CITATION: The Royalton Hospitality Inc. v. Competiello, 2012 ONSC 4850

DIVISIONAL COURT FILE NO.: DV-11-356-00

DATE: 20120824

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

THE ROYALTON HOSPITALITY INC.

Plaintiff (Appellant)

– and –

ANTHONY COMPETIELLO and JULIANA CRUPI

Defendants (Respondents)

F. Souza, for the Appellant

P. Polster, for the Respondents

HEARD: August 15, 2012

Appeal from the Judgment of Deputy Judge C. Iacono dated October 28, 2011

REASONS FOR DECISION

DiTOMASO J.

THE APPEAL

[1] The appellant, The Royalton Hospitality Inc. ("Royalton") appeals from the order of Deputy Judge C. Iacono dated October 28, 2011. The trial judge dismissed Royalton's claim for damages for breach of contract and granted the respondents Anthony Competiello and Juliana Crupi ("Competiello" and "Crupi") claim for the return of their $10,000 deposit together with costs of $5,000.

OVERVIEW

[2] On this appeal, the facts are not in dispute.

[3] In December 2009, Mr. Competiello and Ms. Crupi entered into a contract (the "Contract") with Royalton, a company that operates a banquet hall, to hold their wedding reception. The wedding reception was to have taken place at the Royalton's banquet hall on October 2, 2010. The Contract between the parties called for a minimum of 280 guests, with a charge of $125 per guest. Deposits totalling $10,000 were paid by Mr. Competiello and Ms. Crupi to Royalton shortly thereafter.

[4] Mr. Competiello became ill in early May 2010. His illness caused him to leave his job and he was advised by his physician to postpone the wedding reception until his health improved.

[5] On June 1, 2010 Mr. Competiello and Ms. Crupi advised Royalton that they would have to postpone their wedding. They proposed a re-scheduled wedding reception (for the exact same number of guests), and, in addition, that a bridal shower and stag take place at Royalton's facility, which would have generated an additional $14,500 in revenue for Royalton.

[6] Royalton refused to accept this proposal, kept the $10,000 deposit and sued Mr. Competiello and Ms. Crupi for $17,650.00 being half the total contract price in accordance with the cancellation provisions of the contract.

[7] Royalton sought to rely on the "Cancellation and Termination" provisions contained in the standard form Contract between the parties. Mr. Competiello and Ms. Crupi advanced a counterclaim for the return of their $10,000 deposit. They maintained that they did not seek to cancel their wedding reception but only sought to postpone it to a later date.

[8] At trial, the trial judge dismissed Royalton's claim and gave judgment in favour of Mr. Competiello and Ms. Crupi for return of their deposit, together with costs in the amount of $5,000 inclusive of disbursements.

[9] Royalton now appeals from the judgment at trial.

POSITIONS OF THE PARTIES

Position of Royalton

[10] Royalton submits that Mr. Competiello and Ms. Crupi booked the Royalton banquet hall for their wedding reception for October 2, 2010. They entered into a Contract that provided where customers cancelled a booked event, they would be liable to pay Royalton a percentage of the contract price if Royalton was not able to re-book the same date for the same amount as the contract price.

[11] Royalton had this policy to protect itself against losses arising from the cancellation of a booked date. For example, if a wedding cancelled on four months notice (as in this case) Royalton submits it is highly unlikely that it would be able to have another wedding on the same date. Weddings typically are booked about a year in advance. Royalton asserts that the trial judge ignored the clear terms of the Contract between the parties. Contrary to the terms of the Contact, Royalton submits that the trial judge found Mr. Competiello and Ms. Crupi could cancel a booked date so long as they agreed to re-schedule their wedding reception.

[12] Royalton submits the trial judge erred in law with respect to the legal principles for contractual interpretation in this case with the result that his judgment should be aside. In its place, Royalton seeks judgment in the amount of $17,650.00 and further, be allowed to retain the deposit of $10,000 and costs of the appeal and below.

Position of Anthony Competiello and Juliana Crupi

[13] Mr. Competiello and Mr. Crupi submit that the trial judge did not err in dismissing Royalton's claim and granting judgment in their favour. They did not seek to cancel their wedding reception. They only sought to postpone it to a later date. The Contract said nothing about postponing or re-scheduling an event notwithstanding the fact that there were many instances where functions were re-scheduled or postponed. They were willing to book an event of the same value and add two more events, namely a stag and bridal shower which Royalton refused. They submit that the trial judge correctly applied the principles of contractual interpretation and, therefore, the appeal should be dismissed with costs.

TRIAL PROCEEDINGS

[14] Royalton and Mr. Competiello and Ms. Crupi entered into a Contract whereby Royalton agreed to host their wedding reception on October 2, 2010 ("Function Date"). The total price payable by them to Royalton was $125 per person and they guaranteed a minimum of 280 guests. Mr. Competiello and Ms. Crupi provided a deposit of $10,000.

[15] The contract also specified that in the event of any cancellations and terminations made ninety days before the Function Date, the customer (Mr. Competiello and Ms. Crupi) would pay to Royalton fifty percent of the costs as set out in the Contract for the minimum number of guests specified in addition to the deposit which would be forfeited by the customer.

[16] The specific terms of the Contract read as follows:

3. a. All cancellations and terminations are subject to an administrative fee of $150.00 for each individual function whether or not the ballroom(s) has been re-booked for another function. This fee is in addition to all other cancellation or termination charges.

4. b. All cancellations and terminations made beyond ninety (90) days prior to the function date, the deposit, in full, will be returned only if the ballroom(s) has been re-booked with a function of equal monetary value. In the event that a function has not been re-booked for the function date, the customer shall pay the Royalton 50% of the cost as set out in the Function Contract for the minimum number of guests specified therein in addition to the deposit, referred to in paragraph 1) above, whether it has been paid by the customer or not which shall be forfeited. If the ballroom(s) become re-booked for a function at a lesser monetary value, the customer shall be charged the difference between the two functions.

...Both parties agree that the above noted charges are reasonable and represent a fair and genuine pre-estimate of the projected losses of The Royalton in the event of a cancellations or termination without a re-booking.

[17] The Contract itself was signed and all schedules thereto were initialled by the parties. Further, the parties agreed to a number of amendments which were not initialled but are not material in respect of the issues raised on this appeal.

[18] On or about June 1, 2010, Mr. Competiello and Ms. Crupi emailed Royalton to postpone their function scheduled for October 2, 2010. This is not in dispute. Also not in dispute was that Mr. Competiello suffered from ill health and on the recommendation of his physician Mr. Competiello's wedding ought to be postponed until his health improved. Mr. Competiello accepted his physician's recommendation. Both he and Ms. Crupi wanted to postpone or re-schedule to another date. The facts are clear that they were even prepared to hold two other events at Royalton's facilities in addition to the wedding reception. Royalton refused.

[19] Eventually, Mr. Competiello and Ms. Crupi were married on October 1, 2011 at another banquet hall.

[20] Mr. Competiello and Ms. Crupi were advised by Royalton that if the Function Date was re-booked with a function of equal monetary value then their deposit in full would be returned. This is not disputed.

[21] Royalton's witness at trial further explained during his testimony that any re-booking had to be on the same date as the date that was originally booked. He explained it was difficult to re-book the date because weddings usually are booked a year in advance. Royalton would incur a loss because it would not have a wedding reception for the Function Date. The testimony of Mario DeCicco on this point was not challenged. As Mr. DeCicco testified for Royalton"people – people book weddings a year in advance. They typically don't book weddings four months prior to the date."

[22] As it happened, Royalton incurred a loss because they were not able to re-book a wedding reception for October 2, 2010. The wedding reception for Mr. Competiello and Ms. Crupi was to cost $35,000. Royalton was only able to book a "Sweet 16" party for $950.

[23] The trial judge found that there was a contract between parties but concluded:

...from my understanding of the evidence that's been presented to this court, a function has to be re-booked of equal value. Who; what; where; when; and how. Well, what we have before this court are defendants that did not want to cancel; they wanted to postpone. They want to postpone the exact same event to another date. So is that the re-booking that is sought under these terms and conditions? I don't know. The terms and conditions of this agreement are vague and lack any sort of specificity upon which I can rely for any type of guidance...

...Well they weren't cancelling. They were re-booking. They were postponing their event. Not only was there a proposal to re-book the wedding, which if equal value, as is set out in the terms and conditions of the contract, but they also threw in a few other functions to boot, as the old term goes...

...Now I find that there was, at least to the extent, an agreement entered into; an agreement into a contract. There was a meeting of the minds here. But I think that the terms and conditions, as set out in Schedule "A" are so convoluted that it leaves things very open, at least to my reading, to the extent that I could very easily see that what the defendants were doing, or trying to do, by re-booking was in full compliance to the requirements of the agreement, to the extent that they were doing what to be done without incurring any damages.

ISSUES

[24] The issues on this appeal are as follows:

1. What is the standard of review applicable to this appeal?

2. Did the trial judge err in law with respect to the legal principles of contractual interpretation?

3. Did the learned trial judge err with respect to costs awarded?

ANALYSIS

Issue No. 1: What is the standard of review applicable to this appeal?

[25] Where issues address questions of law, the standard of review by the appellate court is one of correctness see: MacDougall v. MacDougall, 262 D.L.R. (4th) 120 (Ont. C.A.), The Plan Group v. Bell Canada, 2009 ONCA 548, [2009] O.J. No. 2829 (Ont. C.A.) para. 129.

[26] Where issues address questions of fact, the standard of review by the appellate court is that the appellate court will only interfere with the findings of the trial judge if there is a palpable and overriding error which affected the trial judge's assessment of the facts, see: General Signal Ltd. v. Magnesium Express Ltd. (1995), 79 O.A.C. 287 (Div. Crt.).

[27] I find the trial judge made an error in law in failing to apply proper contractual principles of interpretation. The trial judge's interpretation is subject to review on a standard of correctness.

Issue No. 2: Did the trial judge err in law with respect to the legal principles of contractual interpretation?

[28] This question is answered in the affirmative.

[29] The Court of Appeal has set out the following legal principles with respect to contractual interpretation:

37. Little, if anything is to be found in the application judge's reasons about the principles of interpretation he invoked.

Broadly speaking, however – as this Court noted in Ventas, Inc. v. Sunrise Senior Living Real Estate Investment Trust (2007), 2007 ONCA 205, 85 O.R. (3d) 254, at para. 24 – a commercial contract is to be interpreted,

(a) as a whole, in a manner that gives meaning to all of its terms and avoids an interpretation that would render one or more of its terms ineffective;

(b) by determining the intention of the parties in accordance with the language they have used in the written document and based upon the "cardinal presumption" that they have intended what they have said;

(c) with regard to objective evidence of the factual matrix underlying the negotiation of the contract, by without reference to the subjective intention of the parties; and (to the extent there is any ambiguity in the contract),

(d) in a fashion that accords with sound commercial principles and good business sense, and that avoid a commercial absurdity. [Footnotes omitted.]

38. In addition, as Doherty J.A. observed in Glimmer Resources Inc. v. Exal Resources Ltd. (1999), 119 O.A.C. 78 (C.A.), at para. 17, each word in an agreement is not to be "placed under the interpretative microscope in isolation and given a meaning without regard to the entire document and the nature of the relationship created by the agreement." Courts should not strain to dissect a written agreement into isolated components and then interpret them in a way that – while apparently logical at one level – does not make sense given the overall wording of the document and the relationship of the parties. Yet that is precisely the effect of accepting The Plan Group's interpretation of the word "conduct" in the arbitration clause and of minimizing or eliminating the import of the words "the then-current rules [of the Institute]." [^1]

[30] I find that nowhere in his Reasons, did the trial judge state what contractual principles of interpretation guided his decision other than to refer to his own view about the use of "who, what, where, when and how".

[31] The trial judge made some references in his Reasons to the terms being vague and being reproduced in a small font. Counsel agree the size of the font is not an issue on this appeal. I find the terms of the Contract were clear and specific either on the face of the original Contract or, in the alternative, in the email copy of the Contract.

[32] I find that the trial judge failed to interpret the Contract as a whole and in a manner that gave meaning to all its terms and avoided an interpretation that would render one or more of its terms ineffective. In this regard, the terms and purpose behind the cancellation provision was, with respect, misunderstood by the trial judge.

[33] I find that the trial judge focused on the word "re-booking" in isolation, without looking at the entire document and the nature of the relationship created by the Contract. Without referring to the "Function Date", the trial judge misinterpreted what the parties had agreed to in the Contract.

[34] The Contract does provide for what re-booking means:

For the purpose of this agreement, a room or function shall be considered "re-booked" if a similar type of function or event, for an equivalent monetary value is booked in place of the function or event under this contract. In the event that the re-booking is for a function or event at a lesser monetary value, the Royalton reserves the right to charge the customer named herein the difference between the two values.

[35] The "re-booking" had to be by Royalton and for the same date as the "Function Date" referred to in the Contract. I find to hold otherwise would render the Contract commercially unreasonable. It would mean that any customer could cancel a function for a specific date as long as he or she gave some promise to book another date. To accept this interpretation would ignore the fact that Royalton would not have a function on the cancelled date and thus would suffer damages. The profit from another date would not compensate Royalton as it would have lost the ability to be paid for both dates.

[36] I find the Contract did not create a right to re-book for the customer. Contrary to the trial judge's finding, the contractual term dealt with what would happen in case of a breach by the customer. There was an obligation to attempt to mitigate on the part of Royalton in the face of the breach of contract by Mr. Competiello and Ms. Crupi. Royalton attempted to mitigate and was only able to book a "Sweet 16" party for $950 on the Function Date.

[37] I find the trial judge misapprehended the objective meaning of the terms of the Contract in favour of the highly subjective interpretation of Mr. Competiello and Ms. Crupi. He found that they only sought to postpone the exact same event to another date and they did not seek to cancel their event. With respect, Mr. Competiello and Mr. Crupi were not prepared to proceed with their reception on the Function Date for which they had contracted with Royalton. Royalton was not obliged to accept their offer to re-book to another date or to accept the offer to hold two additional events at Royalton's banquet hall.

[38] Rather, the Contract is clear and unambiguous as to the Function Date and what happens if the customer (in this case Mr. Competiello and Ms. Crupi) is not prepared to proceed with their event on the Function Date. (See Contract under paragraph 3 Cancellations and Terminations). Calling their non-attendance on the Function Date a "postponement" does not change the fact that Mr. Competiello and Ms. Crupi were not prepared to proceed with their event on October 2, 2010. On that day, their inability to proceed per their June 1, 2010 email, left Royalton with an open date instead of a date for a wedding reception in the amount of $35,000 in accordance with the Contract.

[39] Contrary to the findings of the trial judge, the terms and conditions of this Contract are not vague and do not lack any sort of specificity. The wording of the Contract at paragraph 3(b) is clear as to what would happen should Mr. Competiello and Ms. Crupi not proceed with their wedding reception on the Function Date of October 2, 2010.

[40] As it turned out, the Royalton facility could not re-book for a function of equal monetary value. Mr. Competiello and Ms. Crupi were given credit for the $950 event which did take place on October 2, 2010.

[41] The Contract is certain that re-booking speaks to a function or event of an equivalent monetary value booked "in place of the function or event under this contract". In this case, the function or event under this Contract means a wedding reception on the Function Date of October 2, 2010 and not any other date postponed sometime in the future.

[42] I find the trial judge failed to take into account that the parties had agreed the terms for cancellation were fair. The Contract provided:

Both parties agree that the above noted charges are reasonable and represent a fair and genuine pre-estimate of the projected losses of The Royalton in the event of a cancellation or termination without a re-booking.

[43] For these reasons I would allow the appeal.

[44] Pursuant to paragraph 3(a) of the Contract, Royalton is entitled to an administrative fee of $150.

[45] Pursuant to paragraph 3(b) of the Contract, Royalton is entitled to retain the deposit of $10,000. A credit shall be given to Mr. Competiello and Ms. Crupi in the amount of $950 for the "Sweet 16" party which did proceed on October 2, 2010.

[46] I find that Royalton is entitled to damages from Anthony Competiello and Juliana Crupi calculated as follows:

1. The contract amount of $35,000 less credit $ 950

for Sweet 16 party held October 2, 2010

Subtotal $34,050

2. Fifty percent of $34,050 per section 3(b) $17,025

of the contract

3. Add $150 administration fee per section 3(a) $17,175

of the contract

[47] I find damages of $17,175 are payable by Mr. Competiello and Ms. Crupi to Royalton.

Issue No. 3: Did the learned trial judge err with respect to costs awarded?

[48] I set aside the trial judge's costs award. I find the quantum of costs awarded was too high and not reasonable in the circumstances. The overarching principle of fixing costs is that the amount is fair, reasonable and proportional rather than any exact measure of the actual cost to the successful litigant. See: Boucher v. Public Accountants Council for the Province of Ontario (2004), 71 O.R. (3d) 291 (C.A.) at paras. 26 and 37; Davies v. Municipality of Clarington (2009), 2009 ONCA 722, 100 O.R. (3d) 66 (C.A.) at paras. 29-30.

[49] In any event, given the success of Royalton on this appeal, the answer to this question is largely moot.

CONCLUSION

[50] For these reasons, the appeal is allowed. The order or judgment of the trial judge is set aside. Judgment is granted as follows:

a. The Royalton Hospitality Inc. shall have judgment against Anthony Competiello and Juliana Crupi in the amount of $17,175;

b. The Royalton Hospitality Inc. is entitled to retain the deposit of $10,000 paid by Anthony Competiello and Juliana Crupi; and

c. Costs of this appeal and trial below are fixed in the amount of $4,000 all inclusive payable to The Royalton Hospitality Inc. by Anthony Competiello and Juliana Crupi.

DiTOMASO J.

Released: August 24, 2012

[^1]: The Plan Group, supra paras. 37 and 38