





CITATION:
1230995 Ontario
          Inc. v. Badger
Daylighting
Inc., 2011 ONCA 442



DATE: 20110608



DOCKET: C52312



COURT OF APPEAL FOR ONTARIO



Laskin, Goudge and Karakatsanis JJ.A.



BETWEEN



1230995 Ontario Inc.



Plaintiff (Respondent)



and



Badger
Daylighting
Inc.



Defendant (Appellant)



Irving Marks and Shawn
Pulver
, for
          the defendant (appellant)



Thomas J. Corbett, for the plaintiff (respondent)



Heard & released orally:
June 1, 2011



On appeal from the judgment of Justice W.A. Jenkins of the
          Superior Court of Justice dated May 25, 2010.



ENDORSEMENT



[1]

The appellant
Badger argues three points on appeal:

1)

The trial judge erred in finding that the respondent
    had complied with its obligation under s. 4.7(2) of the 2003 Marketing
    Agreement to aggressively and fully develop and exploit the market for the
    Services and diligently solicit orders in the four counties;

2)

the trial judge erred by enforcing the entire agreement
    clause section 10.11, instead of giving effect to the common understanding and
    reasonable expectations of the parties that the nine counties were work zones
    and continued to be governed by the 2002 Work Zone Amendment and the letter of
    understanding and;

3)

the
trial judge erred in
    finding that the nine counties had been assigned to the respondent as work zones
    under the 2003 Marketing Agreement.

We do not accept any of these
    arguments.

[2]

Badgers first argument fails for two reasons.  First, it runs up against the trial judges
    finding of fact in
para
. 187 of his reasons 
Given the market conditions, I am satisfied
    that the plaintiff fully developed the London market to the extent possible.  I therefore find that the plaintiff complied
    with
para
. 4.7 (2) of the Marketing Agreement and
    that there was no breach of that agreement by the plaintiff.  This finding is well supported by the
    evidence at trial.

[3]

The trial
    judges reference to the potential for increased revenues by putting a truck in
    the London area is not inconsistent with this finding.  The trial judges finding under s. 4.7(2) is
    that the respondent has complied
to
date.  His finding on damages recognizes that the
    respondent could grow the market in the future.

[4]

Additionally,
    the trial judges use of the phrase to the extent possible does not amount to
    a misinterpretation of s. 4.7(2).  It
    simply reflects the commercial reality that
Benko
had
    a strong presence in the London market.

[5]

Second, in
    taking the four counties away from the respondent, Badger did not rely on s.
    4.7(2).  Nor did it exercise the right in
    s. 9.1(3) to terminate the marketing agreement for breach of s. 4.7(2).  Rather, Badger exercised what it thought,
    mistakenly, was its unilateral right to reassign the four counties.  For these reasons, we reject Badgers first
    argument.

[6]

The trial
    judge rejected Badgers second argument, and in our view, he was fully
    justified in doing so in the light of the entire agreement clause and the
    definition of Territory, which included the work zones.  To the extent that the 2003 Marketing Agreement
    was ambiguous, the trial judge correctly noted that this was a contract of
    adhesion to be interpreted
contra
proferentum
.

[7]

Part of
    Badgers argument on this point is that the trial judge improperly curtailed
    cross-examination that was designed to elicit support for applying the
    principle of
estoppel
by representation or
    convention.

[8]

We think that the trial judges ruling was correct.  He upheld an objection to a question that
    asked for Mr. Potters subjective understanding of the Agreement.  That question was irrelevant to the
    interpretation of the contract.  It was
    also irrelevant to
estoppel
by convention, which
    requires shared assumptions based on representations by statements or conduct.

[9]

Further, although the trial judge did not expressly
    address the parties reasonable expectations, implicitly he concluded that his
    interpretation of the Marketing Agreement gave effect to their reasonable
    expectations.  Accordingly, Badgers
    second argument fails.

[10]

Finally, we reject Badgers third argument.  Having found that the respondents territory
    included work zones, the trial judge was entitled to consider extrinsic
    evidence to identify what those work zones were.  And on the evidence, there was no doubt
    whatsoever that the work zones referred to the nine counties.

[11]

Accordingly, the appeal is dismissed with costs to the respondent
    fixed in the amount of $ 16,000 inclusive of disbursements and applicable
    taxes.

John Laskin J.A.

S.T. Goudge J.A.

Karakatsanis J.A.


