Global Learning Group Inc. v. Eskasoni First Nation

Ontario Reports

Court of Appeal for Ontario,

Rosenberg, Goudge and Tulloch JJ.A.

May 16, 2013

115 O.R. (3d) 558 | 2013 ONCA 325

Case Summary

Contracts — Interpretation — Applicant contracting with respondent Indian band to solicit donations for respondent — Contract providing that applicant would be paid "fee equivalent to 15 percent (including GST) of the gross amount of donations" raised — Respondent statutorily exempted from payment of GST on services provided to it — Contract clear and unambiguous — Phrase "including GST" not referring to GST that non-exempt client would have to pay but rather to GST that respondent had to pay — Amount of GST in this case was zero.

The applicant contracted with the respondent to solicit donations for the respondent. The contract provided that the applicant would be paid "a fee equal to 15 percent (including GST) of the gross amount of donations" raised. As an Indian band, the respondent was exempted by statute from payment of GST on services provided to it. A dispute arose about the meaning of "including GST" in the contract. Taking the position that "including GST" referred to the amount of GST that a non-exempt client would be required to pay for equivalent services, the applicant brought an application to resolve the dispute. The application judge found that the contract was not ambiguous and rejected the applicant's interpretation. The applicant appealed.

Held, the appeal should be dismissed.

Neither the phrase "including GST" nor its contractual context referred in any way to the GST that a non-exempt client would have to pay for equivalent services. Rather, the phrase simply referred to the GST that the respondent had to pay for those services, which was zero. The phrase "including GST" did not carry any implication of a discount to the applicant.

Statutes referred to

Indian Act, R.S.C. 1985, c. I-5

APPEAL from the judgment of Stewart J. of the Superior Court of Justice dated November 7, 2012 interpreting a contract.

Maxime Faille, for appellant.

David Winer, for respondent. [page559]

The judgment of the court was delivered by

[1] GOUDGE J.A.: — The appellant is an Indian band within the meaning of the Indian Act, R.S.C. 1985, c. I-5. The respondent provides fundraising services to clients such as the appellant.

[2] On October 20, 2009, the respondent contracted with the appellant to solicit donations for the appellant. The contract provided that the respondent would be paid "a fee equal to 15 percent (including GST) of the gross amount of donations" raised for the band in the time frame being invoiced.

[3] The dispute arose because the appellant, as an Indian band, is exempted by statute from payment of GST on services provided to it. A service provider to the appellant is therefore not required to collect GST from it for remitting to the government.

[4] This led to a difference between the parties on the meaning of the reimbursement provision in the contract, particularly "including GST".

[5] The appellant says that "including GST" refers to the amount for GST that a non-exempt client would be required to pay for equivalent services. It says that this amount constitutes a deduction from the 15 per cent that it is required to pay. On the other hand, the respondent says that "including GST" means the GST payable on these services to this appellant, which, because of the exemption, is zero.

[6] The respondent brought an application to resolve this dispute. The application judge concluded that the contract was clear and unambiguous. She agreed with the respondent's interpretation, holding:

On its face, the contract required the Applicant to assume the risk and responsibility of remitting GST. The fact that GST was determined to be inapplicable to the Respondent does not operate to reduce the fees to be paid by it or trigger a corresponding discount.

[7] In the alternative, the application judge went on to consider the post-contract conduct of the parties which she viewed as supportive of the respondent's interpretation, if one viewed the contract as ambiguous.

[8] The appellant appeals to this court from the order of the application judge. Both parties essentially reprise the arguments they made at first instance.

[9] For several reasons, I would dismiss the appeal.

[10] First, I do not think the words "including GST" can bear the meaning urged by the appellant. Neither that phrase nor its contractual context refer in any way to the GST that a different, non-exempt client would have to pay for equivalent services. [page560] Rather, the phrase simply refers to the GST that this client has to pay for these services. Given the appellant's tax exempt status, that amount is zero.

[11] Second, I do not think that the contested phrase "including GST" carries any implication of a discount to the appellant. Whether the GST that a client has to pay is 0 per cent (as it is with the appellant) or 5 per cent (as it would be for a non-exempt client), the contract obliges the appellant to pay a fee equal to 15 per cent of donations, not some lesser amount. The contract language clearly requires the appellant to pay a fee of 15 per cent. Moreover, there is no suggestion in the factual context for the making of this contract, namely, the factual matrix, that the parties contemplated that the appellant's exemption from GST would provide it with any discount from 15 per cent.

[12] I would therefore conclude that the application judge was correct to find that the language of the contract is clear and that the respondent read it correctly.

[13] It is therefore unnecessary to deal with the question of post-contract conduct and any possible ambiguity.

[14] The appeal must be dismissed.

[15] The parties may file written submissions on the issue of costs of no more than three pages within three weeks of the release of these reasons.

Appeal dismissed.

End of Document