CITATION: September Seventh Entertainment Ltd. v. The Feldman Agency et al., 2017 ONSC 552
COURT FILE NO.: 16-58947
DATE: 2017-01-24
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
SEPTEMBER SEVENTH ENTERTAINMENT LIMITED
Jean-Paul Gauthier, Granted Leave to Represent the Plaintiff
Plaintiff
- and -
THE FELDMAN AGENCY, JANN ARDEN, J.A. TOURS INC., BRUCE ALLEN TALENT, JOHNNY REID, JOHNNY MAC ENTERTAINMENT INC., and WALKIN THE DOG LTD. f.s.o. COWBOY JUNKIES
Brian Shiller, for the Defendants
Defendants
A N D B E T W E E N:
JOHNNY REID
Brian Shiller, for the Plaintiff by Counterclaim, Johnny Reid
Plaintiff by Counterclaim
- and -
SEPTEMBER SEVENTH ENTERTAINMENT LIMITED
Defendant by Counterclaim
Jean-Paul Gauthier for the Defendant by Counterclaim, September Seventh Entertainment Limited
HEARD: December 19, 2016
JUDGMENT RE MOTION FOR SUMMARY JUDGMENT
The Honourable Mr. Justice A.C.R. Whitten
I.
[1] In February 2016, the plaintiff corporation negotiated with The Feldman Agency (the agent) to provide for the performances of the artist Jann Arden, Johnny Reid, and the Cowboy Junkies at the Harvest Picnic 2016 Festival. Each artist had individual managers. The festival was to be held at the Christie Lake Conservation Area north of Dundas, Ontario, August 27th and 28th, 2016.
[2] The performance contracts were identical in format. Each had an exclusion clause which effectively eliminated the agent from any resulting liability. Each had a radius clause which limited where the artist could perform within a particular timeframe relative to the Harvest Picnic 2016 Festival and when any future performances could be announced. Each contained a limitation of liability clause limiting damages to the lesser of the premium (the agreed upon fee) or the actual or direct out-of-pocket expenses incurred by the "purchaser", namely the plaintiff corporation.
[3] Ms. Arden regrettably became ill (a fact which is not disputed) and was unable to perform at the festival. Her agreed upon deposit paid by the purchaser was accordingly returned in its entirety.
II.
[4] Jean-Paul Gauthier, the operating mind of September Seventh Entertainment Limited, was granted leave to represent the plaintiff corporation pursuant to Rule 15.01(2).
[5] The defendants have moved collectively pursuant to Rule 20.01(3): a) to dismiss the claims against the agent on the basis of the exclusion clause contained in the performance contracts applicable to the three artists; b) to dismiss the claim as against Jann Arden on the basis of the limitation of liability clause contained in the same contract; c) to limit the extent of the damage claims against the remaining defendants and their managers to that of the same limitations of liability clause; and d) for there to be a trial of an issue with respect to whether there was a breach of the contract and the actual damages incurred in accordance with the limitation of liability/damage clause.
[6] The core issues of the application are:
a) The powers of a jurist in a summary judgment motion;
b) The validity of the exclusion clause; and
c) The validity of the limitation of liability/damage clause
III. Applicable Additional Facts
[7] As mentioned above, the exclusion clause eliminates any liability of The Feldman Agency for whatever arises during the operation of the performance contracts. The limitation of liability clause limits any damages, assuming there is a breach of the contract found to the lesser of the "premiums" i.e. the amount paid to the artist or the actual out-of-pocket expenses of the purchaser.
[8] The basic facts above the contracts themselves are that Ms. Arden did not perform because of sickness as mentioned above. She did however announce her Toronto performance "Christmas with Jann Arden" before August 28th, 2016 as per the amended contract. The announcement of the Toronto performance was made June 8th, 2016.
[9] It is alleged that both the remaining artists breached the radius agreement in that Johnny Reid announced August 23rd, 2016 and scheduled a performance at the Country Music Awards September 11th, 2016. The Cowboy Junkies breached their radius clause by announcing June 2nd, 2016, a performance scheduled for October 27th, 2016.
[10] Aside from broad allegations and stratospheric figures based on calculations of the ticket sales of the events that allegedly breached the radius agreement, the plaintiff (effectively Gauthier) has not led any evidence as to actual out-of-pocket expenses.
IV. Applicable Law
A. Summary Judgment Motion
[11] Paraphrasing the applicable wording of Rule 20.04(1) it is mandated that a jurist grant summary judgment if "there is no genuine issue requiring a trial with respect to a claim or defence". In so determining, the presiding jurist may: 1) weigh the evidence; 2) evaluate the credibility of a deponent; and 3) draw any reasonable inferences from the evidence. Before exercising these latter powers, the jurist should determine whether there is a genuine issue for trial. If there is sufficient evidence to allow for a fair and just adjudication, the process is invariably timely, affordable (at least much more so than a full blown trial) and proportionate. Ref. Hryniak v. Mauldin, (2014) 2014 SCC 7, 1 S.C.R. 87 para. 66.
[12] Justice Karakatsanis cautions jurists who contemplate using the powers set out in 20.04(2.1) to consider whether their use is justified in the interests of justice at this juncture or at the trial itself keeping in mind the cost-cutting efficiencies of such a motion (Ibid. para. 67).
[13] Obviously, there has to be a sufficient factual basis, sometimes referred to as a "constellation of facts" in order to found the decision to proceed at this point.
[14] It is in their best interest that the parties put their best foot forward in this potential opportunity to narrow the issues or eliminate the action in its entirety.
B. Interpretation of Contractual Clauses Generally and Specifically in the Context of the Case
[15] At the outset, one has to approach a contract and its clauses in a principled fashion. It is in the interests of all, that parties be held accountable for that which they contracted for. Therefore, contracts should be interpreted in a manner that gives effect to the reasonable expectations of the parties.
[16] The words of one provision are not considered in isolation but are considered "in harmony" with the rest of the contract and "in light of its purposes and commercial context". Ref. Tercon Contractors Ltd. v. British Columbia (Transportation and Highways), 2010 SCC 4, [2010] 1 SCR 69.
[17] As Wilson J. noted in Hunter Engineering Company v. Syncrude Canada Ltd., 1989 CanLII 129 (SCC), [1989] 1 SCR 426, as quoted by Binnie J.:
...exclusion clauses, like all contractual provisions, should be given their natural and true construction. Great uncertainty and needless complications in the drafting of contracts will obviously result if courts give exclusion clauses strained and artificial interpretations in order, indirectly and obliquely, to avoid the impact of what seems to them ex post facto to have been an unfair and unreasonable clause. (Ibid. at para. 127)
[18] In Tercon Contractors, there were both majority and dissenting judgments; the judgments did not differ in the appropriate framework of analysis, but only in the application.
[19] What emerged as to the inquiries to be made when the validity of an exclusion clause is challenged is equally applicable to limitation of liability clauses.
[20] The first question is as a matter of interpretation: does the exclusion (or limitation of liability clause) apply to the factual circumstances. "This will depend on the court's assessment of the intention of the parties as expressed in the contract". If the clause is not applicable, the analysis ends (Ibid. at para. 122).
[21] In our case, there are only these contracts between the plaintiff (the purchaser) as referred to in the contract and the artist and their managers. The gist of the contract is the procuring of the appearance of the artist on a particular date. The agent is essentially out of the picture as soon as the contract is negotiated and signed. The Feldman Agency was not paid any money by the plaintiff for its services; whatever money was received was forwarded to the managers or the artists. The agent has no further involvement; he is not even a party to the contract, both sides, namely the purchaser/plaintiff and the artists and their managers agree that the agent has no liability for whatever transpires. Neither side can sue the agent. The exclusion clause definitely applies to the circumstances of the case (i.e. the alleged breach of the radius agreement and what, if any, damages ensue).
[22] Continuing with the Binnie analysis as contained in Tercon, the next question becomes whether the exclusion clause was "unconscionable" at the time the contract was made. Unconscionability could lie in a situation of unequal bargaining power between the parties (Ibid. para. 122).
[23] A specific example of "unconscionability" within the context of unequal bargaining power is where one party has abused its power to take advantage of the other. Ref. ABB Inc. v. Domtar Inc., 2007 SCC 50, [2007] 3 SCR 461 at para. 82.
[24] The burden of proof with respect to the establishment of unconscionability is on the plaintiff. Although the judgment of Justice Binnie refers to the possible scenarios of unequal bargaining power, that scenario does not automatically mean "unconscionability".
[25] The plaintiff bandies the term unconscionability around without any factual basis. His assertions are not enough.
[26] This is not a situation of unequal bargaining. This is evidenced by the fact that the plaintiff was able to make changes to the contract that were accepted. His handwritten changes are evidence of a degree of autonomy on his part.
[27] To describe this as a David and Goliath situation is not enough. The analogy does not completely work, as in the original story the consequences for Goliath were not too good. That being said, if you changed the storyline to provide for David wanting to hire Goliath given his particular talents, which appear to be that of commanding presence and strength, he would have to accede to Goliath's demands if he wanted to have the show of his talents. In the latter scenario, David does not have to hire Goliath any more so than a particular promoter has to hire the artist in this case. If the promoter does want the acts, he has to be prepared to "pay the piper", the artist. This is not a picture of unconscionability, it is the reality of the marketplace between those who are talented and those who seek to capitalize on that talent. Nor does the odour of unconscionability arise with respect to the agent. He negotiated the terms and then everyone is off to the performance. Specifically, there is no evidence that the agent knew that the artist would allegedly breach the radius agreement after the fact. The claims for $12,417,592.00 for loss of expected revenue is illustrative of these bold assertions. The contracts do not talk at all about "expected revenues of the purchaser". That is not the concern of the artists and their managers, any more so is the revenue that the artist generates at future gigs. The superlative claims for including punitive damages are "a reaching" for that which was not within anyone's contemplation. The agent is "out of the loop" once the contract is negotiated.
[28] If the exclusion clause is held to be valid and applicable, the court can still consider whether or not the exclusion clause should be enforced because of the "existence of an overriding public policy". The burden of proof for the existence of such a phenomenon is upon he or she who seeks to avoid enforcement. That proof must be of sufficient magnitude to "outweigh the very strong public interest in the enforcement of contracts" (Ibid. at para. 123).
[29] Although the plaintiff pleads that numerous local entities (it is amazing that he did not include the local animal life) will be affected by the actions of the defendants, there is no proof of such an impact, just bold assertions. In reality, the future of the Harvest Festival is more likely to be affected by the plaintiff launching this suit and not paying the artist completely. What artist would sign on for these problems?
[30] The plaintiff includes various emails and communications between himself and Jeffrey Craib, the president of The Feldman Agency, after the fact of the contract and the performances. These communications were not pleasant and illustrate the "reality" referred to above. Their inclusion in the materials does not change the significance of the clauses in dispute, nor does it anything to the analysis of unconscionability.
[31] As mentioned above, the limitation of liability clause is subject to the same three-part analysis as the exclusion clause. It definitely does apply to the circumstances of the case. It is not per se "unconscionable"; it was another negotiated term in the contract. The plaintiff, who is free to make changes to the contract as he did, did not change in any fashion these clauses.
[32] The clause represents simply another aspect of what you have to agree to as a promoter to get the performance of an artist. Again there is no overwhelming public interest at stake which requires judicial intervention for the public good.
C. The Duty of Good Faith and Honest Performance
[33] The plaintiff had made reference to the duty of good faith and honest performance as enumerated by Justice Cromwell on behalf of the court in Bhasin v. Hrynew, 2014 SCC 71, [2014] 3 S.C.R. 494. The case was somewhat unique in its facts in that it pertains to a dealership agreement between the parties. The defendants surreptitiously literally created a situation which squeezed out the plaintiff in being an enrollment director.
[34] Justice Cromwell wrote, and I quote:
In my view, it is time to take two incremental steps in order to make the common law less unsettled and piecemeal, more coherent and more just. The first step is to acknowledge that good faith contractual performance is a general organizing principle of the common law of contract which underpins and informs the various rules in which the common law, in various situations and types of relationships, recognizes obligations of good faith contractual performance. The second is to recognize, as a further manifestation of this organizing principle of good faith, that there is a common law duty which applies to all contracts to act honestly in the performance of contractual obligations. (para. 33)
[35] At first blush trying to define "good faith" is like trying to define other positive phenomenon, for example love. To some extent we all know it when we see or experience it; describing it is something else.
[36] Good faith involves concepts of fairness and basic honesty and trust. As Justice Cromwell states:
There is an organizing principle of good faith that parties generally must perform their contractual duties honestly and reasonably and not capriciously or arbitrarily. (para. 63)
[37] His Honour proceeded to expand upon this by stating, and I quote:
The organizing principle of good faith exemplifies the notion that, in carrying out his or her own performance of the contract, a contracting party should have appropriate regard to the legitimate contractual interests of the contracting partner. While "appropriate regard" for the other party's interests will vary depending on the context of the contractual relationship, it does not require acting to serve those interests in all cases. It merely requires that a party not seek to undermine those interests in bad faith. This general principle has strong conceptual differences from the much higher obligations of a fiduciary. Unlike fiduciary duties, good faith performance does not engage duties of loyalty to the other contracting party or a duty to put the interests of the other contracting party first. (para. 65)
[38] Again, the plaintiff tends to bandy the term "good faith" around without any evidence to back up his allegations. On the face of it, the defendant artists allegedly broke the radius clause with respect to when or where they could perform next. The plaintiff had added times before which the artists could not announce the fact of his subsequent performance. The plaintiff alleges a breach. The plaintiff only pays Johnny Reid a half of what was due as the "premium". As mentioned in court, there is this notion of "clean hands" and that you cannot come into court claiming equity if you yourself have not been equitable. You cannot cherry-pick terms out of a contract to serve your interests and ignore others.
[39] The facts before this court are not of the unscrupulous nature as existed in Bhasin, with its long-term relationship between the parties. There is no evidence led that alerts the court to the possibility of bad-faith dealings. If anything, it is quite straight forward. One artist becomes sick and cannot perform. Another is paid half of what is due. All artists allegedly breached the radius agreement.
[40] In any event, the assertions of bad faith cannot retroactively change the meaning in the application of the exclusion and liability limiting clauses. To some extent "bad faith" is considered within the concept of unconscionability.
IV. Conclusions
[41] Having found that exclusion clauses with respect to the defendant Feldman Agency are valid, there will be summary judgment dismissing the claim as against the defendant as there is no genuine issue for trial. The limitation of liability clause is valid. In other words, the only damages claimable are the lesser of the premium or the actual out-of-pocket expenses of the plaintiff. In the case of Jann Arden because she returned the premium advanced, she was at zero in terms of premium paid, therefore, any damages are eclipsed completely. You cannot go any lower than zero. Therefore, the practical reality is that there is no genuine issue for trial and that even if she did breach the radius clause by announcing her Christmas concert, the damages would be zero according to the clause. Accordingly, there will be summary judgment dismissing the clause as against Jann Arden and her managers J.A. Tours. There is absolutely no evidence of a case against the latter independent of the evidence against Jann Arden, nor for that matter are there any facts plead in the statement of claim as against J.A. Tours Inc.
[42] With respect to the remaining defendants, both artists and their managers, the limitation of liability clause is equally valid. Therefore partial summary judgment will issue defining the trial of the issues to that of 1) determining whether or not there was a breach of the radius clause, and 2) if a breach is found what is the lesser of the premium or actual out-of-pocket expenses incurred by the plaintiff. Given the premiums paid, this looks like a matter within the scope of the Simplified Rules.
[43] The plaintiff will have seven days from receipt thereof to indicate his approval as to content and form of the order based upon the above conclusions. Failure to so indicate by the plaintiff will result in the defendants being able to file with the court, that which was tendered upon the plaintiff.
[44] Counsel and Mr. Gauthier are to have 60 days to exchange Bill of Costs and submissions (no greater than 10 pages) as to the liability for and quantum of costs of this motion. As always, the parties can agree on this issue and notify the court accordingly.
Whitten J.
Released: January 24, 2017
CITATION: September Seventh Entertainment Ltd. v. The Feldman Agency et al., 2017 ONSC 552
COURT FILE NO.: 16-58947
DATE: 2017-01-24
ONTARIO
SUPERIOR COURT OF JUSTICE
B E T W E E N:
SEPTEMBER SEVENTH ENTERTAINMENT LIMITED
Plaintiff
- and -
THE FELDMAN AGENCY, JANN ARDEN, J.A. TOURS INC., BRUCE ALLEN TALENT, JOHNNY REID, JOHNNY MAC ENTERTAINMENT INC., and WALKIN THE DOG LTD. f.s.o. COWBOY JUNKIES
Defendants
A N D B E T W E E N:
JOHNNY REID
Plaintiff by Counterclaim
- and -
SEPTEMBER SEVENTH ENTERTAINMENT LIMITED
Defendant by Counterclaim
REASONS FOR JUDGMENT
ACRW:co
Released: January 24, 2017