DATE: 20021219

DOCKET: C38033

COURT OF APPEAL FOR ONTARIO

McMURTRY C.J.O., GOUDGE AND MACPHERON JJ.A.

B E T W E E N:

HUGHES, KING & COMPANY LIMITED and C. WALLIS KING

Plaintiffs (Respondents in Appeal)

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ROBIN R. McISAAC, KAREN R. SHOFFNER, CAROL HUDD, HIBERNIAN CAPITAL MANAGEMENT LTD. and CASTELLUM CAPITAL MANAGEMENT INC.

Defendants (Shoffner and McIssac Appellants)

Counsel: Robert Shour for the appellant Thomas J. Gorsky for the respondent

Heard: December 16, 2002

Released Orally: December 16, 2002

On appeal from costs judgment of Justice John Wilkins of the Superior Court of Justice dated September 3, 2002.

BY THE COURT:

[1] The contractual provision in question here is certainly not a model of legal drafting.

[2] However, we agree with the trial judge that its clear design was to set up a significant disincentive to a moving shareholder taking business from the respondent by providing a reduction in the payment to that shareholder where that happens.

[3] In our view, the wording of the provision is not so confused that no meaning can be given to it and the trial judge was right to try to give this provision commercial efficacy.

[4] We agree with him that the language of this provision, interpreted in the factual context of the this case, requires that where the annualized last quarter revenue from the lost business is greater than the value otherwise owing to the departing shareholder, that shareholder must pay the difference to the respondent. This interpretation is consistent with the language of the provision and true to its purpose.

[5] As to the costs order made below, we read the minutes of partial settlement to preclude the respondent from recovering costs for all claims save the contract interpretation question prior to the date of that settlement.

[6] The trial judge appears not to have given effect to this in making his costs order. We would therefore vary the costs order made at trial. In the circumstances when only one of the large number of issues can attract costs, the realistic solution, rather than to parse pages of discovery issue by issue, is to provide for no costs of the proceedings before March 25, 1999.

[7] Thus apart from this variation as to costs the appeal is dismissed.

[8] The respondent has pursued a cross appeal of the finding that the appellants are severally liable only. In our view, given the clear basis on which each of these parties contracted, the conclusion of the trial judge on this issue is sound. The cross-appeal is dismissed as well.

[9] Success of the day being relatively equally divided, we think the fair disposition of costs of the appeal is that there be no costs in this court.

Released: December 19, 2002 “RRM” “R.R. McMurtry C.J.O.” “S.T. Goudge J.A.” “J.C. MacPherson J.A.”