COURT OF APPEAL FOR ONTARIO
CITATION: ID Inc. v. Toronto Wholesale Produce Association, 2025 ONCA 22
DATE: 20250116
DOCKET: COA-24-CV-0070
Nordheimer, Copeland and Madsen JJ.A.
BETWEEN
ID Inc.
Plaintiff (Respondent/ Appellant by way of cross-appeal)
and
Toronto Wholesale Produce Association* and StrategyCorp.
Defendants (Appellant*/ Respondent by way of cross-appeal*)
David Greenwood and Christopher McClelland, for the appellant/respondent by way of cross-appeal
James Zibarras and Richard MacGregor, for the respondent/appellant by way of cross-appeal
Heard: December 2, 2024
On appeal from the amended judgment of Justice Loretta P. Merritt of the Superior Court of Justice, dated January 15, 2024, with reasons reported at 2023 ONSC 4770.
Nordheimer J.A.:
[1] The Toronto Wholesale Produce Association (“TWPA”) appeals from the amended judgment of the trial judge that granted a declaration that the TWPA had breached its contract with the respondent, ID Inc., and awarded ID Inc. damages in the amount of $837,743.00 together with interest and taxes.[^1] ID Inc. cross-appeals from the trial judge’s dismissal of its claim arising out of an alleged separate oral agreement.
A. BACKGROUND
[2] These claims arise out of a proposal to transform a billboard located on property that is owned by the Province of Ontario and which houses the Ontario Food Terminal (“OFT”). The OFT is a food and produce hub covering approximately 40 acres (the “OFT property”) located on The Queensway near Park Lawn Road in the City of Toronto. The Frederick G. Gardiner Expressway runs along the south side of the OFT property. The Ontario Food Terminal Board ("OFTB") manages the OFT property. Wholesalers operate out of the OFT selling fruits, vegetables, and flowers. These wholesalers belong to the TWPA, an Ontario corporation without share capital.
[3] There was a large, double-sided, traditional (or static) billboard sign on the OFT property which could be seen from the Gardiner Expressway. The TWPA owned the billboard. It had leased the small bit of land upon which the sign sits from the OFTB since 1997.
[4] ID Inc. is a corporation that specializes in identifying opportunities for the erection of advertising signs for third-party advertising. These signs are located on properties owned by others who receive advertising revenue or fees from the third-party advertisers. ID Inc. supplies, installs and maintains the signs and arranges the third-party advertising.
[5] ID Inc., through its principal, Paul Kenny, thought to convert the OFT billboard from a traditional static sign to a digital sign. Digital signs generate significantly more advertising revenue than traditional billboard signs because they can accommodate many advertisers with different advertisements rotating every few seconds. Traffic exposure is the single most important determinant of advertising revenue: the more people who will see the sign, the more advertisers will pay. Mr. Kenny described signs facing the Gardiner Expressway as the "holy grail" of advertising signs because the traffic counts on the Gardiner Expressway are among the highest in Canada.
[6] Mr. Kenny approached the TWPA in mid-2012 with the idea of transforming the billboard to a digital sign. He forecasted that the sign could generate advertising revenue of $1,000,000 per year if the existing sign was converted to a two-sided digital sign and if any existing advertising restrictions were removed. This proposal was communicated to the Board of the TWPA. The Board instructed the staff of the TWPA to pursue the proposal.
[7] Staff from the TWPA had discussions with Mr. Kenny about the proposal. They also had discussions with the OFTB about it. The OFTB was also in favour of pursuing the proposal. At the same time, the TWPA and the OFTB had discussions about extending the current lease that the TWPA had for the property on which the sign was located.
[8] There was a meeting in late January 2013 between ID Inc. and the TWPA. This is the meeting at which ID Inc. contends that an oral agreement was reached. Notes of this meeting record that Mr. Kenny was concerned about one of ID Inc.’s competitors approaching the OFTB with a similar proposal. Mr. Kenny wanted to ensure that there was an agreement in place with the OFTB regarding the sign before any approach was made to the City of Toronto for a permit to transform the sign. Mr. Kenny told TWPA staff that the OFT property was grossly undervalued and could accommodate three signs along the Gardiner Expressway and a series of billboards around the perimeter. Mr. Kenny encouraged TWPA staff to get a binding agreement with the OFTB for the rights to all outdoor advertising so they would have the opportunity to build more signs. It appears that it was at this meeting that, for the first time, a question was raised regarding whether the City of Toronto had jurisdiction over the OFT because it is located on provincial land. This question would become a significant issue in the dealings between the parties.
[9] ID Inc. began working on a permit application including gathering information needed for that application. The TWPA arranged for the OFTB to write a letter to the Sign By-Law Unit of the Toronto Building Department, confirming its support of the TWPA's proposal to digitize the sign. Mr. Kenny was identified as the authorized agent of the TWPA for negotiations with the City of Toronto relating to the sign permit. TWPA staff also sent Mr. Kenny a list of contracts for advertising on the existing traditional sign.
[10] On March 28, 2013, the TWPA and the OFTB signed a document called the Lease Amendment and Extension Agreement extending the lease of the property on which the sign was located to March 31, 2027, allowing for the conversion to digital signs, removing an advertising restriction, and providing for equal sharing between the TWPA and the OFTB of the net revenue from advertising on the sign.
[11] On this same day, March 28, 2013, ID Inc. and the TWPA signed a Sale and Maintenance Agreement (the “SMA”). The SMA provides for the digitization of the sign with the TWPA paying ID Inc. $630,000 plus HST for the supply, installation and maintenance of the digital sign (referred to in the SMA as the “Display”). The SMA provides for an initial non-refundable deposit of $25,000, a deposit of $290,000 after the permit is obtained, and a final payment of $396,900 ten days later. Of particular importance to this appeal is paragraph 8 of the SMA which states:
PERMITS Notwithstanding paragraphs 3 and 5, upon [ID Inc.’s] receipt of the initial deposit, [ID Inc.], on behalf of the [TWPA], shall make application to all necessary regulatory and governmental authorities for any required permit to initially install the Display and any failure or inability of [ID Inc.] to obtain such permit for the Display within three hundred and sixty (360) days of the date of this Agreement shall result in this Agreement being terminated and [ID Inc.] shall be entitled to retain the initial deposit in compensation for [ID Inc.’s] bona fide efforts to obtain such permit (and, in such case the deposit shall be inclusive of HST).
[12] In early April 2013, Mr. Kenny met with the Sign By-Law Unit Manager of the City of Toronto to alert him that an application would be forthcoming. Mr. Kenny discussed whether the fact that the sign was on land owned by the Province had any impact on the permit process and was advised that it did not. Subsequent to this meeting, Mr. Kenny advised the TWPA of several concerns regarding the permit application, including the fact that the City was undertaking a study of digital signs, that the local councillor was not in favour of digital signs, and that the by-law staff might issue a negative recommendation regarding the proposed sign.
[13] According to Mr. Kenny’s evidence a trial, a negative staff recommendation is not necessarily a bad thing, as it can be used by an applicant to revise the application and address concerns. The negative staff report can assist a permit applicant in providing further information and the Sign Variance Committee can approve an application despite a negative staff report. It appears that Mr. Kenny did not communicate any of this to TWPA staff at the time.
[14] On April 15, 2013, Mr. Kenny started the application by opening a file and paying the fee. The following day, Mr. Kenny sent a letter to the Sign By-Law Unit addressing the nine criteria which the City of Toronto uses to assess such applications. After the permit application was submitted, Mr. Kenny advised TWPA staff that the by-law staff were not going to support the application. Mr. Kenny did not tell TWPA staff that a negative staff report was not a big deal.
[15] The defendant, StrategyCorp, had become involved in the digital sign transformation. StrategyCorp was already working with the TWPA in its capacity as a management, consulting, and government relations firm. The TWPA told ID Inc. that it wished to have StrategyCorp involved in the plan to transform the sign. This decision by the TWPA would cause friction as matters progressed.
[16] StrategyCorp did not have any particular expertise in dealing with digital signs or with the City of Toronto with respect to such signs. StrategyCorp did, however, have expertise and connections with the Province. In this regard, a legal opinion had been obtained that the OFTB was a provincial Crown agency. If that had been the case, approval from the City of Toronto would not have been necessary. StrategyCorp wanted to pursue the provincial approval route rather than the municipal approval route. ID Inc. was not happy with this approach.
[17] As a consequence of this change in direction, ID Inc. withdrew the permit application on May 17, 2013. As found by the trial judge, all three parties – ID Inc., the TWPA and StrategyCorp – agreed that this should be done as the TWPA did not want ID Inc. pursuing a city permit while they were exploring the possibility of provincial approval.
[18] In May and June 2013, the parties actively pursued the provincial approval route. This included holding meetings to discuss strategy, retaining a lawyer to provide a legal opinion, attending various meetings, and getting the OFTB on board. ID Inc., the TWPA, and StrategyCorp all actively participated in various aspects of this process.
[19] During this same time, ID Inc. and StrategyCorp became involved in a dispute over StrategyCorp’s wish to obtain a success fee if the sign transformation occurred. The TWPA would not give StrategyCorp a success fee and told StrategyCorp that if it wanted a success fee it should negotiate one with ID Inc. out of any share ID Inc. might receive from the advertising fees. While these issues are addressed in the companion appeal involving ID Inc. and StrategyCorp,[^2] it is sufficient for the purpose of these reasons to record the fact that tensions arose and that they impacted on the relationships, not only between ID Inc. and StrategyCorp but also between ID Inc. and the TWPA.
[20] Indeed, by early December 2013, TWPA staff wanted to cut ties with ID Inc. They spoke with the TWPA’s lawyer about how to move forward. It was decided that having ID Inc. and Mr. Kenny sign a confidentiality agreement (or non-disclosure agreement) would protect the TWPA from any interference by Mr. Kenny with the sign deal. The TWPA’s lawyer wrote to Mr. Kenny and requested that ID Inc. and Kenny sign a non-disclosure agreement.
[21] In mid-December 2013, ID Inc. and StrategyCorp signed a Consulting Agreement, which provided that StrategyCorp would obtain its success fee from advertising fees to be received by ID Inc.
[22] On January 13, 2014, the TWPA, ID Inc., and Mr. Kenny signed the non-disclosure agreement.
[23] As matters progressed, sometime in the early part of 2014, it was determined that the legal opinion that had been given respecting the status of the OFTB was wrong: the OFTB was not a Crown agency. Consequently, there was no provincial approval route for the signs. This fact was confirmed by a second opinion letter from a different law firm. It also became apparent that it would be time consuming and expensive to attempt to have the OFTB's status changed to give the Province jurisdiction. As a consequence, the TWPA decided to proceed with the municipal permit. This decision was not communicated to ID Inc. at that time.
[24] ID Inc. and StrategyCorp continued to have discussions between May and August 2014 during which StrategyCorp told ID Inc. about the problem with the original opinion letter. However, StrategyCorp was still looking at fixing the problem, potentially by legislative means. By December 2014, however, StrategyCorp decided that the municipal approval route should be pursued in preference to any provincial approval route and so advised the TWPA.
[25] In January 2015, StrategyCorp sent a letter to ID Inc. advising that the Consulting Agreement was at an end. It did so on the basis that the Consulting Agreement was subject to the SMA and that the SMA had terminated in accordance with its terms. Neither ID Inc. nor Mr. Kenny responded to the letter. It appears that the TWPA also considered the SMA to be at an end because it started to consider the possibility of using another company to undertake the transformation of the sign.
[26] In February 2015, the TWPA instructed StrategyCorp to pursue the municipal approval route. By May 2015, the TWPA and StrategyCorp had discussions with another company about transforming the sign. In October 2015, they had discussions with yet another company about the sign transformation. The TWPA ultimately decided to go with one of those other companies for the transformation of the sign. An agreement with this company was signed in May 2016. On July 5, 2016, the Sign Variance Committee approved the transformation of the sign.
B. ISSUES ON APPEAL
[27] The trial judge concluded that the SMA had not terminated in accordance with its terms. She found that ID Inc. had not failed to get the permit nor was it unable to do so. Rather, she found that the TWPA had waived compliance with the expiry provision or, alternatively, was estopped from relying on it.
[28] The first issue raised in this appeal is whether the trial judge was correct in her interpretation of the SMA. If she was not, then the second issue is whether the trial judge was correct in finding that the TWPA had waived compliance with the provision or was estopped from relying on it. I find that the trial judge erred on both issues.
(i) Breach of contract
[29] The trial judge found that the TWPA had breached the SMA when it chose another company to build and install the digital sign. She awarded ID Inc. damages for the profit lost by ID Inc. relating to the construction and maintenance of the digital sign. In reaching her conclusion that the SMA had been breached, the trial judge found that the SMA had not expired in accordance with its terms. Central to that finding, was the trial judge’s conclusion that ID Inc. had not failed to obtain the permit for the sign because ID Inc. had been told not to apply for the permit. Put another way, the trial judge, in essence, found that ID Inc. could not fail to do something unless it was a consequence resulting from its own fault. The trial judge said, at para. 253 of her reasons:
ID cannot fail or be unable to do something they were told not to do. Nor can the TWPA tell ID to withdraw the ID Permit Application then turn around and claim the contract expired because ID followed their instructions.
[30] Generally, a trial judge’s interpretation of a contract is entitled to deference on the basis that the interpretation of a contract involves a question of mixed fact and law. As Rothstein J. said in Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, [2014] 2 S.C.R. 633, at para. 50: “Contractual interpretation involves issues of mixed fact and law as it is an exercise in which the principles of contractual interpretation are applied to the words of the written contract, considered in light of the factual matrix.”
[31] While reaching that conclusion, Rothstein J. also repeated certain basic principles involved in the interpretation of a contract. Two of those basic principles should be repeated in the context of this case. First, a contract must be read as a whole “giving the words used their ordinary and grammatical meaning”: Sattva, at para. 47. Second, the interpretation of a contract “must always be grounded in the text”: Sattva, at para. 57.
[32] In my view, the trial judge erred in her interpretation of the SMA. She did so by injecting a fault concept into the terms of the contract, a concept that the plain language of the contract does not bear, and which is inconsistent with the roles of the parties as revealed by the surrounding circumstances. In doing so, the trial judge made the same error as did the trial judge in Paletta International Corp. v. Canada Life Mortgage Services Ltd. (2003), 2003 CanLII 5761 (ON CA), 170 O.A.C. 5 (C.A.), leave to appeal refused, [2003] S.C.C.A. No. 260. The wording of paragraph 8 of the SMA is clear. It refers to “any failure or inability of the Vendor to obtain such permit” (emphasis added). It is similar in kind to the wording of the agreement under dispute in, and reproduced at para. 11 of, Paletta: “If, for any reason, including, without limiting the generality of the foregoing, any failure or inability of the Borrower to satisfy any of the terms and conditions contained in the said First Mortgage Loan Approval.”
[33] The borrower in Paletta argued that the failure to achieve the stated rental revenue in the shopping centre it was seeking to finance was not the result of any action or inaction on its part but was the result of market forces and economic factors. The trial judge accepted that argument. This court concluded that the trial judge had erred in doing so. Directly on point for the issue raised in this appeal, MacPherson J.A. said, at para. 30: “In a commercial transaction between two sophisticated parties, the reasons for Paletta's failure to meet a condition of the agreement which was its responsibility is irrelevant. Default was failure, period. Paletta failed and, therefore, was in default.”
[34] In this case, ID Inc. was hired, under the SMA, for the purpose, first and foremost, of obtaining the permit for the transformation of the sign. There can be no question that securing the permit was the responsibility of ID Inc. Mr. Kenny admitted as much (trial judge’s reasons, at para. 52). It is also clear that ID Inc. did not obtain the permit within the 360-day time period provided for in paragraph 8 of the SMA. A proper interpretation of the provision in the SMA does not consider why ID Inc. failed to obtain the permit, simply whether it did fail to do so. As MacPherson J.A. said in Paletta, “default was failure, period”: at para. 30.
[35] Four points from the factual matrix in this case are relevant to the conclusion on the proper interpretation of the SMA. One fact is that ID Inc. prepared the original draft of the SMA. It put paragraph 8 in the SMA and must be taken as having appreciated its consequence. It could have worded the provision to restrict its application to actions or inactions caused by ID Inc. but it did not. It undertook to obtain the permit, pure and simple. No one else had that responsibility. It was ID Inc. who came up with the idea and it was ID Inc. who was hired to make it happen. I would add, on this point, that insofar as ID Inc. might suggest that there is ambiguity in the wording of paragraph 8 of the SMA in this respect, the principle of contra proferentem would come into play: 2249778 Ontario Inc. v. Smith (c.o.b. Fratburger), 2014 ONCA 788, at para. 22.
[36] Another fact is that Mr. Kenny understood the “clock was ticking” with respect to the time limit in the SMA. This can be seen from the evidence, including Mr. Kenny’s own evidence that he was concerned about the involvement of StrategyCorp in the process because “he had a deadline to produce a permit” (trial judge’s reasons, at para. 60).
[37] Yet another fact is that paragraph 8 of the SMA provides that, if the 360 days pass without a permit, ID Inc. gets to retain the initial deposit “in compensation for [its] bona fide efforts to obtain such permit”. There is, therefore, no inherent unfairness to ID Inc. in interpretating the SMA in this way since, should it come to pass that ID Inc. was unable to obtain the permit, it would nevertheless receive compensation for its efforts.
[38] Still another fact is that StrategyCorp relied on the expiration of the SMA as the basis for its termination of the Consulting Agreement. When it wrote to ID Inc. to that effect, it expressly referred to the expiration of the SMA. ID Inc. did not make any challenge to that assertion. It did not do so at the time, nor at any time for months after, until it decided to launch this claim. Its silence on this point is entirely inconsistent with the interpretation it now urges for this provision in the SMA.
[39] In reaching her conclusion, the trial judge relied on the decision in U.S. Steel Canada Inc. et al. v. The United Steel Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union et al., 2022 ONSC 6993, 5 C.BR. (7th) 95, leave to appeal refused, 2023 ONCA 277. That decision does not support the trial judge’s conclusion. In that case, it was the failure of an entity that was not a party to the agreement that was at issue. The contractual term was different in kind to the term here or, for that matter, the term in Paletta.
[40] The trial judge also failed to give effect to the plain words used in paragraph 8 of the SMA in another sense. Paragraph 8 of the SMA refers to the failure “or” inability of ID Inc. to obtain the permit. The trial judge, however, treats these requirements as conjunctive rather than disjunctive. Indeed, the trial judge said, at para. 254 of her reasons, “[f]ailure and inability in this sense refer to actions taken by ID to no avail.” Just as was the case with any failure by ID Inc., the concept of inability does not require a connection to something that ID Inc. has done or has not done. The provision states that if ID Inc. is unable to obtain the permit within 360 days, then the SMA expires. It is that simple.
[41] In the result, the words in paragraph 8 of the SMA are plain. That provision provides a period of 360 days for ID Inc. to obtain the permit, failing which the SMA ends. The words in paragraph 8 are not limited nor are they restricted. ID Inc. was hired to obtain a permit within 360 days, and it did not do so. Whatever other arrangements might have been made between the parties as time passed, they do not change the fact that the SMA expired in accordance with its terms. Notably, ID Inc. never asked the TWPA for an extension of time for the SMA.
[42] The fact that this result works out badly for ID Inc. does not change the proper contractual interpretation. As observed by Lord Neuberger in Arnold v. Britton, [2015] UKSC 36, [2015] A.C. 1619, at para. 19, "[t]he mere fact that a contractual arrangement, if interpreted according to its natural language, has worked out badly, or even disastrously, for one of the parties is not a reason for departing from the natural language.”
(ii) Waiver
[43] The trial judge also found that the TWPA had waived reliance on the time limit in paragraph 8 of the SMA. In so finding, she quoted the basic requirements for a finding of waiver. Those basic requirements are set out in Saskatchewan River Bungalows Ltd. v. Maritime Life Assurance Co., 1994 CanLII 100 (SCC), [1994] 2 S.C.R. 490, where Major J. said, at p. 500:
Waiver will be found only where the evidence demonstrates that the party waiving had (1) a full knowledge of rights; and (2) an unequivocal and conscious intention to abandon them. The creation of such a stringent test is justified since no consideration moves from the party in whose favour a waiver operates. An overly broad interpretation of waiver would undermine the requirement of contractual consideration.
[44] There is no quarrel with the trial judge’s finding that the TWPA had full knowledge of the 360-day time limit in the SMA. The issue arises from her finding that the TWPA had waived reliance when it instructed ID Inc. to pull the original permit application. There are two problems with that conclusion. One is that, as found by the trial judge, all parties agreed that the permit application should be pulled while the provincial approval route was explored. It was not a unilateral direction of the TWPA nor did ID Inc. raise any objection to it.
[45] The other problem is that the trial judge does not cite any evidence that would support a finding that the TWPA had “an unequivocal and conscious intention to abandon” reliance on the expiry provision: Saskatchewan River Bungalows, at p. 500. Indeed, to the extent that there is any evidence on the subject, it is to the contrary. For example, when StrategyCorp inquired about the status of the SMA in January 2015, because of its desire to terminate the Consulting Agreement, it was the TWPA’s lawyer who told StrategyCorp that the SMA had expired in accordance with its terms. StrategyCorp refers to this fact in its letter to ID Inc. terminating the Consulting Agreement. This advice from the TWPA’s lawyer is fundamentally inconsistent with a finding that the TWPA had unequivocally and consciously abandoned reliance on that provision of the SMA.
[46] Further, as Major J. pointed out in Saskatchewan River Bungalows, at p. 501: “The overriding consideration in each case is whether one party communicated a clear intention to waive a right to the other party.”
[47] The trial judge does not cite any evidence that would support a finding of any such clear intention by the TWPA, nor does she cite any evidence of a clear communication of any such intention to ID Inc. That is likely because there is none in the record. No such communication ever happened. What the trial judge did do was what Major J. cautioned against doing. She adopted an overly broad interpretation of waiver and one that was not consistent with the dealings between the parties as she recited them.
[48] The trial judge’s reliance on waiver also fails to accord with the fundamental principle that waiver is a remedy of very narrow application. Indeed, Major J. referred in Saskatchewan River Bungalows to there being a “stringent test” for its application: at p. 500. This point was also made in Jack Ganz Consulting Ltd. v. Recipe Unlimited Corporation, 2021 ONCA 907, at para. 46, leave to appeal refused, [2022] S.C.C.A. No. 52, citing Saskatchewan River Bungalows, at p. 500, where this court said: “The court must apply a stringent test before finding unilateral waiver of a contractual right because ‘no consideration moves from the party in whose favour a waiver operates”.
[49] The trial judge did not approach her consideration of this remedy with these cautions in mind nor does she, at any point, refer to them.
(iii) Estoppel
[50] The trial judge also found that the TWPA was estopped from relying on the 360-day limit. She said that “the equities favour” ID Inc. As Major J. observed in Saskatchewan River Bungalows, waiver and estoppel are closely related. In applying estoppel in this case, the trial judge relied on estoppel by convention and cited the decision of this court in Grasshopper Solar Corporation v. Independent Electricity System Operator, 2020 ONCA 499, leave to appeal refused, [2020] S.C.C.A. No. 360, where Huscroft J.A. said, at para. 55:
Estoppel by convention is a relatively rare form of estoppel that may arise when both parties to a contract act based on a shared assumption concerning circumstances relevant to their contract. If it would be unfair to allow a party to resile from the assumption, the doctrine operates to provide a remedy for detrimental reliance on the assumption by the other party.
[51] The assumption found by the trial judge was that “the parties agreed to withdraw the ID Permit Application pending the pursuit of the Provincial Path so that a negative staff report would not create an obstacle on the Provincial Path.”
[52] Assuming that there was such an assumption, it is unclear how that assumption affected the 360-day time limit in the SMA. As earlier noted, ID Inc. was very aware of the 360-day time limit, and the delay that could be occasioned by pursuing the provincial approval route, yet did not raise any issue regarding the time limit or the delay that the provincial approval route posed.
[53] More importantly, however, what is missing in this case is the evidentiary requirement for an estoppel. Justice Huscroft clearly enunciated this requirement in Grasshopper Solar where he said, at para. 56:
As Bastarache J. explained in Moore, estoppel by convention requires a "manifest representation" of a shared assumption, which may arise out of a statement or conduct but may also arise from silence. But regardless of how an assumption arises, it must be clear and it must be shared. There is no room for doubt about the nature of an assumption that gives rise to the estoppel. The parties must be of "a like mind" at the material time: Moore, at para. 61, and this will not be so if the nature of the assumption is in doubt.
[54] The trial judge does not cite any evidence to support a finding of a clear shared assumption of the type necessary to estop the TWPA from relying on the 360-day time limit. There is no evidence that the parties were of “a like mind” on the point. To the contrary, as discussed under the waiver issue, the evidence shows a very different position by the TWPA.
[55] On a proper interpretation of the SMA, there could not have been any breach of it because, by the time of the events which are alleged to have constituted the breach, the SMA had expired. The TWPA did not waive the time limit in the SMA and it is not estopped from relying on it. The claim by ID Inc. in this regard ought to have been dismissed.
(iv) Pre and postjudgment interest
[56] While it is technically unnecessary for me to address this issue, given the conclusion that the breach of contract claim ought to have been dismissed, I will deal with it briefly, and only on the points of the jurisdiction of courts to award interest and the sufficiency of pleadings respecting claims for interest, because of their potential impact on future claims generally.
[57] The trial judge awarded pre and postjudgment interest to ID Inc. at the rate of interest set out in paragraph 12 of the SMA: “All unpaid amounts due under this agreement shall bear interest at the rate of 2% per month calculated monthly for an effective annual rate of 26.8% from the date of default.”
[58] In this case, pre and postjudgment interest at that rate amounted to $1,803,244.94, almost double the amount of damages awarded.
[59] ID Inc. did not make a claim for this interest in its statement of claim or in its amended statement of claim. Rather, the claim made by ID Inc. was for: “Prejudgment and postjudgment interest pursuant to the provisions of the Courts of Justice Act, R.S.O. 1990, c. C.42, as amended”.
[60] In fact, the issue of the rate for pre and postjudgment interest did not arise until after the trial judge had released her reasons. It came up when ID Inc. included it in the draft judgment. The TWPA disputed this interest claim, with the result that a further hearing was held before the trial judge. The trial judge then released separate reasons on the issue (“reasons on interest”).[^3]
[61] The trial judge found that ID Inc. did not have to make an express claim for interest at the rate provided for in the SMA. Rather, she found, at para. 29 of her reasons on interest: “[T]hat it was sufficient for the plaintiff here to plead the breach of the SMA and a claim for interest pursuant to the CJA and an amendment to the claim is not necessary.”
[62] The trial judge reached this conclusion on two bases, neither of which supports her conclusion. The trial judge found that ss. 128(4)(g) and 129(5) of the Courts of Justice Act, R.S.O. 1990, c. C.43 (“CJA”) gave the court jurisdiction to award interest other than under that statute. In fact, those provisions do not do that. Those provisions do not award interest. They simply provide that, if there is a right to interest other than under the CJA, the court can award that rate and not the rate that would otherwise be prescribed by the statute. In other words, the provisions authorize the court to depart from the interest that would be prescribed by the CJA and grant it under a separate entitlement. The provisions do not create a separate right to interest, absent another basis for it between the parties. Such a right must be found in some other place such as, for an example, an agreement between the parties.
[63] The other foundation that the trial judge relied on was the decision in Bank of America Canada v. Mutual Trust Co., 2002 SCC 43, [2002] 2 S.C.R. 601. That decision does not address the issue that is raised here. It merely confirms that courts have jurisdiction to award interest given by rights other than by a statute such as the CJA. Indeed, Major J. makes the same point I have just made about the effect of the sections of the CJA relied on by the trial judge when he says, at para. 40:
Sections 128(4)(g), 129(5) and 130 CJA, each of which allows the judge to award interest other than as specifically set out in ss. 128 and 129, clearly indicate that the rates and calculation methods of interest provided in ss. 128 and 129 are applicable in the absence of more appropriate rates and methods of calculation. [Emphasis added.]
[64] It remains the fact that if a party wishes to claim interest at a rate other than under the CJA, it must advance that claim in its pleading. A boilerplate claim for interest under the CJA does not fulfill that requirement nor does it provide a pathway for the court to award interest other than as stipulated by the CJA. Failing to plead that separate right to interest also does not comply with the requirements of r. 25.06(9) of the Rules of Civil Procedure, R.R.O., 1990, Reg. 194 which reads, in part:
Where a pleading contains a claim for relief, the nature of the relief claimed shall be specified….
[65] The trial judge erred in concluding that the pleading in the statement of claim was sufficient to award interest at the rate set out in the SMA. Having made that fundamental point, I expressly do not address the trial judge’s alternative reasoning by which she granted ID Inc. leave to amend the amended statement of claim, nor do I address her conclusions regarding prejudice in that respect.
C. CROSS-APPEAL
[66] ID Inc. cross-appeals from the trial judge’s dismissal of its claim for breach of a separate oral agreement that it says it reached with the TWPA. The trial judge concluded that no oral agreement had been reached between the parties.
[67] In reaching her conclusion, the trial judge reviewed in detail the evidence relating to the alleged oral agreement. She concluded that the conduct of the parties did not establish that any oral agreement had been reached. She found additional support for that conclusion in the following:
a) There was an entire agreement clause in the SMA. The SMA was entered into after the alleged oral agreement. The entire agreement clause created a strong presumption that it reflected the entire agreement between the parties;
b) It was highly unlikely that the TWPA would enter into such an agreement without Board approval and without the involvement of the TWPA’s lawyers;
c) The lawyer for the TWPA had expressly told Mr. Kenny in writing that there was no agreement between the parties until the SMA was signed;
d) There were many important terms not addressed by the alleged oral agreement.
[68] ID Inc.’s central challenge to the trial judge’s conclusion is its submission that she applied the incorrect test in determining whether an oral agreement had been reached. In doing so, ID Inc. unfairly parses the language of the trial judge in her discussion of the legal principles. In particular, ID Inc. says that the trial judge incorrectly referred to the test as being whether an objective reasonable bystander would conclude that, in all the circumstances, the parties intended to contract. ID Inc. says that the correct test is whether an objective reasonable bystander “in the position of the other party” would conclude that the parties intended to contract.
[69] I do not agree with ID Inc.’s formulation of the test. In doing so, ID Inc. has fixed on particular words in some of the applicable case law rather than looking at the broad principle. The effect of the case law on that principle is clear. The test for finding that an oral contract has been reached is an objective one. In Owners, Strata Plan LMS 3905 v. Crystal Square Parking Corp., 2020 SCC 29, [2020] 3 S.C.R. 247, Côté J. affirmed “the common law’s long adherence to an objective theory of contract formation”: at paras. 29, 33.
[70] What ID Inc. attempts to do by fixing on language in some cases that refer to a reasonable person “in the position of the other party” is to turn the accepted objective test into a subjective one by essentially saying that the trial judge was obliged to look at the facts solely from the point of view of ID Inc. That is not the proper approach nor is it the proper test. The question is not whether ID Inc. thought it had an agreement. It is whether an objective reasonable bystander would so conclude.
[71] Further, the many evidentiary pieces that ID Inc. refers to in its factum, viewed objectively, simply reflect ongoing discussions between the parties that might have, at some future point, led to an agreement. The content of those discussions, general as they were, is inconsistent with a finding of binding terms. The trial judge made this point when she said, at para. 241 of her reasons: “I find they had an intention to eventually enter into an agreement with Kenny. They intended to enter into an agreement with ID for the advertising and for any subsequent signs and likely would have done so were it not for the meeting where he threatened them.”
[72] ID Inc. also unfairly characterizes the trial judge’s review of the evidence on this issue as evidencing that she was applying a subjective, rather than an objective, test. That is not what the trial judge did. Rather, the trial judge, as she was required to do, set out what the various witnesses had said about the discussions that had occurred. That evidence formed the factual matrix that would be known to an objective reasonable bystander. She then applied an objective test to decide whether that evidence would lead that objective reasonable bystander to conclude that a contract had been made.
[73] In addition, ID Inc.’s effort to rely on the indoor management rule as somehow undermining the trial judge’s analysis is fundamentally flawed. ID Inc. was well aware of the various times that the proposal to convert the billboard, and decisions relating to that proposal, had been reviewed by the TWPA’s Board. What the trial judge did, and properly so, was use this evidence to suggest that an oral agreement of the type alleged by ID Inc. would have been reviewed by the TWPA’s lawyer and would have gone to the TWPA Board for approval. This analysis has nothing to do with the indoor management rule. Rather, it is another example of the trial judge viewing the entire factual context from an objective viewpoint to determine the likelihood that an oral agreement had been made.
[74] ID Inc. also submits, unpersuasively, that the trial judge erred in reading paragraph 14 of the SMA as an entire agreement clause. Although paragraph 14 was styled as a “Representations” clause, its text provided, in part, “[T]his Agreement contains and expresses the whole Agreement made between the parties.” On that wording, it was open to the trial judge to characterize paragraph 14 as an entire agreement clause. Contracting parties are not required to use magic words to achieve particular legal results: Third Eye Capital Corporation v. Ressources Dianor Inc./Dianor Resources Inc., 2018 ONCA 253, 141 O.R. (3d) 192, at para. 65, leave to appeal requested but application for leave discontinued, [2023] S.C.C.A. No. 67. In Maxam Opportunities Fund Limited Partnership v. 729171 Alberta Inc., 2016 BCCA 53, for example, the British Columbia Court of Appeal accepted that a clause entitled “Prior Understandings” constituted an entire agreement clause: at paras. 28-29. In this case, to accept ID Inc.’s proposed interpretation of paragraph 14 of the SMA would be to offend the principle in Sattva that contractual interpretation ought to be guided by “a practical, common-sense approach not dominated by technical rules of construction”: at para. 47.
[75] Finally, ID Inc.’s effort to cast this issue as a question of law requiring the application of a correctness standard fails. The trial judge applied the proper legal principles to the facts as she found them. Her conclusion that no oral agreement was reached between the parties is a question of mixed fact and law and, thus, requires ID Inc. to show a palpable and overriding error. ID Inc. has not done so.
D. CONCLUSION
[76] I would allow the appeal and dismiss the action against the TWPA. I would dismiss the cross-appeal. I would grant the TWPA its costs of the appeal and the cross-appeal fixed in the amount of $75,000, inclusive of disbursements and HST. I would also grant the TWPA the costs of the trial in the amount of $641,891.65 as fixed by the trial judge.
Released: January 16, 2025 “I.N.”
“I.V.B. Nordheimer J.A.”
“I agree. J. Copeland J.A.”
“I agree. L. Madsen J.A.”
[^1]: By way of clarification, the formal judgment was amended by the trial judge on January 15, 2024 to address the issue of the proper interest rate on the judgment. However, the reasons of the trial judge dealing with her conclusions on the claims advanced are dated August 25, 2023.
[^2]: ID Inc. v. Toronto Wholesale Produce Association, 2024 ONCA 948.
[^3]: ID Inc. v. Toronto Wholesale Produce Association, 2024 ONSC 158.