CITATION: 1230995 Ontario Inc. v. Badger Daylighting Inc., 2011 ONCA 442
DATE: 20110608
DOCKET: C52312
COURT OF APPEAL FOR ONTARIO
Laskin, Goudge and Karakatsanis JJ.A.
BETWEEN
1230995 Ontario Inc.
Plaintiff (Respondent)
and
Badger Daylighting Inc.
Defendant (Appellant)
Irving Marks and Shawn Pulver, for the defendant (appellant)
Thomas J. Corbett, for the plaintiff (respondent)
Heard & released orally: June 1, 2011
On appeal from the judgment of Justice W.A. Jenkins of the Superior Court of Justice dated May 25, 2010.
ENDORSEMENT
[1] The appellant Badger argues three points on appeal:
The trial judge erred in finding that the respondent had complied with its obligation under s. 4.7(2) of the 2003 Marketing Agreement to “aggressively and fully develop and exploit the market for the Services and diligently solicit orders” in the four counties;
the trial judge erred by enforcing the entire agreement clause section 10.11, instead of giving effect to the common understanding and reasonable expectations of the parties that the nine counties were work zones and continued to be governed by the 2002 Work Zone Amendment and the letter of understanding and;
the trial judge erred in finding that the nine counties had been assigned to the respondent as work zones under the 2003 Marketing Agreement.
We do not accept any of these arguments.
[2] Badger’s first argument fails for two reasons. First, it runs up against the trial judge’s finding of fact in para. 187 of his reasons “Given the market conditions, I am satisfied that the plaintiff fully developed the London market to the extent possible. I therefore find that the plaintiff complied with para. 4.7 (2) of the Marketing Agreement and that there was no breach of that agreement by the plaintiff.” This finding is well supported by the evidence at trial.
[3] The trial judge’s reference to the potential for increased revenues by putting a truck in the London area is not inconsistent with this finding. The trial judge’s finding under s. 4.7(2) is that the respondent has complied to date. His finding on damages recognizes that the respondent could grow the market in the future.
[4] Additionally, the trial judge’s use of the phrase “to the extent possible” does not amount to a misinterpretation of s. 4.7(2). It simply reflects the commercial reality that Benko had a strong presence in the London market.
[5] Second, in taking the four counties away from the respondent, Badger did not rely on s. 4.7(2). Nor did it exercise the right in s. 9.1(3) to terminate the marketing agreement for breach of s. 4.7(2). Rather, Badger exercised what it thought, mistakenly, was its unilateral right to reassign the four counties. For these reasons, we reject Badger’s first argument.
[6] The trial judge rejected Badger’s second argument, and in our view, he was fully justified in doing so in the light of the entire agreement clause and the definition of Territory, which included the work zones. To the extent that the 2003 Marketing Agreement was ambiguous, the trial judge correctly noted that this was a contract of adhesion to be interpreted contra proferentum.
[7] Part of Badger’s argument on this point is that the trial judge improperly curtailed cross-examination that was designed to elicit support for applying the principle of estoppel by representation or convention.
[8] We think that the trial judge’s ruling was correct. He upheld an objection to a question that asked for Mr. Potter’s subjective understanding of the Agreement. That question was irrelevant to the interpretation of the contract. It was also irrelevant to estoppel by convention, which requires shared assumptions based on representations by statements or conduct.
[9] Further, although the trial judge did not expressly address the parties’ reasonable expectations, implicitly he concluded that his interpretation of the Marketing Agreement gave effect to their reasonable expectations. Accordingly, Badger’s second argument fails.
[10] Finally, we reject Badger’s third argument. Having found that the respondent’s territory included work zones, the trial judge was entitled to consider extrinsic evidence to identify what those work zones were. And on the evidence, there was no doubt whatsoever that the work zones referred to the nine counties.
[11] Accordingly, the appeal is dismissed with costs to the respondent fixed in the amount of $ 16,000 inclusive of disbursements and applicable taxes.
“John Laskin J.A.”
“S.T. Goudge J.A.”
“Karakatsanis J.A.”