract between Latium and Airways governing this arrangement.

The disputed contract terms

The nature of the contractual relationship between the parties became the central issue in this litigation. Airways maintained that its standard form of contract, a two-page document, governed each vehicle rental. The front page was a pre-printed form with space to fill in specific rental details such as the "Returned Due Date," kilometres in and out, dates and times, as well as rates per day, per week and per month. The second page set out standard form printed terms. These standard terms included a clause providing that each rental's due date could be no longer than 30 days from the date the vehicle was rented, and an early termination and repossession clause allowing Airways to terminate any rental agreement and demand return of vehicles at any time before the due date by giving notice in writing. The standard form terms also included a clause defining circumstances representing breach of the contract, entitlement to terminate the contract for breach, and an entire contract clause. Airways' evidence was that it provided this standard form with each rental by leaving a copy in the glove box of the vehicle and emailing it to Latium. Latium, however, disputed accepting these standard form terms. It contested receipt of the emails prior to taking possession of each vehicle, argued that the emails only sent the first page of the standard form, and challenged receipt of the printed copies in the glove boxes. Latium's position was that different terms governed the parties' rental arrangements based on their long-standing course of dealings — but it did not articulate what those alternative terms were, aside from a claimed agreement that payment terms were 60 days.

The rate increase and termination

On April 6, 2022, Airways provided a revised rate sheet to Latium that increased monthly rental rates by over 25%, increased excess kilometre rates by 35 to 50%, and required Latium to pay invoices within 30 days of receipt. The revised rate sheet stated that it applied to new rentals effective immediately and to existing rentals effective May 1, 2022. Latium refused to accept these unilateral amendments. On April 22, 2022, Airways gave notice and issued a demand for payment on the basis that Latium was in arrears of amounts owing for rentals in the total amount of $118,273.27, and demanded the return of all vehicles rented by Latium by April 25, 2022. Latium did not pay the arrears amount in accordance with that demand nor did it return the vehicles as demanded, though it did make payments towards the amount claimed as arrears over the next few weeks. On April 27, 2022, Airways gave notice of termination of the rental contracts and demanded the immediate return of the vehicles. Latium ultimately returned the rented vehicles over a period of time from April 27 to June 9, 2022. Airways issued invoices relating to the rental of the vehicles returned by Latium for the periods of time Latium or its customers had possession of the vehicles.

The summary judgment application and counterclaim

Airways brought a claim for unpaid invoices totalling $248,191.42 and applied for summary judgment. Latium filed a counterclaim alleging Airways breached the rental contracts by improperly and unilaterally increasing rental rates mid-rental, altering payment terms from 60 days to 30 days without adequate notice, and terminating the rental contracts. Latium also claimed breach of a contract by Airways to lease a picker truck to Latium, which Latium alleged was agreed to in March 2022. Latium sought damages including the unauthorized increased rental rates charged, the cost of retrieving the rental vehicles from its customers, lost profits from the premature return of those vehicles, lost profits from Airways' refusal to supply a picker truck, and administrative costs of repairing relationships with Latium's customers resulting from the improper termination of the leases. The Applications Judge granted summary judgment to Airways on its debt claim on March 14, 2024 but did not dismiss Latium's counterclaim. Latium appealed the summary judgment, while Airways did not appeal the decision regarding the counterclaim but sought leave at the appeal hearing to have it dismissed.

The appeal and standard of review

On appeal before the Honourable Justice E.C. Lew of the Court of King's Bench of Alberta, Latium argued that fresh evidence had been adduced, warranting a de novo standard of review rather than correctness. Latium pointed to four items: answers to undertakings of Bart Dornan, further answers to undertakings of Christopher Shaw filed February 14, 2024, the transcript of proceedings before the Applications Judge, and the March 14, 2024 Birkett Order. The Court rejected this argument, finding that the answers to undertakings were available at the hearing before the Applications Judge and did not constitute new evidence, and that the transcript and order arising from that hearing were not evidence. The standard of review was therefore correctness. Latium also challenged the Applications Judge's reliance on Tempo Alberta Electrical Contractors Co Ltd v Man-Shield Construction Inc, 2023 ABKB 444 (Tempo KB), which had since been overturned on appeal in Tempo Alberta Electrical Contractors Co Ltd. v Man-shield (Alta) Construction Inc, 2025 ABCA 310 (Tempo CA). While acknowledging the reversal, Justice Lew found it was not necessary to consider whether the Applications Judge erred by reliance on Tempo KB, as the summary judgment was independently supportable.

The Court's analysis of the contract dispute

Justice Lew applied the summary judgment framework from Weir-Jones Technical Services Incorporated v Purolator Courier Ltd, 2019 ABCA 49, which requires the moving party to show there is no defence and no genuine issue requiring a trial, after which the resisting party must put its best foot forward. The Court found that Airways satisfied its burden by asserting contractual terms which support its claim. Critically, a March 22, 2021 email from Latium's own affiant and operations manager, Christopher Shaw, to Airways requested "a blank sample copy of your rental contract with terms," and in response, Airways provided a blank standard form with both the front and back pages. This exchange occurred after Latium entered its contract with Pacific and a little less than two months prior to Latium beginning to rent the 36 vehicles. The Court concluded that Latium was aware of Airways' standard terms and that its subsequent conduct in entering into rental arrangements for 36 vehicles within a short time evidenced acceptance of those terms, relying on Beller Carreau Lucyshyn Inc. v. Cenalta Oilwell Servicing Ltd., 1999 ABCA 122, which held that conduct can support acceptance of contractual terms. The Court drew an important distinction between being unable to prove the terms of a contract at a chambers hearing as compared to being unable to describe and particularize what those terms are — the former may require a trial, while the latter is a failure to convince the Court that Latium's defence and counterclaim have merit. Airways' standard terms were found to be a complete response to Latium's breach arguments: if Airways was in a position to terminate each rental contract on 24 hours' notice, then there was no contractual basis to oppose the notice to increase rental pricing, termination of the rental contracts, or the demand for return of the vehicles. Regarding the picker truck, the evidence did not show that the parties entered into a binding contract for Airways to supply the picker truck, as there was no evidence that the rental contract sent by Airways was signed and returned.

The ruling and outcome

Justice Lew dismissed Latium's appeal and upheld the summary judgment in favour of Airways for its debt. The Court further exercised its inherent jurisdiction — relying on Pyrrha Design Inc v Plum and Posey Inc, 2016 ABCA 12, which was cited with approval by the Alberta Court of Appeal in Debut Developments Incorporated v Redcliff (Town), 2025 ABCA 223 — to dismiss Latium's counterclaim in its entirety. The Court found that Latium had failed to particularize the terms of the contracts it alleged were breached and that it could not prove those breaches, and those findings disposed of the counterclaim. The Court reasoned that if it failed to dismiss the counterclaim, Airways would be obliged to issue an application to do so, and Latium would have no substantive defence to such an application — it would be a formality that would result only in additional cost and delay. Airways, represented by Lauren Pearson of Bishop & McKenzie LLP, was the successful party, awarded summary judgment in the amount of $248,191.42.