





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.



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 Marinelands 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:

1.         Both parties support breeding and
    genetic diversity of mammal populations at their respective parks;

2.         Both parties intend to maintain
    long-term care of marine mammal attractions and exhibitions;

3.         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

4.         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:

20.       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.

21.       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 SeaWorlds 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 Marinelands 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), 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 judges 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]

Marinelands 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]

Marinelands 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 courts
    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.


