COURT OF APPEAL FOR ONTARIO
RE:
ANDREW KOWLACZEWSKI INSURANCE BROKERS LIMITED (Plaintiff/Respondent in Cross-Appeal) – and – IRENE HUNT and NORWOOD INSURANCE GROUP INC. (Defendant/Appellant in Cross-Appeal)
BEFORE:
WEILER, FELDMAN and SHARPE JJ.A.
COUNSEL:
Marco Drudi for the appellant
David Gomes for the respondent
HEARD:
November 14, 2001
On appeal from the judgment of Justice Jack H. Jenkins dated October 10, 2000.
E N D O R S E M E N T
1The respondent Hunt resigned from her appointment as a producer of insurance with the appellant broker. Pursuant to a written agreement between the parties, the respondent elected to purchase her "book of business" rather than sell it to the appellant. This appeal concerns the amount owing to the appellant as a result. The central issue at trial was whether the amount to be paid by the respondent, fixed as a percentage of annual commissions, was to be determined with reference to the commissions for the year past or with reference to the year following the respondent’s resignation. The trial judge accepted the appellant's contention and granted judgment on the basis that the calculation was to be made on a prospective basis.
2The appellant raised three grounds of appeal:
(1) that the trial judge erred in failing to award the appellant $1491.68 on account of bad debts;
(2) that the trial judge erred in failing to award the plaintiff pre-judgment interest and;
(3) that the trial judge erred in refusing to award the appellant costs.
3The first ground of appeal was abandoned during oral argument.
4The respondent cross-appeals, alleging that the trial judge erred in his interpretation of the agreement between the parties and that the trial judge erred in dismissing the respondent’s counterclaim.
5It is convenient to deal first with the cross-appeal. In our view, there is no merit to the respondent’s contention that the trial judge erred in his interpretation of the agreement. There was ample support for the trial judge’s finding that the amount the respondent was to pay was to be fixed by reference to commissions received during the year following her resignation. We refer in particular to the terms of the agreement itself, to the subsequent agreement dated February 25, 1994 and signed by both parties, which clearly supports the appellant’s position, and to the decision of this court in Andrew Kowalczewski Insurance Brokers v. Janicki (2000), CarswellOnt. 3650 affirming the decision of Loukidelis J. (November 26, 1998) interpreting a similar agreement.
6Although the trial judge failed to make any explicit findings with respect to the counterclaim, the parties have treated his judgment as amounting to a dismissal of the counterclaim. In our view, there is no basis for us to interfere with this result. The principal element of the counterclaim was the contention that the appellant had wrongfully withheld commissions paid following the respondent’s departure from his brokerage, but prior to the transfer of the respondent’s business to the new broker. During this interim period the appellant remained the broker of record with all the obligations and responsibilities pertaining thereto. In our view, the respondent could not expect to receive 100% of the commissions during this period. She was required by virtue of her agreement with the appellant to split the commissions on a 50% - 50% basis and she had gone to another broker where she was subject to a less favourable split of commissions. The appellant paid her 50% of these commissions and we see no basis for the contention that she was entitled to more.
7Accordingly, the cross-appeal is dismissed with costs.
8We allow the appeal on both remaining grounds, the failure to award pre-judgment interest and costs.
9The trial judge gave no reasons for failing to order pre-judgment interest. He did say the following with respect to costs:
In my view, even though I warned counsel and the parties before this trial started that I wasn’t very happy about this kind of law suit over this amount of money involving this kind of court time and obvious expense to the parties, however, the agreement was prepared by the plaintiff, and there is at least an argument created by the poor wording of the agreement. I agree with counsel for the defendant that it is a poorly worded document. It could have been much more precise, and then there wouldn’t be any law suit. In those circumstances, I’m going to deprive the plaintiff of costs.
10In the circumstances of this case, these reasons reflect an error in principle justifying the intervention of this court.
11The dispute between the parties revolved around the interpretation of the agreement. If the respondent’s contention had been accepted, she would still have been obliged to pay the appellant $20,000 for the book of business. The appellant had submitted an offer to settle in the amount of $20,000. Accordingly, we cannot accept as reasonable the trial judge’s finding that the appellant should bear the brunt of the matter proceeding to trial. In view of the result reached by the trial judge and in view of the fact that the appellant had offered to settle the case on the basis of the respondent's interpretation of the agreement, there was no basis for the trial judge's refusal to award the appellant costs. In the circumstances, we see no reason to depart from the ordinary result flowing from rule 49.10. The appellant is entitled to costs on a party and party basis up to the date of the offer to settle and costs on a solicitor client basis thereafter.
12The trial judge gave no reasons for failing to order pre-judgment interest. It may be inferred, however, that the reason was the same as that expressed with respect to costs, namely, his apparent displeasure with the appellant for having brought and continued the lawsuit.
13While the decision to award or withhold pre-judgment interest is a discretionary matter, we are of the view that the trial judge’s failure to award pre-judgment interest reflects an error in principle justifying the intervention of this court. Pre-judgment interest is ordinarily awarded, absent special circumstances, to reflect the value of money wrongfully withheld from the plaintiff. On the basis of the trial judge’s findings and in the absence of any valid finding as to special circumstances justifying the refusal of pre-judgment interest, his refusal to order pre-judgment interest cannot be sustained. The appellant is entitled to pre-judgment interest at the rate prescribed by the Courts of Justice Act from February 1, 1995.
14For these reasons, we would allow the appeal with costs, dismiss the cross-appeal with costs and order that the judgment be amended to provide:
that the appellant is entitled to party and party costs to March 16, 1999 and to solicitor and client costs thereafter, and
that the appellant is entitled to pre-judgment interest at the rate prescribed by the Courts of Justice Act from February 1, 1995 to the date of judgment.
“K.M. Weiler J.A.”
“K.N. Feldman J.A.”
“Robert J. Sharpe J.A.”