King v. Operating Engineers Training Institute of Manitoba Inc.,

• Jurisdiction: Manitoba
• Judge: Monnin, Steel and Hamilton, JJ.A.
• Neutral Citation: 2011 MBCA 80
• Citation: (2011), 270 Man.R.(2d) 63 (CA),2011 MBCA 80,341 DLR (4th) 520,[2011] MJ No 311 (QL),270 Man R (2d) 63,270 Man.R.(2d) 63,[2011] M.J. No 311 (QL),270 ManR(2d) 63,(2011), 270 ManR(2d) 63 (CA),341 D.L.R. (4th) 520
• Date: 17 December 2010
• Court: Court of Appeal (Manitoba)

King v. Operating Eng. Training (2011), 270 Man.R.(2d) 63 (CA);

      524 W.A.C. 63

MLB headnote and full text

Temp. Cite: [2011] Man.R.(2d) TBEd. OC.009

Robert King (plaintiff/respondent) v. Operating Engineers Training Institute of Manitoba Inc. (defendant/appellant)

(AI 10-30-07356; 2011 MBCA 80)

Indexed As: King v. Operating Engineers Training Institute of Manitoba Inc.

Manitoba Court of Appeal

Monnin, Steel and Hamilton, JJ.A.

September 27, 2011.

Summary:

The defendant hired the plaintiff three different years to teach a heavy equipment operator course. The plaintiff argued that part of his remuneration was a commitment by the defendant to pay him an amount net of taxes. Revenue Canada demanded that the plaintiff pay income tax owing. The plaintiff sued to force the defendant to fulfill its commitment and indemnify him for taxes payable.

The Manitoba Court of Queen's Bench, in a decision reported at 252 Man.R.(2d) 121, allowed the action and granted the plaintiff judgment for $34,295.81 plus interest. The defendant appealed.

The Manitoba Court of Appeal dismissed the appeal.

Contracts - Topic 7526

Interpretation - Surrounding circumstances - Commercial setting - [See first and second Evidence - Topic 6204 ].

Evidence - Topic 6200

Parol evidence rule - General principles - General - The Manitoba Court of Appeal stated that, basically, the parol evidence rule could be stated as follows: where the whole of a contract had been reduced to writing, extrinsic evidence was not admissible to add to, subtract from, vary or contradict that written contract. Extrinsic statements and promises could not affect the parties' obligations as stated in the written agreement - However, there were a myriad of exceptions to the rule, or circumstances where the rule was inapplicable - See paragraphs 35 and 36.

Evidence - Topic 6202

Parol evidence rule - General principles - Exceptions - General - [See Evidence - Topic 6200 ].

Evidence - Topic 6204

Parol evidence rule - General principles - Evidence offered to contradict or explain written agreement - The defendant hired the plaintiff three different years to teach a heavy equipment operator course - The contracts stated that the defendant agreed to pay the instructor "a sum of ... per week as remuneration  ..." - Revenue Canada demanded that the plaintiff pay income tax owing - The plaintiff sued for indemnification respecting the taxes payable - He argued that it was understood and promised explicitly that the amounts payable were net of taxes - Other course instructors offered similar evidence - The plaintiff alleged that the contract was ambiguous and parol evidence was admissible - The defendant argued that there were no such promises and the only amount payable was a gross amount stipulated in the contracts - The trial judge allowed the action - The agreement was that the amount paid would be net of taxes - All the evidence indicated that the practice in the industry was to speak of amounts net of taxes and this would be in relation to the cash the operator actually received after deductions at the time the cheque was issued - Since the contract did not explicitly stipulate that the amount was "gross", evidence of a commitment to a "net" payment did not contradict the contract but qualified or explained it - The Manitoba Court of Appeal dismissed the defendant's appeal - Whether one treated it as a collateral contract or a contract partly in writing and partly oral, the term that payment was to be net of taxes did not contradict the written terms of the contract, which simply referred to remuneration - The contract did not explicitly speak of either a gross or net amount - It was silent on this aspect - The evidence as to the defendant's promise that compensation would be net did not contradict the express written terms of the memorandum, but rather filled the gap in the memorandum - See paragraphs 38 to 57.

Evidence - Topic 6204

Parol evidence rule - General principles - Evidence offered to contradict or explain written agreement - The defendant hired the plaintiff three different years to teach a heavy equipment operator course - The contracts stated that the defendant agreed to pay the instructor "a sum of ... per week as remuneration  ..." - Revenue Canada demanded that the plaintiff pay income tax owing - The plaintiff sued for indemnification respecting the taxes payable - He argued that it was understood and promised explicitly that the amounts payable were net of taxes - Other course instructors offered similar evidence - The plaintiff alleged that the contract was ambiguous and parol evidence was admissible - The defendant argued that there were no such promises and the only amount payable was a gross amount stipulated in the contracts - The trial judge allowed the action - The agreement was that the amount paid would be net of taxes - All the evidence indicated that the practice in the industry was to speak of amounts net of taxes and this would be in relation to the cash the operator actually received after deductions at the time the cheque was issued - Since the contract did not explicitly stipulate that the amount was "gross", evidence of a commitment to a "net" payment did not contradict the contract but qualified or explained it - The Manitoba Court of Appeal dismissed the defendant's appeal - The trial judge's admission of the extrinsic evidence could be justified as evidence of the circumstances surrounding the contract at the time of its execution, or evidence of the "factual matrix" - He was, in essence, relying on the factual matrix and the custom of the trade in determining that the agreement was that the amount would be net of taxes - See paragraphs 58 to 80.

Evidence - Topic 6204

Parol evidence rule - General principles - Evidence offered to contradict or explain written agreement - The Manitoba Court of Appeal stated that "The parol evidence rule does not apply where there is an allegation that the contract is partially in writing and partially oral, or that a collateral contract exists. In such cases, certain extrinsic evidence is admissible to substantiate those allegations. Also, evidence with respect to the surrounding circumstances or factual matrix is admissible to aid the court in understanding and interpreting the language and meaning of the written contract, even where no collateral contract is alleged." - See paragraphs 83 and 84.

Evidence - Topic 6205

Parol evidence rule - General principles - Evidence offered to show that document itself was not whole contract - [See all Evidence - Topic 6204 ].

Practice - Topic 8808

Appeals - General principles - Duty of appellate court respecting conclusions or interpretation of trial judge (incl. contractual interpretation) - The Manitoba Court of Appeal discussed the standard of review in cases involving the interpretation of a contract and the parol evidence rule - See paragraphs 19 to 29.

Cases Noticed:

Prairie Petroleum Products Ltd. v. Husky Oil Ltd. et al. (2008), 231 Man.R.(2d) 1; 437 W.A.C. 1; 2008 MBCA 87, refd to. [para. 21].

Plan Group et al. v. Bell Canada (2009), 252 O.A.C. 71; 96 O.R.(3d) 81; 2009 ONCA 548, refd to. [para. 21].

Midnight Marine Ltd. v. Oppenheim - see Midnight Marine Ltd. v. Underwriters, Lloyd's London.

Midnight Marine Ltd. v. Underwriters, Lloyd's London (2010), 302 Nfld. & P.E.I.R. 85; 938 A.P.R. 85; 325 D.L.R.(4th) 254; 2010 NLCA 64, refd to. [para. 21].

H.L. v. Canada (Attorney General) et al., [2005] 1 S.C.R. 401; 333 N.R. 1; 262 Sask.R. 1; 347 W.A.C. 1; 2005 SCC 25, refd to. [para. 22].

Castledowns Law Office Management Ltd. v. 1131102 Alberta Ltd. et al. (2009), 454 A.R. 328; 455 W.A.C. 328; 78 R.P.R.(4th) 1; 2009 ABCA 148, refd to. [para. 22].

Housen v. Nikolaisen et al., [2002] 2 S.C.R. 235; 286 N.R. 1; 219 Sask.R. 1; 272 W.A.C. 1; 2002 SCC 33, refd to. [para. 24].

Hayes Forest Services Ltd. v. Weyerhaeuser Co. (2008), 250 B.C.A.C. 286; 416 W.A.C. 286; 289 D.L.R.(4th) 230; 2008 BCCA 31, refd to. [para. 25].

Casurina Limited Partnership et al. v. Rio Algom Ltd. et al. (2004), 181 O.A.C. 19; 40 B.L.R.(3d) 112 (C.A.), leave to appeal refused (2004), 335 N.R. 199; 203 O.A.C. 399 (S.C.C.), refd to. [para. 25].

MacDougall v. MacDougall (2005), 205 O.A.C. 216; 262 D.L.R.(4th) 120 (C.A.), refd to. [para. 25].

Bell Mobility Inc. v. MTS Allstream Inc. (2009), 236 Man.R.(2d) 167; 448 W.A.C. 167; 2009 MBCA 28, refd to. [para. 26].

Barcode Systems Inc. v. Symbol Technologies Canada Inc. et al. (2008), 225 Man.R.(2d) 312; 419 W.A.C. 312; 2008 MBCA 47, refd to. [para. 26].

McGarry v. Co-operators Life Insurance Co. (2011), 304 B.C.A.C. 238; 513 W.A.C. 238; 333 D.L.R.(4th) 533; 2011 BCCA 214, refd to. [para. 27].

Roorda et al. v. MacIntyre et al. (2010), 487 A.R. 213; 495 W.A.C. 213; 26 Alta. L.R.(5th) 110; 2010 ABCA 156, refd to. [para. 27].

Thorburn Wharf Fisheries Ltd. v. ING Insurance Co. of Canada et al. (2010), 296 N.S.R.(2d) 197; 940 A.P.R. 197; 92 C.C.L.I.(4th) 27; 2010 NSCA 96, refd to. [para. 27].

Double N Earthmovers Ltd. v. Edmonton (City) et al. (2005), 363 A.R. 201; 343 W.A.C. 201; 6 M.P.L.R.(4th) 25; 2005 ABCA 104, refd to. [para. 27].

885704 Alberta Ltd. et al. v. Oxford Properties Group Inc. et al. (2005), 371 A.R. 178; 354 W.A.C. 178; 34 R.P.R.(4th) 159; 2005 ABCA 274, refd to. [para. 27].

Director of Investigation and Research, Competition Act v. Southam Inc. et al., [1997] 1 S.C.R. 748; 209 N.R. 20, refd to. [para. 28].

Gallen v. Allstate Grain Co. et al. (1984), 9 D.L.R.(4th) 496 (B.C.C.A.), refd to. [para. 37].

Nevin v. British Columbia Hazardous Waste Management Corp. (1996), 66 B.C.A.C. 116; 108 W.A.C. 116; 129 D.L.R.(4th) 569 (C.A.), reving. [1994] B.C.J. No. 524 (S.C.), refd to. [para. 42].

Hawrish v. Bank of Montreal, [1969] S.C.R. 515, refd to. [para. 53].

Bauer v. Bank of Montreal, [1980] 2 S.C.R. 102; 32 N.R. 191, refd to. [para. 53].

Carman Construction Ltd. v. Canadian Pacific Railway Co. and C.P. Rail, [1982] 1 S.C.R. 958; 42 N.R. 147, refd to. [para. 53].

River Wind Ventures Ltd. v. British Columbia (2011), 299 B.C.A.C. 310; 508 W.A.C. 310; 2011 BCCA 79, leave to appeal refused [2011] S.C.C.A. No. 179, refd to. [para. 53].

Manulife Bank of Canada v. Conlin et al., [1996] 3 S.C.R. 415; 203 N.R. 81; 94 O.A.C. 161, refd to. [para. 60].

Investors Compensation Scheme Ltd. v. West Bromwich Building Society, [1998] 1 All E.R. 98 (H.L.), refd to. [para. 61].

Hill v. Nova Scotia (Attorney General), [1997] 1 S.C.R. 69; 206 N.R. 299; 157 N.S.R.(2d) 81; 462 A.P.R. 81, refd to. [para. 62].

Eli Lilly & Co. et al. v. Novopharm Ltd. et al., [1998] 2 S.C.R. 129; 227 N.R. 201, refd to. [para. 63].

Moore (Geoffrey L.) Realty Inc. v. Manitoba Motor League (2003), 173 Man.R.(2d) 300; 293 W.A.C. 300; 2003 MBCA 71, refd to. [para. 65].

Glaswegian Enterprises Inc. v. B.C. Tel Mobility Cellular Inc. (1997), 101 B.C.A.C. 62; 164 W.A.C. 62 (C.A.), refd to. [para. 66].

Water Street Pictures Ltd. v. Forefront Releasing Inc. et al. (2006), 231 B.C.A.C. 189; 381 W.A.C. 189; 26 E.T.R.(3d) 197; 2006 BCCA 459, refd to. [para. 67].

Eco-Zone Engineering Ltd. v. Grand Falls-Windsor (Town) (2000), 5 C.L.R.(3d) 55; 2000 NFCA 21, refd to. [para. 68].

Reardon Smith Line Ltd. v. Hansen-Tangen, [1976] 3 All E.R. 570 (H.L.), refd to. [para. 68].

Prenn v. Simmonds, [1971] 3 All E.R. 237 (H.L.), refd to. [para. 69].

Dumbrell v. Regional Group of Companies Inc. et al. (2007), 220 O.A.C. 64; 85 O.R.(3d) 616 (C.A.), refd to. [para. 71].

Langley Lo-Cost Builders Ltd. v. 474835 B.C. Ltd. et al., [2000] 7 W.W.R. 46; 140 B.C.A.C. 182; 229 W.A.C. 182; 2000 BCCA 365, refd to. [para. 72].

Kentucky Fried Chicken Canada v. Scott Food Services Inc. et al. (1998), 114 O.A.C. 357; 41 B.L.R.(2d) 42 (C.A.), refd to. [para. 72].

MacMillan Bloedel Ltd. v. British Columbia Hydro and Power Authority, [1993] 2 W.W.R. 127; 19 B.C.A.C. 215; 34 W.A.C. 215, refd to. [para. 73].

Authors and Works Noticed:

Fridman, Gerald Henry Louis, The Law of Contract in Canada (4th Ed. 1999), pp. 478 [para. 73]; 484 [para. 51].

Hall, Geoff R., Canadian Contractual Interpretation Law (2007), pp. 10 [para. 65]; 44, 45 [para. 39]; 106, 107 [para. 20]; 109 [para. 22].

Herschorn, Arnie, The Parole Evidence Rule (1998), 20 Advocates' Q. 176, generally [para. 34].

Manitoba, Law Reform Commission, The Parol Evidence Rule (2010), generally [para. 34].

Perell, Paul M., A Riddle Inside an Enigma: The Entire Agreement Clause (1998), 20 Advocates' Q. 287, generally [para. 34].

Perell, Paul M., The Ambiguity Exception to the Parol Evidence Rule (2001), 36 Can. Bus. L.J. 21, generally [para. 34]; p. 21 [para. 65].

Swan, Angela, Canadian Contract Law (2nd Ed. 2009), paras. 8.47 [para. 36]; 8.72 [para. 56].

Waddams, Stephen M., Do We Need A Parole Evidence Rule (1991), 19 Can. Bus. L.J. 385, pp. 387 [para. 34]; 390 [para. 36]; 391 [para. 55].

Counsel:

M.T. Green, for the appellant;

G.M. Fleetwood, for the respondent.

This appeal was heard on December 17, 2010, before Monnin, Steel and Hamilton, JJ.A., of the Manitoba Court of Appeal. Steel, J.A., delivered the following judgment for the court on September 27, 2011.