COURT OF APPEAL FOR ONTARIO

DATE: 20060531

DOCKET: C42383

RE: GOLD RIVER CAREHOMES INC. (Plaintiff/Respondent) – and – HALLMAN ELDERCARE INC. and BANKSIDE HUMANACARE INC. (Defendants/Appellants)

BEFORE: MCMURTRY C.J.O., WEILER and BLAIR J.J.A.

COUNSEL:

Edward L. D’Agostino and Jennifer J. Breithaupt for the appellants

Frank L. Gardner for the respondent

HEARD: May 19, 2006

On appeal from the judgment of Belleghem of the Superior Court of Justice, dated August 10, 2004.

E N D O R S E M E N T

[1] The appellants seek to set aside the order of Belleghem J. dated August 10, 2004, finding that there was an oral agreement binding on the parties. The agreement was that Gold River would provide exclusive management services to the retirement residences owned by the appellants in exchange for a 5% value-added equity position in those residences upon termination of the management arrangement.

[2] The appellants argue that the parties had failed to agree on terms essential to the agreement and that the trial judge erred by creating essential terms that were not agreed to by the parties.

[3] This is essentially a fact-driven appeal. Mr. Hallman, through his companies, provided the capital for, and developed, elder homecare sites. Mr. Neid, through his company, managed these sites. The two men worked together for approximately five years in the residential retirement home industry before Mr. Hallman’s death in June 1999. Shortly thereafter, the services of Mr. Neid and Gold River were terminated by Mr. Hallman’s brother, who took over operation of the business.

[4] Mr. Neid says that he and Mr. Hallman entered into an oral agreement that provided for his exclusive services in exchange for 5% value-added equity. Although no written agreement was ever formalized and signed, Mr. Neid testified that the proposals and drafts before the Court simply reflected the exclusivity/equity arrangement.

[5] Although the evidence was open to other interpretations, the trial judge accepted the plaintiff’s evidence. He found there was an oral agreement that the respondent would be entitled to 5% of the increased value of the retirement homes brought about by Mr. Neid’s development and management of the homes, in exchange for Mr. Neid devoting his full time and exclusive care and attention to the development and management of the homes.

[6] In spite of the appellants’ arguments, we can find no palpable and overriding error, or error in law, on the part of the trial judge. The finding there was an oral agreement was open to him on the evidence. There is a substantial body of objective evidence, surrounding circumstances and history between the parties which supports the fundamental finding that equity participation was not only discussed but was agreed to by Mr. Hallman. Mr. Neid’s testimony that he specifically agreed to – and did – shut down another management project in which he was involved, but wanted to finish, because Mr. Hallman insisted that “exclusive was exclusive”, is strong evidence in support of the respondent’s position. There is no other reason, in the circumstances, why he would agree to do so without the equity participation in exchange. Although no written agreement was ever signed, the parties worked together, apparently on the basis of the agreement, for two years prior to Mr. Hallman’s death, with no complaints from the other. Given their relationship, this silence is probative of consensus.

[7] Accordingly, the appeal is dismissed.

[8] The respondent is entitled to its costs of the appeal, fixed in the amount of $12,500 plus disbursements and GST.

“R.R. McMurtry C.J.O.”

“K.M. Weiler J.A.”

“R.A. Blair J.A.”