DATE: 20020214 DOCKET: C30865

COURT OF APPEAL FOR ONTARIO

RE:

SAEED A. BOKHARI (Plaintiff/Respondent) –and– OTTAWA CUSTOMS CONSULTING LTD., WILLIAM CHAPMAN and RICHARD DUCHARME (Defendants/Appellant)

BEFORE:

WEILER, ABELLA and GOUDGE JJ.A.

COUNSEL:

Daniel J. Leduc, for the appellant Ottawa Customs Consulting Ltd.

Melody D. Loubert, for the respondent

HEARD:

February 4, 2002

On appeal from the judgment of Justice Douglas J. Cunningham dated October 9, 1998.

E N D O R S E M E N T

WEILER and GOUDGE JJ.A.:

[1] This appeal is about contract interpretation. The appellant appeals the judgment of Cunningham J. dated October 9, 1998 in which the respondent was awarded, for breach of contract, commissions obtained through his efforts in respect of six Ottawa Customs Consulting Ltd. (“OCC”) corporate clients.

[2] The respondent left his job of 22 years at Revenue Canada in 1991 to work for OCC as a private custom consultant, which involved performing customs and excise audits. The respondent contracted with OCC on Feb 18, 1991 to provide services to OCC for one year in exchange for a salary, a consulting fee percentage, and commissions. On May 29, 1991, the respondent sought to protect his interests with respect to considerable commission potential and entered into a second contract with OCC. This agreement called for an eleven-month term – February 18, 2001 to January 18, 1992 – extendable on mutually agreeable terms and conditions. On February 20, 1992, the parties discussed terms on which the contract could be extended but were unable to come to an agreement. Prior to this meeting and following the January 18, 1992 termination of the agreement, the respondent continued working for the appellant on a casual basis.

[3] The respondent received commission cheques until August 1992. In early September, the appellant informed the respondent that he would no longer be sharing money that came into OCC. On September 25, the parties met with their accountants for what was a short, tense meeting. In December 1992, the respondent issued his statement of claim.

[4] The main issue is the interpretation of the May 29, 1991 agreement. The respondent’s position is that he is entitled to commissions in respect of clients solely acquired by him or jointly acquired by him and OCC not only during the life of the contract but forever after in connection with work done by the defendants on behalf of such clients. The appellant contends that the respondent is entitled only to commissions in respect of work done by him and filings made by him during the life of the agreement. The trial judge found that the parties, who were friends and unfortunately did not see the need for clear contractual terms, intended that the revenue sharing provided for in the agreement would continue beyond one year. The trial judge concluded that the words used in paragraph 4 of the second agreement under the heading “Sharing of Recoveries”; namely, “recovered or to be recovered at a later date for such clients”, meant that the respondent would be entitled to his commissions even after the expiry of the agreement or any extension thereof in respect of clients jointly acquired or those acquired solely by him. He further concluded that paragraph 1 under the heading “Ownership and Rights to Clients”, which set out that clients assigned to or brought in by the respondent are to be OCC clients and that OCC has the exclusive right to serve them for one year form the expiry or termination of the agreement after which the respondent could deal with them directly, does not restrict the respondent to recoveries made on behalf of the appellants for a period of one year following the termination of the agreement.

[5] In our opinion, the appellant has not shown any reversible error on the part of the trial judge. He did not err in his interpretation that the agreement continued to provide the respondent with “finders fee” commissions beyond the fixed 11-month term of the contract. We disagree that the agreement included conditions precedent; namely, that the respondent would service the client and work on client files before he would be entitled to commissions. This is not a case to apply the doctrine of repugnancy as there are no clearly contradictory terms in the agreement. The specific terms of the contract, that it was for a period of eleven months, related to the length of time over which services were to be performed, whereas recovery of commission could clearly take place beyond the life of the agreement. Nor did the trial judge err in failing to apply the doctrine of contra proferentem in respect of the second agreement. This was not a contract of adhesion. In our opinion, both the positions adopted by the parties were extreme. While, having regard to the contract as a whole, we would not necessarily have interpreted the contract in this fashion, having regard to the positions of the parties we have not been persuaded that, in adopting the interpretation put forward by the respondent, the trial judge committed any reversible error.

[6] The appeal is therefore dismissed.

Signed: “Karen M. Weiler J.A.”

“S.T. Goudge J.A.”

ABELLA J.A. (dissenting):

[7] In my view, the wording of the contract and the nature of the relationship between the parties do not support the trial judge’s interpretation of the contract in a way that results in indefinite commissions to the respondent. The question, then, is what can reasonably be taken from the contract language and the evidence to be the parties’ intentions with respect to the recovery of commissions.

[8] By his own admission, as the trial judge noted, Mr. Bokhari considered the agreement with OCC to be a “temporary agreement which will prevail until we renegotiate and come up with new arrangements.” Based on this fact alone, it seems to me to be unreasonable to attribute to the parties an intention that perpetual financial consequences would flow from an eleven-month interim agreement.

[9] Moreover, the contract as a whole reveals a one-year time-limited arrangement with a two-stage exit strategy over two years available for Mr. Bokhari. In the first year after the end of the contractual term, Mr. Bokhari was free to compete with OCC. At the beginning of the second year, the respondent and OCC were equally free to solicit any OCC clients Mr. Bokhari brought in or helped to bring in. The right to compete for these clients is, it seems to me, inconsistent with Mr. Bokhari’s claim that he is contractually entitled to perpetual commissions from them.

[10] There is no question that Mr. Bokhari is entitled to recover 25% of the commissions earned from clients he either jointly or exclusively brought into OCC. The question is how long that entitlement should last. Given the short duration and temporary nature of the agreement, I think the interpretation which best reflects both commercial sense and the parties’ intentions is one which results in Mr. Bokhari being entitled to his share of commissions earned from those clients, provided that work was done for them during the contractual term. He is entitled to that money, whether or not it is available during the life of the contract. To that extent, I see no time limit on the payment of commissions. But the work must have been performed during the contract, whether by Mr. Bokhari or by other OCC personnel. If no work was done, no commissions are payable. If work was done, they are payable to Mr. Bokhari whether or not they are received beyond the contract term. This, I think, is what is meant by the phrase “to be recovered at a later date.”

[11] To find otherwise would render meaningless the fact that there is a time limit in the contract. It would also nullify the language in paragraphs 2 and 3 of the “Sharing of Recoveries” section of the contract, which refers to the deduction from the commission of expenses incurred in earning the gross monies recovered. This language would be redundant unless the paragraphs are interpreted as meaning that work has to be done – and expenses incurred – before any commission is payable.

[12] The phrase “recovered or to be recovered” should therefore be read to mean recovered or to be recovered for work done. This means, among other things, that the phrase “recovered or to be recovered” has the same meaning not only in paragraphs 2 and 3 of the “Sharing of Recoveries” section, but in paragraph 1 of that section as well. In fact, the phrase “recovered or to be recovered” makes no sense in paragraph 1 of that section at all unless the words “for work done” is read in, and unless the work is done during the term of the contract. If no work was done, there is no recovery.

[13] I am also reinforced in this view by Mr. Bokhari’s contractual right, as set out under the “Restrictions and Limitations” section, to approve and determine the remuneration of anyone retained by OCC to work on a jointly or exclusively obtained client. This means that the parties intended a one-year arrangement during which Mr. Bokhari had a veto power over the selection and remuneration of persons working for clients he brought in or helped bring in. This provision, creating a supervisory role, only makes sense if it is seen as having a mirror relationship with paragraphs 2 and 3, that is, that it anticipates work being done, being done by people approved by Mr. Bokhari, and being done during the term of the contract.

[14] I would therefore find that the commissions payable to Mr. Bokhari are for work done during the subsistence of the one year contract, whether or not done by Mr. Bokhari, and whenever the monies are recovered.

[15] Accordingly, I would allow the appeal.

Signed: “R.S. Abella J.A.”