Court File and Parties
CITATION: SeaWorld Parks & Entertainment LLC v. Marineland of Canada Inc., 2011 ONCA 616
DATE: 20110928
DOCKET: C54024
COURT OF APPEAL FOR ONTARIO
Goudge, Sharpe and MacFarland JJ.A.
BETWEEN
SeaWorld Parks & Entertainment LLC
Applicant (Respondent)
and
Marineland of Canada Inc.
Respondent (Appellant)
John Keefe and Julie Rosenthal, for the appellant
Peter Jervis and Rebecca Gosevitz, for the respondent
Heard: August 12, 2011
On appeal from the judgment of Justice Richard A. Lococo of the Superior Court of Justice dated July 5, 2011.
Reasons for Decision
Goudge J.A.:
[1] SeaWorld Parks & Entertainment LLC (“SeaWorld”) owns a male killer whale named Ikaika. SeaWorld agreed to loan Ikaika to Marineland of Canada Inc. (“Marineland”) pursuant to the Breeding Loan Agreement signed on November 16, 2006. When SeaWorld gave written notice to Marineland of its intention to terminate this agreement when it expired on December 31, 2010, Marineland declined to return the killer whale. SeaWorld then brought this application seeking a declaration that the Agreement was properly terminated and ordering that Ikaika be returned to SeaWorld.
[2] The application judge dismissed Marineland’s motion seeking a trial in order to answer these questions and granted SeaWorld the relief it sought. Marineland appeals.
[3] For the reasons that follow, which closely track those of the application judge, I would dismiss the appeal.
THE BACKGROUND
[4] SeaWorld and Marineland both operate significant facilities for the care and display of captive marine animals. In December 2005 (when SeaWorld was known as Busch Entertainment Corporation) they concluded the Mammal Support and Interchange Agreement (“the Interchange Agreement”). It began with a recognition that in future the parties would collaborate on a number of projects, each having its own individual agreement. It then set out some guiding principles the third of which is relied on by the appellant:
Marineland of Canada, Inc. (“Marineland”) and Busch Entertainment Corporation (“BEC” have agreed to collaborate on a number of on-going projects relating to the care and maintenance of marine mammals and other marine life. The terms and conditions of each agreement will vary, depending on the individual circumstances, but will be guided by the following principles:
Both parties support breeding and genetic diversity of mammal populations at their respective parks;
Both parties intend to maintain long-term care of marine mammal attractions and exhibitions;
Both parties are willing to loan animals to each other for the foregoing purposes, and continue such loans on a regular basis until either party is unable to properly maintain the mammals or requests their return; and
The principals of Marineland and BEC wish to provide each other with access to their respective business philosophies and animal care technologies, subject to reasonable safeguards, including an agreement to restrict such information to the principals of Marineland and BEC.
[5] Attached as exhibits to the Interchange Agreement were four specific agreements one for the loan of the female killer whale to Marineland, one for the loan of the male beluga whale to SeaWorld, one for the sale of two sea lions to Marineland and one for the sale of two male belugas to SeaWorld. The Interchange Agreement provided that its language “will control over any inconsistencies” in these four agreements.
[6] The Interchange Agreement explicitly envisaged that there would be future agreements with mutually acceptable terms negotiated between the parties:
Future Animal Exchanges. The parties intend to engage in future exchanges and additional animal transfers under mutually acceptable terms.
[7] Finally the Interchange Agreement provided that it and the agreements referred to in it constituted the complete agreement of the parties.
[8] The Breeding Loan Agreement for Ikaika was concluded 14 months later.
[9] It provided for a fixed term and rights of termination:
This Agreement shall remain in force, except as otherwise provided, for a term ending December 31, 2010. This Agreement shall be renewed automatically for one year terms thereafter unless or until terminated by either Party. Either Party to this Agreement may terminate this Agreement at any time with respect to some or all of the Specimens listed above by giving the other Party thirty (30) days’ written notice prior to the effective date of the proposed termination.
[10] The other relevant provisions in the Breeding Loan Agreement are as follows:
GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the federal laws of the United States of America, and where not pre-empted by federal law, by the laws of State of Florida without regard to the conflict of laws thereof.
ENTIRE AGREEMENT. This Agreement constitutes the entire agreement between the Loaning Institution and the Receiving Institution with respect to the Specimen(s); it shall not be amended, altered or changed except by a written agreement, signed by the Parties hereto, which is otherwise in conformity with all requirements set forth herein.
[11] On December 1, 2010 SeaWorld notified Marineland of its intention to terminate the Breeding Loan Agreement at the end of the calendar year. It gave no reason. Marineland does not dispute that this complied with the formal notice requirements of that Agreement. However it does contest SeaWorld’s right to terminate.
[12] Marineland filed considerable affidavit evidence concerning the genesis of the relationship with SeaWorld, the precontractual representations by SeaWorld, and its post contractual representations and conduct. In response, SeaWorld provided its own affidavit evidence, much of it conflicting with that of Marineland. In addition, both parties tendered expert evidence concerning Florida law because of the provision in the Breeding Loan Agreement that it was to be governed by Florida law.
[13] The application judge concluded that a trial was unnecessary to determine the Florida law relevant to this application. He found, as the parties’ experts agreed, that Florida law was substantially the same as Ontario law. It provides that where a contract is clear and unambiguous, parole evidence cannot be admitted to vary, alter or contradict its terms.
[14] He then turned to the Breeding Loan Agreement. He found it to be clear and unambiguous and therefore extrinsic evidence could not avail to alter its meaning. He concluded that the termination provision in the Breeding Loan Agreement permitted SeaWorld to terminate when it did, and did not require it to provide a reason for doing so. He rejected Marineland’s argument that this Agreement and the Interchange Agreement should be read together as a single contract. But he found that even if this were done, SeaWorld would still be entitled to terminate as it did, without a reason. He held that the third guiding principle in the Interchange Agreement was not ambiguous, and was not open to the interpretation that SeaWorld could terminate only if Marineland was unable to properly maintain the killer whale. In the result, he granted the remedy sought by SeaWorld.
ANALYSIS
[15] Marineland argues that the application judge erred in the following ways:
(a) by interpreting the Breeding Loan Agreement on its own, rather than construing it together with the Interchange Agreement;
(b) by failing to consider the evidence of the surrounding circumstances in doing so, which would have at least raised an ambiguity in the termination provision that required a trial to address conflicting extrinsic evidence;
(c) by rendering an interpretation that is commercially unreasonable.
[16] The context for these issues is the extent to which evidence beyond the words of a contract can be used to determine its meaning. There is no dispute between the parties that where the words of a contract are clear and unambiguous, extrinsic evidence cannot be used to alter their meaning. Ambiguity is required before that is permitted. See: Eli Lily and Co. v. Novopharm Ltd. (1998), 1998 CanLII 791 (SCC), 2 S.C.R. 129 at para. 55. At the same time, consideration of the circumstances in which the contract was made is part of the interpretive process. This factual matrix is relevant not to alter the meaning of clear and unambiguous language but to assist the court “to determine the meaning of the contract against its objective contextual scene”, in the words of Lord Justice Steyn as adopted in this court in Dumbrell v. Regional Group of Companies (2007), 85 O.R. 3rd (616) (Ont. C.A.). The parties take no issue with the application judge’s finding of fact that the Florida law concerning contractual interpretation is the same as that of Ontario.
[17] The application judge went on to say that the task of determining if a particular contract is ambiguous is not a question of Florida law but rather is for the Ontario court in the course of applying Florida law. We agree.
[18] Marineland’s first argument is that the Breeding Loan Agreement must be construed together with the Interchange Agreement and that the two together constitute the agreement between the parties.
[19] We do not agree. The Breeding Loan Agreement is clear and explicit. It provides that it constitutes the entire agreement between the parties with respect to Ikaika. The Interchange Agreement, made 14 months earlier, supports this. It contemplates that the parties will, in the future, agree to collaborate on a number of projects with the terms and conditions of the contract for each project varying, depending on the individual circumstances. The Interchange Agreement expressly contemplates that future animal exchanges will each require negotiation of its own contract to provide mutually acceptable terms. That is what occurred with the Breeding Loan Agreement in this case.
[20] The presence of “guiding principles” in the Interchange Agreement cannot change this. They are broad assertions of the approach to be taken to future projects, not agreed principles of interpretation of future agreements. They do not diminish the clear language of the Breeding Loan Agreement which explicitly provides that it constitutes a stand alone contract.
[21] Marineland’s second argument is that the application judge erred when he failed to consider the extrinsic evidence of the making of the Breeding Loan Agreement in the course of finding that termination without giving a reason is permitted.
[22] We disagree. The Breeding Loan Agreement is a stand alone contract. Its termination provision is clear and unambiguous: either party may terminate it at any time. Absent any ambiguity, Marineland cannot look to extrinsic evidence to alter this plain meaning. Nor does the evidence of the circumstances surrounding the making of this Agreement enhance the court’s ability to understand the meaning of the words in the termination provision. The words themselves are clear and leave no doubt.
[23] We agree with the application judge that even if the Breeding Loan Agreement and the Interchange Agreement were considered together, there would be no basis to alter the termination right provided to SeaWorld. The third guiding principle in the Interchange Agreement says that the parties are willing to loan animals to each other until either party is unable to properly maintain them or requests their return. The right to request the return of a loaned animal is unqualified and requires no reason to be given. Even if this guiding principle were taken to somehow inform the clear termination right in the Breeding Loan Agreement, it is not ambiguous and therefore does not permit of extrinsic evidence. Moreover, it is perfectly consistent with the termination right found in the Breeding Loan Agreement. SeaWorld had the right to terminate as it did without providing a reason.
[24] Lastly, Marineland says that this interpretation makes no commercial sense because of the investment that the party receiving a loaned animal would inevitably make. Termination at any time without the need to provide a reason would, it says, be commercially unreasonable.
[25] Again we disagree. The Breeding Loan Agreement is not a long term agreement. The maximum term of the loan of Ikaika is only four years and thereafter only a year at a time. There is no suggestion of capital investment being undertaken by the receiving party in reliance on the length of the agreement. Both parties have the right to terminate at any time. This was not a guaranteed long term relationship. The termination provision is clear and not commercially unreasonable.
[26] In summary I would dismiss the appeal.
[27] SeaWorld is entitled to its costs on a partial indemnity basis. I would fix those costs of $15,000 inclusive of disbursements of GST.
RELEASED: September 28, 2011 (“S.T.G.”)
“S.T. Goudge J.A.”
“I agree. Robert J. Sharpe J.A.”
“I agree. J. MacFarland J.A.”